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Cover image:
Van, Turkey, October 2011 7.1 Richter Scale earthquake: A two-week old baby is pulled alive from the
rubble
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Table of Contents
Foreword
1.
2.
3.
Audit guidance
Parallel audit on disaster preparedness
Parallel audit on disaster-related aid
Other material
4.
5.
Accountability
Aid transparency initiatives
Accountability standards for aid organisations
Harmonization of accountability standards, financial reporting and promotion of single
audit
Guidance to create and review an IFAF table
Introduction of harmonised reporting and auditing in the UN
6.
7.
Annexes
Foreword
By Gijs de Vries, Chairman of the INTOSAI Working Group on Accountability for and Audit of
Disaster-related Aid (AADA) and Member of the European Court of Auditors.
To eradicate extreme poverty and hunger remains one of the worlds most urgent challenges.
Disaster can strike at any moment and undermine national and international efforts to combat
poverty, relieve suffering and build a more just world. During the last 12 years 1.1 million people
were killed by disasters, 2.7 million people were affected and the economic losses amounted to an
estimated 1.3 trillion USD. When disaster strikes humanitarian aid often plays a vital role in saving
lives, alleviating poverty and maintaining human dignity. At xxx billion in 2011 the volume of
humanitarian aid is significant, although the global economic crisis is beginning to affect aid levels,
and in 2011 the proportion of unmet humanitarian financing needs was greater, almost 40%, than in
any year since 2001.
Aid must therefore be used carefully and effectively. SAIs can provide assurance that money has
been spent as intended. Through their audits SAIs can also help to raise the efficiency and
effectiveness of aid. In this way, SAIs can help to save lives, alleviate suffering and improve
recovery from disaster. This is the purpose for which the ISSAIs on auditing disaster-related aid
have been drafted. A separate proposal seeks to enhance the accountability of humanitarian aid.
The Working Group has developed and tested the Integrated Financial Accountability Framework,
and made it available for implementation by aid providers.
The Working Group invited comments on the draft guidance both from the INTOSAI community and
from third parties. Many SAIs, but also UN organisations, the World Bank and NGOs expressed their
appreciation for the quality of the guidelines presented and welcomed the financial reporting
framework developed by the Working Group (see also annex 9).
The European Court of Auditors has been honoured to chair this INTOSAI Working Group for the
past six years. I am grateful to the two vice-chairs of the Working Group, the Audit Board of
Indonesia BPK and the Dutch Court of Audit as well as to all the Members of the Working Group for
their countless valuable contributions By preparing this guidance the Working Group and INTOSAI
as a whole have joined a worldwide movement for improving the accountability and transparency of
aid. SAIs are well-positioned to promote good governance in the administration of humanitarian aid.
Our challenge is to help governments and their partners maximise the impact of aid - its economy,
efficiency, and effectiveness - while minimising the risks of fraud and corruption, to the benefit of the
victims of humanitarian disasters. This is more than a professional challenge;it is above all a moral
obligation.
1.1
The interest of SAIs in accountability for and the audit of disaster-related aid reflects the
growing interest shown by the media, disaster victims, and donors (including taxpayers) in the use of
disaster-related funds. Interest turned into action following the experience of SAIs after the disaster
which occurred in South East Asia in 2004. On 26 December, the third biggest earthquake ever
recorded struck off the west coast of Sumatra, Indonesia. It triggered a series of devastating
tsunamis along the coasts of most landmasses bordering the Indian Ocean, killing over 230,000
people in fourteen countries, and inundating coastal communities with waves up to 30 meters high.
It was one of the deadliest natural disasters in recorded history. Indonesia was the hardest hit
country, followed by Sri Lanka, India, and Thailand. The plight of the affected people and countries
prompted a worldwide humanitarian response. In all, the worldwide community donated more than
USD14 billion in humanitarian aid.
1.2 This vast amount of aid flowed from many different donors to many different recipients.
Arrangements for the coordination and reporting of the aid were not in place. SAIs and other
stakeholders assessed the situation and found that there was little information on aid flows and that
it was difficult to establish an audit trail. In 2005, INTOSAI decided to contribute its collective
auditing experience to the international community to enhance the accountability for and the
transparency of disaster-related aid. The aim was to establish an overview of the tsunami-related aid
flows based on the information provided by individual stakeholders (donors, international
organisations, intermediary bodies and recipients) and to collaborate on the audit of the aid.
1.3
In January 2005 at the meeting of the INTOSAI Finance and Administration Committee
INTOSAI members discussed what INTOSAI could do to enhance accountability over tsunami aid
spending. The INTOSAI Governing Board established the INTOSAI Task Force on the
Accountability and Audit of Emergency Aid in November 2005. The Tsunami Task Force tried to
establish an overview of the tsunami-related aid based on information provided by individual
stakeholders. It proved impossible to get such an overall picture with a sufficient degree of
completeness and reliability. It was impossible to find an appropriate audit trial. The Task Force
concluded there was a need for an international agreement on a single information structure, which
would also allow for an audit trail. It also concluded that new technologies (like Geographical
Information Systems, GIS) would provide new opportunities for auditing disaster-related aid. The
Task Force recommended that guidance should be prepared on best practice for financial reporting
in this area and on appropriate tools for the audit of disaster-related aid. INTOSAI accordingly set up
the INTOSAI Working Group on Accountability for and the Audit of Disaster-related Aid at the
XIX INCOSAI in Mexico in 2007.
1.4
1.5
In 2010 the XX INCOSAI in South Africa commended the work being undertaken and
extended the mandate by asking the Working Group to examine the usefulness of its work for the
whole of humanitarian aid.
1.6
Both during its first and second mandate the Working Group translated the two overall
objectives into a dozen concrete tasks, half of them relating to the accountability objective and half
of them aimed at developing guidelines for SAIs auditing disaster-related aid. For more details on
the Working Groups Work Programmes and which SAI was responsible for what see annex x).
Apart from guidelines for the audit of disaster-related aid the audit of disaster-preparedness of
governments, the auditors awareness of risks of fraud and corruption and the use of GIS as an
audit tool were identified as topics warranting specific guidelines.
1.7
To realise the above objectives the Working Groups strategy was to address the
stakeholders through the international standard setting bodies active in the various stakeholder
categories, for which the Working Group built on the stakeholder analysis work carried out by the
Task Force till 2007. Particularly in the area of accountability the Working Group has directed its
activities towards important stakeholders (donor and recipient governments, international
organisations, aid organisations) and, if feasible, its standard setting bodies, like for example
OECD/DAC and the Good Humanitarian Donorship (GHD). For some of the tasks relating to audit
guidelines the same strategy of addressing international standard setting bodies was followed,
mostly resulting in contacts within INTOSAI in order to present ISSAIs for this objective.
1.8
The different tasks identified were divided amongst the members of the Working Group and
individual work fiches per tasks were created, progress reports drafted and reported to the Working
Group meetings, which were held on an annual basis since 2008. During these meetings also draft
guidelines for audit and best practices found in the area of accountability were discussed and
amended. The SAIs responsible for drafting the audit guidance on disaster-preparedness (SAI of
Turkey) and disaster-related aid (SAI of Indonesia) also organised and coordinated a parallel audit
or feedback, by means of surveys, on the drafts prepared. Apart from responsibility for a number of
tasks, the European Court of Auditors as chair also monitored and coordinated the work of the SAIs
involved. Regular exchange on progress was requested and received from the SAIs responsible for
specific tasks, and the Governing Board and the INTOSAI Knowledge Sharing Steering Committee
were regularly informed about the progress made. The Working Group established a dedicated
website to its work, documents produced and achievements made at http://eca.europa.eu/intosai-aada
1.9
At the end of its second term, the Working Group had completed its work and was in a
position to present to the XXI INCOSAI in China in October 2013 the following:
A new 5500 series of ISSAIs containing five ISSAIs on auditing disasterrelated aid including examples of good practice provided by SAIs which were
WG members or which participated in coordinated audits, surveys or
widespread consultation on auditing disaster-related aid.
1.10 Since it was established in 2008, the Working Group has had a membership of between 18
and 23 SAIs with a balance of representatives from donor and potential aid recipient countries and
from a wide variety of geographical locations. 1 Membership has remained fairly constant over the
six years of the life of the Working Group. In May 2013, the following SAIs were members: Austria,
Chile, China, the European Court of Auditors, France, Georgia, India, Indonesia, Jamaica, Japan,
Kenya, Korea (Republic of), the Netherlands, Norway, Pakistan, Peru, the Philippines, Romania,
Russian Federation, Sri Lanka, Turkey, the Ukraine 2 and the United States of America. The
European Court of Auditors chaired the Working Group and provided its secretariat.
1.11
2.1
For its objective to provide guidelines and best practices for SAIs auditing disaster-related
aid the Working Group has chosen to create a new series of ISSAIs for this specific area: the 5500
series.
2.2
The 5500 series of ISSAIs reflects current good practice, making reference to ISSAIs and
other auditing standards, includes examples and proposes practical solutions for auditing disaster-
Members include 6 of the top 10 donors and 2 of the top 10 recipients, according to the 2012 Global Humanitarian Assistance
Report. See http://www.globalhumanitarianassistance.org/report/gha-report-2012
The audit of disaster-related aid has also been addressed by the EUROSAI Task Force on the audit of funds allocated to disasters
and catastrophes, chaired by the SAI of the Ukraine. See http://www.ac-rada.gov.ua/control/eurosai/en/
related aid. The individual ISSAIs are closely related and cross referenced including to the guidance
on general audit methodology and procedures in the third and fourth level ISSAIs, especially those
on financial audit, performance audit and compliance audit. As is the case for other INTOSAI
auditing standards, this guidance is not mandatory and each SAI should consider the extent to
which the guidance is compatible with its mandate. The ISSAIs build upon INTOSAIs Fundamental
Auditing Principles and standards promulgated by other standard setting organisations with which
INTOSAI has a cooperation agreement, such as the International Federation of Accountants.
2.3
ISSAI 5500 introduces and provides an overview of the series of ISSAIs on disaster-related
aid and INTOSAI GOV 9250. ISSAIs 5510 and 5520 cover the audit of the pre- and post-disaster
phases respectively. ISSAI 5530 considers the specific risks of fraud and corruption which arise due
to the emergency nature of much of disaster-related aid. ISSAI 5540 presents geospatial information
as a tool for auditing the pre- and post-disaster phases. The ISSAIs contain examples of auditing
disaster-related aid and can be used as a source of information or as additional guidance to
supplement the general guidance provided for SAIs in the level three and four ISSAIs.
2.4
Figure 1 shows the link between the 5500 series of ISSAIs and the different activities of
disaster-related aid across the disaster-management cycle.
ISSAI 5510
2.6
ISSAI 5510 on auditing disaster risk reduction recognises the increasing emphasis by
governments and international organisations on the risk of disasters and on reducing their potential
impact through adequate preparation. It focuses on the pre-disaster phase and covers the audit of
activities designed to prevent, mitigate and prepare for potential disaster.
2.7
Part 1 defines disasters, disaster management and disaster risk reduction and explores the political
and operational context of auditing disaster risk reduction.
10
Part 2 explores the issues SAIs are faced with when planning or conducting an audit of disaster risk
reduction. It draws examples from the experiences of SAIs in auditing disaster risk reduction,
gathered by means of surveys and a parallel audit conducted amongst SAIs.
Part 3 proposes an audit programme to assist SAIs in auditing disaster risk reduction.
2.8
The SAI of Turkey led the preparation of ISSAI 5510. It consulted with SAIs and other
organisations across the world, carried out surveys and coordinated an audit of disaster risk
reduction (see also section 3). 3
ISSAI 5520
2.9
ISSAI 5520 on auditing disaster-related aid takes account of the notable features of postdisaster activity, which include large amounts of resources flowing into disaster-affected areas,
where there is pressure to deliver aid rapidly to individuals in great need. Aid may be disbursed by a
number of different actors with varying levels of experience. There is often lack of coordination and
inattention to the accountability and reporting of disaster-related aid, which renders the
establishment of an audit trail difficult. This ISSAI focuses on immediate emergency activities of
response and relief and on rehabilitation and reconstruction activities carried out in the aftermath of
disasters.
2.10
The SAIs of Azerbaijan, Chile, India, Indonesia, the Netherlands, Pakistan, the Philippines, Romania, Ukraine and Turkey
contributed to or participated in the coordinated audit.
The SAIs of India, Indonesia Pakistan and Turkey participated in the coordinated audit.
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expected to do. To assist auditors, the ISSAI outlines risks and red flags of which auditors should be
aware and provides advice on how to adapt audit procedures accordingly.
2.13
www.issai.org
12
- testing and improving the contents of ISSAI 5510 and providing concrete examples regarding the
application of the guidelines presented. Experiences that could not be included in the endorsement
version prepared for the XXI INCOSAI will be used for the future update of ISSAI 5510;
- the publication of several audit reports on disaster preparedness and a joint report. This joint report
can be used by SAIs as reference material when deciding about their own audits in this area;
- establishment and collection of training material, based on the experiences of the parallel audit;
- a lessons learned paper will be drawn up, reflecting the parallel audit experiences and
recommendations that can provide feedback for ISSAI 5000 on Principles for Best Audit
Arrangements for International Institutions and Guide for Cooperative Audit Programes between
SAIs.
3.6
13
Other material
3.12 To provide practical and concrete examples summaries of audit work done by the SAIs of
Peru, China, Japan, the European Court of Auditors, India, the USA and Indonesia have been made
and are presented as appendix 6 to 12 in ISSAI 5520. This ISSAI also presents as appendix 3 the
guidelines developed by the SAI of Chile for private firms when auditing humanitarian aid.
4.1
The transparency of and accountability for humanitarian aid has become an issue of
considerable importance for donors and other stakeholders in recent years. Supreme Audit
Institutions are well-positioned to promote accountability and transparency. Through their audits,
they can identify weaknesses in the existing arrangements and propose improvements to make
disaster-related aid better reported, more accountable and more effective. In this context, SAIs have
reported a need for better quality financial reporting and greater availability of information on flows of
disaster-related aid. There is a need for consistently reliable and complete information concerning
the individual flows of disaster-related aid to allow an overall picture of the situation to be
constructed and to form a global view of the volume of aid donated for humanitarian crises, of who
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contributed aid and of where and on what it was spent. At the same time the reporting requirements
on organisations should not constitute an untenable burden.
4.2
To meet the need thus identified by SAIs, the Working Group on Accountability for and the
Audit of Disaster-related Aid has prepared INTOSAI-GOV 9250, which presents the Integrated
Financial Accountability Framework (IFAF). The IFAF is a framework for preparing and making
publically available standardised ex post financial reports on humanitarian aid flows. These financial
reports take the form of IFAF tables prepared by all entities involved in the donation, receipt or
implementation of humanitarian aid.
IFAF tables in a nutshell
4.3
Each entity required to report on transfers of humanitarian aid prepares an IFAF table.
The aid can be financial or in-kind (expressed in its equivalent monetary value).
IFAF tables include transfers of aid into and out of the entity preparing the IFAF table (not
pledges or accrued expenditure) in the calendar year ending 31 December *.
When preparing IFAF tables, entities respect the same rules as those applied for drawing up
their financial statements.
The data for preparing IFAF tables is the same as that used for preparing the entities
financial statements.
The external auditor of the entity audits the IFAF table and provides a statement to this effect.
(*) These requirements are important for IFAF tables to be comparable. Solutions are under development for
entities not using the 31 December as the year end, not using USD and not using English.
4.4
IFAF tables have been tested by a variety of donors and recipients of humanitarian aid.
These tests have been successful: organisations have found it easy to prepare IFAF tables using
data already existing in their financial systems. Furthermore the tests showed that IFAF tables are
simple to prepare and understand, standardised, can be verified and are transparant. IFAF has been
welcomed by several donors (like the Netherlands, Sweden, the World Bank), international
organisations, including several UN organisations and NGOs (Humanitarian Accountability
Partnership, Catholic Relief Services). See also par. 6.3 and annex 1.
4.5
Optimum use of IFAF tables requires that they should be available as open data. There are
many open data intiatives working towards meeting the goal of aid effectiveness through the
availability of better information. Discussions are currently underway between the Working Group
and the International Aid Transparancy Initiative (IATI) on the possibility of integrating the production
of IFAF tables into IATI and using the IATI registry to publicise the location of the tables.
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4.6
The main role in implementing and developing the IFAF necessarily falls to donors which can
prepare IFAF tables themselves and ask recipients of humanitarian aid to report in this way. Donors
can support the inclusion of the IFAF tables in an appropriate open data initiative and oversee its
development in this context.
4.7
http://www.issai.org/composite-194.htm
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5.6
Guidance material for the creation and the review of an IFAF table
5.12 Within the Working Group task of development of audit guidelines for private auditors of aid
organisations the SAI of Chile has made a guide for producing and IFAF table, this in cooperation
with the aid organisation Un techo Para Chile that volunteered to create an IFAF table on a pilot
basis. This IFAF table is presented as an example in appendix 6 of GOV 9250. The guide offers
steps for presenting the receipts and payment parts of the table and provides advice on what kind of
review the entity producing the IFAF table needs to undertake.
5.13 The SAI of Chile developed, in cooperation with private audit firms an audit guide for
reviewing an IFAF table. The guide was tested through a pilot audit on the IFAF table produced by
the NGO Un Techo Para Chile. The audit guide distinguishes three aspects (control environment,
information analysis, accountability) with several subquestions for each element. The guidance is
particularly aimed at NGOs who do not have a strong internal audit framework and can be found at
the website of the INTOSAI Knowledge Sharing Committee at www.intosiaksc.org
5.14
17
18
See for an overview of the general comments annex 9. (reference to complete overview at the PSC at issai.org ?)
19
6.3
See annex 10 for an overview of the participation in the last three meetings of the Working Group.
10
Contacts were also held with subcommittee 1 of the INTOSAI Capacity Building Committee, who produced a document on
Buseiness Continuity for SAIs, which the Working Group disseminated among its members.
11
http://www.ac-rada.gov.ua/control/eurosai/en/
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6.6
In order to raise awareness of the activities of the Working Group, and specifically the draft
ISSAIs and INTOSAI GOV, the chair of 12 of the Working Group addressed:
- The forum on anti-corruption in Chile in November 2011 (check proper title)
- The 15th IACC on Fraud and Corruption in Brasilia in November 2012;
- AFROSAI-E meeting in Mauritius in May 2013
- Global Platform meeting concerning Disaster Risk Reduction in Geneva in May 2013;
- Meeting of the INTOSAI Working Group on Environmental Auditing in June 2013;
6.7
However, besides success in the proceedings the Working Group has identified also a
number of concerns. They primarily relate to costs, being of a financial or a human resource nature:
participation costs for delegates: particularly in the area of humanitarian aid - but this will also
apply to other Working Groups aimed at capacity building - it is important to have a balanced
participation in the meetings of SAIs from donor and recipient countries. The costs of taking part in
meetings of INTOSAI working groups can be a serious concern to SAIs in developing countries and
may impede their full participation;
the costs of chairing a Working Group: chairing a Working Group implies often not only chairing
the meeting itself but also taking up the secretariat of the Working Group activities and monitoring
and stimulating progress were necessary. This implies human resources costs which can be
substantial when producing for example audit guidelines. In addition travel costs for the chair may
be substantial, in view of representation of the Working Group in different INTOSAI forums.
INTOSAI should consider providing solutions to prevent that chairmanship of Working Groups will be
limited to well-endowed SAIs;
the costs of translation: normally a Working Group will limit itself to one working language, in the
case of Working Group AADA English. Although this may involve work when editing for example
draft ISSAIs this solution worked well. However, when producing ISSAIs the translation of these
ISSAIs into the four other INTOSAI working languages falls upon the chair of the Working Group as
such. 13 INTOSAI should consider a different solution for this to enable more SAIs to take up
chairmanship duties within INTOSAI
12
13
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Follow up of ISSAIs
6.9
The Working Group proposes that the ISSAIs should be reviewed and presented to the XXIII
INCOSAI, scheduled for 2019. The review will take account of the requirements regarding the
harmonisation of ISSAIs currently being developed by the PSC. The INTOSAI Knowledge Sharing
Committee (KSC), as Chair of INTOSAI Goal 3 activities, will initiate the review process with the
main authors of the ISSAIs.
6.10 The website currently held by the chair and secretariat of the Working Group, the European
Court of Auditors, will not be maintained. Past and future information on the activities of the Working
Group and on developments in disaster-related aid auditing will be stored on a website held by the
INTOSAI KSC at http://www.intosaiksc.org
6.11 INTOSAI should consider a harmonisation exercise for the draft guidelines that have been
proceduced by at least three Working Groups (see par. 6.5). These guidelines will serve specific
purposes but may have overlap and definition issues that would merit a holistic review.
6.12 The Working Group considers that the Working Group Environmental Auditing (WGEA)
might provide the most appropriate location to host all the information currently on the website of the
Working Group and which needs to remain available for users of the ISSAIs and the GOV (what
about the KSC). The linkage of disaster issues to climate change is evident and disaster risk
reduction often starts with environmental policies to counter climate change. The Working Group
has asked the WGEA to host an open database for the collection of examples of auditing disasterrelated aid from SAIs.
22
and to the United Nations to propose that donors take the application and the further development of
the IFAF forward by preparing tables themselves and require recipients of humanitarian aid to
prepare them as a condition of receipt of aid.
Capacity development
6.16 The new 5500 series of ISSAIs provide useful material that may create a need on having
training on how to use them. INTOSAI members are invited to present training proposals to the
INTOSAI Development Initiative (IDI) to take this forward. This can lead to the organisation of
training seminars and workshops on the audit of disaster-related aid, funded through the INTOSAIDonor cooperation programme.
6.17 Other organisations that might be able to provide training assistance are the UN Office for
Disaster Risk Reduction (UNISDR) and UN OCHA and UNDP, for example through their specialised
training center called CADRI, established to support training related to disaster risk reduction. This
UN organisation also provides training to government officials and members of national platforms for
disaster risk reduction.
7.1
The Working Group AADA has developed a new series of ISSAIs on auditing disasterrelated aid and has presented a simple and standardised framework for preparing amd making
openly available audited, ex-post, final financial data on humanitarian aid flows. Now is the time to
use this material and apply the framework. By using the ISSAIs, auditors can help to raise the
efficiency and effectiveness of their audit work so that their observations and recommendations
contribute towards making humanitarian and disaster-related aid go further, resulting in lives saved
and faster recovery from disaster.
7.2
The Working Group requests the XXI INCOSAI to endorse the new 5500 series of ISSAIs
and INTOSAI GOV 9250, to take note of this Final Report of the Working Group and to disband the
Working Group.