Reforms in Mongolian Government Auditing by Mr. BATBAYAR Badamdorj Deputy Auditor General of Mongolia

May 6, 2005Reforms in Government Auditing2 Brief History 1922–1990: State control organization changed its mandate, status, functions and title 13 times 1995: SAIC was established by the Law on State Audit and Inspection 2003: MNAO established by the Law on State Audit

May 6, 2005Reforms in Government Auditing3 New Legal Environment Public Sector Management and Finance Law (June 27, 2002) Law on State Audit (January 3, 2003)

May 6, 2005Reforms in Government Auditing4 Reference Documents Lima Declaration Generic Audit Model Law prepared by UNDP/PACT

May 6, 2005Reforms in Government Auditing5 Changes in Mandate Former SAIC: Traditional Financial Related Audit (Document Review) Current MNAO: Performance Audit Financial Statement Audit

May 6, 2005Reforms in Government Auditing6 Methodology for Performance Audit GAS introduced in These include 4 general standards, 5 fieldwork standards, and 5 reporting standards for PA. The standards are based upon INTOSAI Auditing Standards and the US GAO “Yellow Book”.

May 6, 2005Reforms in Government Auditing7 Methodology for Performance Audit Performance Auditing Guidelines (based on the Fifth ASOSAI Research Project)

May 6, 2005Reforms in Government Auditing8 Methodology for Performance Audit Handbook on how to use government auditing standards

May 6, 2005Reforms in Government Auditing9 Methodology for Financial Audit Translation and publication of International Standards on Auditing issued by the IFAC Development of Financial Audit Manual.

May 6, 2005Reforms in Government Auditing10 Changes in Organizational Structure Former SAIC: Chairperson and 8 non-staff members (Board Model) Current MNAO: Auditor General makes decision individually (Westminster Model)

May 6, 2005Reforms in Government Auditing11 MNAO and Audit Service Providers The need to cooperate with external audit service providers. 34 private audit firms in UB (with 13 branch offices) and 15 audit firms in provinces. MNAO makes contract with these firms for audit services.

May 6, 2005Reforms in Government Auditing12 New Requirements for Knowledge and Skills Law sets high standards for knowledge and skills required of auditors It is also requirement of the standards Training program for Training materials on Performance, Financial, IT and Environmental Auditing CPA training

May 6, 2005Reforms in Government Auditing13 New Code of Ethics Law sets higher standard for ethical behavior Code of Ethics (based on INTOSAI Code of Ethics): integrity, independence, objectivity, impartiality, political neutrality, professional secrecy, speaking & writing Code of Ethics for Professional Accountants by IFAC

May 6, 2005Reforms in Government Auditing14 SAI as Pilot Entity Supported the government policy on reforming the management and financing systems of government agencies. Piloted the new public management and financing systems in 2001.

May 6, 2005Reforms in Government Auditing15 Results of Piloting First introduced business strategic plan, output planning and reporting, financial statements, and performance agreements. Pilot results facilitated the enactment of the PSMFL.

May 6, 2005Reforms in Government Auditing16 SAI and Democratic Governance MNAO is contributing to promote good governance, principles of transparency and accountability in Mongolian public administration.

May 6, 2005Reforms in Government Auditing17 Audit Reports Performance audit reports are submitted to the Parliament. These reports are also public documents.

May 6, 2005Reforms in Government Auditing18 Annual Report MNAO reports to the Parliament annually.

May 6, 2005Reforms in Government Auditing19 International Cooperation INTOSAI - International Organization of Supreme Audit Institutions – since 1996 ASOSAI - Asian Organization of Supreme Audit Institutions – since 1996 WGEA - INTOSAI Working Group on Environmental Auditing – since 2004

May 6, 2005Reforms in Government Auditing20 Signed MOUs with: China National Audit Office (2000) Accounts Chamber of Russian Federation (1998, 2003) Office of the CAG of India (1999) State Audit Bureau of Kuwait (2001) NAO of UK (2003) National Audit Office of Bulgaria (2003) Turkish Court of Audit (2004) Supreme Chamber of Control of Poland (2004) Swedish National Audit Office (2005)

May 6, 2005Reforms in Government Auditing21 Assistance provided by: GTZ, Courts of Audit of Hessen and Berlin (Project on Support the MNAO) Victorian Auditor General’s Office, Australia (3 month secondment of 2 auditors on financial auditing) GAO, USA (International Auditor Fellowship Program) BAI, Republic of Korea (computers) ADB (training, equipment, consultancy) WB (IDF Grant for introducing ISA and FAM)

May 6, 2005Reforms in Government Auditing22 Some Challenges CPE requirements for government auditors Ensuring independence of SAI in the Mongolian Constitution