Part 1. Identifying audit scope, subject matter and criteria

Workshop 2

For auditors

Case study on two audits

by Mr Pekka Ihalainen

Audit Counsellor

SAI of Finland

Workshop 2

For auditors

Subject matter - the best approach

Workshop 2

For auditors

Which would be the better approach - to define the

subject matter individually for each compliance audit or

to decide on the subject matter forming an overall audit

plan of the SAI?

Workshop 2

For auditors

- The question is still open: depends on what is being audited;

- Different ways to identify subject matter, e.g.

a) overall risk analysis;

b) evaluating materiality;

c) carrying audits auditors identify particular issues;

- Financial audits already have some aspect of compliance audit incorporated

Workshop 2

For auditors

Audit criteria - the best approach

Workshop 2

For auditors

- What are the audit criteria – an entire legal act or a

particular provision of a legal act?

Depends on audit object (topic) (e.g. if state budget is

audited – the entire legal act; in case public

procurement is audited – particular provisions)

Workshop 2

For auditors

- What audit approach should be used for conflicting audit criteria?

Auditor must inform about such a situation legislative body or choose another criteria

(usually in performance audit).

- How much criteria should be used while carrying out a compliance audit?

Too many criteria is not a good practice.

Workshop 2

For auditors

Materiality - the best approach

Workshop 2

For auditors

- Qualitative or quantitative materiality - which is the

better approach for stand-alone audit?

Depends on the case and should be used together.

- How materiality should be defined when carrying out

compliance audit together with financial audit or

performance audit?

Quantitative materiality (based on assets or

expenditures)

Workshop 2

For auditors

Part 2. Sampling for reasonable assurance

Workshop 2

For auditors

Case study

by Mrs Türkan Sever, Principal Auditor

SAI of Turkey

and

Case study

by Mrs Emilija Jasaitienė, Deputy Director

SAI of Lithuania

Workshop 2

For auditors

Practical Exercise: sampling for verifying whether the university

hospitals acquired medical equipment in accordance with the public procurement law

Workshop 2

For auditors

Population

May be variuos definitions of population:

• By date of signature of contract or date of payment;

• Definition of population based on the type of the procurement procedure

• All hospitals in one population, all contracts; fraud cases – separately;

• Based on risks – exclude amounts higher than 500000 EUR and test all of them; exclude amounts less than 500 EUR.

Stratification

May be applicable:

by hospital or/and by type of procurement procedure

Workshop 2

For auditors

Summary of the suggestions presented by the

participants

Sampling in stages

Not recommended in the situation of

the practical exercise

Sampling method

Variuos methods suggested –

from professional judgement to MUS

Workshop 2

For auditors

Summary of the suggestions presented

Sample size

Might be determined using the audit

reliability determination model (in

this case minor scope of tests of

details)

Might be determined by using

formula of the statistical sampling

method

Items selected

Workshop 2

For auditors

Summary of the suggestions presented

Depends on sampling method chosen

Extrapolation

• If statistical sampling used -

extrapolate

• Additional procedures might be

required

Workshop 2

For auditors

Summary of the suggestions presented

Same case – different auditors – different approaches

Workshop 2

For auditors