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The World Bank (WB) recently published an assessment of the quality of audits performed by Supreme Audit Institutions (SAIs). The following aspects served as selection criteria: SAI has the support of the WB and has produced and published in recent years at least one audit report of the WB’s projects.
Initially, 55 SAIs from 6 regions of the world were selected. Finally, a sample of 18 supreme audit institutions was selected, including the Court of Accounts of the Republic of Moldova (CoARM), which has so far carried out 30 audit missions of various types on projects financed by the WB in areas such as health care, social assistance, education. We mention that the CoARM was one of the only 3 supreme audit institutions in Europe and Central Asia, included in the evaluation carried out by the WB.
The purpose of the review was to assess the quality of SAI audits of World Bank-funded projects, with the objective of complying with the International Standards of Supreme Audit Institutions (ISSAIs), to confirm the WB's confidence in SAI's findings on the audit of operations financed by the WB.
Thus, the institutional and organizational capacities of the supreme audit institutions were assessed in the following areas of evaluation: (1) independence of the SAI, (2) quality control, (3) planning, conducting and reporting of audits.
The review established that only 4 SAIs out of 18, or 22%, complied with ISSAI requirements related to the independence of SAI. We note that in complying with the requirements for ensuring independence, most SAIs faced operational challenges from the executive branch, and less - constitutional challenges. In order to fulfill their mandate, the SAIs indicated that they could perform their duties independently and did not face severe interference from the executive branch. However, the operational independence of the financial and personnel management mode is not guaranteed and, as a result, the operational and financial independence of the SAI is restricted.
In terms of ensuring independence, the review identified important gaps related to the budget of the Court of Accounts of the Republic of Moldova, which is approved by the Ministry of Finance, later included in the draft state budget law and submitted to the Government and Parliament for approval. Such a practice does not allow the CoA to draw up its own budget and submit it directly to Parliament for approval. Thus, the Court of Accounts does not have the flexibility to draw up and use its own budget according to its priorities. Therefore, there is room for practical improvement in the CoA's financial independence, concludes the World Bank's assessment.
The review found that only 9 SAIs out of 18, or 50%, met the requirements of international quality control standards. Among them is the CoARM, the WB's assessment establishing that the policies and procedures of the quality control system of the Court of Accounts are relevant, appropriate and comply with ISSAI requirements. The World Bank also found that the CoARM had documented the policies and procedures of the quality control system, employees were informed about them, and guidelines, manuals and regulations related to the system were constantly updated by the Court of Accounts.
According to the assessment, 11 SAIs out of 18, or 61%, including the CoARM, complied with the ISSAI requirements related to the stages of planning, conducting, reporting and monitoring the audit in their audit practice. The review concluded that the level of compliance with the requirements related to the risk-based planning stage of the Court of Accounts is relevant and in line with international auditing standards, the audit manuals provide procedures for obtaining sufficient and appropriate audit evidence for to be the basis of the findings. The CoA’s auditors apply a robust methodology supported by documentation tools and templates. Also, the procedures related to the reporting of audit findings, conclusions and recommendations issued by the Court of Accounts comply with the requirements of ISSAI.
In conclusion, the World Bank mentions that the audit methodology of the Court of Accounts of the Republic of Moldova corresponds to INTOSAI standards, emphasizing that compliance with international auditing standards is an important component of audit quality and is absolutely necessary to maintain SAI’s credibility. At the same time, the evaluation recommends to the CoARM to establish a system of continuous improvement by developing and implementing a robust systematic process, to ensure that lessons learned from audits and practice are identified, understood, disseminated and incorporated into study and development programs, as well as audit guidelines and methodology.
We mention that the evaluation carried out by the World Bank reconfirms at the highest international level the quality and credibility of the activity of the Court of Accounts of the Republic of Moldova. The results of the study presented by this international financial institution emphasize the leading position in the progress registered in ensuring the quality of the activity, held by the CoARM.
NOTE: The sample of SAIs selected by the World Bank for review were: 6 SAIs - Africa, 4 - East Asia and the Pacific, 3 - Europe and Central Asia, 2 - Middle East and North Africa, 2 - Latin America and the Caribbean, 2 - South Asia.
