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SAI Emerging Issues

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III EUROSAI-ASOSAI Joint Conference
Jerusalem, Israel
11.3.2019

by Jenni Leppälahti
Planning Director
National Audit Office of Finland

Published in: Leadership & Management
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SAI Emerging Issues

  1. 1. SAI Emerging Issues III EUROSAI-ASOSAI Joint Conference Jerusalem, Israel 12.3.2019 Ms Jenni Leppälahti Planning Director National Audit Office of Finland
  2. 2. Contents I. EUROSAI Dialogue process and participation II. Results of the EUROSAI Community III. Results of the ASOSAI Community IV. Discussion
  3. 3. EUROSAI Emerging Issues Dialogue Warming up: Think about the emerging issues. What does the future look like to you? Elaborate a bit! Ideas: Which are the most important emerging issues for SAI work in the 2020’s? Evaluation and elaboration: What is most important for SAI work? How are these issues important? How has your SAI taken this issue up in its audit work? The process: Based on your view, how should we take emerging issues into account in the EUROSAI work?
  4. 4. EUROSAI Participation My SAI 4 Albania 1 Andorra 1 Armenia 0 Austria 3 Azerbaijan 0 Belarus 0 Belgium 1 Bosnia and Herzegovina 1 Bulgaria 10 Croatia 1 Cyprus 6 Czech Republic 25 Denmark 13 Estonia 10 European Court of Auditors (ECA) 5 Finland 13 France 1 230 participations altogether Georgia 0 Germany 9 Greece 1 Hungary 2 Iceland 2 Ireland 7 Israel 4 Italy 1 Kazakhstan 2 Latvia 1 Liechtenstein 0 Lithuania 16 Luxembourg 0 Malta 15 Moldova 0 Monaco 0 Montenegro 0 Norway 3 Poland 14 Portugal 26 Romania 0 Russian Federation 0 Serbia 0 Slovak Republic 1 Slovenia 10 Spain 7 Sweden 3 Switzerland 0 The former Yugoslav Republic of Macedonia 0 The Netherlands 1 Turkey 8 Ukraine 5 United Kingdom 1
  5. 5. EUROSAI Participation 5 My role Executive 33 14 % Manager 52 23 % Expert 76 33 % Other 69 30 % My age group Below 25 1 0 % 25-35 54 23 % 36-45 99 43 % 46-55 48 21 % 56-65 28 12 % Over 65 0 0 % My SAI experience 0-3 years 43 19 % 4-7 years 38 17 % 8-15 years 92 40 % 16-25 years 34 15 % Over 25 years 23 10 % Sex Female 119 52 % Male 109 47 % Other 2 1 %
  6. 6. Summary of the EUROSAI Community Results
  7. 7. Executive Summary • The participants emphasize willingness to process emerging issues between the EUROSAI members (and global networks) • Technological advances, for example AI, advanced data analytics, automatization and robotization get top priority in the discussion on emerging issues. • The role of a SAI as an independent watchdog is for one part challenged by the rising need to develop partnerships regarding complex problems like aging population, environmental issues and respect for facts and evidence.
  8. 8. The Future Seems Somewhat Unclear and Calls for Cooperation “Think about the emerging issues. What does the future look like to you?” (Percentage of participants that chose the picture) Most frequent topics • Dangers, uncertainty • Speed of change • Co-operation and partnerships • Finding new ways to operate, renewal • Trust
  9. 9. Technological Development Top Priority in the Discussion - - Disagreement + + --Importance++ ”What is most important for SAI work?”
  10. 10. Technological Development Top Priority in the Discussion - - Disagreement + + --Importance++ ”What is most important for SAI work?”
  11. 11. The Role of the SAIs is Changing - - Disagreement + + --Importance++ ”What is most important for SAI work?”
  12. 12. Wide Range of Opinions Concerning Interaction and Topics - - Disagreement + + --Importance++ ”What is most important for SAI work?”
  13. 13. The Discussion Emerges on Various Levels – Concrete Topics and More Systemic Pondering 190 answers, covering following topics: • Digitalization, technology development, AI and data • Environment and climate, sustainability • Societal changes, aging • Changes of politics and media, truth and validity • Building partnerships and increasing co-operation • Changes in audit work generally “Which are the most important emerging issues for SAI work in the 2020’s?
  14. 14. Technology Development Top Priority in Discussion A transformation is anticipated and already started – although not yet that much in practice. Use of big data and sophisticated analytics will change the nature of audits and allow for a lot of automatization AI makes advanced predictive analytics possible and raises discussion about the nature of audits and balance between auditing and development partnership. This development places a lot of demands on finance, management, leading the change and building the necessary skills and competences The implementation of new technology require investments in the technology itself but also in staff. SAIs must provide education for current employees and recruit people with the right expertise. In order to break down silos, organizations must build teams with the right bundle of skills.
  15. 15. More Thoughts on Technology Development Significant financial investment may be required to achieve a desirable degree of IT use in a SAI. Continuous training and change management are both called for. In the case of audit engagements, it becomes critical that the audit team obtains sufficient understanding of the IT environment of the audited entity at the planning stage.. We have established a cross- departmental team that works in new technology implementation. Access to better data and improved data analysis skill will enable better and more insightful audit work. We are at the very beginning of our Data Analytics project. We are paving the way, searching for sources of information and building capacity within a team of auditors that will enable us to make the best possible use of information scattered around the public sector.
  16. 16. Sustainable Development Seen as a Key Issue, but with Differences of Opinions Several participants raise UN Sustainable Development Goals, Climate change and Environmental issues to the top of the list More discussion follows on the SAI’s role – to which extent can political compromises be evaluated from the perspective of sustainability Both local understanding and the longer- term perspective of international agreements need to be taken into account SAIs should be able to have longer perspective of issues which are important for the development and sustainability of the country, so that the elections and changing governments wouldn't make strategic mistakes. One way is to follow International agreement like SDGs.
  17. 17. More Thoughts on Sustainable Development and Environmental Issues A big issue is that policies and actions to mitigate/overcome climate change are formed in an scientific- political interaction. This means that the actions usually are not optimal from the scientific perspective. Therefore, there is a important role for SAIs: they should support the development of such actions and policies which address the problem in the best possible way. Climate change and natural disasters. Climate change and natural disasters are huge threats that will affect every aspect of society, nonetheless the work of SAIs. SAIs must, more than ever, audit how governments prepare for the risks of natural disasters and work against climate change. Work relating to sustainable development and the implementation of SDGs, to varying degrees, entails that SAIs increasingly embark on environmental auditing. While vast audit opportunities exist, the auditing of sustainable development and the implementation of SDGs is a broad and complex audit area which necessitate that SAIs strengthen their capabilities.
  18. 18. Interaction with citizens and other stakeholders increases The SAI face the need to interact more with citizens and stakeholders to be a visible and credible institution in the society This is due to a change in political and media culture, which challenges the truth. Vast amounts of information for example in social media, which influences politics and the public opinion. Data protection is a key area of interest to the citizens – which the SAI need to take into account The state administration collects huge databases of personal data of the citizens. The aim of the GDPR is to protect all EU citizens from privacy and data breaches in today’s data-driven world. In connection with the adoption of the GDPR, the NAOs are challenged to audit how adequately the interests of citizens are protected and whether the necessary controls are in place.
  19. 19. More Thoughts on Interaction Besides the risk of untruth, the issues come up and are discussed instantaneously. So, every action of the SAI is seen to come always too late. The SAI must be able of, at the same time, providing quicker reports (which must be focused in smaller issues) and value adding reports, saying something that others have not yet said. Or maybe, saying things at several stages and not only in the end of the audit.. Ways of engaging in politics and societal debate is changing. The classic ways of engaging in politics by civilians has changed. Instead, in the era of information overload, debate is growing on social media with facts that might not always be true. More interaction with stakeholders and citizens. More interaction with stakeholders and citizens may be required to ensure that SAI remains relevant to society and is tackling issues of concern to the general public and to specific important stakeholders
  20. 20. Societal Changes Challenge SAI Work Aging population, as the most often named societal change going on, challenges the established systems of the society and has its reflections on SAI work. To ensure relevance the SAI need to keep pace with the changes in the society and compare international benchmarks Big data and comparative analyses allow for new ways of performance auditing. However, it is asked to which extent this will develop in the SAI’s role. I think SAIs need to work on their ability to work quicker and be prepared to discuss topics that are contemporary. They need to explore more what other SAIs are doing…
  21. 21. More Thoughts on Societal Changes We have been tackling aging population before in our audit work (more than 10 years ago), and we are currently doing another follow-up audit in the field. We are reporting on nation preparedness on taking care of the elderly. Ageing population. Many European countries are struggling with ageing population. Life expectancies are increasing and birth rates are falling. This means that more people will be retiring than entering the work force. This in turn, leads to a smaller group of people in charge of working and paying taxes. Better understanding of societal changes. Our societies change quickly: aging population, different family structures; urbanization, etc. These changes need to be understood and our work should address these issues. We don't yet have the audit on this topic, yet I deem it important. However I believe it should be part of a more complex performance audit together with pension system, unemployment and maybe consumption habits.
  22. 22. Cooperation Needs to Increase Between SAIs In line with other forms of interaction the SAIs need to build a strong network and contacts to exchange information and learn from each other This is increasingly important concerning new IT systems and possible use of AI. Reliance on external experts should be avoided. Increasing cooperation between SAIs is an important part of this development. Facilitating the evolution of SAIs, we are all on the same path, we can learn from peers. New tools; EUROSAI platform; market place; foster staff secondments...
  23. 23. More Thoughts on Cooperation One of the emerging issues we are currently facing is the establishment of efficient co-operation in the exchange of international information from audit activities, for example due to legal restrictions in sharing information. Through international co-operation and information sharing, we find examples of good practice, compare the performance of audited areas, or set criteria. The activity of foreign SAIs may also be an inspiration for identifying new audit topics.. Global issues and co- operation. Globalization and shared global challenges require decision-making on various levels from a local to an international level, as well as beyond classic silos. Learn from other SAIs and training of staff so you build capacity within the organisation and don't rely on external expertise
  24. 24. The Work is Changing The role of the SAI is discussed to a certain extent. It is seen that a proactive and predictive role benefits the society in many ways, but also challenges the role of a fully independent ”watchdog” It is inevitable that cooperation between SAIs and interaction with other experts in various fields is increasing. A transparent and reliable model for co-operation is thus being build incrementally. Staying relevant demands that we maintain our position as an independent and credible watchdog on behalf of the Parliament
  25. 25. More Thoughts on Changes in Work in General Over the last decade, we have seen the decline in the respect for facts and evidence in some fields. It is probable that this will create a "backlash": already the importance fact-checking has increased. It is possible that there will new ways in which the value of facts and evidence is supported in 2020s. For example, will there be coalitions of evidence-based organisations in the future? Will there be certificates for factual content of certain information? What will be the role of SAIs - are they going to form new kinds of partnerships with other actors to support the value of facts and evidence in the society? At the least, SAIs will face this as an issue to audit: to check whether governments have taken appropriate actions to support the importance of facts and evidence in society. Enhancing our independence, transparency and accountability We need to be reliable and that is only possible if we are independent. If our quality is questioned our relevance will also be questioned. SAIs already face the challenge of balancing their operations between their "traditional" role as financial auditors and as contributors to enhancing public governance through a priori audits, performance audits, compliance audits or other engagements
  26. 26. Emerging Issues Need Structures for Cooperation • Structures and forums for seamless exchange of information • Network leadership, clear responsibilities • Working groups and expert networks on specific focused topics, seminars • Active participation in INTOSAI and sharing information • Capacity building in financial, performance and compliance audits • Joint (environmental) audits • Online training material • Preparing common guidelines regarding auditing the emerging issues • Alignment with the EUROSAI Strategic Plan for 2017-2023
  27. 27. Results of the ASOSAI Community
  28. 28. Discussion What different aspects regarding technological development need to be taken into account in SAI strategic planning and how? How your SAI has proceed within these areas? 1) New ways of working 2) Resources & capacity building 3) Regulations & security issues 4) Standards 5) Soft skills & innovative mindset
  29. 29. Thank you! Ms Jenni Leppälahti Planning Director National Audit Office of Finland jenni.leppalahti@vtv.fi @LeppalahtiJenni @VTV_fi www.vtv.fi/en

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