How to Increase SAIs Capacity for Preventing Corruption in the Public Sector - Section IV, Workshop 2 (UN & INTOSAI)

Transcription

1 How to Increase SAIs Capacity for Preventing Corruption in the Public Sector - Section IV, Workshop 2 (UN & INTOSAI) June 25, 2014 Keakook Song, PhD&CFE Director, Public Audit Research

2 Contents 2 1. Introduction 2. Corruption 3. Anti-Corruption Movement 4. National Integrity System 5. INTOSAI Activities for Anti-Corruption 6. SAIs Capacity Building 7. Audit Mission, Vision and Requirements 8. Audit Functions and R&R 9. Audit Methods 10. Quality Assurance of Internal Audit 11. Conclusion

3 1. Introduction 3 Hyper-connected Society : Anti-Corruption Movement by UN and INOTOSAI Ferry Disaster in Korea exposed Deeply-rooted Corruption : A Set of Anti-Corruption Bills National Integrity System and SAIs SAI s Capacity Building for Preventing Corruption : Changes in Audit Mission to Methods and Quality Assurance of Internal Audit

4 2. Corruption C (Corruption) = M (Monopoly Power) + D (Discretion) A (Accountability) Klitgaard (1996) C = M + D A (Transparency) Dye and Stapenhurst (1998) * ACFE s 2014 Report to the Nations (Global Fraud Survey) : Global fraud loss of US$3.7 trillion (5% of revenues) 4

5 3. Anti-Corruption Movement US, Foreign Corrupt Practices Act (1977) Transparency International (1993) Inter-American Convention Against Corruption (1996) OECD, Convention Against Bribery (1997) Council of Europe s Criminal and Civil Conventions (1999) African Union Convention on Preventing and Combating Corruption (2003) UN, Convention Against Corruption (2003) 5

6 4. National Integrity System (A) Eight Integrity Pillars for the Nation s Sustainable Development (Langseth et al, 1997) political will, administrative reforms, watchdog agencies, parliament, public awareness/involvement, judiciary, media, private sector * Watchdog Agencies : Rights, Reform, Audit Watchdogs supreme audit institutions (SAIs), anti-corruption commissions, ombudsman offices 6

7 7 4. National Integrity System (B)

8 5. INTOSAI Activities for Anti-Corruption INTOSAI/UN Seminar (1996) and Symposium (2009) for the Fight against Corruption INTOSAI Congress Recommendations on the Fight against Corruption (1998), Task Force on the Fight against International Money Laundering (2002), Working Group on the Fight against Corruption and Money Laundering (2007) INTOSAI Platform for Public Accountability in 8 Partnership with UN Chaired by the SAI of Korea (2007)

9 6. SAIs Capacity Building INTOSAI Capacity Building Committee s Guide (2007) - Five Step Iterative Process of Capacity Building - Three Aspects of Capacity Building A. Professional Audit Capacity Audit Methods, Manuals, Developing/Training Staff Work Planning and Management, Quality Assurance B. Organizational Capacity 9 Forward Planning, Leadership, Managing Resources, Governance and Accountability Arrangements C. Capacity to Deal with the External Environment

10 7. Audit Mission, Vision and Requirements Audit Mission : Two-track Missions Enhancing both Accountability and Integrity Audit Vision : Upgrading and Enhancing the Value of the Organization Audit Requirements Independence (organizational, operational, financial), Professionalism, Integrity (e.g. SAINT : Self-Assessment of 10 Integrity, NCA), Protection for Whistle Blower (e.g. Red Whistle Helpline for Anonymity, KAMCO)

11 8. Audit Functions and R&R (A) Audit Functions - Hunting Dog > Watchdog > Guide Dog - Oversight > Insight > Foresight * Accountability Organization Maturity Model (US GAO, 2006) Combating Corruption, Enhancing Transparency, Assuring Accountability, Enhancing 5E, Increasing Insight, Facilitating Foresight Audit Roles and Responsibilities 11 Directing > Consulting > Coaching > Supporting Self-Audit (e.g. Audit Manual, Checklist, Full Disclosure by Internet, SNS)

12 12 8. Audit Functions and R&R (B)

13 13 8. Audit Functions and R&R (C)

14 14 8. Audit Functions and R&R (D)

15 9. Audit Methods (A) From Single Audit Type to Comprehensive Audit : Encompassing Compliance Audit, Financial Audit and Performance Audit & Integrating Governance, Risk and Control (IIA) * System-based Audit (2003 to 2008, Korea) 15 Identifying Core Problems thorough Preliminary Study and Data Analysis Across-the-Border Examination of the System for Drawing up Fundamental Remedies

16 9. Audit Methods (B) Risk-based Audit : Audit Objects by Risk Assessment e-audit System : CMS (Continuous Monitoring System) by CAATs EDW (Enterprise Data Warehouse) by OLAP AMS (Audit Management System) for all activities Citizens Participatory Audit (e.g. Audit Request System, BAI) 16

17 9. Audit Methods (C) : RBA (KAMCO) Subjects of Risk Management Risk Management & Assessment Audit Management Audit Information System Integrated Planning Division Identifying Risk Risk Profiling Audit Planning Audit Strategy Information System e-approval System 17 SR Support Division Fund Management Division Performance Management Division Information System Division Risk Assessment Risk Rating Selecting Audit Objects ` Checklist Audit Results Audit Conducting Audit Report Post Audit Management Providing Field Information DM Information System Analysis & Processing Creating Audit Information Audit Knowledge Information System Classification & Search Creating Audit Idea

18 9. Audit Methods (D) : CMS 1 (KAMCO) Monitoring Reporting Integrated Dashboard Management Goals Monitoring Items Early Warning (EW) Management of Risk Response Strategy and Operating Goal Reporting Goal Compliance Goal Risk Registration Analysis of Risk Trends Data Analysis Notice Mgt. (SMS, ) EW History Mgt. Rule Setting Request for Risk Explanation Mgt. of Risk Explanation Mgt. of Risk Explanation Results 18 Selecting Risk Related to Strategy Risk Pool Data Analytics

19 19 9. Audit Methods (D) : CMS 2 (KAMCO)

20 20 9. Audit Methods (E) : CPA 1 (BAI)

21 21 9. Audit Methods (E) : CPA 2 (BAI)

22 10. Quality Assurance of Internal Audit (A) 22 Guidelines for Internal Control Standards for the Pubic Sector (INTOSAI, 2004) Enterprise Risk Management-Integrated Framework (COSO, 2004) : Control Environment, Risk Management, Control Activity, Information & Communication, Monitoring - Efficiency and effectiveness of operations - Reliability of financial reporting - Compliance with applicable laws and regulations International Standards for the Professional Practice of Internal Auditing (IIA, 2008) Standards for Internal Control in the Federal Government - Green Book (US GAO, 3 rd revision in 2014)

23 10. Quality Assurance of Internal Audit (B) Assessment of Internal Audit Capacity and Feedback Internal Auditing Capability Model(IA-CM) for the Public Sector (IIA, 2009) Service and Role of IA, People Management, Professional Practices, Performance Management and Accountability, Organizational Relationships and Culture, Governance * Certificates by SAIs (e.g. ISO 9000) * Developing / Training Auditors : Competency-based Curriculum 23

24 10. Quality Assurance of Internal Audit (C) Operating System of the Internal Audit of the KAMCO Audit Strategy Meeting Presided over by the CAE Operating Directions for Internal Audit Activities Watchdog Guide dog Oversight Audit (Traditional Audit) Insight Audit (System Audit) Foresight Audit (Consulting Audit) Noncompliance with Laws and Regulations Budget Waste Detecting Corruption Proposing Alternatives to Enhance 3E (economy, efficiency, effectiveness) Predicting Management Risks and Mid-Long Term Business Outlook, and Enhancing the Value of the KAMCO 24 Post-Action Control

25 Quality Assurance of Internal Audit (D)

26 11. Conclusion Enhancing Accountability and Integrity in the Public Sector by SAIs Capacity Building : Comprehensive Audit Changing Audit Functions and R&R : Foresight, Self-Audit Improving Audit Methods : RBA, e-audit System, CPA Assuring Internal Audit Quality : Assessment and Feedback 26 International Cooperation is vital in Anti-Corruption.

27 References Keakook Song(2012a). Citizens Participatory Audit. (2012b). Readings in International Issues of Auditing. (2013a). Theory and Practice of Internal Audit of Public Institutions. (2013b). Case Studies on Public Audit. 27

28 Thank You!