INTOSAI Working Group on Accountability for and Audit of Disaster-related Aid (AADA)
3rd meeting of the Working Group, Republic of Peru, 12-13 July 2010
Venue: Miraflores Park Hotel, Lima
Summary of meeting
12 July 20101 / Opening and introduction by Mr Maarten B. Engwirda, Member of the European Court of Auditors (ECA) and Chairman of the Working Group
Mr Maarten B. Engwirda welcomed all the participants to the meeting, and especially the guests from UN OIOS. He thanked the Office of the Comptroller General of Peru for hosting this meeting and for making all necessary arrangements. He stressed the importance of this meeting, in view of the next INTOSAI Congress in November 2010 in South Africa. As to the substance, he mentioned the two guidance documents on audit of disaster-preparedness and audit of disaster-related aid, as well as the supplementary practice note on auditors’ responsibilities in respect of fraud and corruption. The discussion on these documents will form the main body for the meeting. A second important issue is the discussion with the representatives from UN OIOS on how INTOSAI and UN internal auditors can cooperate in strengthening accountability and audit arrangements for humanitarian aid. Mr Engwirda stressed that for the working group this outreaching to other actors is extremely important given the strategy developed in its work programme. He was looking forward to an interesting and fruitful meeting.
2 / Welcome speech by Edgar Càceres Gallo, Head of the Technical Cooperation Unit in the Secretariat General of the Office of the Comptroller General of Peru (La Contraloría de Peru) on behalf of Mr Fuad Khoury, Comptroller General of the Republic of Peru
Mr Edgar Càceres Gallo welcomed the working group to Lima. He stressed the importance of the subject in general, and more specifically for Peru, given its experiences with disasters like the recent earthquake in the Pisco area and flooding in the south. He hoped this meeting would allow for sharing experiences amongst SAIs on how to carry out audits on disaster preparation and disaster-related aid, and thus provide for good practices guiding SAIs in doing their audit work to the best of their abilities including use of Geographic Information Systems (GIS).
3 / State of play of the implementation of the Work Programme, the overall picture (ECA)
Mr Jan Pieter Lingen thanked everyone for sending in their progress reports which have all been published in the members’ section of the web-site. He gave an update on the working group’s achievements to date (see website for “Presentation Implementation Work Program”) and paid specific attention to the positive feed back received on the principles and reporting templates in the integrated financial accountability framework. (See website for “IFAF for Lima”.)
He emphasised the need for feed back and mutual support between participants due to the links between tasks and due to the needs of the advocacy work. He also stressed that support from the whole INTOSAI community is needed in this respect, the Congress being a first opportunity to arrange that. In respect of the guidance documents he asked the participants to consider how these should be made public in order that full use can be made of these documents while at the same time assembling feed back in order to further develop the drafts. In respect of the mandate of the Working Group he recalled the decision taken last year to request an extension of three years and to maintain the remit of disaster-related aid, although much of the material developed would be of use for all humanitarian aid.
Presentations of and discussion on progress reports for separate tasks of the Work Programme
4 / 0I.01 Single accountability information structure (Korea) – (See website “Sessions 4-7”)
Ms Alison Ballantine (ECA) summarised progress on this topic on behalf of the Board of Audit and Inspection of Korea as they could not send a delegate to the Lima meeting.
Research had been made on the use by other organisations of the Financial Tracking Service at the UN Office for the Coordination of Humanitarian Affairs (OCHA’s FTS) as a basis for a single accountability information structure. Conclusions to date are that:
• several global efforts are going on to standardize disaster-related terms and data, etc.;
• a single information structure need not be based on FTS in the near future, since what matters is improved compatibility, consistency and relevance of disaster-related information rather than integrating existing disaster-related databases into one;
• there is a lack of responsibility for managing the whole process of financial tracking.
By the year end the Korean team aim to develop ideas on integrating FTS issues with Transparent Aid (TR-AID), International Aid Transparency Initiative (IATI), and on how to ensure responsibility for financial tracking. An interim report will be drafted by end of 2011.
5 / 0I.02/03 Harmonisation of accountability standards for aid organisations and for donors (ECA)
Ms Alison Ballantine explained the ECA work on the harmonisation of accountability standards for aid organisations with the Humanitarian Accountability Partnership (HAP) and for donors with the Good Humanitarian Donorship Initiative (GHDI). (See website for “Presentations Sessions 4 to 7”.)
The objective was to motivate HAP to introduce a specific financial accountability standard as one of the benchmarks required of aid organisations to receive certification against the HAP Standard in Humanitarian Accountability and Quality Management. The draft revised HAP Standard now comprises a strengthened financial accountability component and the IFAF template will be used for the qualifying norm for the HAP certification. HAP is expecting to adopt this draft by the year end.
ECA will continue working with HAP to improve standards and advocate proliferation of the HAP certification scheme so that HAP certification becomes the global scheme and there is greater acceptance by NGOs of the importance of financial accountability.
As for accountability standards for donors, ECA will continue working with GHD to see whether their new Work Plan can include an item on strengthening the financial accountability standard and with DAC to see whether a revised assessment framework for review of humanitarian action can effectively assess compliance with financial accountability standards. However, given that the co-chairs of the GHD change annually and the GHD principles are never revised (unlike the HAP Standard), the working group can at best translate the financial accountability principle into peer review guidelines for OECD-DAC. Another obstacle is that the potential benefits are not always obvious to or understood by individual members of GHD.
6 / 0I.04/0II.06 Harmonisation of financial reporting / Single audit (Norway/ECA)
Ms Alison Ballantine summarised progress on this topic on behalf of the Norwegian Audit Office as the Norwegian delegates to the Lima meeting were recent replacements for the original members of the working group and the tasks were the common responsibility of Norway and ECA. (See website for “Presentations Sessions 4 to 7”.)
To assess whether DAC guidelines (or others) can be used for a harmonised accountability information structure, the Norwegian team conducted research based on OECD-DAC 2003 Guidelines on Harmonising Donor Practices for Effective Aid Delivery. To compare "best practices" from various donors, they also analysed documentation from the Norwegian Ministry of Foreign Affairs (MFA) and the Norwegian Agency for Development Cooperation (NORAD). The results of the different analyses will provide the basis for the draft report.
In Lima, the Norwegian and ECA teams agreed to meet in Luxembourg on 30th September.
Regarding task 0II.06 the Norwegian team proposed starting work in 2011on the Single Audit package once agreements were reached on the accountability issue.
7 / 0I.06/0II.07 Use of accounting standards/internal audit UN (ECA)
Mr Jan Pieter Lingen explained what ECA had done to enhance the use of agreed accounting standards when reporting disaster-related aid (I.06) and to assess the role (UN) internal auditors can play in single audit of disaster-related aid (II.07). (See website for “Presentations Sessions 4 to 7”.)
ECA outsourced a feasibility study which concluded that RIAS* is relevant contact body as it deals with issues closely linked to WG AADA objectives; but bilateral contacts with UN bodies and EC IAS are also needed.
*The Representatives of Internal Audit Services of UN organizations and multilateral financial institutions (RIAS) was established to coordinate UN internal audit services.
The consultant’s work with the UN included discussions in Geneva with the Under-Secretary-General of OIOS (Office of Internal Oversight Services) and UNICEF, UNDP and OIOS in New York. The consultant has reported to the working group.
ECA has also met with the Director General of Internal Audit at the European Commission, observer in RIAS meetings, and will make a presentation at the RIAS meeting in September 2010 on "assurance to donors” which will include the IFAF for humanitarian aid.
ECA will continue contact with OIOS and RIAS to enhance use of agreed accounting standards when reporting disaster-related aid and further moves towards the single audit approach by UN internal auditors, possibly through a resolution agreed by the RIAS assembly.
It was explained that the principles and templates for IFAF that were developed by ECA are accounting-standard neutral. There were many standards being discussed such as the IPSAS cash-based accounting standard and specific development aid standards. The working group is interested in the outcome of these discussions and needs to keep pushing for an agreed standard. Meanwhile, IFAF was devised from scratch. (See website for “IFAF for Lima”.)
8 / 0I.05/0II.08 Accounting standards / Auditing standards (US/UK)
MsPhyllisAnderson of the Government Accountability Office (GAO) presented a progress report on the work carried out by them and UK National Audit Office (NAO) to assess whether the International Public Sector Accounting Standard (IPSAS) Cash-Basis Standard can be used for standardized financial reporting on disasters. (See GAO’s Presentation on progress – Tasks 0I.05 & 0II.08).
MsPhyllisAnderson’s advice to the working group was that any guidance we draft needs to be at a very high level. The greatest room for further development in terms of accounting standards was working with the World Bank in strategic alliance. Other delegates supported this and suggested widening it to the other international banks (IFIs). Along with the European Commission this would be five key players on the world stage. Consideration should be given to involve the international fund-raising organisations.
9 / 0II.05 Auditors' awareness of fraud and corruption during audits of disaster-related aid (ECA)
Mr AriPekkaJantunen gave a presentation on his supplementary note to INTOSAI Practice Note 1240 and the particularities of the humanitarian aid sector. (See website for “Auditor’s Responsibilities Relating to Fraud and Corruption when Auditing Humanitarian Aid”.)
He concluded that: fraud or corruption can occur at all stages of humanitarian operations, in natural disaster the need for quick response and limited knowledge of local context increase the risk, the most vulnerable processes are procurement, logistics, payroll, and the sectors with highest risk are shelter, water, sanitation, food aid and health care. There is already a wealth of guidelines and standards in the area of fraud and corruption, so instead of developing something completely new, it was decided to use the existing ISA and ISSAI as a basis. This is why a supplementary note to ISSAI 1240, focussing on these specific characteristics of humanitarian aid was developed. (See website for “Presentation Practicenote Fraud and Corruption”.)
The discussions that followed included questions on the difficulties encountered during and therefore the worth of a financial audit of the emergency phase of disaster relief. Emergency relief should focus on saving lives; this takes priority over documentation. Whereas reconstruction is more auditable. Nevertheless, it is important for the auditors to be there in the early stages - simply observing without hindering the aid effort – to see the relief in action. An example of what could be noticed is the kind of goods that are really required (e.g. is advantage being taken to shift out-of-date medicines?)
It was suggested the working group’s guidance document should provide separate criteria and indicators for emergency aid and reconstruction. Moreover, the messages of this fraud and corruption note should be taken account of in the Indonesian guidance document (i.e. the guidelines for the planning, the implementation and the reporting of audits on disaster-related aid should include appropriate cross-referencing to the fraud and corruption note.)
One outcome of the discussion was that the matter of (inevitable) price increases immediately after a disaster will be included in the supplementary note to INTOSAI Practice Note 1240.
(The Indonesian team’s experience was that some people took personal advantage of the price increases and the international ignorance of the correct local prices.)
10 / 0II.09 The use of GIS as an audit tool (Netherlands)
MrEgbertJongsma gave a presentation on the Netherlands Court of Audit’s use of Geographic Information Systems. (See website for “GIS and auditing disaster management”.)
At the working group’s previous meeting in Seoul, the delegates from Peru volunteered to be another pilot case for GIS (given the 2007 earthquake and flooding in the Pisco area). During the week preceding the Lima meeting, MrEgbertJongsma was in Pisco with a team from the Office of the Comptroller General of Peru to use GIS in assessing the reconstruction efforts.
This session was interactive with a lot of discussion resulting from questions posed by several delegates.
Audit guidance documents
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12 / 0II.01-03 Guidance for the planning, the implementation and the reporting of audits on disaster-related aid (Indonesia’s SAI: the BPK).
Mr Hasan Bisri, Board Member, introduced the BPK presentation on the revised draft guidance on the audit of disaster-related aid. (See website for “Indonesia’s Introductory Speech”.)
The presentation was then led by MrWidodoMumpuni and MrAgungDoditMuliawan explained the draft in more detail. (See website for “Indonesia’s Lima Presentation”.)
One of the main messages of the presentation is that every disaster is unique and the relative audits should be designed to address this uniqueness.
As well as a general request for comments and input to improve the draft, the team asked:
1. How do we consider the ‘abnormality’ of emergency phase in financial audit?
2. How do we develop audit design matrix for rehabilitation and reconstruction phase?