1. Comprises 8 countries with majority having a structured public audit function The Constitution provides a special status to the Auditor General The institutional set up for conducting audit is derived from the colonial times The public auditor is viewed more as a policeman than an agent of change or provider of assurance SAIs in South Asia Background

2. SAIs in South Asia More Observations The focus is more on compliance with rules and regulations Audit coverage of revenue is limited Assets & liabilities management are relatively untouched Audits are scoped for a check on regularity rather than a fair presentation of financial reports or identification of causes of failures Interaction between the public and private auditors has been minimal.

3. Financial and administrative independence not assured (MOF interference) Narrow audit focus (systemic control weaknesses) Backlog of audits Need for substantial training and career development Limited accessibility by the public of the results of audit (especially action taken, PAC recommendations etc.) Findings from Assessments (CFAA, SFAA etc.)

4. Findings from Assessments (Contd ….) Audit certification on fair presentation of financial statements is imprecise Implementation of audit recommendations by the Executive is delayed or not carried out External peer review or benchmarking not carried out Gaps in comparison to international standards Review of project audits in SAR (improvement visible when there is regular dialogue)

5. Vast majority of the Bank projects are audited by SAIs (Audit agent in Afghanistan) Few cases of private sector auditors Audits cover numerous instances of ineligible expenditure In the past, Bank staff tended to focus on project audits; with the advent of DPLs, interest has shifted to SAI’s overall work Support for capacity building (IDFs, project components, stand alone projects, other donor TFs) Current Involvement with SAIs

6. IDF grants –Nepal-1992,94,97,04 (audit guides, donor projects and SOEs, performance auditing, training of trainers, pilot audits using revised guidelines, HR development, peer review, tie up with Malaysia Audit Office) –India-1995,2001, 2005 (privatization, environment, banking and finance, strategic plan, attest audit) –Bangladesh-2003 (FAPAD capacity, asset mgt. -project actg. manual) –Maldives-2005 (15 yr. strategic plan, Institutional strengthening, certification program for audit staff) TA for Economic Reform –Sri Lanka – Inst. Dev. Plan and revenue audit Support to SAIs

7. Afghanistan: Public Admin. Capacity Building –EPAP 1 and 2 and PACB - Audit Agent support, fiduciary assurance, twinning Pakistan: Improvement to Financial Reporting & Auditing (PIFRA 1 and 2) –Audit standards and techniques, new audit methodology, IT support for field audit, Audit Mgt. Info. Systems & upgrading training facilities Sri Lanka: Governance Capacity Building Project –IDP implementation, strengthening AG’s office & communications, improved audit methodology, IT implementation and HR development Capacity Building Projects

8. Regional conference of SAIs –Knowledge sharing –Mutual support (use of training facilities) –Possible twinning arrangements (Exchange programs, secondment) –Dialogue for moving towards international standards –Peer reviews Other Initiatives

9. SAIs defend - Constitutional mandate Incentive for clients?? (not a priority) Big countries-donor funding is just a fraction Limitations of IDFs-small amount, too many restrictions (foreign training, study tours) Resistance to borrow for capacity building Change agent on the client side -tenure of Deputies usually short being close to retirement Challenges for Way Forward