CAG Audited?
AT the request of the Comptroller and Auditor General of India (CAG), an international peer review team reviewed the performance audit function of SAI India. The objective of the peer review was to assess the extent to which the performance audit function of CAG adheres to applicable standards of professional practice; and to identify opportunities for improvement. The peer review team was led by the Australian National Audit Office and included representatives from the supreme audit institutions of Canada, Denmark, The Netherlands and the United States of America.
India has one of the largest public sectors in the world, within which there is a recognised need to strengthen performance, accountability for results and financial management systems. In this environment, the scale and complexity of the Supreme Audit Institution of India's (SAI India's) work are considerable. SAI India has around 43,500 staff, and its auditing covers multiple levels of government, all government sectors and many different types of organisations. There is also significant diversity in language, governance and development in the 28 states and 7 union territories subject to audit by SAI India. This environment highlights the importance of SAI India's role in terms of improving public sector performance and accountability, and necessarily affects the audit approach it adopts.
Recommendations of the peer review :
1. To strengthen quality management in the performance audit function, we recommend that SAI India review and update the Audit Quality Management Framework, and improve communication to its staff about the framework.
2. To clarify and enhance performance audit direction and guidance, we recommend that SAI India review and update its Auditing Standards and Performance Auditing Guidelines, taking into account current performance audit practices, and relevant international standards and guidance.
3. To strengthen performance audit capability, we recommend that SAI India build on the current performance audit training program by further developing performance audit skills of relevant staff, including through on - the - job training.
4. To improve performance audit design and the basis for forming audit conclusions, we recommend that SAI India refine its approach to developing achievable audit objectives, appropriate audit criteria, and the test programs necessary to satisfy the audit objectives.
5. To assist in managing the actual and potential conflicts of interest of its staff and contractors, we recommend that SAI India introduce a formal independence policy, which would require staff and contractors involved in performance audits to declare actual and potential conflicts of interest at the planning stage, and subsequently if they arise.
6. To inform audit conclusions and focus attention on performance audit recommendations aimed at improving administration and program performance, we recommend that SAI India:
1. review its approach to obtaining responses to audit reports from audited entities; and
2. request that audited entities respond directly to each recommendation made in draft audit reports, and publish the responses received in final audit reports.
7. To provide natural justice to third parties, and obtain and appropriately consider their perspectives when developing and finalising performance audit reports, we recommend that SAI India review its approach to consulting with third parties.
8. To strengthen the evidence base supporting performance audit findings and conclusions, we recommend that SAI India reinforce validation techniques and documentation requirements for different types and sources of evidence.
9. To strengthen application of reporting standards across performance audit reports, we recommend that SAI India develop and implement a strategy to improve reporting capability and reinforce the requirements of its standards.
10. To increase assurance on compliance with applicable standards of professional practice and identify opportunities for improvement, we recommend that SAI India introduce:
1. an annual quality assurance program covering a sample of performance audits completed during the year; and
2. a process to identify and disseminate lessons learnt for performance audits.
India's CAG has agreed with all the recommendations.