Presentation by Joop Vrolijk, Netherlands, on the Case study "Vehicle management", at the workshop organised by SIGMA for the Lebanese Court of Accounts on Introducing performance auditing in Supreme Audit Institutions, held in Beirut 28-29 June 2016.
3. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
1. Why Vehicle Management?
Number of vehicles: 344 vehicles in 2011 on central state level
Number of users: at least 23.000
Financial materiality:
o RSD 84.9 m (1.165 m LP) on mechanical repairs and replacement tyres,
o RSD 159.5 m (2.190 m LP) on petrol costs
Not investigated in any other type of audit;
No other authorities deal with the issue in terms of examining the
performance achieved through the expenditure of particular funds.
No accurate data as to how many official vehicles are in use;
No authority is in possession of accurate numbers of official vehicles at its
disposal or the expenditures associated with managing them.
Significance of issue is not confined to particular groups but of interest to the
broader public, the media, non- governmental organisations
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8. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
3.2 Assessing Potential Risks
• Review of the stages of vehicle management process:
o procurement planning
o usage planning
o actual use
o oversight mechanisms available to responsible officers
o vehicle disposal.
• Risks were then considered and assessed for each stage of
the vehicle management process.
Question:
What could be risks for vehicle management?
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9. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
3.3 Audit questions
1. Are there uniform rules governing the management of official
vehicles at the national level?
2. Do current vehicle management records provide comprehensive
information about the number and use of official vehicles, as well as the
associated expenditures and outflows?
3. Do record-keeping, monitoring, and oversight arrangements
with regard to vehicle management pose risks of abuse?
4. Are official vehicles procured and disposed of based on ex-ante
analyses?
5. Do direct budget beneficiaries have appropriate information
gathering systems with regard to vehicle management that can inform
decision-making to allow economical and efficient use?
Question:
Do above questions give information for achieving objective
of the audit? 8
10. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
3.4 Scope of the Audit
Limited to:
1. Management of official vehicles available to direct budget
beneficiaries3
2. Management of general-purpose official vehicles (no
special-purpose vehicles
3. Focus on
o identifying how direct budget beneficiaries plan their
needs for official vehicles;
o their regulations governing vehicle use;
o established vehicle use practices;
o monitoring and oversight of vehicle use. 9
11. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
3.5 Working methodology
1. Requests for general information regarding official vehicles and associated
expenditures were sent to direct budget beneficiaries
2. Analysis of:
a. vehicle numbers;
b. models;
c. purchase date;
d. purchase and current value;
e. mileage from purchase date to 31 December 2012;
f. mileage in 2012;
g. title holder;
h. statutory basis for use;
i. average fuel consumption;
j. fuel costs;
k. maintenance costs;
l. spare part costs;
m. registration, insurance, and parking costs.
3. Result of analysis was input for defining scope and plan of the audit
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13. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
3.6 Problems faced during data
collection
• Time constraint: most beneficiaries were late in providing
information;
• Incomplete, unreliable and contradictory information: request
for correct and re-submitting of information;
• In 2012, some vehicles were used by ;
• In 2012, beneficiaries used vehicles owned by other
beneficiaries whilst at the same time providing their own
vehicles for use elsewhere;
• No records of fuel consumption and other expenditures
relating to official vehicles available;
• Structures of several Ministries and other authorities had been
changed (audit was carried out in post-election period);
• Internal: audit team not complete yet: 4 staff with no
experience in PA 12
17. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
4.1 Selection of beneficiairies
15 of the total of 126 beneficiaries for detailed analysis
• Selection criteria (based on extremes: best/worst performances)
• Materiality (number of vehicles and amount of total and individual
expenditures);
• Regulations in place at the beneficiary to govern the use of official vehicles;
• Vehicle use (mileage);
• Reliability of data provided (assumption testing);
• Need for additional clarification by beneficiary management;
• Good practices;
• Share of vehicles owned in total number of vehicles used by each budget
beneficiary.
20/80 rule used: coverage of 88% of total number of vehicles and 84% of
vehicle expenditures.
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18. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
4.2 Key message
1. Management of official vehicles not governed by law; existing
regulations are not consistent
2. Records do not contain up-to-date and comprehensive information
about
Number of Official vehicles
Their utilisation
Expenditures
3. Inadequate systems for recording, monitoring and controlling systems
are in place and poses a risk for abuse
4. No ex-ante analysis for acquisition and disposal of official vehicles
Conclusion:
Risk that management of official vehicles of central level budget
beneficiaries is uneconomically and inefficiently
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19. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
5. Reporting phase
• Draft report to SAI management
• Quality Control review
• Draft report to auditees and former responsible officers for comments
(34 in total)
• Audited entities and former responsible officers may comment on the
Draft Report;
• SAI may respond to such comments;
• Meeting is held to discuss any outstanding issues;
• Draft Final Report is provided to audited entities and former
responsible officers (40 in total);
• Audited entities and former responsible officers may comment on
Draft Final Report;
• SAI Council adopts conclusions
• Final Report is adopted
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20. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
6. Assistance Twinners
No. Period Area Output
1
14.-
18.01.2013
Concept and significance of
performance audit; aim of first
performance audit; identification of
possible problems; selection criteria for
audited entities
Issue to be audited under first
performance audit identified as
‘ Management of official
vehicles by direct budget
beneficiaries’
2
11.-
14.03.2013
Audit planning (audit questions;
sources of information; scope and
methodology, constraints; expected
outcomes)
Work plan
3
13.-
16.08.2013
Assistance in selecting case studies –
development of check list;
communication with audited entity;
announcement of audit; presentation of
results)
Selection of 15 direct
budget beneficiaries for case
studies
4
11.-
15.11.2013
In-depth studies; evaluation of
results; reporting
Drafting of findings,
conclusions, main message, and
recommendations
5 27.-
31.01.2014
Development of draft structure of audit
report
Outline draft report
6
12.-
16.05.2014
Knowledge gained from first pilot audit;
recommendations for improvement;
guidance and initiation of second pilot
Evaluation of first pilot audit
19
21. AjointinitiativeoftheOECDandtheEuropeanUnion,
principallyfinancedbytheEU
7. Impact and lessons learned
• High impact with Parliament and the media with requests for
more studies.
• The study on second PA (property management) proved to be
undeliverable in original form and was scaled back to become a
series of case studies.
• Introduction of doing full preliminary studies before
committing to projects.
• Heavy training input on performance audit has impact on
absorption ability of the PA unit
• Learning from other SAIs in transition on the Balkans is
considered
• The SAI law requirements on the skills of auditors is too
restrictive (limited to accountants and lawyers
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