Enhancing Internal Audit in Maldives

Sujets

• management
• risk management

Informations

• Publié par: Feduh
• Nombre de lectures: 21
• Langue: English

Extrait

Project Number: 4
July 2007


Enhancing Internal Audit in Maldives
(Financed by the
Australia-ADB South Asia Development Partnership Facility
[RETA 6337: Development Partnership Program for South Asia])



A. Basic Data
1. Activity Title: Enhancing Internal Audit in Maldives
2. Project Officer(s): Kyung Nam Shin
3. Request Date: 8 June 2007
4. Executing Agency: Asian Development Bank (ADB)
5. Implementing Agency(ies): The Ministry of Finance and Treasury, The Government of Maldives
6. Types of Interventions: Innovative Intervention
7. Amount Requested: $500,000
8. Period this funding request will cover: 20 January 2008 – 20 July 2009 (18 months)
9. Region/Country: Republic of Maldives
B. Description of Executing and Implementing Agency
Ministry of Finance and Treasury (MOFT) will be the Executing and Implementing Agency headed
by the Financial Controller. This agency has significant experience in executing and
implementing projects over a range of agencies. This was clearly demonstrated on the projects
post the Tsunami period in project monitoring, financial reporting and staff training to ensure
projects are implemented as per the agreed requirements. Whilst Government of Maldives
(GOM) has developed an initial organization chart and budgets for the Internal Audit Department,
during the preparation of the Strategic Management Plan, the current GOM’s plans will be
reviewed and incorporated as part of the overall recommendations and agreement.

C. Proposed Project
1. Background and Rationale:

The GoM has initiated a program to modernize the public accounting system to enable it to
improve financial management of the public sector, enhance public sector governance and
strengthen its accountability. Phase I was completed in 2002, with a technical assistance support
provided under the Capacity Building of the Maldives Public Accounting System (hereafter
referenced as the PAS) Project financed by the Asian Development Bank. During the Phase I of
PAS, a detailed diagnostic study of existing systems and proposed reforms was undertaken, and
an implementation strategy prepared. The implementation was deferred until the recent passage
of the Public Finance Act that necessitates changes to current systems for financial management
and regulatory reporting. As part of the overall modernization, the MoFT will need to establish an
internal audit function. To this end, it requires a preparation of Strategic Management Plan and
using it as a basis for establishing the internal audit function for the GoM.

2. Objectives:

To enhance an internal audit function in order to provide an independent and objective opinion to
the Financial Controllers, Accounting Officers, Management of the GoM on risk management,
control and governance, by measuring and evaluating control and governance effectiveness in
achieving the organization’s agreed objectives. Moreover, the internal audit function will provide
an independent and objective consultancy service specifically to help line management improve
the organization’s risk management, control and governance. Also, the risk assessment
management will need to be explored to cover the processes on financial statement misstatement
and framework of potential sources of risk which could be applied to Atolls administrative bodies.

3. Scope of Work/Description of Proposed Approaches

As part of the preparation of the Strategic Management plan, the following tasks will be
completed: -

• Review the Public Finance Act (passed in December 2005) and proposed Public Audit Bill
(passed in April 2007), identify stakeholder and their expectations. This will include running
workshops, defining parameters of internal audit after stakeholder consultations, common
activities and specific needs of specialist ministries, detail how government auditors can add
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value and bring about positive change and recommend organizational models needed to achieve
the objectives;

• Through stakeholder consultations define the Mission, articulate the common mission discussed
and recommend the organizational authority and responsibilities of the function between audit
and functional staff;

• Develop and recommend formal framework for organization and management structure, address
centralized versus decentralized approach and the options for the line ministries’ structure;

• Assess skills requirements and include a detailed analysis of the necessary critical resources,
skills and competencies, consider external providers as an option to approaching internal audit to
accessing needed skills sets and assess time required to train core staff;

• Examine options for developing or acquiring enabling infrastructure, methodologies and
technologies and options of developing own programs compared to acquiring what is
commercially available consistent with international audit standards;

• Develop broad Audit Plan to be used as the basis for the development of more detailed plans;

• For reporting and communication protocols define the development, format, review and timing of
audit reports. Document organizational expectations for the timely follow-up and resolution of
internal audit issues and recommendations on internal audit and auditees;

• Establish a methodology for measuring of results by develop objective and subjective metrics and
for a process for communicating audit results to all staff;

• Prepare a time table for establishing the audit function and for commencement of audit; and

• Prepare a multi-year budget sufficient to achieving stakeholder expectations.
4. Work Plan and Reporting
The establishment of internal audit will be completed over three phases.
Phase I the following are some key reports that will required as part of the delivery of the services: -
i. Inception Report;
ii. Draft Strategic Management Plan by the end of month 2:

Phase II activities will be completed on the basis of Phase I recommendations and agreement with
GOM and will include the following: -

i. Organization structure and reporting requirements;
ii. Appointment of staff;
iii. Staff training;
iv. Audit programs;
v. GOMs’ Budget requirements to support the Internal Audit Department; and
vi. Management Reporting and action etc (please see details in DMF)

Phase III will be the actual implementation of the agreed arrangements.
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5. Expected Outputs and Outcomes

Outcomes

The establishment of internal audit function will enable:
• Improvement by the Government in evaluating various management models in establishing the
internal audit function including (i) central MoFT based; and (ii) decentralized (auditors) based in
line ministries. The alternative models should consider (i) relationship with Auditor General; (ii)
establishment of benchmarks; (iii) audit program development; (iv) risk management tool and
framework development; (v) staff training requirements; and (vi) reporting.
• Enhancing accurate, reliable, and timely financial reporting and monitoring to meet international
accounting standards for providing financial information to the Government for
management/financial decision making; and
• Ensuring more comprehensive and updated control over public funds, development of appropriate
budget and cash management strategy which will be shared with atolls

Outputs

Phase 1
1. Assessment and evaluation of current Audit General’s staff that will be transferred to the Internal
Audit Division
2. Preparation of Strategic Management Plan to assist the Government in evaluating various
management models in establishing the internal audit function, and recommendations

Phase 2
3. Assist with the establishment of the organizational structure, institutional framework and operations
of the Internal Audit Office.
4. Prepare human resource policies, mandate and any additional legislation requirement, audit and
accounting standards to be followed;
5. Prepare corporate plan, including auditor and accounting registration standards, strategic audit
plans and time recording system;
6. Assist with assessment and evaluation of current Auditor General’s staff that may be suitable to be
transferred to the Internal Audit Division;
7. As an option for completing internal audit activities, prepare outsourcing systems, including
contracting out of audits to private auditors according to procedures for review of bidders’ financial
status and ability to perform work;
8. Prepare comprehensive audit manual based on risked-based auditing and performance auditing
methodology;
9. Develop risk assessment tool and framework covering the processes and each potential sources of
risks, what those risks are, and how an audit approach would respond to mitigate those risks, etc.
10. Train staff by means of formal training sessions and on-the-job training and implemented new
methodologies relating to relevant audit tasks and related risk mitigation;
11. Procure computer equipment and installed the hard