“Improving Quality through effective management frameworks”

Quality, the degree to which inherent characteristics— clarity, effectiveness, efficiency, objectivity, relevance, reliability, significance and timeliness—of an audit fulfills requirements, must be viewed as a continuous process, one that occurs throughout the audit cycle. Controlling and assuring quality can be challenging, particularly in environments where resources are limited, since quality involves systems and processes aimed at ensuring SAIs issue reports that are appropriate and in accordance with applicable laws and regulations. Creating a central, dedicated quality office is essential—it allows a SAI to focus on the public expenditure cycle in its entirety, improve final reports prior to issuance, and creates a more effective and efficient framework.

Managing Quality – SAI Pakistan’s Experience

Pakistan’s SAI is at the heart of the nation’s accountability process. Led by an Auditor General serving a fixed, four-year, nonextendable term and staffed with more than five thousand employees in 30 field audit offices across the country, SAI Pakistan performs nearly nine thousand audits annually. The audits and financial recovery efforts have proven successful, in part, due to a strong quality management system based on strengthened ethics, standards, guides and frameworks.

SAI Pakistan has adopted the International Organization of Supreme Audit Institutions (INTOSAI) code of ethics, and SAI Pakistan’s Financial Audit Manual (FAM), Quality Management Framework (QMF) and public sector audit guidelines are consistent with the ISSAIs.

The FAM. The FAM provides auditors with a set of modern, ISSAI-based standards, concepts, techniques and quality assurance arrangements for auditing government entities in Pakistan. A comprehensive document spanning the audit cycle, the FAM requires the SAI to pay particular attention to quality assurance programs as a means to improve audit performance and results.

The QMF. In Pakistan, an audit report tabled before the Public Accounts Committee (PAC) passes through several quality control and assurance stages, which includes team observations and field office report re-examination prior to sending forward to the Auditor General, who also provides a thorough analysis prior to report finalization. The QMF, originally implemented in 2011, was developed using INTOSAI and Asian Organization of Supreme Audit Institutions (ASOSAI) standards and guidelines. The framework provides three broad mechanisms to ensure quality: 

• Quality Assurance (QA) is implemented by the head of a particular field audit office and focuses on quality throughout the audit (at the onset of audit planning through audit execution to audit report production). 

• Quality Control (QC) is the application of external quality checks on an audit office. It takes place in two stages: (1) sample testing an audit office’s previously quality-assured assignments; and (2) examining all Quality Control Committee (QCC) final audit reports. 

• Quality Improvement includes creating and implementing corrective actions based on quality assurance and quality control reviews.

Managing Quality – Some challenges

Managing Quality—Some Challenges Today, SAIs operate in a constantly changing world with an ever-rising tide of expectations for transparency and accountability. Quality Management (QM) must be viewed as a dynamic process aimed at responding to these changing societal demands. Some current challenges faced by SAI Pakistan include: Treating QM as a rotational assignment; Developing a proper Information Technology (IT) support system; Missing linkages with Civil Society Organizations (CSOs); Developing and managing relationships with auditees; Managing organizational change; Sustaining reforms; QM training; Retaining talent; and Expanding areas of operation.

Managing Quality – Some Recommendations

Focusing on the Complete Audit Cycle. Creating high standards for reports is key, as is emphasizing overall quality.

Making Quality Management a Dedicated Function. An independent office dedicated to managing and assuring quality provides more consistent, institutional approaches to quality.

Developing National Standards. SAI Pakistan is finalizing a Performance Measurement Framework (PMF) draft report, which represents a critical first step in consolidating the SAI’s various frameworks while also conforming to ISSAI guidelines.

Parliamentary Support and Ownership. SAI Pakistan and its quality framework operate within limits defined by parliament.

Employing an Effective Management Information System (MIS). An MIS supports QM frameworks by providing a platform for report centralization, control, filtering and processing.

Incorporating QM into Pre-Report Issuance. The QM intervention must be a pre-report issuance inspection, not a post-report inspection step.

Creating a Strong Internal Audit System. Establishing an independent internal audit department (and improving coordination with external audit divisions) at the federal and provincial levels is vital to broadening audit quality.