Strategy of the National Audit Office and development thereof

Jaanus Kasendi | Urmet Lee | 7/20/2020 | 10:23 AM

Text size: [-A] [+A]

Language: EST | RUS | ENG


In July 2020, the Auditor General approved the Strategy of the National Audit Office for 2020–2024. Analysing the development trends of the audit environment both in Estonia and elsewhere in countries with a similar institutional structure, the discussions led to the conclusion that updating the current strategy is needed to give even more precise focus and emphasis to the activities of the entire organisation.

In public administration and policymaking, events take place and decisions are made faster than ever before. More and different data than ever before is available for making decisions, and the National Audit Office would not be able to make its best contribution to ensuring that public funds are used honestly and reasonably if it focused only on the assessment of past events.

The new strategy has grown out of the one in force so far, foremost specifying the expectations regarding the so-called proactiveness of the attitudes of the auditors of the National Audit Office. This means putting the focus on monitoring the resolution of issues and post-audit activities securing the issues raised by the National Audit Office to be resolved. The new strategy also provides principles for fact-based work with shorter deadlines and narrower focus to offer information to the public and policymakers for making better decisions. The core values – objectivity and independence, competence and diligence, cooperation and openness, honesty and integrity – of the organisation that the National Audit Office is guided by in its everyday operations remain unchanged in the strategy.

The implementation of the strategy is guided by the implementation plan to be agreed upon every year. At the same time, the strategy itself has to be a living document that has a real impact on the selection of audit topics, the method of carrying out audits as well as the use of resources, so it may be necessary to refine the strategy during its period of validity in 2020–2024.

Development of the strategy in time

After its activities were restored in 1990 the National Audit Office worked without an official strategy for almost a decade. Even though the development activities were driven by the best intentions and skills also in the 1990s, the whole process was still rather eclectic. The lack of an extensive and consistent development plan was pointed out as one of the problems of the National Audit Office also by the experts of SIGMA (Support for Improvement in Governance and Management), which operates under the joint initiative of the European Union and the Organisation for Economic Cooperation and Development (OECD), in their 1999 survey that emphasised the need for a more effective planning system.

In February 2000 Juhan Parts, the Auditor General at the time, approved the first strategy of the organisation. The keyword of this development plan was Europe. Accession to the European Union was one of the main challenges of Estonia at the time, the amounts of grants received from the European Union was growing and it also increased the need to audit their use. The new audit ideas that were implemented (especially the creation of the performance audit) reflected our desire to think in a more European manner. The main priority of the strategy was to bring the audit practice in line with internationally recognised audit principles and standards.

The strategy for 2000-2003 was quite advanced for its time and it attributed importance to the actual impact of the National Audit Office on the public sector. Audits were not valued as such and the focus had to be on important areas where the risks were the highest. The idea was to move further from mere assessment of adherence to legislation and the terms that were used seemed simple at first glance but were actually rather complicated (e.g. "sound financial management" or "fair recognition of assets"). The strategy also acknowledged the problems of the National Audit Office itself that needed to be worked on (e.g. it was admitted that the National Audit Office did not understand the requirements of European Union grants at the time).

The next strategic document created was the National Audit Office’s audit strategy for 2002-2004. As the name says, the objective of the document was not to dissect the entire organisation and its external environment, but to specify the principal activities of the National Audit Office or auditing and the desire to improve the current development plan on the basis thereof. The audit strategy was clearly based on the different types of audits and prescribed in a rather detailed manner what each audit department (financial audit, performance audit and operational risk audit) was about.

For instance, it was determined how many auditors there would be in each department in the next three years and how many working hours should be spent on auditing on average. In the case of financial audits the extension of the scope of the audit was discussed more specifically. In 2002 financial audits were mostly confined to auditing the accuracy of annual accounts, but in 2003 it was to be accompanied by assessments of the legality of transactions and thereafter also by assessments of the level of internal control and correctness of expenditure information. The opportunity to rely on the work of internal auditors in the assessments of the National Audit Office was mentioned for the first time. The Operational Risk and Performance Audit Departments also determined the areas in which they operate. The Operational Risk Department was to focus on grants, activity licences and public procurement whilst the Performance Audit Department agreed on eight audit areas (e.g. independent coping, physical security of persons and property, healthcare and preservation of the cultural environment).

As said above, the audit strategy for 2002-2004 was to be one of the inputs for updating the development plan for 2000-2003. However, no updating was done in the end and an entirely new document was approved in 2003 instead, titled “National Audit Office Strategy: The Main Development Trends for 2003-2005”. In some ways, this document was just a further version of the audit strategy 2002-2004, which had been updated with the mission and main development activities of the National Audit Office.

The National Audit Office’s quest to give the taxpayers more assurance that their money is being used prudently was worded as its mission for the first time. It was also emphasised that the person responsible in the eyes of the National Audit Office is usually the minister. The strategy continued the stance set out in earlier development plans that the Riigikogu is one of the main addressees of the National Audit Office’s work and its goal should not be just to introduce reports to the committee of the Riigikogu, but to raise issues that should be discussed at sessions. The new strategy did not lead to any significant differences in the audit departments in comparison to the previous strategy, apart from the reduction of the number of audited areas to five in the case of performance audits.

Almost three years passed until a new strategy was drafted in the National Audit Office in November 2005. This one was planned for a longer period that all previous ones (2006-2010, i.e. five years), but it was nevertheless the shortest of all strategies drafted (only 8 pages). The vision of the National Audit Office (to be an innovative audit organisation) was the most important change added to the new strategy and it also phrased a number of impact goals that the National Audit Office believed were important to achieve in the long term. The impact goals were rather ambitious and some of them can be clearly classified according to audit types. For example, one of the goals was improvement of financial accounting in the entire state, the other to achieve the desired impact of the different policy areas of the state (i.e. aiming performance audits predominantly at conducting impact audits).

Transfer to the new structure based on audit types started in the end of 2008 as the need of the National Audit Office to be able to perform the duties of a group auditor when auditing the consolidated annual reports of the state was becoming increasingly more obvious. Even though it did not concern the substantive goals of the strategy, a new strategy was approved in 2010, which contained some specifications made about the organisation's development and other issues.

The strategy of the National Audit Office for 2014–2020 was completed after long discussions, about a year after Alar Karis was appointed as the Auditor General in 2013. Compared to the previous development plans, the new document was short and concise: the three main objectives for the National Audit Office fit on only three pages. The strategy had abandoned the formulation of specific outside impact objectives and focused foremost on increasing the professional stability of the organisation, and it also emphasised the importance of the impact to be achieved with audits. For the first time in the history of the National Audit Office, the plan was to annually analyse the results of the work together with the whole organisation in order to get a better understanding of the common objectives and which audit techniques help to bring about positive results the best. Looking back, we can say that the strategy of the National Audit Office for 2014–2020 and its implementation had a positive effect on the quality and effectiveness of the activities of the National Audit Office as well as on ensuring the relevance and timeliness of these activities.

  • Posted: 7/20/2020 10:23 AM
  • Last Update: 8/28/2020 8:47 AM
  • Last Review: 8/28/2020 8:47 AM

Additional Materials