Practical Advice for Auditors of Foreign Aid Projects in the Pacific

PASAI completed its first pilot of conducting a co-operative financial audit for the region and selected the topic of foreign aid projects. Six SAIs from Cook Islands, Fiji, Kiribati, Tonga, Tuvalu and Samoa participated with the support of INTOSAI Development Initiative (IDI). This pilot programme resulted in multiple observations and lessons learned which forms the basis of this regional report. The report also includes practical advice to assist SAIs in the conduct of financial audits of foreign aid projects in the future. It is expected that both SAIs and development partners in the Pacific region may learn valuable lessons from individual SAI reports as well as from this regional report to improve and enhance the quality of the audits of funds provided by foreign aid.

The current PASAI Chairperson, Public Auditor of the Federated States of Micronesia (FSM) State of Pohnpei office Mr Iso Ihlen Joseph summed up the importance of this topic in his foreword to this report “With a worldwide focus on the UN Sustainable Development Goals (SDGs) there is an ever-increasing quantity of aid flowing into developing countries relating to SDGs. This requires governments to be even more responsible for the transparent and accountable use of funds provided by foreign aid, whether it is for SDG implementation or government projects. In the Pacific this can be even more challenging and highlights the need for a strong country financial system to manage these aid funds honestly and fairly, to ensure they are meeting the needs of the targeted government projects.”

The official launch of this regional report was held in Auckland, New Zealand at the Grand Millennium Hotel on 23 February, 2017, during PASAI’s 16th Governing Board meeting which was attended by the Governing board members, PASAI’s INTOSAI representative and development partners from Australia Department of Foreign Affairs and Trade (DFAT), New Zealand Ministry of Foreign Affairs and Trade (MFAT), the World Bank and Pacific Islands Forum Secretariat. All delegates were presented with a copy of this report and it will also be published on PASAI’s website (www.pasai.org) from Tuesday 28 February, 2017.

PASAI promotes transparent, accountable, effective, and efficient use of public sector resources in the Pacific. It contributes to helping its member SAIs improve the quality of public sector auditing in the Pacific to uniformly high standards and assists governments to develop effective, accountable and transparent institutions at all levels which aligns with Goal 16 of the Sustainable Development Goals (SDGs).

PASAI acknowledges the financial support of the Australian Government Department of Foreign Affairs and Trade (DFAT) and the New Zealand Ministry of Foreign Affairs and Trade (MFAT) and the collaborative ongoing joint regional partnership with IDI.

Photo: PASAI Advocate, Mr Eroni Vatuloka handing a copy of the regional report to the PASAI Chairperson, Mr Iso Ihlen Joseph at the launch. 

Exciting New Web Interface for IDI

The IDI has a new and exciting web interface for all its stakeholders beginning 2017. It is available at the same address as the previous website: www.idi.no

Back at number one and it’s personal

“Putting people first in maintaining integrity” was a theme in Lyn Provost’s last speech as Auditor-General at the fifth Transparency International Leaders Integrity Forum last week.

This point was echoed by the Brian Picot Chair in Ethical Leadership at Victoria University, Professor Karin Lasthuizen.

New Zealand has worked hard to have a public sector with high integrity, which has been reflected in our ranking on Transparency International’s Corruption Perceptions Index for a long time. We are usually ranked either first or first equal in the world, but we slipped to second and fourth in 2014 and 2015.

It’s certainly good to be back at number one (at least, first-equal with Denmark) on the 2016 index. But we are not complacent.

In 2012, our Office’s work on fraud helped lead to an increase in awareness and action. Now all of us in the public sector have an opportunity to raise awareness and understanding of bribery and corruption.

Lyn told the Integrity Forum that the second word in “Corruption Perceptions Index” matters as much as the first. She has seen an increase in accusations of corruption during her term as Auditor-General, even though the Office’s inquiries have not upheld those accusations.

The increasing perception of corruption should be of concern to us all, Lyn said.

“Without transparency, allegations of corruption will flourish. Without transparency, people wonder what their politicians and officials are trying to hide. We can hardly blame them.”

As public sector auditors, we meet thousands of public servants committed to improving the lives of New Zealanders. They’re doing a great job, but our reputation is a fragile thing. There is plenty that can go wrong. Public entities can get too focused on avoiding risk, ticking boxes, following processes, and managing throughputs. Of course we need systems, but what comes first in maintaining integrity is concern about people.

Karin’s presentation on research in ethical leadership reinforced Lyn’s emphasis on concern for people. She told the forum that ethical leadership and explicit communication about ethics is particularly important for combatting unethical behaviour. Communication about ethical values and norms, and open discussion about ethical dilemmas, helps reduce perceptions of favouritism inside an organisation, and discrimination outside of it.

The Kiwis Count Survey run by the State Services Commission shows that New Zealanders' trust in public services by experience is consistently much higher than their perception of trust. By both measures, trust has increased markedly since 2007. It shows that their trust is closely linked to their personal contact with the public sector.

In her last address as Auditor-General to the public sector, those at the Forum might have expected a discussion of accounting and financial management challenges and of the systems that could be improved. But Lyn showed the forum the trait that has made her distinctive as an Auditor-General – her willingness to talk about the issues that matter for people.

She challenged the public sector to focus on, and find ways to improve, five issues that trouble us all and blight so many of our lives: and that undermine our integrity:

1. Suicide – the third leading cause of premature death in New Zealand. Every suicide is a tragedy. Our Office has tried to contribute to this complex problem by looking at how information is collected and used to prevent future suicides.

2. Mental health – in our Office, as in communities throughout New Zealand, no one’s life is untouched by the pain of suicide and mental health related issues. In the next few months, the new Auditor-General, Martin Matthews, will present a report on acute care of mental health patients.

3. Māori education – too many Māori children leave school without the education they deserve. The achievement gap between Māori and non-Māori is closing too slowly. As an Office, we are proud of our reports on Māori education, and we hope the sector will have the courage to do what is needed to help Māori students achieve their full potential.

4. Jobs for youth – we are an organisation that recruits graduates who are beginning careers to become our future public sector leaders and finance managers. Too often we hear the phrase “we want experienced people”! How does a young person get experience with that attitude?

5. Family violence and its impact on children – in her eight years in Police, Lyn says she saw the impact of family violence again and again. Family violence is not acceptable.

Staying at number one on the Corruption Perceptions Index means making it personal – having the uncomfortable conversations to find ways to tackle the issues that matter for people.

FULL ARTICLE AT: https://oag.parliament.nz/blog/2017/back-at-number-one

““Without transparency, allegations of corruption will flourish. Without transparency, people wonder what their politicians and officials are trying to hide. We can hardly blame them.””

— Lyn Provost

Supporting performance measurement of public auditors in the Pacific

The Pacific Association of Supreme Audit Institutions (PASAI) and INTOSAI Development Initiative (IDI) continued with phase II of the SAI Performance Measurement Framework (SAI PMF) project for supreme audit institutions (SAIs) in the North Pacific by facilitating a week long workshop in Guam on 30 January to 3 February 2017. Twenty one staff from nine SAIs including a representative from the United States Department of the Interior Office of Inspector General (US DOIOIG) attended the workshop.

The Speaker of the 34th Guam Legislature, the Honourable Mr Benjamin J.F.Cruz officially openedthe workshop. In his opening remarks, he acknowledged that the work of SAIs is vital and necessary in keeping all government officials including politicians, in line with utilizing public funds and public resources.

SAIs from Guam, Marshall Islands, Federated States of Micronesia (FSM) Office of the National Public Auditor, FSM States of Pohnpei, Kosrae and Yap will conduct peer reviews of each otherusing the SAI PMF framework. Staff from SAIs Cook Islands, Samoa and Tonga who took part in Phase I of this project participated as resource persons to assist with the peer review of the six SAIs in the North Pacific.

The main objectives of the workshop were:

• To train staff of SAIs who will participate in conducting a SAI PMF assessment;
• To develop the terms of reference (TORs) for the SAI PMF assessments; and
• To assess the SAI’s institutional capacity by measuring its independence and legal framework.

The planned activities for Phase II which will be executed in the next few months are peer reviews of the six SAIs and a final workshop to discuss and analyse the results of the assessments. The intended output of this phase is completed SAI Performance reports for all six SAIs participating in the programme.

Camilla Fredriksen, SAI PMF advisor from IDI, hopes that the implementation of Phase II will strengthen the knowledge on SAI Performance in the Pacific and that the results will enable regional bodies and SAIs to identify good practices as well as opportunities for capacity development throughout the region. She added that rolling out the Phase II provides an opportunity for applying the lessons learnt from Phase I, and to strengthen the regional expertise of SAI PMF assessors.

The assessment results will assist the SAIs in taking appropriate measures to ensure they have the capabilities and resources to carry out its responsibilities effectively with professionalism. The results will also assist the SAIs to know if they have the ability to respond to stakeholders’ expectations as well as emerging issues that impact the lives of citizens at large.

This program is aligned with one of PASAI’s strategic goals requiring SAIs to develop performance measurement framework to assist with improving the delivery of SAI’s audit responsibilities.

The workshop was facilitated by a team of facilitators consisting of Ms Camilla Fredriksen, SAI PMF Advisor from IDI, Mr Robert Buchanan, PASAI Consultant, Mrs Sinaroseta Palamo-Iosefo, PASAI Director of Practice Development, Mr Allen Parker and Mr Desmond Wildin of Cook Islands, Mr Marshall Maua of Samoa and Mr Kelepi Makakaufaki from Tonga.

This project is supported by Australian Department of Foreign Affairs, INTOSAI Development Initiatives (IDI) and New Zealand Ministry of Foreign Affairs and Trade.

Image of the workshop participants and coordinators 

Spotlight on Success: Regional Collaboration to Close the Accountability Gap-the PASAI Approach

THE CHALLENGE

Several smaller island nations in the Pacific have limited auditing capabilities. For example, back in 2009, theTuvalu Office of the Auditor-General (TOAG) and the Kiribati National Audit Office (KNAO) were not completing audits in a timely manner. They had backlogs of audits and struggled to keep up with changes to international financial reporting and auditing standards.

One of their main challenges was in the area of human resources, a typical problem faced by small island nationsin the Pacific. The untimely audit of the government’s accounts entailed reduced accountability for the use of public funds in Tuvalu and in Kiribati, as the Parliaments and the citizens did not receive assurance that funds were spent as intended.

THE RESPONSE

The Pacific Association of Supreme Audit Institutions (PASAI) designed a Sub-regional Audit Support Programme (SAS) to support some of the smaller and most vulnerable SAIs that were facing similar challenges with staff capabilities, audit methodologies and systems. The programme was linked to PASAI’s strategic plan and its work program, the Pacific Regional Audit Initiative (PRAI). 

The SAS programme was operational from 2009 to 2016. It supported TOAG and KNAO capacity building by helping them complete financial audits, train SAI personnel and improve information sharing. This effort was made possible by a team of secondees from each participating country and supported by consultants to assist in the audit of public accounts using updated auditing standards.

The Asian Development Bank financed the SAS programme, through the Japan Fund for Poverty Reduction.  The Australian Department of Foreign Affairs and Trade and the New Zealand Ministry of Foreign Affairs and Trade have been the primary funders of the PASAI Secretariat, whichhas helped implement the programme.

THE RESULTS

• The KNAO is now up-to-date with the whole of government audits
• The TOAG has audited all financial statements submitted, including the whole of government financial statement for 2015
• The competency, confidence and experience of the staff involved in the SAS programme have significantly increased.
• The timely completion of the whole of government audits has positively contributed to the availability of up to date and reliable financial information for the respective governments in preparing budgets and in formulating relevant policies, which will benefit citizens

The results in PASAI have been made possible with the support of donors who have aligned behind PRAI and PASAI´s strategic plan, leading to well-coordinated support to the SAIs in the region.

PASAI’s regional approach to capacity development has enabled scarce resources to be utilized in an effective way, as synergies have been realized and peer SAIs have worked together to improve performance at the country level. The approach has included staff training and development, sharing resources regionally and aligning policies to strengthen national capacities. This isa good illustration of the key principles for SAI capacity development in the INTOSAI-Donor Memorandum of Understanding.

On the basis of the same regional approach, the INTOSAI- Donor and PASAI secretariats have designed a programme for measuring performance that is in line with PASAI’s regional priorities. Financed by the Australian Department of Foreign Affairs and Trade, this newly developed initiative facilitates SAI Performance Measurement Framework (SAI PMF) assessments for numerous smaller SAIs throughout the Pacific region. Using a combination of self- assessment and peer reviews, the goal is to effectively address the challenges associated with staff and skill limitations.

The TOAG takes part in the SAI PMF programme. The TOAG assessment was conducted in 2016 using a combination of internal assessment and peer review by the Samoa Audit Office with support from PASAI. Following the completion of the draft assessment, the peer review team presented preliminary findings to TOAG management and staff, who acknowledged and accepted the constructive feedback for improvement.

FOR FULL ARTICLE CLICK HERE

SAS committee May 2013

SAS Committee May 2014 - signing new MOU

Martin Matthews - Controller and Auditor-General

On 1 February 2017, Martin Matthews began his seven-year term as New Zealand’s Controller and Auditor-General.

Martin has worked in the public service for more than 36 years.

He joined the (then) Audit Office in 1979 and spent the first 18 years of his career in the office. He was an Assistant Auditor-General from 1990 to 1998, holding various portfolios during this period.

Martin then spent 10 years as Chief Executive of the Ministry of Culture and Heritage. He later served as Secretary for Transport and Chief Executive of the Ministry of Transport, from 2008 to June 2016.

Martin was the select committee’s advisor on the Public Finance Act 1989 and led much of the policy design work for the Public Audit Act 2001.

As Controller and Auditor-General, Martin's principal functions and duties are set out in the Public Audit Act 2001. In summary, they are to:

• ensure that the office carries out its obligation to conduct audits of public sector bodies, and report to Parliament on the results of the audits; and
• ensure the efficient, effective, and economical management of the Office of the Auditor-General. 

Martin is a Fellow of Chartered Accountants Australia and New Zealand, New Zealand Institute of Management, New Zealand Institute of Chartered Logistics and Transport, and Companion of the New Zealand Institute of Professional Engineers. 

STORY COURTESY OF: http://oag.govt.nz/our-people/martin-matthews