The National Audit Office carry out public audits in implementing the tasks entrusted to it.
Public audit is an independent and objective assessment carried out by the Supreme Audit Institution in audited entities.
The National Audit Office carry out three types of public audit:
- Financial audit – where the National Audit Office assess the data in the audited entity's annual (consolidated) financial statements and budget execution reports and issues an independent auditor‘s opinion.
- Performance audit – where the activities of the audited entity are assessed in terms of economy, efficiency and effectiveness.
- Compliance audit – where it assesses the compliance of the audited entity's activities with legal and/or other requirements and may express an independent auditor's opinion.
In order to improve the performance of the audited entity(ies) and to increase the benefits to society, the results of the public audits are used to formulate proposals - recommendations to address problems identified during the audit. Public audits are an important factor in promoting the efficiency, accountability and effectiveness of public sector institutions and improving the lives of citizens.
DOCUMENTS PROVIDING GUIDANCE TO PUBLIC AUDITING
Professional standards and guidelines are essential to ensure the reliability, quality and professionalism of public sector audit. The National Audit Office carry out audits in accordance with the INTOSAI Framework of Professional Pronouncements consisting of the INTOSAI Principles (INTOSAI-P), the International Standards of Supreme Audit Institutions (ISSAIs) and Guidelines (GUID). Financial audits are also guided by the International Standards on Auditing (ISAs) issued by the International Auditing and Assurance Standards Board of the International Federation of Accountants, which are incorporated into INTOSAI's Standards on Financial Auditing (ISSAIs 2000-2899).
In accordance with the requirements of the ISSAIs, ISAs (in the case of financial audits) and INTOSAI Guidelines, the National Audit Office has developed manuals on Financial, Performance, Compliance and Information Technology audits. The Information Technology Audit Manual also takes into account the Information Systems Audit Standards and Guidelines of the International Information Systems Audit and Control Association (ISACA), as well as other ISACA methodological material. The objective of the audit guidance documents prepared by the National Audit Office is to provide and explain the general and procedural requirements for audits in order to ensure the audit quality.
AUDITOR’S RESPONSIBILITY IN PERFORMING FINANCIAL AUDIT
By conducting audits in accordance with International Standards on Auditing and International Standards of Supreme Audit Institutions, we use professional judgement and professional scepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the (consolidated) financial and budget implementation accounts, whether due to fraud or error, design and perform procedures in response to those risks, and obtain sufficient appropriate audit evidence to provide a basis for our opinion. Detection risk of a material misstatement due to fraud is greater than detection risk of a material misstatement due to error, as fraud may include deception, forgery, intentional omission, misinterpretation, or override of internal controls;
- assess the internal control of the entities/group of entities involved in an audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's/group of entities' internal control;
- assess the appropriateness of accounting policies used and the reasonableness of accounting estimates and related management disclosures;
- assess the overall presentation, structure and content, including disclosures, of the (consolidated) financial statements and the budget implementation reports and whether they present the underlying transactions and events in a manner that is consistent with the concept of fair presentation.
As part of our group audit, we also obtain sufficient appropriate audit evidence about the financial information or activities of the entities within the group to enable us to express an opinion on the group's consolidated financial statements and budget implementation reports. We are responsible for directing, supervising and performing the group audit. We are solely responsible for expressing our opinion on the audit.
We communicate to those charged with governance, among other things, the scope and timing of the audit and significant audit observations, including significant deficiencies in internal control that we identify in the course of the audit.
Among the matters that we communicate to those charged with governance, we highlight those that were the most significant in the financial audit for the current period and are considered to be key audit matters. We describe such matters in the report if we are not prohibited by law or regulation from disclosing the matter publicly or if, in very limited circumstances, we determine that the matter should not be disclosed because the adverse consequences of disclosure might reasonably be expected to outweigh the benefits to the public.
PLANNING OF PUBLIC AUDIT
In order to implement the tasks assigned to it, the National Audit Office determine each year the scope of activities in the Annual Activity Plan.
The Institution is independent in deciding which audits or assessments are carried out, and only the Seimas, by its resolution, may assign the National Audit Office to carry out public audit within the scope of its competence.
The institution’s Annual Activity Plan is drawn up in such a way to cover the most important areas of public sector activities and to carryout all public audits and assessments assigned to the National Audit Office by laws and other legal acts. The Annual Activity Plan is approved by the Auditor General after it has been presented to the Seimas Committee on Audit.
PUBLIC AUDIT RECOMMENDATIONS
In order to maximise the impact of public audits and positive developments in the public sector, public audit recommendations are provided during each audit. Taking into account the extent of changes for the implementation of goals of state policy, public governance and society, they are marked as high, medium and low importance. Recommendations are the possibility of the National Audit Office as the supreme audit institution to initiate processes of improvement of the activities of public sector institutions, increase the value of the public sector to society and benefit to the State.
For the implementation of the recommendations and for monitoring their implementation, each time a plan of implementation of recommendations is being prepared and coordinated with the audited entity, which is part of the public audit report. The plan specifies the changes sought by the implementation of the recommendations, their evaluation indicators and values, the deadlines for the implementation of the recommendations and the measures proposed by the audited entity implementing the recommendations, and other important information. The audited entity informs the National Audit Office of the results of the implementation of the recommendations within the deadlines agreed in the plan of implementation of recommendations.
In order to strengthen the impact of the audit on public finance management and control systems and on the improvement of public administration in audited areas, the National Audit Office carries out regular monitoring of the implementation of recommendations. The results of this monitoring: the status of implementation of the recommendations, the responsible entities and the changes that have taken place following the implementation of the recommendations can be followed in Lithuanian in continuously updated open data on the institution’s website. Twice a year, before the spring and autumn sessions of the Seimas of the Republic of Lithuania, the National Audit Office submits reports on the monitoring of the implementation of the recommendations to the Seimas Committee on Audit. The reports review the status of implementation of the audit recommendations of high importance for the past half-year, draw attention to the problems observed when implementing the recommendations, identify a list of laws necessary to implement the recommendations and achieve the impact of the audit. These reports are available on the website of the National Audit Office.
COOPERATION
When implementing its functions, the National Audit Office cooperates with many institutions, including the Office of the President, Seimas, Government, the Association of Municipal Controllers as well as directly with public sector institutions as present or former audited entities. Cooperation of the National Audit Office with the Seimas is very important in making a positive and effective impact of public audit on public finance and asset management and control system. When exercising parliamentary scrutiny of the executive, the Seimas uses the results of the public audit as one of the parts of the system of parliamentary scrutiny and seek that the entities in which the National Audit Office has carried out public audit implement public audit recommendations. The National Audit Office cooperates most intensively with the Seimas Committee on Audit, which regularly considers public audit reports. Depending on the area audited, audit reports (as well as other products produced in implementing other functions of the institution) are submitted for consideration to other committees and commissions of the Seimas.
To implement advanced methods of budgetary governance and internal control in the public sector close cooperation is maintained with the Ministry of Finance, the Association of Internal Auditors, the Association of Municipal Controllers, municipal control and audit services, the Lithuanian Chamber of Auditors in improving the audit and accounting legislation, public sector audit methodologies, and sharing experience.
The National Audit Office has concluded cooperation agreements with the Bank of Lithuania, the Chief Official Ethics Commission, the Prosecutor General’s Office, the Public Procurement Office, the Special Investigation Service, the Financial Crime Investigation Service, the State Tax Inspectorate, the Competition Council, the Ministry of Finance, the Ministry of Social Security and Labour, the Faculty of Economics and Business Administration of Vilnius University, Vytautas Magnus University, Mykolas Romeris University, Lithuanian Chamber of Auditors, the Association of Municipal Controllers, the Association of Internal Auditors.
The National Audit Office also co-operates with various institutions when submitting conclusions, comments and proposals concerning drafts of laws and other legal acts, considers and prepares conclusions regarding draft decisions of the Government.
The National Audit Office maintains collegiate relations with the academic community: representatives of the institution are regularly invited to give lectures to students of higher education institutions, students of general education schools come to get acquainted with the activities of the institution.
The Institution also invites the general public to cooperate; when annually drawing up a public audit programme and deciding which audit topics to choose, the National Audit Office addresses the public by proposing to contribute to the development of the public audit programme in a specially designed tool for this purpose on the website where it is possible to indicate noticeable public sector failures that the National Audit Office could assess during the audit. Proposals of citizens are evaluated and taken into account when choosing directions and topics of public audit.
The National Audit Office also liaise with its peers in foreign countries – other supreme audit institutions. One of the most important expressions of this cooperation is the cooperative international audit. National Audit Office is an active member of the International Organisation of Supreme Audit Institutions INTOSAI and the European Organisation of Supreme Audit Institutions EUROSAI, participates in the work of committees and working groups of these international organisations. Read more about this cooperation in the section Internationality.
More than three years after the National Audit Office’s audit “Municipal Waste Management”, two of the seven recommendations made have been implemented. The most important changes are still to come: more waste must be recycled rather than incinerated or disposed of in landfill sites; residents must be provided with better facilities for sorting waste; and waste management must be planned and evaluated on the basis of reliable data.
In Lithuania, around 12 percent of pupils have special educational needs (SEN). More than 90 percent of them study alongside their peers, and young people with SEN who wish to do so are guaranteed the opportunity to continue their education at vocational education (VET) institutions. However, an audit carried out by the National Audit Office entitled “Educational Support in Schools” shows that although more than 90 percent pupils with SEN successfully obtain a vocational qualification, they rarely manage to integrate into the labour market – around 70 percent of pupils with SEN who graduate from VET institutions do not find employment.