The Netherlands Court of Audit

January 2012single audit Netherlands Court of Audit1

The Netherlands Court of Audit

Audit approachAudit approach

System based approachSystem based approach

&&

Single auditSingle auditTon Kok

Netherlands Court of Audit

[email protected]


Content

• Audit environment

• Audit approach NCA

• Definition Single Audit

• Conditions using single audit

• Single Information and Single Audit (SISA)


Audit environment

Governmental levels Audit Mandate and Scope NCA

State level(21 budget chapters)

12 Ministers + 8 Assistant Secretary

Central Government+

-Legal entities with statutory duties (quangos)-State subsidized organisations-Recipients of EU subsidies

Provincial level (12) Not local governments

Municipal level (431)

Constitution and ‘comptabiliteitswet’ -> powers, checks and balances, requirements for financial management etc.

Dutch governance system

Parliament

Policy directorates

Central Directorate for Financial & Economic Affairs (internal control)

Secretary General (Audit Committee)

Minister

Internal Audit Department

Court of Audit

Beneficiaries- local government- care and health- education- industry

External private Audit

ReportAudit opinion

ReportAudit opinion

ReportAudit opinion

Au

dit chain

Financial management

Internal control (supervision)

Accountability report

Accountability report



Definition Single Audit

• No clear international accepted definition

• In general it is a name which covers a way

of thinking about a situation where one

entity is subject to many audits or the

entity has already been audited by an

other auditor


I Reliance on the work of others

A. Review of the audit departments' audit work

1. review of audit files2. interviews/consultation3. reperformance

II Additional audit work by the Court of Audit

B. Systems-basedC. Substantive

Audit activities (single audit)


Standards used

A. International standards on auditing

• 3000 Assurance Engagements Other Than Audits or Reviews of Historical Financial Information;

• 600-699 Using Work of Others | 610 Using the Work of an internal auditor; 620 Using the Work of an auditor’s expert

• 100-999 Assurance Engagements to audit historical financial information.

B. International Standards of Supreme Audit Institutions


Internal Audit Department

Planning

Execution

Evaluation/ reporting

I

II

+

III

International Standards on Auditing (IFAC)

Capacity auditors (Certified Public Auditors)


Review Internal Audit Department

Organisation and planning:

• Capacity (quality and quantity)?

• Are norms specified?

– Materiality?

– When is a transaction regular or not?

• Are recent developments taken into account?

• Is risk analysis performed well?

• Are enough tests of control and substantive tests planned?

I

Plan

nin

g's p

ha

se


Review Internal Audit Department

Execution:

• Is the audit performed well (material audit, right

norms, right selection of audit objects, etc)

• Is the audit performed according to plan?

Reporting:

• Are all findings taken into account? (closing

documents)

• Quality evaluation

II+III

Execu

tion a

nd re

portin

g ph

ase


Reports NCA (single audit)

Accountability Day (each year in May)

In 2011 we published our:

State of Central Government Accounts

+

28 reports (for each budget chapter of 2010)

+

Report on the Dutch EU meber state declaration 2010


Single Information and Single AuditWhy?

• Developed with regard to grants given from central to local government

• Many grants from different ministries with specific provisions

• Many accountability and audit reports

Solution

• Single information + Single audit


From multiple to single accountability

Cultuur-bereik

Cultuur-bereik

Acc. verklaring

Acc. verklaring

Bestrijding rampen

Bestrijding rampen

Acc. verklaring

Acc. verklaring

Verkeer en vervoer

Verkeer en vervoer

Acc. verklaring

Acc. verklaringHeroïne

verstrekking

Heroïneverstrekking

Acc. verklaring

Acc. verklaring

Externe Veiligheid

Externe Veiligheid

Acc. verklaring

Acc. verklaring

Stads-economie

Stads-economie

Acc. verklaring

Acc. verklaring

WWBWWB

Acc. verklaring

Acc. verklaring

JaarrekeningJaarrekening

Acc. verklaring

Acc. verklaring

One accountability report for all stakeholders


Single audit• Annual (financial) report and audit is leading

• No longer for each specific grant a separate audit (protocol)

• Reference and standards for local auditor

– General auditing standards

– Requirements for all specific grants in a note for the auditor

– Regulation of specific grants


Single review• Auditor of local government covers all

specific grants in his annual audit activities

• Also on central state level the auditors of

the ministries are working together

• One review team reviews and verifies the

quality of the locally performed audits for

different ministries (selection based upon

risk-analyses and sampling)

January 2012single audit Netherlands Court of Audit16 25-27 October 2010CAP 2010 Experiences in the Netherlands16

Pro and contra Single audit PRO

• Systematic control and audit

• Asks for adequate system and management

• Less audit burden

• Less resources

CONTRA

• Only paper

• Chain is as strong as weakest connection

• No statistical underpinned statement


Questions?


Developments• Result of New Public Management

• ‘in control statements by minister,

including regularity’

• Non financial information (VBTB)

• Centralisation of internal audit departments

• Financial crisis

Policy (VBTB) Budget• Goal: make budgetary process more policy-

oriented. Three questions (known in the

Netherlands as the www-questions):

• What do we want to achieve?

• What will we do to achieve it?

• What will be the costs of our efforts?


Policy (VBTB) Annual report• After budgetary year, the governments

national annual report will have to answer

the logical equivalents to these three

questions:

• Have we achieved what we intended?

• Have we done what we should have done

in achieving it?

• Was the cost what we had expected?January 2012single audit Netherlands Court of Audit20

Documents

The Netherlands Court of Audit