NIK peer review report - NajwyÅ¼sza Izba Kontroli

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In the SBEA NIK covers the account items very broadly. NIK is free tochoose its audit procedures, but is expected by the Sejm to cover specificaccount items at regular intervals.NIK has informed the peers that NIK has introduced a number of changesin the audit methodology that reduce the level of sampling depending onthe materiality, for instance so-called purpose-based sampling. Thesechanges have been applied to audits carried out in 2012.Description of selection of auditees under the SBEABelow ministerial level, NIK is free to leave accounts unaudited in the SBEA.The SBEA includes 3rd or 4th level administrators. At the 1st level (ministries),all entities are audited every year. At lower levels (with lower risk) NIKis free to leave accounts unaudited or conduct simplified audits. In total about10% of the about 3,000 entities, corresponding to 270-300 entities, are auditedevery year (administrators at the lowest levels are audited every 6-7years).NIK’s approach ensures broad coverage of all accounts. The inherent riskhas been that the effort is not sufficiently targeted to the most risk-proneareas. The recent changes in audit procedures will according to NIK assuremore focus on the inherent risk and areas identified in the risk analysis.In order to assure broad coverage of the state budget NIKs selection processis guided not only by substantial risk analysis, but also by a principleof rotation. Minor units thus might receive more attention than significantlyrisky areas.Consequently, NIK’s challenge is to prioritize further among the auditedentities. NIK might to a larger degree determine the level of resources tobe allocated to each individual audit every year based on an assessmentof risk and materiality. One way of doing this is to move further in the directionof conducting systems analysis and scale down substance auditingin the individual accounts.Moving in this direction would probably increase the transparency of theaudit principles and offer the advantages of a more system-based approach,i.e. a more efficient use of resources and a more risk-based approachto audit selection. Reducing the level of substance auditing, on theother hand, would force NIK to present more information on the methodologyused and the level of coverage and assurance, i.e. NIK does notroutinely cover all items, but targets the most risky and significant areas.NIK has informed the peers that NIK continually strives at applying a morerisk-based approach.Among the cases reviewed – also cases outside the SBEA – the peersnoticed several audits that included very large samples of auditees thatrequired large-scale audits involving many branches and auditors. The14 PEER REVIEW REPORT
peers agree with NIK that sampling and the size of samples should bebased on an individual assessment considering many factors. Considerationson how to get an optimum of assurance balanced against availablestaff resources should always be based on sound methodological choices.However, a more risk-based approach to the audit sampling could haveresulted in a more focused and efficient use of resources.Examples of sampling in NIK auditsIn the audit of the implementation of tasks to prevent overweight and obesityprevention among children and adolescents (P/10/190) a total of 74 entitieswere included in the sample audited. Among the auditees were many schoolsetc. The peers did not review the basis for the sampling and the methodologyused, but it is worth considering, if the same results might have beenachieved with a smaller sample. NIK has specified that sample size in thiscase also was a matter of assuring the credibility of the report.In the audit of the execution of the government programme “My sports field –Orlik 2012” by local government administrative units (P/10/146), the initialrisk analysis indicated that auditees in the bigger cities should be excluded.The entities finally included in the audit were chosen because they volunteeredto participate in the audit.Recommendation # 3. Consider the benefits of cross-cutting analysisand assure that findings and recommendations are directed atthe appropriate level in the line of responsibilityAs a SAI NIK is in a favourable position to look at aspects across thepublic sector, i.e. across sectors and across levels of responsibility.When it is decided which type of audit that should be performed, the governmentallevel of responsibility towards which the audit should be directedshould be carefully considered. In a number of the cases reviewed,the peers discussed whether a different audit design might have allowedNIK to direct its reservations at the level responsible for the design, monitoringor control of a particular programme instead of only addressing thelevel executing the programme. NIK is in an excellent position to addresssuch issues and the peers find that NIK should utilize this position to itsfull potential.In a number of cases, the peers found that audit findings reflecting problemsof a general nature could have been addressed at a general governancelevel. Issues relating to programme design were not addressed atthe level of governance responsible for designing the programme, but atthe level of the units that were executing the programme.See ISSAI 1260 Communicatingwith thoseCharged with Governance.Specific findings and recommendations of individual audits could to ahigher degree be supplemented with general comments designed to holdthe relevant ministry accountable in order to improve, for instance, ministerialsupervision or governance structures.PEER REVIEW REPORT 15
Page 1 and 2: PEER REVIEW REPORTON THE POLISH SUP
Page 3: Table of contentsExecutive Summary
Page 6 and 7: Memorandum of Understanding(MoU)The
Page 8 and 9: 2. Main Conclusions, Strengths andR
Page 10 and 11: It is the peers’ general conclusi
Page 12 and 13: peers that the work plan for 2013 i
Page 16 and 17: The purpose would furthermore be to
Page 18 and 19: 4. ImplementationFinancial AuditDo
Page 20 and 21: NIK has tried to scale up performan
Page 22 and 23: collaboration with the auditees. Th
Page 24 and 25: NIK could benefit from an increased
Page 26 and 27: ic external reviews regarding their
Page 28 and 29: 6. Follow-upOnce an audit is comple
Page 30 and 31: Attachment 1. About the Peer Review
Page 32 and 33: The findings presented in this repo
Page 34 and 35: Attachment 3. List of Persons Inter

NIK peer review report - NajwyÅ¼sza Izba Kontroli

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