ROLE OF SUPREME AUDIT INSTITUTIONS IN DEVELOPING PUBLIC FINANCIAL MANAGEMENT (PFM)

1. ROLE OF SUPREME AUDIT INSTITUTIONS IN DEVELOPING PUBLIC FINANCIAL MANAGEMENT (PFM) Assoc. Prof. Dr. Recai AKYEL President of the Turkish Court of Accounts IV. EUROSAI/ARABOSAI Joint Conference 16-18 April2013, Baku

2. Role of SAIs in Developing Public Financial Management (PFM) OUTLINE OF THE PRESENTATION • INTRODUCTION • EXPERIENCE OF THE TURKISH COURT OF ACCOUNTS (TCA) • CONCLUSION AND SUGGESTIONS

3. INTRODUCTION - 1 • Supreme Audit Institutions (SAIs), which conduct audits, are a part of the PFM system in their countries. • The effective operation of SAIs and the generation of reliable reports by the SAIs play an important role in the improvement of financial system. The findings and suggestions in those reports generally form the most fundamental inputs of the reform processes in PFM. 3

4. INTRODUCTION- 2 • External audit focuses on providing consultancy and contribution to public entities. • The entities, the Parliament and the public are informed in an accurate and reliable manner about the general functioning of the PFM; the risks in the system are put forward; and necessary suggestions are developed to eliminate those risks. 4

5. EXPERIENCE OF THE TCA - 1 PURPOSES OF EXTERNAL AUDIT The audit of the TCA is carried out with the purposes of: • Submitting reliable and sufficient information to the Turkish Parliament and the public concerning the activity results of public administrations, as required by the power of purse, • Executing PFM in conformity with laws, and safeguarding the public resources, • Evaluating the performance of public administrations, • Establishing and extending accountabilityandfiscal transparency. 5

6. EXPERIENCE OF THE TCA - 2 BOUNDARIES OF EXTERNAL AUDIT • TCA does not undertake propriety audit and does not render decisions that limit or remove the discretion of management. • Audits are carried out in accordance with the generally accepted international auditing standards. • For maintaining quality assurance, each stage of audit is reviewed constantly in terms of its conformity with audit standards, strategic plans, audit programs and professional code of ethics. 6

7. EXPERIENCE OF THE TCA - 3 TYPES OF EXTERNAL AUDIT • Audits by the TCA: • Regularity audit (financial audit and compliance audit), • Performance audit, • Audits assigned by the Parliament. 7

8. EXPERIENCE OF THE TCA - 4 ANNOUNCEMENT OF REPORTS • The reports of the TCA, except for the cases forbidden by law, are announced to the public by the President of the TCA or the Deputy President assigned by him, within fifteen days after the submission of the reports to the Turkish Parliament and related public administrations. 8

9. EXPERIENCE OF THE TCA - 5 EXTERNAL AUDITREPORTS The TCA submits the following reports to the Turkish Parliament: Statement of General Conformity External Audit General Evaluation Report Accountability General Evaluation Report Financial Statistics Evaluation Report State Economic Enterprises Audit Reports Other Reports 9

10. EXPERIENCE OF THE TCA - 6 GETTING THE TCA’S OPINION • By-laws and regulatory acts in force of by-laws to be regulated in financial matters by public administrations enter into force after getting the advisory opinion of the TCA. The TCA gives its opinion on those regulations within thirty days after the request is made. 10

11. EXPERIENCE OF THE TCA - 7 JUDICIAL POWERS • Thanks to the judicial audits that the TCA has been conducting as an Accounts Court since its inception, the public loss incurred due to irregular transactions is recovered from those responsible. • In addition, where an irregular transaction results in public loss, the relevant Ministry or its top management is informed of and warned against the situation and the existing risks. 11

12. EXPERIENCE OF THE TCA - 8 INTERNAL AUDIT • The Internal Audit Coordination Board has been established under the Ministry of Finance in order to monitor the internal audit systems of public administrations. • Internal audits are performed in line with the auditing and reporting standards established by the Board on the basis of internationally accepted standards. • Internal audit reports and the actions taken accordingly are communicated by the heads of the administrations to the Internal Audit Coordination Board within two months at the latest. 12

13. EXPERIENCE OF THE TCA - 9 RELATION BETWEEN INTERNAL AUDIT AND EXTERNAL AUDIT • During the audits of the TCA, the reports produced by internal auditors are obtained and used in risk assessment. • Since internal auditors are more familiar with the auditee, the TCA auditors communicate with internal auditors throughout the audit process. • With the help of this communication, the TCA auditors obtain information from internal auditors and their reports on significant matters and risks. 13

14. CONCLUSION AND SUGGESTIONS • SAIs should make an effort to conduct accurate and reliable audits and produce reports. • The public administrations, the Parliament and the public should attach the required significance and value to the SAI reports. • Auditees should be apt to benefit from these reports. 14