Strategy of the National Audit Office and development thereof

Jaanus Kasendi | 12/4/2019 | 10:23 AM

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The current development goals of the National Audit Office have been set out in the strategy for 2010-2013. In addition to the clear mission that describes what the National Audit Office is trying to achieve in the state, it also contains a vision of the kind of organisation the National Audit Office should be and its core values. Clear external impact goals, which all departments must keep in mind when planning their audits, have been formulated in the strategy. They are rather ambitious. Most of them concern financial audits and one of the goals, for instance, is to see that the state's financial accounting is in order and correct in 2013. Only one of the seven impact goals is directly related to performance audits (i.e. the state’s programmes and policy should have the desired impact).

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.

  • Posted: 12/4/2019 10:23 AM
  • Last Update: 12/4/2019 10:53 AM
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