2005 performance auditing for the public sector

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2005 performance auditing for the public sector

  1. 1. 2005PERFORMANCE AUDITINGFOR THE PUBLIC SECTOR Organised by: ASIA BUSINESS FORUM Singapore 5 May – 6 May 2005
  2. 2. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTOR 3 KEY WORDSPerformance Balanced RiskMeasurements Scorecard Management
  3. 3. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTORday one : thursday 5th may 20051 a modern approach to strategic internal audit planning for the public sector and a brief of the performance measurements in use by internal auditors today2 public sector performance management – using the balanced scorecard as a tool
  4. 4. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTORday one : thursday 5th may 20053 real-life experiences in the development and implementation of the balanced scorecard for auditors in the public sector4 developing effective corporate governance for internal auditors in the public sector to achieve strategic results – challenges, opportunities and pitfalls
  5. 5. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTORday one : thursday 5th may 20055 the KPMG Public Sector BSC: three Pillars – outcomes and transparency in Public Sector Management6 making the best of enterprise risk management and internal audit tools to enhance the internal audit function7 integrated strategic enterprise governance framework: next step for performance auditing
  6. 6. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTORday two : friday 6th may 20051 the global move towards better public sector financial reporting – the way to good performance2 detection, mitigation & prevention of fraud & corruption in the public sector3 current developments and challenges of performance auditing in malaysian central government
  7. 7. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTORday two : friday 6th may 20054 risk mapping: a powerful tool for public sector audit risk management5 enterprise-wide risk management – a practical approach to standards for the public sector auditor6 risk based auditing – the practical approach
  8. 8. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTORperformance measurements used by internal auditors? Examples:• stakeholders > value creation (i.e. profit) and socially responsible (i.e. inda ‘timing’)• financial > healthy cash flow• customer & employees > satisfaction & loyalty• suppliers > reliable & many
  9. 9. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTORbalanced scorecard?a framework to implement strategy into actionbuzz words: mission, customer, financial, internal processes, learning & growth“the balanced scorecard process allows an organization to align and focus all its resources on its strategy” – robert kaplan
  10. 10. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTORhow to manage risks? what is risk?in the context of financial auditing? failure to detect error (error means financial statements do not give true and fair view)in the context of performance auditing (di setiap jabatan dan agensi kerajaan)? failure to highlight kerugian / losses (value creation), management oversights iaitu inda mematuhi surat keliling, akta, garispandu (socially responsible) etc.
  11. 11. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTOR“internal audit should establish key performance indicators (KPIs) to measure its own performance. these should be linked to the audit mission and objectives that are contained in the internal audit charter”– stephen linden, chairman of stanton partners
  12. 12. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTOR“over 90% of organizations have not effectively aligned their strategy at all levels of the organization” and“leadership is the influence an individual exerts on the behaviour of others. it is the ability to maintain morale and to inspire or persuade others to convert dreams, desires and aspirations into action”– ron cartey, chairman of the AT Group
  13. 13. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTORsingapore healthcare system – key issues“disease prevention & management, good care delivery standards, develop relationship with customers, public positioning, improve cost efficiency, increase revenue, IT infrastructure support and retention & recruitment of manpower”– tay guan mong, senior vice presidentArtemis International
  14. 14. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTOR“as information trickles out and the finger pointing begins, its clear many people involved had spotted warning signs of Enron’s accounting malfeasance long before the company’s fall” – TIME.com12 Feb 2001: new CEO joined, kenneth lay stays as chairman (stock price >US$70)26 Jun 2001: enron’s stock price at US$4421 Aug 2001: lay sells 93,000 shares, earns $2m (tapi suruh kakitangannya membali saham enron)16 Oct 2001: enron reveals $1.2billion decrease in company value2 Dec 2001: enron files for bankruptcy, stock price at 26cents
  15. 15. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTOR1 service2 collaboration3 resource management– dr terry reilly, associate directorKPMG Business Advisory
  16. 16. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTOR“how automation helps?risk assessment data is centralised;auditor can ‘pull’ the data into audit planning module to do risk-based audit planning;provide functionality to rank ‘auditable areas’ based on user-defined scoring / weighting criteria…”– Foo Mei Ling Director of TrainingAdvent CGS
  17. 17. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTOR“comes from 3-tiered approach, which should be implemented in phases for maximum effectiveness1 enterprise risk management – organisational health check2 balanced scorecard – corporate strategic direction & benchmarks3 human resource performance management – embedding strategies into key performance indicators”– margaret chin, managing director of Roots Consulting
  18. 18. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTOR“losses and long-term liabilities are often hidden by cash-bound accounting systems”“state treasurers are the best-placed agent to determine national accounting standards…”“EU has announced that its member countries will adopt IAS and IPSAS in 2005… seven countries in latin america have adopted accrual accounting...”– david tong, managing partner of Pannell Kerr Forster
  19. 19. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTOR“results of national fraud initiative 2002/2003:total detected fraud and overpayments - £83mfraudulent benefit payments to public sector employees – 1,600 casesoccupational pensions in payments after death of pensioner – 2,076 casesduplicate employmentfraudulent housing tenancies”– mike langley, anti-fraud & corruption unit,UK Audit Commission
  20. 20. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTOR“PA is undertaken by the AG’s Dept on a limited number of cases per year (i.e. 31 cases for year 2003 (due to capacity)”“each division of AG’s Dept is responsible for the designated sectors of public services”“example – auditing civil servant housing project at jalan duta, kl…”“in each division, PA is undertaken based on cycle, or at time based on priorities- obvious mismanagement and public complaints”– dr muslim harsani mohamad, International Islamic University Malaysia
  21. 21. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTOR“main types of fraud: corruption (wrongful use of power & influence), asset misappropriation (theft or misuse) and fraudulent statements (falsification of legal & financial statements)”“common anti-fraud elements in place:*a culture of honesty and ethics*anti-fraud processes and controls*appropriate oversight process”“fraud risk map”– marc ronez, managing director of Asian Risk Management Institute
  22. 22. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTORHigh Fraudulent Misappropriation Statements Espionage Illegal Comm. Kickbacks Forgery Embezzlement Fraudulent Manipulation DisbursementsSignificance Skimming Cyber Crime Bid Rigging I/P Fraud Bribery Theft Credit Card Lapping Ghost Petty Cash Fraud Employee Conflicts of interestLow Low Likelihood High
  23. 23. 2005 PERFORMANCE AUDITING FOR THE PUBLIC SECTOR THANKS

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