Comprises 8 countries with majority having a structured public audit function

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

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

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

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

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

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

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

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

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