Creating effective adult learning courses – a blueprint for success

By Danial Sadeqi, eLearning Specialist, PASAI

In the ever-evolving landscape of adult learning, designing effective and engaging courses is essential. As we expanded the number of training initiatives under our new strategy, we recognised the need for structured course development to foster consistency, quality and alignment in training programs. To this end, we have created a course design blueprint to serve as a guide for PASAI program directors and course consultants in developing high quality training programs.

Why a course design blueprint?

A well-structured blueprint serves as the foundation for all our courses, ensuring that:

• learners experience a cohesive curriculum regardless of the instructor

• course objectives, content and assessments are properly aligned

• development processes are streamlined and efficient

• quality standards are maintained across all training materials

• content is optimised to the delivery method to maximise learning

• a learner-centred approach is maintained throughout the training.

Key components of our blueprint

1. Needs analysis

A needs analysis helps us respond to specific requirements of our member SAIs and ensures our training is most relevant and adds value to them. We use a multi-faceted approach to keep informed of our members’ changing needs. This includes information gathering, SAI PMF assessments and country missions.

The importance of identifying and addressing our members’ needs is well illustrated in our Ethics training. Delivered by Chartered Accountants Australia and New Zealand (CA ANZ), more than 83 Pacific Island participants completed last month’s course and more than 100 staff from SAI Papua New Guinea registered for the second iteration of the course to be completed by the end of this month.

2. Instructional design principles

The blueprint streamlines the application of best practice in our course design as well as building consistency across all programs. We embedded all the principles outlined in an earlier blog post into the blueprint.

3. International standards

As the Pacific regional organisation of the International Organization of Supreme Audit Institutions (INTOSAI), we follow INTOSAI standards and our Competency Framework is built on GUID 1950 and GUID 1951. Moreover, given our Pacific auditing context, we have embedded training requirements and guidelines of CA ANZ and the US National Association of State Boards of Accountancy (NASBA).

4. Content alignment

A cornerstone of the blueprint is rigorous content alignment, ensuring seamless integration of learning objectives, content, assessments and activities. This involves continuous checking mechanisms throughout the course design to ensure all components of the course are well aligned to ensure a cohesive learning experience.

By following the backward design principle, we ensure that objectives define measurable outcomes, content supports these goals and assessments validate their achievement. By embedding this alignment, we ensure that all courses are effective, relevant and meet the highest standards of quality.

5. Enhancing engagement

Research consistently shows that engaged adult learners are more likely to persist in the face of challenges and achieve better learning outcomes. Our blueprint incorporates various strategies to boost engagement, recognising that adults learn best when actively involved in the learning process.

We implement repeated content reinforcement mechanisms, such as spaced repetition, interactive quizzes and multimedia elements to maintain attention and improve retention. Additionally, the blueprint emphasises the use of work-related projects and real-world applications, allowing learners to see the immediate relevance of the material to their professional lives. This approach not only increases motivation but also facilitates deeper understanding and application of knowledge.

We endeavour to ensure that our training programs are not just informative, but also highly engaging and effective for adult learners in the auditing profession. This is one way that our activities are having a bigger impact in the region.

References

Allen, M. (2016). Michael Allen’s guide to e-Learning (second edition): Building interactive, fun and effective learning programs for any company. Wiley.

Jia, J. (2012). Educational stages and interactive learning from kindergarten to workplace training. Information Science Reference.

Hung, D., & Khine, M. S. (Eds.). (2006). Engaged learning with emerging technologies. Springer.

Hung, D., Tan, S. C., & Koh, T. S. (2006). Engaged learning: Making learning an authentic experience. In D. Hung & M.S. Khine (Eds.), Engaged learning with emerging technologies (pp. 29-48).

You are a performance auditor: are you a scientist, an artist or the best of both?

By Mike Scott, Program Director, PASAI

One of the things that I have always enjoyed and admired most about performance audit as a profession is the range of fantastic people with diverse backgrounds and perspectives that it attracts. People with backgrounds in amazing areas such as engineering, nursing, teaching, policing, ancient history and the performing arts!

So, what category would you put yourself in as a performance auditor. Are you a scientist, an artist or the best of both. Well, I’m going to present the case for being the best of both.

First, the scientist’s case

I must start with science as I’m a chemistry graduate and, way back in the day, did post-graduate research burning organic compounds to examine their potential as possible alternatives to hydrocarbon-based fuels, such as petroleum and natural gas. 

Also, science has given us many world-changing discoveries such as electricity, gravity, DNA, antibiotics and vaccines, to name but a few.

What I enjoyed about chemistry and chemical research was the methodical approach, precision of gathering scientific evidence and the potential for making a difference through the results that I found. Like science and scientific research, performance audit takes a methodical approach, is evidence-based and makes a difference through what the audit discovers and recommends.

Animated image of a DNA double helix by Zephyris, CC BY-SA 3.0, via Wikimedia Commons

Making links between cause and effect are also part of both science and performance audit. While standing in front of my chemical apparatus of glass bulbs and tubes, mercury thermometers and furnace, burning chemicals all day and then putting the gases given off through a spectrometer, I was seeking to understand how the properties of the chemicals that I was burning changed and why. In other ways, performance audits seek to understand why the performance of public services is different to that expected and make recommendations directed at the causes of shortfalls to improve performance.

Careful analysis of evidence and findings, independent quality review of them, and compelling write-up and visual presentation of them in scientific journals, were also important to my scientific research, as these things are in the context of performance audit.

Albeit, perhaps not on a world-changing scale, performance audits also bring benefits to people and can contribute to changing people’s lives for the better. I like to think some of the more memorable audits I have been involved in have done this, such as the ones examining how well the financial affairs of mentally incapacitated people are looked after and how well the police respond to emergency calls.

Portrait of Dora Maar by Pablo Picasso – picture taken at the Musée Picasso, Fair use

Next, the artist’s case

I also enjoyed studying writing and literature at school (non-fiction of course, as there is no place for fiction in performance audit). I could have equally gone down the route of doing an arts degree at university.

Art has also given the world many great wonders. The plays of Shakespeare, poems of Milton, paintings such as the Mona Lisa and sculptures such as The Thinker, to name some of the most famous, and not to mention the many great artistic performances through time.

I enjoyed writing short stories about trips I’d taken, such as to the Roman ruins of Hadrian’s Wall in the Northeast of England where I grew up, describing what I had seen, done and learned. I’ve also always enjoyed looking at paintings. I’ve even tried painting some of my own, a long time ago, and quickly realised I wasn’t a painter. What I enjoy about paintings and pictures is looking at the patterns, flow of the colours and vividness of the scenes.

I think the art in performance audit is about standing back and looking at the big picture, seeing connections between pieces of evidence, adding themes together and weaving them into a coherent story. Don’t underestimate the importance of doing this, and storytelling, to the value and impact of a performance audit. There is a legitimate place for evidence-based artistic creativity in performance audit, in my view.

A great performance audit report grabs the reader’s interest, leads the reader clearly, compellingly and convincingly through the findings and conclusions to the recommendations, showing them a few vivid pictures and graphics that support the story, along the way. It is concise, uses language that requires no interpretation and tells the reader exactly what you mean. Like any great work of non-fiction.

The case for both the scientist and the artist

So, I guess it’s pretty clear by now that I think performance auditors are a grand combination of a scientist and an artist, putting aside my natural science bias. We are methodical, analytical, insightful, creative and engaging all in one.

I’ll leave you with that thought and these images of works by Leonardo da Vinci, arguably one of the greatest painters of all time and the catalyst for one of the greatest innovations of all time.

Painting of The Last Supper by Leonardo da Vinci, Public domain, via Wikimedia Commons

Picture of an aerial screw (or helicopter) design from circa 1489 by Leonardo da Vinci, Public domain, via Wikimedia Commons

Oh, and for those of you who didn’t read my blog post last June, performance auditors are also firefighters!

Strengthening enduring capabilities requires continuous learning and collaboration

By Sinaroseta Palamo-Iosefo, Program Director, PASAI

PASAI’s HR Champions program

SAI Performance Measurement Framework assessments that we conducted under our last strategy identified that most of our developing member SAIs are not well-resourced to coordinate and manage human resource issues. These issues ranged from recruitment, appraisal and staff well-being to professional development and training.

As a result, we collaborated with experts from the Swedish National Audit Office (Swedish NAO) to enhance human resource capabilities in the PASAI region. This collaboration focused on developing skills at the individual staff level, the SAI-level and the regional level.

To develop capabilities at the individual and SAI-level, we delivered a regional HR Champions program over 18 months. The program aimed to create a group of staff capable of supporting their own SAIs in a self-sustaining model, minimising a reliance on external expertise for HR support.

Twelve staff from 8 SAIs [1] graduated from the program in November 2024 after completing tasks to solve issues in the various phases of the human resource management (HRM) cycle as depicted below.

HRM cycle (image source: Chapter 1, PASAI HR Guide)

Participants also completed a project in an HR area prioritised by their SAIs. The program was delivered through various modalities – online facilitated training, self-study, in country peer support and in-person workshops.

Success stories

Reflecting on their journeys, participants highlighted their knowledge of HR processes has progressed from little or none to now having a solid understanding. They acknowledged the importance of HR in helping the SAI establish effective systems and processes to manage its most valuable asset – its people. Through the program:

• three SAIs have developed an HR strategy

• three SAIs have enhanced their staff performance management processes by revising job profiles and developing competence frameworks

• one SAI has created its own HR manual

• another SAI has established an internal career pathway for performance auditors.

Some participants who were financial auditors noted that the new knowledge and skills they acquired have provided them with an alternative career path. Participants also learned about various aspects of staff wellness and how SAIs can foster a healthy working environment to keep staff members motivated and performing at their best.

Despite the time difference between our experts in Sweden and the Pacific SAIs, everyone involved was committed to the course resulting in a successful program. With newfound confidence, participants are now ready to take action to improve HR processes at their SAIs and in the region.

Collaboration is crucial

Building enduring SAI capabilities involves various players and requires resources which may not always be readily available to them. Hence, collaboration with the appropriate partners who share common goals fosters the sharing of knowledge, resources and expertise.

Various institutions in the PASAI and INTOSAI communities have contributed to our journey to build HR capabilities in the region. HR experts from the following organisations were invited to share their HR practices, experiences and tools:

• AFROSAI-E – employee lifecycle

• Audit Office of New South Wales, Australia – HR strategy and diversity & inclusion

• Court of Accounts of the Republic of Moldova – competence management

• INTOSAI Development Initiative – recruitment & onboarding

• Kiribati Audit Office – developing an HR strategy

• Office of the Auditor-General, Republic of Fiji – developing HR policies

• Office of the Auditor General Liberia – setting up an HR function

• Office of the Auditor-General, New Zealand – competency framework and training & development

By working together with the various partners listed above, we took advantage of each other’s strengths, pooled resources and innovated more effectively to achieve impact at the SAIs. Participating SAIs benefitted from the exchange of best practices through these collaborative efforts, enhancing the quality and efficiency of their HR processes. Through collaboration, we have built stronger networks, improved our adaptability and ultimately achieved our goal of building HR capabilities in the region more efficiently and sustainably.

Networking of PASAI and AFROSAI-E secretariats

To ensure that SAIs receive adequate support, it was essential that capacity development initiative providers were also well-resourced and capacitated. In collaboration with the Swedish NAO, a networking visit by some of our staff to the AFROSAI-E Secretariat took place in October 2024. Given we share the mission of strengthening SAI capabilities, the visit was highly informative resulting in mutual benefits for both organisations.

The 2 organisations discussed how they plan, implement, monitor and evaluate the support they provide to their member SAIs. By sharing knowledge about their programs, methodologies and available resources, both secretariats were able to explore ways to share resources and technical expertise in areas such as audit, communication and HR. They also addressed common challenges, such as managing donor and stakeholder expectations.

We gained a thorough understanding of the A-SEAT, [2] an audit management tool AFROSAI-E developed for SAI work with customisation possible for specific manuals and standards. Dialogue is ongoing regarding the use of this tool by our member SAIs.

What’s next in HR for our region?

A pool of HR resources is now in place that will support SAIs in the region to establish, embed and sustain HR practices. The HR Champions will play a critical role to lead, advise on and facilitate interventions to sustain HR capabilities at their SAIs but also to support us to deliver HR initiatives in the region. Six key roles that they have been equipped to deliver are depicted below.

HR Champions’ roles

In the next 5 years, we will deliver our ‘People and leadership’ program which aims to nurture excellence, build the competencies of staff at all levels and transform SAIs’ performance. The program will include online training, SAI-level support, peer support and regional seminars. We will continue to collaborate with relevant partners to transform SAIs so they can make a difference in the Pacific.

A series of online trainings will kick off in March 2025 with the topic ‘Understanding the employee lifecycle’. Look out for dates of upcoming training sessions in our quarterly newsletter.

References

[1] SAIs Fiji, FSM National, Guam, Kiribati, Marshall Islands, Tonga, Tuvalu and Vanuatu

[2] AFROSAI-E SAI Enhancement Audit Tool

Bold new steps to expand PASAI’s twinning program

By Sarah Markley, Deputy Secretary-General of PASAI and Director, International Engagement, Office of the Auditor-General of New Zealand

Twinning between developed and developing SAIs, also known across the INTOSAI community as peer-to-peer partnerships, is proven to play a critical role in positive shifts in SAI capability. PASAI is committed to being involved in all proven capability building modalities so twinning is a prominent feature of PASAI’s new 2024–2034 strategy. Significant to the new strategic approach PASAI will not only support any twinning partnership that have been enabled through bilateral funding arrangements but is now in the business of enabling partners too.

As part of new agreements with core development partners, PASAI has allocated funding to enable those Australian state and territorial audit offices that are willing to participate in its twinning program to do so.

While this is great news for the south Pacific and Westminster-aligned members, PASAI wants to be able to facilitate twinning relationships for all its members. So, we are continuing to work on achieving a funding agreement to enable PASAI’s north Pacific members to establish partnerships as well.

PASAI’s confirmed twinning partnerships

PASAI is committed to enabling as many twinning partnerships as possible across our region. To maximise the relationships that are possible in our small region, we have decided not support partnerships which result in multiple developed SAIs supporting one developing SAI, if this leaves another developing SAI without a partner. Discussions at the recent Australasian Council of Auditors-General (ACAG) meeting enabled some clarification of partnerships and agreement on a PASAI twinning framework.

The partnerships that have been agreed to receive PASAI funding support are set out below. The matches were agreed considering contextual factors such as Parliamentary alignments, strengths, focus areas and historical relationships.

PASAI developing SAI	Twinning partner
Fiji	Western Australia
Kiribati	Australian Capital Territory
Tonga	South Australia
Tuvalu	Victoria
Vanuatu	Queensland

These newly support partnerships add to the partnerships already in place with bilateral funding support from the New Zealand Ministry of Foreign Affairs and Trade (MFAT) and the Australian Department of Foreign Affairs and Trade (DFAT):

PASAI developing SAI	Twinning partner and funder
Cook Islands	New Zealand – MFAT
Papua New Guinea	Australia – DFAT
Samoa	New Zealand – MFAT
Solomon Islands	New South Wales – DFAT

PASAI’s twinning program framework

With funding secured and new partnerships confirmed we have been working on establishing a framework to support the expanded twinning partnership program.

While there are administrative details that have been notified to those who will be supported by PASAI funding here’s some key information about how the twinning program framework we have developed will work.

Funding – How much are we putting into twinning partnership support?

Based on the current core development partner funding agreements PASAI has set aside funding to specifically support each twinning partnership. At this stage there is a maximum of NZD$600,000 per year available for this program. Each SAI in a partnership needs to carefully consider the volume of support it has the capacity to provide or receive each year. PASAI will ensure the total funding available for twinning work is allocated across the partnerships.

What can twinning partnerships work on?

There are no restrictions on what activities can be supported through the PASAI-funded program. However, coordination and alignment with the Secretariat’s activities is key to success. While working in any part of the twinning program it is critical that we continue to check complementarity and duplication risk by asking ourselves:

• Are the activities we are planning to do with our twinning partner complementary to what PASAI is offering them through SAI individual support or through regional programs?

• Have we ensured that what we are planning to do with our twinning partner will not duplicate anything offered by PASAI?

Planning and implementing – making the exciting part happen

A critical part of achieving complementarity and avoiding duplication will be embedding PASAI’s twinning support program into its annual planning process.

For the 2025–26 year onwards an agreed annual plan of activities for each twinning partnership will be developed and documented through a PASAI-lead annual planning process. This process will be rolled out for the first time in February/March 2025. It will focus on making sure there is alignment across PASAI’s work stream, providing budget information so members involved can plan well and setting ourselves up to enable good quality reporting on what we achieve. Once agreement is in place, the twinning partners will be responsible for implementing the plan in the new financial year.

There will likely be hiccups and suggestions for improvement in future years will be welcomed, but the process will be here to stay as coordination is going to be critical to success and to reporting on that success at the end of the year.

PASAI’s program directors’ knowledge of SAI needs will be invaluable to the annual planning and ongoing delivery of twinning support. Ensuring the relevant PASAI program director plays an active role in twinning partnerships is important. Directors should be included as an integral part of activity planning.

Measurement and reporting processes

Setting up systems to measure achievements of all PASAI-supported twinning partnership activities is a critical part of the new framework. We are busy working on establishing measures to demonstrate success, twinning work data collection processes and other financial and outcome related reporting requirements. Once these are ready they will be shared with PASAI’s supported twinning partners.

We are excited to see the growth of our twinning program and look forward expectantly to reporting great results from our new partnerships. And we won’t forget those who don’t yet have a partner or funding support – we are working hard to enable each of PASAI’s members to have the opportunity to participate in this proven form of capacity building.

Taking inspiration from the Commonwealth Women’s Forum

By Susana Laulu, Program Director, PASAI

Last month Samoa hosted the Commonwealth Heads of Government Meeting (CHOGM). The event opened with forums for women, youth, people and business. I was fortunate to attend the Commonwealth Women’s Forum (CWF) which brought together about 400 delegates with the theme, Collective Action for a Resilient Commonwealth: Solidarity for Gender Equality.

The CWF aim was to explore and share the critical challenges and opportunities to advance women’s empowerment and gender equality in the Commonwealth. 

Women’s leadership, economic empowerment and climate finance

It was noted that despite encouraging progress on legislative reform, women continue to encounter challenges in realising their ambitions of becoming leaders in various sectors. Issues such patriarchy, misogyny, biases and gender-based violence, including technology-facilitated violence, curtail women’s ambition and opportunities in both public and private leadership. 

CWF panellists recognised the need to continue support for women in leadership and to include their perspectives in all peace and security efforts.

The CWF acknowledged that female entrepreneurs often face systemic obstacles when seeking investment for their businesses. Eliminating difficulties to access finance is important for the growth of women-led businesses and poverty reduction. It leads to more diverse and innovative solutions, enables women to identify new markets and export their services and goods, and creates a more inclusive and prosperous economy for all.

Interventions by development partners, governments and policy makers should strive to meet the needs of women and must focus on working with communities. The interventions should address factors such as location, literacy levels and access to technology. More importantly, women must be engaged to the point where they are comfortable and willing to take the necessary steps or make the changes required to move to the next level.

I joined an interactive discussion on increasing access and deployment of gender-responsive climate finance. We discussed the lack of information on climate finance unaided by language that is too technical. We recommended building the capacity of women to access climate finance by making processes simpler and quicker. We noted policy making and solution design should involve inclusive participation.

CWF delegates L to R: Susana Laulu, Faith Esera-Viane, Loau Donina Tili Vaa (CEO of the Samoan Ministry of Women’s, Community and Social Development), Salma Hazelman and Vanessa Schuster

The Prime Minister of Samoa, Hon Fiame Naomi Mataafa, in talanoa (conversation) with the Prime Minister of Tuvalu, Hon Feleti Penitala Teo, noted that women, youth, children and people with disabilities must be central to global, regional and national strategies for sustainable development and climate resilience.

The CWF was very informative about the critical issues impacting women and gender equality. Insights from the CWF will be useful to us in improving our initiatives to promote gender equity, disability and social inclusion (GEDSI).

Promoting female leadership in SAIs

As explained in a previous blog post, Establishing a community of women in audit, we have been running a Community of Practice (CoP) for women working in our SAIs to gather virtually and benefit from each other’s insights.

October’s CoP session focused on the experiences of female graduates in SAIs, emphasising supportive induction processes, mentoring and addressing cultural challenges. A total of 27 participants explored various aspects of working in SAIs, including:

• insights on supportive and flexible environments, robust induction programs and continuous professional development opportunities

• challenges such as managing priorities, maintaining work–life balance and developing public speaking skills essential for public accountability

• advice for new graduates, emphasising the value of informative induction programs, mentorship and CPD opportunities while acknowledging the need to build confidence and adapt to audit work pressures

• the welcoming and supportive nature of SAIs, including access to mentors and networking opportunities

• improvements such as comprehensive training on legislation and cultural protocols, recommending extended induction programs to better prepare graduates.

The key takeaways included the importance of effective induction processes, coaching to address cultural challenges and strong support systems within SAIs to ensure professional growth and integration.

The experiences shared by 5 female graduates highlighted the significance of effective induction programs in navigating challenges within SAIs, particularly when engaging with senior government officials. Their insights underscored the value of structured onboarding and support systems in fostering professional growth and addressing workplace complexities.

Australian Deputy Auditor-General, Rona Mellor, will join our next CoP session on Wednesday 4 December. In this follow-up we will assess whether SAIs have implemented measures to promote work–life integration and enhance induction programs.

Impacts on auditing

The Revitalised Pacific Leaders Gender Equality Declaration was made last year. Pressure continues to build on UN Member States to “leave no one behind” in achieving the Sustainable Development Goals (SDGs) of the 2030 Agenda. This includes SDG 5: Achieve gender equality and empower all women and girls.

To address the ongoing challenges that hinder women's progress and ambitions at all levels of society, leaders in the Pacific region have strengthened their commitments to support and implement legislation and policies that create opportunities for women's empowerment.

SAIs can create value in their jurisdictions by evaluating the success of government financial and policy commitments to improve women’s empowerment and gender equality. They can also be model institutions within the public sector.

References

CWF program (with names of panellists)

https://samoachogm2024.ws

Highlights from the 2024 APIPA Conference

By Doris Flores Brooks, Program Director, PASAI

The Association of Pacific Islands Public Auditors (APIPA) held its annual conference from 26 to 30 August 2024 in Koror, Palau, with a theme of “Bridging the Gap of Public Accountability and Transparency”. There were more than 400 participants in attendance from at least 10 different countries.

The first annual APIPA Conference was held in June 1989 in the Marshall Islands with fewer than 50 participants. Among the original attendees were Atmita Jonathan who is the Audit Manager of the Republic of the Marshall Islands Office of the Auditor-General and Haser Hainrick, the Public Auditor for the Federated States of Micronesia (FSM).

The APIPA members have grown to include the 10 audit offices using Generally Accepted Government Auditing Standards (GAGAS), namely the SAIs of American Samoa, FSM National and the 4 states of Chuuk, Kosrae, Pohnpei and Yap, Guam, the Marshall Islands, the Northern Mariana Islands and Palau, plus SAIs Fiji and Samoa who follow the ISSAIs. The US Department of the Interior, Office of Inspector General (DOI OIG) is a non-voting member of APIPA.

The APIPA conference is held mainly to provide training to auditors, finance officers and other government professionals in related fields. This year’s APIPA offered 21 courses in various tracks. The newest addition focused on investigations and included Basics of Investigations, the First Steps of an Investigation and Documents & Fraud Interviewing. Other courses included Basic Auditing, Conducting Audits, Ethical Decision-Making and Auditing Grants. There were several repeat courses such as Basic Governmental Accounting, Grants Management and the Single Audit: What You Need to Know. Attendance at the repeat courses often approaches 200 participants.

The highlight of the conference is the closing plenary session, where the member audit offices select an audit, outline the audit objectives and discuss their findings. This year’s session included the following:

• American Samoa: Accounts receivable of Department of Administration

• FSM Chuuk: The condition of state hospital plus pharmaceutical drugs

• FSM National: Government vehicles

• FSM Yap: The financial audit of the Public Transportation System

• Guam: Guam Homeland Security Office of Civil Defense

• Marshall Islands: Procurement of school buses

• Northern Mariana Islands: Department of Finance procurement of government vehicles and leases

• Palau: The National Health Care Fund

• Samoa: Fraudulent and internal control issues associated with procurement

Participants select the courses they wish to attend and can earn up to 40 hours of continuing professional education.

The annual APIPA conference is conducted by instructors from Graduate School USA with a grant from the US Office of Insular Affairs. This year all the investigative courses were conducted by DOI OIG special agents.

As most of the APIPA principals attend the annual conference there is a principals meeting to discuss various administrative matters to include financial reports, pending audit issues, attendance, the next APIPA host and, this year, the permanent establishment of APIPA as a non-profit organisation in Palau.

The APIPA conference is annually rotated among most of the members. Next year’s host will be the Northern Mariana Islands on the island of Saipan.

Managing homelessness services performance audit

By Salv Bianco, Assistant Auditor-General, Performance Audit, Audit Office of South Australia

Background

The Audit Office of South Australia tabled a performance audit report this July on the management of homelessness services by the South Australian Housing Trust (SAHT).

We chose this topic because it is important that these services are effectively managed, as people experiencing homelessness are among the most vulnerable in our community. Homelessness can significantly harm people’s health, safety, wellbeing and ability to engage socially and economically.

The Government of South Australia commits significant expenditure each year (around AUD$70 million) in grant funding to non-government organisations to provide homelessness services. These services support clients in their efforts to find and maintain housing. Recently, demand for homelessness services has increased considerably due to significant pressures on South Australia’s housing market that make finding affordable housing difficult.

Scope and coverage

This performance audit provided an independent view to Parliament on whether:

• the homelessness services funded by SAHT are effectively planned and designed to meet the needs of people who are homeless or at risk of homelessness

• SAHT has effective oversight and performance monitoring over homelessness service providers to ensure they are achieving contracted outcomes.

Our review was scoped to address the following key areas:

• Is there an effective process to identify and prioritise the service needs of people who are homeless or at risk of homelessness?

• Have the objectives, outcomes and success measures for specialist homelessness services been effectively defined?

• Is there a strategy that outlines how specialist homelessness services will meet identified needs and achieve outcomes?

• Are there effective processes for designing the individual specialist homelessness services delivered by homelessness service providers?

• Have effective outcome performance measures been defined and effective processes established to collect relevant and reliable information to measure homelessness service outcomes?

• Is there effective oversight and performance monitoring of homelessness service providers to ensure their contracted performance outcomes are achieved?

• Is there effective performance monitoring and evaluation of the achievement of SAHT’s system-wide objectives and outcomes for specialist homelessness services?

Our audit work started in August 2023 and the audit concluded that, while SAHT is progressing some important initiatives to improve its practices and processes, it is not effectively managing its provision of specialist homelessness services and the increased demand for them. We reached this conclusion after identifying and reporting gaps in the key areas we reviewed. The detailed findings and recommendations are in our report, Managing homelessness services.

Audit challenges

This was a challenging audit with a new service delivery model and multiple stakeholders. There were also changes and departures of key staff during the audit, which caused delays in receiving information and responses to our queries. Our conclusion, detailed findings and recommendations meant that the procedural fairness process had to be managed carefully and thoroughly.

Our audit was also complicated by the change in responsibility for the homelessness services function that occurred as we were finalising our report to Parliament. The function was transferred from SAHT to another government agency from 1 July 2024, and this meant we then had to engage with the other government agency before we reported to Parliament.

Key lessons from our audit

• To ensure the client was aware of our audit scope, we communicated our audit objectives and criteria to them for feedback before we started. This proved invaluable later when the client needed to understand the basis for our audit conclusions.

• To manage delays in receiving information from the client, we agreed protocols in writing for responding to our requests at the start of the audit. We kept a register to track our requests and had regular meetings with the client to follow up outstanding requests and clarify responses. We also escalated outstanding matters when we needed to.

• We summarised data, and used statistics, studies, graphs and visualisations in our report to convey important background information on the topic including what homelessness services are, how they are delivered, the causes of homelessness, the extent of the problem in South Australia and the outcomes of the services provided.

• We used graphics and case studies to convey the consequences and impact on people who are experiencing homelessness.

• We engaged with a sample of contracted service providers to gain insights about the sector and to support and test our observations and recommendations. We used these insights in our report in highlight boxes titled ‘Service providers told us’. For example, at page 43 of our report we highlighted insights relating to key performance indicators (KPIs) and key result areas (KRAs) in service contracts as follows:

• We prepared a preliminary summary of indicative issues and discussed them with the client as early as possible to help progress our audit findings and minimise delays in receiving feedback from the client.

• We summarised the client’s feedback and concerns about our audit conclusion, findings and recommendations, and the response and actions we would take, which was critical in finalising the procedural fairness process. We used the summary to discuss the client’s feedback with them and the rationale for our response. In this way the client felt that we had heard their concerns.

• Because of the change in agency responsibility for homelessness services right at the end, we had to consult with a wider group of stakeholders when finalising our report. It was important that we clearly identified the decision makers for both agencies and kept them in the loop about the process and timelines to finalise the report. This meant maintaining an ongoing dialogue and understanding the risks they were managing and responding to these.

The various challenges our office faced had the potential to delay our report to Parliament. We were able to navigate these challenges, report on time and maintain effective relationships with both clients involved in the audit. The Audit Office of South Australia is pleased to note that both agencies are now working together on how to implement our recommendations for more effective management of homelessness services in the future.

Establishing a community of women in audit

By Susana Laulu, Program Director, PASAI

A notable increase in women in the accounting and auditing professions signals a broader societal shift towards gender inclusivity. Factors contributing to this change include mentorship programs, diversity and inclusion policies, professional development, educational outreach and advocacy for workplace flexibility. However, challenges continue to impede professional growth for women in audit through gender disparities, stereotypes and unconscious bias. [1]

Building on the success of the Governance and Leadership Women Symposium held in Samoa this February, we established a Community of Practice (CoP) for PASAI Women in Audit to continue conversations about the opportunities, barriers and emerging issues impacting the progress and growth of women working in our SAIs.

At last month’s online meeting, CoP members discussed the purpose, goals and rules of engagement of this group. There was unanimous agreement for this CoP to be a:

• member-led community, by women, for women

• safe and supportive online environment for PASAI Women in Audit to meet, encourage and inspire each other

• platform to nurture, mentor and accelerate the advancement of mid-level and emerging women leaders in audit.

Respect and trust are core values of this group.

Topics of interest for group discussion this year include:

• leadership styles

• adapting to change in the profession

• benefits of mentorship

• flexible working arrangements

• advocacy for gender-based issues, including responding to unconscious bias and supporting equal opportunities for men and women

• professional development opportunities in audit.

The CoP for PASAI Women in Audit plans to meet online for an hour on the first Wednesday of the month. Female SAI staff are encouraged to ask questions, share ideas and experiences, and take turns chairing the sessions. As a COP “by women, for women” I will be here to walk alongside the SAIs as they step out to take turns leading our sessions.

Our next CoP for PASAI Women in Audit will take place online on Wednesday 4 September. We thank the female leaders of SAI Samoa for leading this session, which will explore strategies for women to effectively manage work–life integration.

I am excited to see the impacts of this community for our women and the resulting improvement in governance, accountability, transparency and integrity that this community will influence. We are committed to promoting gender equality and inclusion through our Gender Equality, Disability and Social Inclusion (GEDSI) program. The Women’s CoP is just one of its key activities.

References

[1] Asuzu, O.F.: “Women in accounting and auditing: A review of progress, challenges and the way forward”, Finance and accountancy Journal, (6) (2), 2024

Communication: the most important link between audit work and impact

By Luke Eaton, Communications Advisor, PASAI

As guardians of public trust and financial accountability, supreme audit institutions (SAIs) must be both credible and accessible. If a SAI’s diverse audience cannot easily understand its findings and recommendations, its work will likely not have the necessary impact. This is where clear communication becomes not just beneficial, but essential.

Do you want to fish or do you want to catch?

Some people, when they ‘go fishing’, hop into a wide boat with barnacles underneath, enjoy a few hours of leisure playing with a rod and some undersized hooks, then pick up a cheeseburger on the drive home. This has very little in common with the kind of fishing done for hundreds and thousands of years in the Pacific region.

Island fishers can’t afford to return empty handed. Their slender boats glide efficiently through the water and they time their expeditions to optimise the catch or ensure the sustainability of future catches. These centuries-old practices have been refined to eliminate waste.

Pacific Island governments do not have money to waste either.

The comparison between fishers and auditors isn’t perfect but indulge me a little longer. A lot of audit work gets turned into reports. Like fishing boats, reports can vary in size. However, they should be designed to work with minimal resistance. Long, complicated sentences full of jargon are obstacles for readers trying to understand reports. It’s worth polishing off the barnacles to make a smoother ride. Using plain language in reports is about respecting the limited time of its readers.

Pā kahawai (trolling lure), 1750-1850, New Zealand, maker unknown. Oldman Collection. Gift of the New Zealand Government, 1992. Te Papa (OL000106/10)

Attracting attention

In Aotearoa New Zealand, Māori would often use paua (abalone) shell to line the shank of their ingenious fishhook lures. The iridescent quality of the shell attracts fish through its flashes of colour and movement in the water. I don’t mean to equate audit report readers with fish that need to be tricked into becoming someone’s meal, but rather to emphasise the importance of being appealing.

Consider how worthless a fishing expedition would be if, after all that effort, you did nothing to entice the fish. Likewise, audit reports and their associated ‘products’ should quickly tell readers why they should care. Readers will quickly disengage with content that doesn’t meet their needs. Communicating a report’s value will be even easier if the audit shows a difference between ‘what is’ and ‘what could be’ on a topic that matters to people.

A case study in attracting readers

A few years ago, the Government Accountability Office (GAO) of the United States of America introduced ‘Fast Facts’ at the top of its report webpages. The SAI knew many in its audience reads its content online, often on portable devices like smartphones.

Fast Facts give readers clear and concise information in language they can understand the first time they read it. Engaging images convey the topic, show evidence or visually explain information.

The SAI’s website user analysis shows Fast Facts do even more than help readers find, understand and use its work. It experienced a dramatic increase in the time people spent on its website (particularly those on mobile devices). Many more people downloaded its reports and shared its work as well.

In this case, the Fast Facts functioned as an effective lure to get people to engage in the broader audit work.

Consider the user experience

I’m not advocating all SAIs should imitate GAO’s webpage design. Instead, I mention Fast Facts to show the effectiveness of using writing principles that attract readers and remove obstacles to their understanding. This goes beyond plain language. Readers like to be able to scan for information they need, so use formatting like headings, bulleted lists and bolded text. Royalty free images or other graphics can entice reader engagement, break up a ‘wall of words’ and aid comprehension.

HUD Rental Assistance Fast Facts example on a smartphone

Clear communication is a universal lure

The audience of audit reports is much broader than a small group of legislators or the financial officers at the audited entity. Ideally, it includes the media, researchers, civil society organisations, development partners and citizens. A well-formatted document written in plain language meets the needs of all these groups. This is unlike the hooks and lures that only work with one type of fish! You get the biggest impact by quickly answering the question, ‘Why should I care?’ then retain engagement with frictionless communication.

The benefits of clear communication

• Facilitate informed decision making

Decision-makers can quickly grasp key findings and recommendations without getting bogged down in technical jargon. Flow-on effects include better resource allocation, program improvements and policy changes.

• Improve implementation of recommendations

Clear, actionable language can bridge the gap between identifying issues and implementing solutions. Recommendations that auditees easily understand are more likely to be actioned and create positive change.

• Enhance public engagement

When SAIs take the time to make their work appeal to the public, civic participation increases. In some cases, this might involve language translation and social media messaging to get wider engagement with important public sector issues.

• Amplify your messages

Civil society organisations and the media are more likely to accurately repeat well-crafted content. In the example below, a popular TV program quoted directly from one of GAO’s Fast Facts.

Last Week Tonight with John Oliver: Nursing Homes

Matching a commitment with capability

By committing to clear communication, you can ensure your valuable work reaches and influences a wider audience. This not only enhances the impact of individual audits but also contributes to a more informed and engaged citizenry – a cornerstone of a healthy democracy.

Clear communication is not just a matter of style – it's a fundamental aspect of effective public sector accountability. By making your work more accessible and understandable, you can amplify your impact and better serve the public interest.

Like a successful fishing expedition, clear communication takes skill, practice and effort. That’s why it features in every course in our communications program. If you want to know more about plain language, effective formatting and appealing presentation, an excellent place to start is our self-paced course on the Fundamentals of report writing. Pacific auditors can enrol and complete the whole course online through our Learning Platform.

Firefighting, saving lives and the value of performance audit

By Mike Scott, Director Performance Audit, PASAI

I volunteer as an Operational Support Firefighter in my small, rural hometown in New Zealand. I am one of nearly 12,000 fire and emergency volunteers across the country. Last week, an independent valuation of the contribution of New Zealand’s volunteer fire force was published. The report, Hidden in Plain Sight, estimated the annual economic contribution of volunteers to be $823 million.

This got me thinking about the value of performance audit and how being a performance auditor isn’t as different as it might seem to being a firefighter.

Being capable, timely and well-planned, independent critical thinkers, part of a high-performing team and making a difference in people’s lives by leaving a situation better than we found it, are just some of the similarities I see.

Being capable

I train with my brigade for two hours on a Monday evening to build and maintain our capability to respond when needed, not dissimilar to how performance auditors build and maintain their professional competency through training, experience and continuing professional development.

Being timely and well-planned

When the siren sounds and the brigade responds to a call for help, we get to where we are needed as quickly as possible. However, we don’t all rush inside burning buildings as soon as we’re on site. The first thing that we do when we arrive is assess the situation, decide our objective and plan how to achieve it. Timeliness and planning are no less critical for performance audits.

You may not be putting out a fire or rescuing someone trapped in a car, but setting a clear objective for a performance audit focused on improvement, and planning a sound, evidence-based approach to complete the audit, are key to a successful outcome.

Supreme audit institutions should choose their audit topics considering how their timing is likely to create value and have impact. To be relevant and make a difference, the audit report needs to be issued on time to make the information available for use by the legislature, the management of the audited entity and other interested parties.

Being independent critical thinkers

In my view, the quality of the brigade’s response to a situation is determined in large part by the independent thinking and objective judgements made on the ground, based on the presenting facts and circumstances. The firefighter and performance auditor share this ability to apply their independent thinking and judgement to come to an informed opinion about the current situation and what is needed to improve it.

In the case of a performance audit, this opinion is often about how well public funds are being used to deliver outcomes for people and what improvements are needed, where relevant. Performance auditors may not fix the situation directly like firefighters but their recommendations influence others to act.

Being a high-performing team

The teamwork is one of the things that I enjoy most about volunteering. Every member of the brigade responding to a situation is focused on the outcome, makes a constructive contribution, trusts one another, listens, shares ideas and does what is needed, without rivalry or self-interest.

Performance audit is also about being a high-performing team. Added to the attributes I see when the brigade responds, performance audit teams that value diversity of thought, are open to different viewpoints and who constructively challenge one another, add greater insight and value through their work, in my view.  

Making a difference by leaving a situation better than we found it

Ultimately both firefighters and performance auditors improve a situation by what they do. Firefighters may save people’s lives more directly, but performance auditors can have a huge impact in indirectly enhancing people’s lives. For example, the recommendations they make can lead to better health, education, housing and other outcomes for people.

So, all you performance auditors out there, don’t underestimate your worth. Speaking as an auditor, I can say that I think we tend to.

You don’t just save the public money; you safeguard how well people are served by the use of public money.

Auditors and firefighters alike are heroes!

Performance audit report by Office of the Auditor General for Western Australia

How a culture’s ‘power distance’ affects auditing

By Luke Eaton, Communications Advisor, PASAI

Across the Pacific region the power distance dimension of culture varies. This refers to the relationships between people perceived to have different ‘statuses.’ In places with a low power distance, interactions are usually less formal and challenges to authority are normal and even expected. In places with a high power distance, there are greater sensitivities around rank.

A mysterious crash

It was a rainy night in Guam, when, in 1997, a perfectly good plane flown by well-trained pilots crashed into the top of a small hill near the airport. Hundreds of people – nearly everyone on board Korean Air Flight 801 – died on impact. I mention this because power distance probably explains this tragedy.

The plane’s cockpit voice recorder later revealed the co-pilot and flight engineer seemed reluctant to act despite their concern the captain was still relying on the plane’s autopilot function while steeply descending on that rainy night. There were several seconds of indecision after alarms sounded in the cockpit but when the captain finally turned off the autopilot it was too late. [1]

The crew members were behaving in accordance with hierarchical Korean culture and deferring to seniority. The failure to question the poor judgement of the captain was, in this and other similar cases, a fatal mistake. [2]

Implications of this cultural dynamic on audits

If you are in a high power distance culture, you probably already know the various protocols around greeting people. However, as an auditor (or fraud investigator), it is especially important not to let the seniority of auditee staff influence your careful examination of the information they provide. If discrepancies appear, you may need to overcome ingrained habits of deferring to authority. You should also pay attention to how this aspect of culture may affect an assessment of fraud risk.

An INTOSAI CBC blog post [3] put forward that auditors in a high power distance culture tend to adhere closely to procedural checklists, seeking the approval of their superiors. This comes at the expense of innovation in evidence gathering. They are also less likely to perceive power as a source of corruption, taking less scepticism into audit engagements.

Fostering a culture of review

On paper, a SAI might have the necessary powers to demand certain documents of interest or be entitled to be provided diligently prepared financial statements by a well-established deadline. However, all too often audits succeed or fail to make a timely impact based on the willingness of auditees to cooperate with the SAI. This is where good communication skills might be a benefit.

Ideally, auditees would readily understand that audits are a gift. However, many treat audits like an unwelcome provocation. It may be worth spending a little extra time explaining the benefits to the auditee and the public at large, of having a financial management system with this self-improvement function. You are like a mechanic looking under the hood and advising which parts need a tune up for a smoother ride. Perhaps you can think of a better comparison.

Of course, in the unreasonable absence of a paper trail to audit, there would be good reason to sound the alarm of high fraud risk.

SAIs should always strive to serve as model public sector agencies. On the topic of audit quality at the recent Congress, we discussed the importance of having a culture of review, challenging assumptions and continuous feedback for improvement. Quality doesn’t happen by accident. It needs systems in place and a ‘tone from the top’ that quality matters and that review is welcome. A SAI’s reputation is earned by the quality of its products and demonstrating a willingness to itself be transparent and open to improvement.

Sometimes it takes bravery to follow or give voice to your intuitions. An environment that welcomes a diversity of perspectives certainly makes the process easier. In either case, we need to avoid crashing the proverbial plane.

References

[1] Is culture a factor in air crashes? Guam probe may raise touchy issue
Don Phillips, Washington Post

[2] Could Malcolm Gladwell's Theory of Cockpit Culture Apply to Asiana Crash?
Brian Clark Howard, National Geographic

[3] Power distance cultural dimension among auditors
Dr Sayed Alwee Hussnie Sayed Hussin, SAI Malaysia, Director of Policy and Internal Relations

Investing in integrity: PASAI’s new strategy

By Sarah Markley, Deputy Secretary-General of PASAI and Director, International Engagement, Office of the Auditor-General of New Zealand

We are less than a month away from our 2024 Congress! While every Congress is a major event on the PASAI calendar, this year marks a significant milestone with the adoption of our new strategy for 2024–2034.

How did we get to this point?

The strategy is the result of more than a year’s collective efforts starting at our last Congress in Palau in March 2023. Since then, Governing Board members have progressed the development of the strategy, drawing from:

• the independent review of our work under the current strategy

• contributions received from SAI heads and emerging SAI leaders provided during our Community of Practice sessions

• feedback from our core development partners.

The last stage of consultation on the new strategy has occurred over the past two months through discussions with SAI heads at sub-regional meetings and engagement with our newly established Women’s Community of Practice.

We will release the proposed strategy document to all members in early May. We really encourage all members and supporters to familiarise themselves with the strategy before Congress.

Building on strong foundations

Work under our current 10-year strategy (2014–24) created a strong foundation for the next phase of support. We have:

• assessed all developing SAIs against the internationally recognised standard for SAI capability (the SAI Performance Management Framework, or PMF) to establish maturity and development needs

• developed a SAI-led delivery model that progresses development activities based on prioritisation of weaknesses identified by their SAI PMF assessment

• advocated for the independence of SAIs across the region

• strengthened technical capability, built resources and assisted in the delivery of key financial, compliance and performance audits

• helped build broader organisational capability – such as through refreshed technology and strategic, workforce and communications planning.

What will you see in the new strategy?

Our strategy proposes three key priorities to support SAI development to 2034 and to contribute to strengthened public financial management (PFM) systems in the Pacific. These priorities reshape our current strategic priorities but recognise three enduring areas that are critical to SAI success.

The strategic priorities for the period to 2034 are:

• Strengthening public financial management (PFM): Advocating for SAI independence and well-functioning PFM systems.

• Audit quality: Supporting SAIs to deliver their mandate and to enhance audit quality.

• SAI governance: Supporting SAIs to build their governance and enduring capability.

Although the strategic priorities are very familiar focus areas for us, you can expect us to support you in new ways to achieve these goals. Among many other things, you will see a commitment to establish twinning relationships for all SAIs. We recognise the benefit of having long-term relationships between developed and developing SAIs in the region.

You will also see new ways to support improvement of audit quality through a dedicated technical hub for the region that will offer technical and quality assurance capability on a centralised basis. We will work proactively to advocate for SAI independence, build understanding of the role of SAIs and support SAIs’ interaction with legislatures.

To support these initiatives, the new strategy places more emphasis on collaboration with developed SAIs in the region, as well as other development agencies also working to develop the PFM system.

What is the new strategy seeking to achieve by 2034?

By focusing on these three priorities, our work over the new strategic period will support SAIs and the PFM systems SAIs are part of to achieve:

• increased Public Expenditure and Financial Accountability (PEFA) scores

• higher SAI PMF assessment scores as evidence of increased SAI maturity

• up-to-date and robust financial reporting by government

• a wide range of performance audits on matters of public interest and concern.

What makes our work possible?

We rely on our core development partners, the New Zealand Ministry of Foreign Affairs and Trade and the Australian Department of Foreign Affairs, to deliver the ambitions set out in our new strategy. Our core funders are committed to continuing this work with us.

But there is more to do than can be achieved with this funding alone. We are continuing to seek new partners who share our vision to support us to achieve the full scope of the new strategy.

What do you need to do?

Your engagement in this process has been critical to get us to where we are now. When you receive the strategy in early May, please engage again to ensure the strategy is what we need for the next 10 years.

Send your final feedback to the Chief Executive and to me so we can adjust the strategy, if needed, ready for final consideration and adoption at Congress.

Thank you again to those who have contributed to the process so far and we look forward to hearing your final thoughts on the new strategy.

The evolution and future of performance audit

By Mike Scott, Director Performance Audit, PASAI

It is a privilege and a pleasure to be sharing my experience with colleagues in the Pacific. I have been a performance auditor since 1987. Although the precise origins of performance auditing are debatable, performance audits became more recognised as a type of audit relatively recently, during the 1970s. So, I feel like I have been a performance auditor almost since the start of time!

Making a difference for people

I am often asked why I have been a performance auditor for so long. For me, it is because performance audits are ultimately about making a difference for people. They shine a light on how well public funds are managed and used to provide what matters to people.

The 200 or more (I haven’t done a precise count) performance audits that I have had a direct hand in have had many faces. They have covered the spectrum of public services across education, law enforcement, healthcare, defence, the environment, housing, roads, welfare support and much more. What they have had in common is providing transparency and accountability, and promoting improved performance for people.

I have valued the opportunity on each audit to offer insights and recommendations for effective delivery of public services for people. To now be able to support performance audits in the Pacific to make a difference for Pacific people is a great privilege.

Broad and deep examination of issues

Another question I am sometimes asked is what has changed in the time I have been doing performance audit. The biggest shifts I have observed are audits becoming broader and more ambitious in the range of issues they examine, and deeper and more sophisticated in how they analyse those issues.

Performance audits have shifted from primarily looking in at how well the processes, procedures and systems within public organisations are operating, to looking out at how well they are delivering. I think that performance audits now give a more rounded view of both the operational performance of public organisations and their success in delivering outcomes for people.

At the same time, performance audits have shifted to become more analytical by using more sophisticated techniques to gather evidence, drill into issues and generate insights. Interviews and document reviews, although still core evidence sources, are now augmented by techniques such as data analysis and understanding people’s ‘lived experience’.

As technology continues to rapidly advance there are new opportunities to explore for enhancing the value of performance audit, such as considering how artificial intelligence might be applied.

Strengthening performance audit in the Pacific

In my role I am focused on supporting SAIs to complete performance audits that provide transparency and accountability, and make a difference for Pacific people. I am working with SAIs to strengthen performance audit practice that is high-quality and sustainable.

Some of the ways I am doing this are by running a series of webinars and a workshop, and building an online resource bank, about applying good practice to plan, conduct and report on performance audits. We held the first webinar on 29 February and will hold the rest regularly through the year.

The five-day, in-person workshop will prepare participants to contribute to a cooperative performance audit, and the resource bank is already available to member SAI staff within our Learning Platform.

Our collective goal is Strengthening performance: making a difference in the lives of Pacific people. This is also the theme for the upcoming Congress in the Cook Islands. If I don’t meet you there, I hope there will be many other opportunities to interact in the future.

Turning the tide – SAIs respond to 2023 Accountability and Transparency Report findings

By Angela Drake, Principal Advisor International Engagement, Office of the Auditor-General, New Zealand 

Transparency International’s annual Corruption Perceptions Index (CPI) has confirmed that, for the fifth year in a row, there is stagnation in the Pacific CPI scores. [1] This will be no surprise to PASAI members who strive to turn the tide on these low scores through their daily work.

Nine months ago, PASAI published its fourth Accountability and Transparency Report, exploring the effectiveness of the work of Pacific SAIs between 2018 and 2022. The report found that there is work to do to overcome a range of integrity threats facing Pacific SAIs. SAIs, and the context they work in, both need to change if we are to see better accountability of governments in the Pacific.

As the Accountability and Transparency Report points out, there is a need for consolidated, collaborative action – across both the public financial management system and the national integrity system – to achieve meaningful progress towards good governance, accountability, transparency and integrity in the Pacific. 

Challenges facing Pacific SAIs

There are four leading themes in the issues discussed in the report:

• Investment is needed in the capability of those responsible for preparing accountability information (for example, financial statements of government) for SAIs.

• A clear and aligned view needs to be established by those with power to influence the public financial management and integrity systems.

• Independence is fundamental to enabling SAI effectiveness.

• SAIs in the Pacific are under sustained pressure to build and maintain both their capacity and the capability to play an ongoing and impactful role in their national integrity systems. Additional investment and support to SAIs to continue to build their capability and capacity remain vital.

Small steps to create change

Talking about the challenges we face

PASAI has already started to address the most significant weaknesses identified in the report.

Over the last nine months, PASAI Secretary-General, John Ryan, has hosted a webinar series on Building strong national integrity systems in the Pacific. Drawing on expertise from across our region, these panel discussions evaluate progress, issues and risks involved with building and maintaining accountability and transparency in the Pacific.

Communities of practice

PASAI also offers facilitated communities of practice after each panel discussion.

These discussions support SAI heads and emerging SAI leaders to consider what practical steps their SAI can take to improve collaboration with other players involved in the public financial management and integrity systems. Participants are encouraged to apply the one-degree rule: they share reflections on how their SAI might raise its appetite or ‘temperature’ by one degree to increase their impact or the effectiveness of their work.

Creating a strategy together

The communities of practice have been an instrumental forum to capture and discuss the ambitions of member SAIs in the next 10 years. Important perspectives and contributions shared continue to shape the development of PASAI’s future strategic priorities.

PASAI is also working with current and potential development partners to secure funding for the PASAI 2024–2034 Strategy.

In September 2023, PASAI jointly hosted a Funder’s Forum in Fiji at the Australian High Commission in partnership with the New Zealand Ministry of Foreign Affairs and Trade and the Australian Department of Foreign Affairs and Trade. Potential future partners were able to provide feedback on, and contribute to, the development of PASAI’s strategic intentions.

Communities of practice in action

What topics have been covered in the webinars and communities of practice?

The May 2023 panel explored how to raise the level of public participation in the allocation, distribution and management of public funds with two prominent Pacific civil society organisations (CSOs) – Transparency International Papa New Guinea and the Pacific Islands Association of Non-governmental Organisations (PIANGO).

In July 2023, we built on this dialogue through a second panel discussion with three investigative journalists from TV, radio and print media across the region. Panellists described how the media and SAIs can be allies in their pursuit of bringing accurate, independent information about public sector spending to the community.

The third panel, held in December 2023, focused on how the United Nations Convention Against Corruption and the Teieniwa Vision have supported countries to develop inter-agency approaches to detect and prevent fraud and corruption. Panellists partnering with the UN Office on Drugs and Crime shared challenges common to small island states. These include addressing conflicts of interest, lack of powers to investigate and challenges in prosecuting and sentencing. The value of increasing public understanding was expressed – specifically, mobilising young people to seek accountability and justice when behaviours do not meet integrity standards.

Warming up by one degree

In August 2023, at the Leadership Community of Practice, SAI heads committed to increase their SAI’s engagement with the public, CSOs or local media by one degree, including by:

• Planning one face-to-face outreach with citizens so that members of the community are more able to understand the role of the SAI and its work. Proposals included outreach events to outer island communities, engaging with high school leavers and hosting community groups at the SAI.

• Building the SAI’s relationship with local media over a coffee or a phone call to ensure they understand what government auditors do and the frequency of audit reporting.

• Working as a team to be more effective and timelier at providing short summaries of audit findings to media and weblinks to audit reports for CSOs.

• Leading proactive engagement with media to explain why an audit report has been delayed (for instance, if the legislature has not yet released it or auditees have not provided enough detail to audit) to create visibility of issues and pressure/momentum for changes to be made.

• Increasing social media posts relating to published audit reports to provide citizens with another avenue to access information.

• Encouraging colleagues to participate in PASAI’s Communications training programme, especially for teams that do not have the resources to appoint a communication officer.

What’s next?

Developing strong relationships

In the next panel discussion on 23 February 2024, we will focus on the importance of developing strong relationships with legislatures, parliamentary accounts committees and other legislative committees.

Panellists from across the region will provide practical advice on how to build and enhance the working relationships between SAIs and legislatures. We will consider how public access to information is a critical part of the democratic process, allowing people to contribute to the scrutiny of government performance. The effectiveness of the relationship between the legislature, its committees and the SAI plays a major role in the integrity of this scrutiny. The legislature’s deliberations on audit findings support better public awareness of issues, improved transparency by public organisations and more accountability from the government to the public.

Can you play a part?

We welcome new members to join our communities of practice in 2024 and look forward to delving deeper into what each SAI considers may be its next practical step to enhance engagement with its legislature and committees.

We encourage you to consider what steps you can take in 2024 to best influence other players in your national integrity systems to promote public trust and to hold power to account. May our collective efforts soon turn the tide on the region’s Corruption Perceptions Index scores.

The Office of the Auditor-General of New Zealand has made past webinar recordings in the series available on its website.

References

[1] Annual corruption report reveals fifth year of stagnation in the Pacific

Challenges faced by our SAIs in ensuring audit quality

By Meresimani Vosawale-Katuba, Director (South Pacific), PASAI

Supreme audit institutions (SAIs) in small island developing states (SIDS) face unique challenges in capacity to adhere to international standards. A major factor is the small pool of qualified and experienced supervisors to provide a robust system of quality controls for their audit engagements. This is exacerbated by the small size of the SAIs, for whom it may not be a sustainable option to establish a dedicated quality assurance (QA) function.

Only the two largest SAIs out of our 20 SAI members in SIDS have a QA function. Audit quality is therefore a major issue that we need to address. Our recent independent QA reviews of the seven SAIs participating in an audit programme revealed only two had satisfactory compliance with the ISSAIs.

Factors such as high inflation in SIDS have resulted in experienced SAI staff migrating to more developed countries for better pay and quality of life for their families. This depletion of financial audit experience and training/mentoring has made it very challenging to fill supervisory roles.

The remaining supervisors not only have fewer staff resources available to complete audits on time but often have to train and mentor new recruits on top of their increased workload. While SAIs are faced with the challenge of a limited local pool of experienced and qualified financial audit supervisors, performance auditing technical expertise is in even shorter supply.

Creative solutions needed

However, a history of limited resources for these remotely located SIDs has made their SAIs rather resilient as they have always needed to improvise solutions. Because of this, Pacific Island SAI heads have ideas and thoughts on how assistance can be structured. They may need flexibility from donors on the eligibility of their gratefully received interventions. Support can be tailored to meet SAI needs and address their challenges after consultation with the SAIs.

How the SoAQM initiative can help

One intervention to the challenge of ensuring audit quality is a collaboration between us and the INTOSAI Development Initiative (IDI) to support SAIs in setting up a System of Audit Quality Management (SoAQM).

Such systems will be consistent with the organisational requirement of the revised ISSAI 140 Quality Management for SAIs (currently under exposure draft), which requires SAIs to move towards a holistic and systemic risk-based approach to quality management.

Through the IDI–PASAI SoAQM initiative, we will provide regionally customised support to SAIs to transition from the old concepts of quality control/assurance into systemic, dynamic, scalable and risk-based quality management. [1]

What happens next?

IDI has also developed a draft playbook to support SAIs in setting up a SoAQM. We will work with IDI to deliver the SoAQM programme to six SAIs from our region. The SoAQM focuses on key processes in quality management, rather than on defining what should be in specific components of the quality control system in a SAI. These processes include quality risk management, monitoring and remediation, and evaluation which provide scalable solutions to SAIs. [2] The programme will involve integrated professional education as well as an implementation phase for participating SAIs. Letters of commitment from SAIs are to be finalised this month.

References

[1] and [2] The SoAQM Pilot for SAIs

The ClimateScanner project – How Pacific SAIs can help address climate change

By Jane Rogers, Sector Manager, Office of the Auditor-General, New Zealand 

In October this year, I was privileged to represent the PASAI region’s Working Group on Environmental Auditing (WGEA) at a workshop on climate change and specifically how SAIs can contribute, in Santiago, Chile. This blog post is about the ClimateScanner project, which was a focus of that workshop, and some of the other themes emerging from SAIs’ work in the climate area.

ClimateScanner project

SAI New Zealand, as well as being the PASAI region’s WGEA representative, is part of a group of 18 SAIs from across the world that have been working with SAI Brazil on the ClimateScanner project. The ClimateScanner is a web-based tool that allows SAIs to carry out a rapid review and assessment of government climate actions in three areas:

• public policies,

• governance, and

• climate finance.

The tool involves researching the climate-related actions in these areas and making an independent assessment of their adequacy using a grading scale.

Among the project’s aims is for SAIs to become more familiar with climate actions in their jurisdictions and to enable them to conduct climate-related audits in the future. SAIs from all INTOSAI regions are encouraged to participate in the ClimateScanner project for maximum impact.

SAI Brazil’s workshop presentation on the ClimateScanner project

Each SAI assesses its own government and completes the web-based tool. The information collected will then be consolidated into a global picture. This will be presented at the 29th United Nations Climate Change Conference (COP29) at the end of 2024 and will show strengths and challenges in governments’ climate actions around the world.

The results for each country at a national level will help governments identify vulnerable areas. They will also help SAIs identify important topics for their future work. The information can also be used to inform work at a regional level, which is important in a region like ours that is especially vulnerable to the impacts of climate change.

It is vital that we get as complete a picture as possible of our region’s climate actions. Therefore, we encourage all Pacific SAIs to participate in the ClimateScanner project. The results will give us a useful assessment of the legal and policy framework for addressing climate change in the Pacific, as well as climate finance arrangements, and can help draw attention to these issues and lead to more climate action.

PASAI and the regional WGEA will be coordinating with SAI Brazil to organise training and support for SAIs that choose to take part. The training is expected to be in June 2024, with the aim of completing the tool by that September.

We will provide more information about the project in due course, including seeking a commitment from each SAI to take part in the ClimateScanner project next year.

Inter-regional workshop on climate change: The contribution of SAIs

The workshop I attended in Chile was organised by the Special Technical Commission for the Environment (COMTEMA) which is part of OLACEFS (Organization of Latin American and Caribbean Supreme Audit Institutions). As well as a focus on the ClimateScanner, there were sessions on other climate and environmental audit-related issues, including presentations from the WGEA’s regional representatives.

I spoke at the workshop about the earlier PASAI co-operative audit on climate change and the Pacific SAIs involved in the global co-operative Climate Change Adaptation Actions (CCAA) audit. I also spoke about the work we are doing at SAI New Zealand, which includes preparations to provide assurance over greenhouse gas emissions and a performance audit on climate change and local government.

The themes that came across in the other presentations included:

• Complexity: Climate change involves many different disciplines that often don’t speak the same language, as well as both public and private organisations. It is also important to not just think in environmental terms, as the effects of climate change are also social and economic.

• Co-ordination: This is key at all levels (nationally, regionally and globally), but is also one of the greatest challenges.

• Inclusion: Climate change is an additional factor in inequality. Not all communities have the same vulnerabilities or resources to help them adapt, and those most affected are generally contributing the least to the problem.

• Data: Accurate and understandable information is important to decision makers, but also to the public who must be part of the solution.

The presentations also considered the role of SAIs in climate change. They noted that environmental auditing is becoming a priority for many SAIs who have an important role in raising awareness about climate change through their work.

For more information

You can find more information about the ClimateScanner project online and you can email me or Jonathan Keate (Pacific RWGEA Coordinator) if you have any questions or comments.

PASAI develops its first Competency Framework

By Danial Sadeqi, eLearning Specialist, PASAI

Background

We at PASAI promote transparency and accountability in the use of public sector resources in the Pacific by building the capability of our member SAIs. We help SAI staff to become professional auditors who can conduct timely audits and publish reports to ensure accountability in their jurisdictions. We do this through a host of programmes and activities which have evolved over the years.

Feedback from development partners and stakeholders highlighted the need for a Competency Framework to guide and streamline our capability development initiatives. The framework will provide a structure for our capacity building interventions by clarifying the required skills, identifying skill gaps and creating targeted training programmes. It will also guide staff in member offices on which training programmes to access to build the skills required to do their jobs effectively.

While international frameworks are available, there was a need for a framework that reflects the learning and development requirements of the Pacific region and is tailored to that context (including existing capacity, job descriptions and resourcing set-ups).

We have used our unique understanding of this context to develop a framework that supports a coordinated approach for our members. This also helps to attract development partner funding and achieve economies of scale.

The framework outlines core competencies for all audit roles within a SAI and contains functional competencies for each specific position.

Methodology

We completed a comprehensive review of existing international and SAI-level competency frameworks and adopted the following approach.

First, we collected role descriptors and knowledge required for different audit roles. We analysed competency frameworks and relevant documents from:

• internationally recognised audit entities [1]

• developed SAIs within the Pacific region [2]

• internationally recognised institutions [3] and

• other institutions in the Pacific region. [4]

Second, we collated and analysed audit, communications, human resource and information technology job descriptors from job advertisements across New Zealand, Australia and Pacific SAIs. We also conducted interviews with SAI heads, senior auditors, human resource staff and other stakeholders. SAIs who participated in our interviews included those of Fiji, the Marshall Islands, Solomon Islands, Kiribati, the Cook Islands, Sweden (HR team), Western Australia, New South Wales and New Zealand. We also used interviews with Secretariat staff and existing data from PASAI surveys to collate the relevant information.

We grouped this information into competency areas and developed dimensions accordingly. We adjusted the proposed competency areas in response to feedback during Congress to better match the competency areas required at SAI level.

The Competency Framework

1. Key concepts

There are three measurable or observable competencies critical to successful job performance:

a) knowledge (the theoretical or practical understanding of a subject)

b) skills (the proficiencies developed through training or experience) and

c) personal attributes (the qualities, characteristics or traits of a person).

The extent to which a specific competency is measured or observed depends on what the framework is being used for (the purpose).

The competency framework, then, is the conceptual model that details and defines the competencies expected of individual/collective human resources contributing to the successful implementation of PASAI’s mission and strategy at any given point in time.

Competency frameworks are not static but rather dynamic in nature and seek to define the elements needed to drive success. These elements will change depending on the circumstances.

2. Components of the Competency Framework

The PASAI Competency Framework is organised into three levels:

Level 1 core competencies will cover the knowledge, skills and personal attributes of any person entering the SAI and working at any audit technical role.

Level 2 functional competencies is where specific knowledge, skills and personal attributes will be developed in the three main audit streams – financial, compliance and performance audits. Other areas that can be added to this level include investigations and information technology.

Level 3 professional competencies further enhanced knowledge and skills for the main audit streams, leading to professional certification. We also endeavour to build the leadership, human resource management and office management competencies of senior staff to ensure the sustainability of SAI performance.

Competencies

Core competencies	Functional competencies	Professional competencies
Mandate of the SAI	Financial audit	Financial audit certification
SAI independence	Performance audit	Performance audit certification
Internal governance and ethics	Compliance audit	Compliance audit certification
Public sector auditing	Special audits and investigations	Continuing education
Public finance management system	Information technology	Leadership
Audit methodology	Communication	Human resources and office management
Skills - audit, IT, comms, management		Communication with stakeholders
Attributes - integrity and commitment

3. Proficiency levels

Competency level	Proficiency level
Core competencies	Level 1 - Junior Auditor
	All auditors entering the SAI must understand: - Mandate of the SAI (Domain A) - SAI independence (Domain A) - Internal governance and ethics (Domain B) - Fundamentals of public sector auditing (Introduction to Domain C) - Public Financial Management (related to Domain C) - Audit methodology - Cross-cutting audit skills - Skills - audit, IT, comms, time management - Attributes - integrity and commitment
Functional competencies	Level 2 – Senior Auditor
	Develop skills of auditors in the following work streams: - Financial audit (Domain C) - Performance audit (Domain C) - Compliance audit (Domain C)
	Learn skills for other audit work: - Investigations and audits of projects etc - IT audits
	Learn communication skills: - Clients - Stakeholders
Professional competencies	Level 3 – Advanced Auditor
	Attain professional certification in the following work streams: - Financial audit (Domain C) - Performance audit (Domain C) - Compliance audit (Domain C) - Continuing professional education – accounting and auditing standards, IT and emerging issues (Domain E)
	Learn other skills for advanced auditor training to be SAI heads: - Leadership - Human resource, financial and office management (Domains D & E) - Communications with stakeholders (Legislature, civil society and media) (Domain F)

4. Next steps

Given the nature of competencies required in an ever-changing world and the complexity of a framework that is relevant to SAIs with different mandates, staffing, resources, etc., we are making the framework available to SAIs and working closely with them to ensure that the framework is and will continue to be relevant in the future. We are also working on aligning our existing training programmes to the Competency Framework as well as ensuring that our suite of trainings covers all competency areas.

References

[1] INTOSAI’s Competency Framework for public sector audit professionals at Supreme Audit Institutions, INTOSAI’s The Future Relevant Value-adding Auditor, INTOSAI GUID 1950, INTOSAI GUID 1951, ISSAI 200 Financial Audit Principles, ISSAI 300 Performance Audit Principles and ISSAI 400 Compliance Audit Principles.

[2] Audit New Zealand, the Australian National Audit Office and the Territorial Chamber of Accounts of New Caledonia.

[3] The World Bank, United Nations, UN Women, UNESCO, International Atomic Energy Agency, UNICEF and Talent OECD.

[4] Pacific Islands Forum Secretariat, Civil Defence and Emergency Management NZ, New Zealand Transport Agency, University of Otago, New South Wales Public Service Commission, Victorian Public Sector Commission, Australian Health Informatics and Australian Evaluation Society Inc, Northern Territory Government (Office of the Commissioner for Public Employment).

New quality management standards for the North Pacific

By Doris Flores Brooks, Director (North Pacific), PASAI

The American Institute of Certified Public Accountants (AICPA) has issued a new standard on a Firm’s System of Quality Management. To be compliant with the standard, systems are to be implemented by 15 December 2025, and will be effective for audits and reviews of financial statements for periods beginning from that date.

The standard applies to firms who perform audits of financial statements. It does not apply to government audit offices. However, they may find the standard useful in improving their overall internal quality control system and quality assurance.

INTOSAI has also issued an exposure draft of ISSAI 140 Quality Management for SAIs. The new ISSAI provides guidance on establishing and maintaining an appropriate system of quality management to cover all audit and other assurance work performed by each SAI.

SAIs operate under different mandates and models with their size varying greatly around the world. The guidance may not be equally applicable to all SAIs but is intended to lead SAIs towards the common goal of audit quality.

Here, I will outline some of the characteristics of the new AICPA standard and not the ISSAI 40 exposure draft.

The AICPA standard follows a new risk-based approach to include a risk assessment process, tailored quality management, revised components of systems of quality management, more robust leadership and governance requirements and an enhanced monitoring and remediation process.

The components of quality management

There are eight components of quality management:

• Risk assessment process

• Governance and leadership

• Relevant ethical requirements

• Acceptance and continuance of client relationships and specific engagements

• Engagement performance

• Resources

• Information and communication

• Monitoring and remediation process

Risk assessment process

Establish quality objectives, identify and assess quality risks, design and implement responses.

Governance and leadership

Office culture, leadership responsibility and accountability, office organisational structure, assignment of roles and responsibilities, resource planning and allocation and the tone at the top.

Relevant ethical requirements

Know the requirements and follow them.

Acceptance and continuance of client relationships and specific engagements

Establish the necessary objectives to make appropriate judgements.

Engagement performance

The office’s actions to promote and support consistent performance of quality engagements.

Resources

Obtain, develop, use, maintain, allocate and assign resources in a timely manner to enable the design and use of the system of quality management and performance engagement, including technological, intellectual and human resources.

Information and communication

Obtain, generate and use information about the system of quality management, and communicate information to internal and external parties on a timely basis.

Monitoring and remediation process

Provide the office with relevant, reliable and timely information about the design and use of the system of quality management and take appropriate action to remediate deficiencies on a timely basis.

An audit firm should design and use a system of quality management to provide it with reasonable assurance that its personnel:

• fulfil their responsibilities in accordance with professional standards and applicable legal and regulatory requirements;

• conduct engagements in accordance with standards and requirements; and

• issue engagement reports that are appropriate in the circumstances.

For more information

Refer to AICPA’s Statements on Quality Management Standards A Firm’s System of Quality Management and Engagement Quality Reviews.

SAIs who operate in a congressional system (which is predominant in the North Pacific) can now pick and choose between the AICPA quality management statements or the ISSAI 40 exposure draft.

References

I acknowledge Dr Jeanne Yamamura. I obtained much of the above information from the session she presented on AICPA Quality Management Standards at the 2023 APIPA Conference.

Taking a regional approach to good governance and public accountability

By Susana Laulu, Programme Director, PASAI

I was privileged to attend the 34th annual APIPA Conference in Majuro, Republic of the Marshall Islands, from 28 August to 1 September 2023.

The Association of Pacific Islands Public Auditors (APIPA) was formed to achieve the following objectives:

• Establish an organised body to act as one voice in support of the goal of promoting efficiency and accountability in the use of public resources of emerging nations of the Pacific.

• Provide a forum for exchanging ideas, experience, problems, and identifying solutions, which are often unique to the Public Auditors in the Pacific.

• Sponsor auditing and accounting training workshops in cooperation with established associations of the staff of member offices.

• Identify scholarship sources for Pacific Islanders needing financial assistance to study auditing and accounting at the post-secondary level.

• Promote public awareness for the purposes of conducting audits of public resources. [1]

Building on the theme, “Shining a Light on Public Accountability”, the conference signalled a continuous commitment to raise awareness of the importance of public audits. The primary objective of these audits is to strengthen the accountability of governments by reporting on the use and management of public resources.

In his keynote address, His Excellency David Kabua, President of the Marshall Islands, reiterated this commitment. He acknowledged the fundamental role of SAIs to report on and inform the work of government and what the leaders are doing. This, more importantly, holds the leaders accountable for the wise and prudent use of public funds to better serve the interests of citizens. With the significant challenges brought by rapid economic, technological, social and environmental changes, the insight of credible SAIs has never been so crucial as now.

HE David Kabua, President of the Marshall Islands

The commitment of public auditors to promoting good governance and accountability requires proper resourcing, capacity and capability of their respective SAIs. Equally important is for SAIs to uphold and maintain ethical values and to protect the independence and integrity of their offices.

The conference provided training on specific and cross-cutting topic areas to strengthen and enhance the skills and knowledge of SAI staff. Ideally, SAIs should be able to do more than just conduct quality audits on the government’s use and management of public resources. They should also raise awareness of their work and publish timely, accessible reports to inform the citizens of what their leaders in government have been doing. Transparent reporting on the activities of government promotes and strengthens good governance and accountability.

The conference theme echoes the PASAI vision which refers to the work of SAIs leading to increased accountability in the Pacific. The training offered was a good complement to the activities we undertake through our own strategic priorities.

Regional events such as this conference, which involve other active participants in the public financial management system, are needed to support Pacific SAIs effectively deliver their mandates and be champions of good governance and public accountability.

In the words of HE David Kabua, “Our collaboration and collective efforts are pivotal to promote good governance, responsible spending and accountability in all sectors of the public service within our respective nations and our Blue Pacific.”

APIPA Principals

References

[1] About the Association of Pacific Islands Public Auditors

Non-standard audit reports

By Logan Moore, Senior Advisor – Public Sector Finance and Reporting, Office of the Auditor-General, New Zealand 

Audit reports are the vital end products of audit engagements. Audit reports enable auditors to communicate findings of entities’ financial and non-financial information.

Ideally, an auditor will be able to issue a report expressing a “clean” or unmodified opinion of the information. However, if an auditor following the International Standards of Supreme Audit Institutions has identified matters they wish to draw the reader’s attention to, they will issue a “non-standard audit report”.

A non-standard audit report is one that contains:

• an “emphasis of matter” or an “other matter” paragraph; and/or

• a “modified” opinion.

It’s important that entities understand and address any matters raised in a non-standard audit report. They present opportunities to improve systems, processes or the presentation of the financial statements.

Parliamentary and legislature committees, the public, civil society organisations and the media should consider the matters auditors raise in audit reports and ensure entities are held to account to act on them.

Additional recommendations that don’t meet the criteria of being included in the audit report are typically included in the management letter. Similarly, entities should act on the recommendations in that letter, to take full advantage of the auditor’s independent feedback.

Emphasis of matter and other matters

Without modifying the audit opinion, auditors can include an “emphasis of matter” or “other matter” paragraph in the audit report. These paragraphs draw attention to matters such as:

• fundamental uncertainties

• breaches of law or

• concerns over probity or financial prudence.

Auditors can use these paragraphs to bring to the readers’ attention matters that are important to their understanding of the financial statements. But they’re only for when the matter isn’t “material” (significant) to the financial statements. An issue is material if it will affect a reader’s view or understanding of the information.

The key consideration for an auditor in choosing between an emphasis of matter paragraph and modifying the audit opinion is whether the matter is material.

Over the last few years, the audit reports for most public entities in New Zealand have included an emphasis of matter paragraph. The paragraph has drawn attention to disclosures in the financial statements about the COVID-19 pandemic, given the significant uncertainty the pandemic has caused.

Across the Pacific, auditors have often referred to the adoption of new accounting standards in an emphasis of matter paragraph.

Modifications to the audit opinion

Auditors give a modified opinion when either:

• There’s a disagreement between the auditor and management. It could be a material misstatement about the treatment or disclosure of a matter in the financial and/or non-financial information.

• There’s been a limitation in the scope of the audit. This can happen when the auditor has been unable to obtain sufficient appropriate evidence to support an issue or disclosure. As a result, the auditor is unable to express an opinion on the financial or non-financial information, or a part of the financial or non-financial information.

The auditor needs to determine whether the misstatement or limitation in scope is pervasive. This determination enables the auditor to select the type of modified opinion to issue. There are three different types of modified opinions:

• an “adverse” opinion

• a “disclaimer of opinion” and

• a “qualified opinion”.

An adverse opinion, in which an auditor concludes there are pervasive misstatements of information, is the most serious type of non-standard audit report. However, management should resolve matters raised in any type of opinion as soon as possible.

The following chart from the PASAI Regional Financial Audit Manual shows how to determine which type of modified audit opinion to issue.

Audit reports (especially non-standard) should be viewed as a valuable resource by all stakeholders. They’re a tool for the auditor to communicate and encourage improvements to the accountability and transparency of the public sector.

Further reading

The Kiwi guide to audit reports