Recent audit work of NAOF Jonna Carlson National Audit Office of - - PowerPoint PPT Presentation

Recent audit work of NAOF

Jonna Carlson National Audit Office of Finland Annual Meeting of INTOSAI Working Group on Public Debt, 23-25 May 2019, Baku, Azerbaijan

The structure of the presentation

I. Moving forward – changing NAOF II. Current findings of financial audit III. Case example of auditing contingent liabilities

• Financial liabilities of the Government in international
• rganisations (2/2018)

National Audit Office of Finland

• Finland's Supreme Audit Institution
• An independent institution operating in affiliation with

Parliament

• Audits the state’s finances, monitors fiscal policy, and oversees

election and political party funding

• Status and mandate grounded in the Constitution
• Follow ISSAI standards

Social Insurance Institution Funds for which Parliament is responsible

Parliament Parliamentary audit

Bank of Finland

State-

• wned

companies Recipients

• f state aid
• r EU

funds Unincorpo- rated state enterprises

Certain

• rganizations

responsible for procuring funds

• r taking care of

special tasks

Government agencies

• internal

control

• internal audit

Off-budget funds

Office of the President of the Republic

Other audits according to legislation Other audits according to legislation

Government

Government financial controller's function Government Controller-General

Ministries

Internal control internal audit

Right to conduct audits and receive information according to legislation on the NAO Right to receive information according to legislation on the NAO

Other audits according to legislation

National audit office

Parliament’s

• wn finance

Sphere of activities

Current findings of financial audit

Financial audits 2018:

• Financial Central Government Accounts (annual)
• Ministry of Finance (annual)
• State Treasury (annual)

Source: State Treasury – Debt Management Annual Review 2018

Audit of State Treasury

Audit is performed annually (risk analysis)

We verify that

• key rules of the state budget and its application are followed
• process controls of all balance sheet items > EUR million are

working properly

• financial statements present true and fair view
• internal control mechanisms are properly arranged
• debt management is carried out in accordance with the

provisions of the Ministry of Finance AUDIT CONCLUSIONS 2018

Case example of auditing contingent liabilities

Financial liabilities of the Government in international

• rganisations (2/2018)

Finland is a member of several international

• rganisations. When joining an organisation, a

member state must enforce treaties regarding the

• rganisation. With such treaties, the member

states commit to being responsible for already existing commitments and liabilities.

Identification of liabilities

• Deposit guarantee
• Other support to the banking sector
• State-owned companies (increase of

share capital either to retain

• wnership share or to secure
• perational capability)
• Operations of the regional authorities
• Environmental liabilities,

catastrophes, external security International organisations employee benefits

Contingent liabilities Explicit Legally binding Implicit Socially/polically binding

• Government guarantee
• State guarantee
• Export financing liabilities
• Liability for compensation of

SMEs´bad debts and guarantee losses

• On demand capital contributions in

international financial institutions

• Climate liabilities
• Nuclear liability

I. I. Ho How much con

• nti

tingen ent t liab liabil ilit ities es to

• Fin

inla land will ill arise rise fr from em employee e ben enefi fit ob

• bli

ligations of

• f in

intern ernati tional or

• rganis

isations? ? II. II. Wheth ther th the e fin final l cen central l government acc ccounts shou

• uld in

indic icate e th the e fin financia ial liab liabili liti ties of

• f th

the e Government in in in inter ernational l or

• rganisati

tions? III. Ho How th thes ese liab liabil ilit ities es shou

• uld

ld be e taken in into

• acc

ccount t when en makin ing decis ecisions on

• n joi
• ining in

intern ernational l or

• rganisations?

?

Audit questions:

Audit Process

Sample based on information from central bookkeeping Identifying organisations with most financial impact Analysis & Reporting

• Annual membership fees to

international organisations

• Analysis made with acl-analytics
• Audit evidence:
• 1. Financial Statements
• 2. Original treaties, Basic texts

and other

• 3. Internal guidance documents of

the organisations

• Documentation analysis by

Nvivo-coding.

Off-Balance Sheet Liability

Recognition

Employee benefits of International Organisations Preparedness

Transparent reporting on contingent liabilities is needed

• Organisations are poorly prepared

to pay non-current employee benefits

• 90 % of the liabilities are non-

funded

• Finland´s share of the non-funded

liabilities is around EUR 1,4 billion.

Thank you for your attention! Comments, Questions?