Internal Audit and International Development

1
Internal Audit and International Development

• Address by Nicole Mendenhall, CIDA
• 20th ICGFM International Conference
• Miami, Florida
• May 8, 2006

2
Evolution of Internal Audit in Canada

• 1962 Glassco Commission recommended internal
  financial audit in departments
• Late 1970s - MBO adopted in the Government
• 1979 Lambert Commission need to expand
  internal audit beyond finance

3
Evolution of Internal Audit in Canada

• Early 1990s - Results Based Management introduced
  in Government
• 1994 - Review Policy integration of audit and
  evaluation
• 2004 Sponsorship the Gomery Commission
• 2006 Internal Audit Policy

4
Evolution of Audit Focus in CIDA

• Late 1990s - CIDA starts its change from a
  project to a program focus
• 2003 to now country program audits
• Introduction of the management accountability
  framework as the basis for audits
• Internal audit now taking an outward or
  international view

5
Country Program Audits

• An integrated holistic approach
• Assessing systems and processes in place to
  support aid effectiveness
• Governance, accountability, stewardship, risks
• Policy dialogue plans, systems, etc
• Local ownership capacity building

6
The Provision of Assurance

• Chief Audit Executive provides assurance on
  individual audits management of risks and the
  functioning of fundamental controls
• The Chief Financial Officer provides assurance
  that the financial controls are working
• The Auditor General provides assurance on the
  Financial Statements of the department / ministry

7
The Challenge of Assurance in International
Development

• Donor internal audit work in a multi-donor
  environment
• Each donor is not solely accountable for the
  delivery of its aid dollars joint or shared
  accountability is the norm

8
Assurance in a Multi-donor Environment a
question

• How can internal audit give assurance that funds
  are well managed and controlled, that they are
  being used for the purposes intended, that the
  progress towards results and the use of funds are
  properly linked when each donor has no direct
  control, the funds are pooled, and accountability
  is shared?

9
The Challenge for Donor / Recipient Internal Audit

• Paris Declaration reinforced the need for program
  based approaches with the recipient in the
  drivers seat.
• National and multilateral donors fund long term
  programs developed by the recipient
• Acceptance of recipient systems
• Common reporting and audit rules
• Mutual accountability

10
The Gaps in Assurance

• Although aid is harmonizing gaps in assurance
  remain
• Definition of mutual accountability to whom?
  by whom?
• Management accountability frameworks are not
  commonly understood and accepted
• Risk management need for commonly accepted
  risks risk mitigation strategies

11
The Gaps in Assurance

• Donor internal audit cannot and should not
  unilaterally audit a multi-donor program
• Currently, audits planned are financial mostly
  done by the recipients supreme auditor

12
Meeting the Challenge

• Is there a will in the donor/recipient community
  to perform internal audits of program based
  approaches?
• Is there a will for donors/recipient countries to
  strengthen the function of internal audit?
• Is there a will to share the results of internal
  audits?

13
The Question

• How can Internal Audit ensure that donor/partners
  meet fiduciary obligations vis-à-vis their
  respective population?