M EASURING IA S UCCESS ? P OLISH PERSPECTIVE Konrad Knedler, CIA, CGAP O CTOBER 4, 2011.

MEASURING IA SUCCESS?

POLISH PERSPECTIVE

Konrad Knedler, CIA, CGAP

OCTOBER 4, 2011

www.auditsolutions.pl2

IA IN POLISH PUBLIC SECTOR BASIC FEATURES

Decentralised IA function Initial legal framework were laid down in 2001 –

mandatory requirements Many, rather small units in ministries, government offices,

quangos and local government Soft coordination (and quality assurance) – Ministry of

Finance IIA standards in force Recognition of IIA qualifactions Functional reporting to top management (ministries, CEOs,

mayors) Audit Committees at ministries’ level Coexistence with Control, Inspection type units

www.auditsolutions.pl

1 person37%

2 per-sons9%

2-10 persons9%

part time job32%

va-canc

y6%

external provider5%

others2%

GOV IA SIZE*

*Internal Audit & Management controli2011 – MoF Activity Report


1 person22%

2 per-sons2%

2-10 per-sons3%

part time job16%

vacancy24%

external provider32%

others1%

LOCAL IA SIZE*

*Internal Audit & Management controli2011 – MoF Activity Report


Statutory obejctives27%

Supporting activities (e.g. HR, procurment

etc.)58%

Managemnt processes

14%

others1%

Audit area focus


IC IN POLISH PUBLIC SECTOR BASIC FEATURES

2001 – start with the concept of financial control 2010 – management control (MC) concept COSO based framework MC is top management responsibility Ministers and other top managers issue

Declarations of Assurance (avaliable on www) Only 5 of 17 ministries issued clean DAS Reservations concerned mostly the lack of risk

management process No liaison (so far) between DAS and budgetary

discharge procedure


WHAT’S THE PROBLEM? WHAT IS IA FOR?

Ex ante IA existence justification: „As easy as that” – legal requirements EU negotiations commitments SAI recommendations to professionalise existing

Control inspection type units Calls for Value for Money

Ex post IA existence justification : Compliance focus – is it enough? What was in lawmakers minds? Where is added value? What are IA costs? What are CLEAR benefits for IA existence?


IA INDICATORS

Compliance oriented Independence Charter Audit process as defined in

regulations Timeliness as defined in

regulations Performance oriented

Time consumed for audit activities (target 70%)

Savings? Audit area focus


PUBLIC SECTOR INTERNAL AUDIT BENCHMARKING – MOF REPORT SEPT.

2011 Start of benchmarking process Source of criteria for selfassessment Limited to government sector Organisations grouped by: empleyees number,

expenditure level, IA size, type (ministries, central officess), number of auditors/number of staff

Measures based on: Performance Measures for Internal Audit Functions: A Research Project

3 performance measures categories based on: Outcomes Quality Efficiency Impact


OUTCOMES BASED MEASURES

Number of assurance assignments Number of consulting assignments Number of recommendations


NUMBER OF ASSURANCE ASSIGNMENTS IN DIFFERENT TYPES OF ORGANISATIONS

Minist

ries

Unive

rsiti

es

Hospi

tals

Agenc

ies

Fund

s

Tax

Cham

bers

Custo

ms

Regio

nal O

ffice

s

Defen

ce u

nits

Centra

l Offi

ces

Pros

ecut

or's

Office

s

Courts

Budge

tary

Uni

ts

Cultu

re in

stitu

tions

Lega

l ent

ities

0

5

10

15

20

25

30

43 3

11

27

43 3

23

2

4

2 23

Series1


QUALITY BASED MEASURES

Auditors turnover Audit certificates Auditing experience Quality assurance techniques


AUDITORS TURNOVER IN DIFFERENT TYPES OF ORGANISATIONS

Minist

ries

Unive

rsiti

es

Hospi

tals

Agenc

ies

Fund

s

Tax

Cham

bers

Custo

ms

Regio

nal O

ffice

s

Defen

ce u

nits

Centra

l Offi

ces

Pros

ecut

or's

Office

s

Courts

Budge

tary

Uni

ts

Cultu

re in

stitu

tions

Lega

l ent

ities

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

33%

19%

30%

21%

7%

41%

21%23%

33%

20%

25%23%

28%

42%

26%

Series1


EFFICIENCY BASED MEASURES

Audit duration Audit workload Auditing as % of IA time budget Accepted recommendations


AUDIT WORKLOAD-ASSURANCE MANDAYS/NUMBER OF

ASSURANCE PROJECTS

exte

rnal

pro

vide

r

part

time

- bel

ow 1

/2

part

time

- 1/2

- 1

1 au

dito

r

max

2 a

udito

rs

over

2 a

udito

rs

over

all

0

10

20

30

40

50

60

20 20

29

36

57 56

39


IMPACT BASED MEASURES

High risk areas covered by IA Audit cycle


HIGH RISK AREAS COVERED BY IA

Minist

ries

Unive

rsiti

es

Hospi

tals

Agenc

ies

Fund

s

Tax

Cham

bers

Custo

ms

Regio

nal O

ffice

s

Defen

ce u

nits

Centra

l Offi

ces

Pros

ecut

or's

Office

s

Courts

Budge

tary

Uni

ts

Cultu

re in

stitu

tions

Lega

l ent

ities

31% 31%

20%

37%

54% 54%

42%

29%

23%26%

23%

40%

22%

29%

22%

Series1


IA MEASURES - WORRIES

One dimension assessment always fails. A need for multidimensional appraisal

Every measure can be interpreted in different way. „White or black” situations are really rare

Contextual perspective is essential. IA is as matured as organisation for which it serves

Common distrust in benchmarking – specificity as an excuse


FURTHER CONSIDERATIONS

Rationality What is profit maximizing for IA?

Goals consistency Top management and IA – are they working for

the same (common) good? Independence

Help or obstacle? Top management vs IA perspective.

Performance Performance or compliance – what goes first?


POTENTIAL FOR IA RATIONALE

Proactive involvement in management control and risk management processes, performance based budgeting and other projects – „agent of changes”

Auditing external actions – subordinate and supervised bodies.

Focus on savings – VFM audits Meeting Board’s expectations More data analyses job

THANK YOU

[email protected]


mailto:[email protected]

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M EASURING IA S UCCESS ? P OLISH PERSPECTIVE Konrad Knedler, CIA, CGAP O CTOBER 4, 2011.

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