Transcript Evolution of Internal Audit

Canadian International
Development Agency
Agence canadienne de
développement international
Internal Audit and
International
Development
Address by Nicole Mendenhall, CIDA
20th ICGFM International Conference
Miami, Florida
May 8, 2006
Canadian International
Development Agency
Agence canadienne de
développement international
Evolution of Internal Audit in
Canada
1962 – Glassco Commission –
recommended internal financial audit in
departments
Late 1970s - MBO adopted in the
Government
1979 – Lambert Commission – need to
expand internal audit beyond finance
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Canadian International
Development Agency
Agence canadienne de
développement international
Evolution of Internal Audit in
Canada
Early 1990s - Results Based Management
introduced in Government
1994 - Review Policy – integration of audit
and evaluation
2004 – Sponsorship & the Gomery
Commission
2006 – Internal Audit Policy
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Canadian International
Development Agency
Agence canadienne de
développement international
4
Evolution of Audit Focus in
CIDA
Late 1990s - CIDA starts its change from a
project to a program focus
2003 to now – country program audits
Introduction of the management
accountability framework as the basis for
audits
Internal audit now taking an outward or
international view
Canadian International
Development Agency
Agence canadienne de
développement international
Country Program Audits
An integrated holistic approach
Assessing systems and processes in place
to support aid effectiveness
Governance, accountability, stewardship,
risks
Policy dialogue – plans, systems, etc
Local ownership & capacity building
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Canadian International
Development Agency
Agence canadienne de
développement international
6
The Provision of Assurance
Chief Audit Executive provides assurance
on individual audits; management of risks;
and the functioning of fundamental
controls
The Chief Financial Officer provides
assurance that the financial controls are
working
The Auditor General provides assurance on
the Financial Statements of the
department / ministry
Canadian International
Development Agency
Agence canadienne de
développement international
The Challenge of Assurance in
International Development
Donor internal audit work in a multi-donor
environment
Each donor is not solely accountable for
the delivery of its aid dollars – joint or
shared accountability is the norm
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Canadian International
Development Agency
Agence canadienne de
développement international
8
Assurance in a Multi-donor
Environment – a question
How can internal audit give assurance that
funds are well managed and controlled,
that they are being used for the purposes
intended, that the progress towards results
and the use of funds are properly linked
when each donor has no direct control, the
funds are pooled, and accountability is
shared?
Canadian International
Development Agency
Agence canadienne de
développement international
The Challenge for Donor /
Recipient Internal Audit
Paris Declaration reinforced the need for
program based approaches with the
recipient in the “driver’s seat”.
National and multilateral donors fund long
term programs developed by the recipient
Acceptance of recipient systems
Common reporting and audit rules
Mutual accountability
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Canadian International
Development Agency
Agence canadienne de
développement international
The Gaps in Assurance
Although aid is harmonizing – gaps in
assurance remain
Definition of mutual accountability – to
whom? – by whom?
Management accountability frameworks
are not commonly understood and
accepted
Risk management – need for commonly
accepted risks & risk mitigation strategies
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Canadian International
Development Agency
Agence canadienne de
développement international
11
The Gaps in Assurance
Donor internal audit cannot and should not
unilaterally audit a multi-donor program
Currently, audits planned are financial
mostly done by the recipient’s “supreme
auditor”
Canadian International
Development Agency
Agence canadienne de
développement international
Meeting the Challenge
Is there a will in the donor/recipient
community to perform internal audits of
program based approaches?
Is there a will for donors/recipient
countries to strengthen the function of
internal audit?
Is there a will to share the results of
internal audits?
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Canadian International
Development Agency
Agence canadienne de
développement international
The Question
How can Internal Audit ensure that
donor/partners meet fiduciary obligations
vis-à-vis their respective population?
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