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About the area of activity

In performing the tasks assigned to it the National Audit Office carries out public audit. Public audit is an independent and objective assessment carried out in the audited entities by the supreme audit institution.

The National Audit Office carries out three types of public audit:  

  • Financial audit – where the sets of data of annual (consolidated) financial statements and reports on the execution of the budget of the audited entity are assessed and an independent auditor’s opinion is issued.
  • Performance audit – where the activities of the audited entity are assessed in terms of economy, efficiency and effectiveness. 
  • Compliance audit – where compliance of the audited entity’s activities with legal acts and/or other requirements is assessed, and an independent auditor’s opinion may be issued.

In order to improve the performance of the audited entity(s) and increase the public benefit, proposals - recommendations are formulated on the basis of the results of public audits to resolve the problems identified during the audit. Public audit is an important factor in promoting the efficiency, accountability and effectiveness of public sector institutions and improving citizens’ lives.
   

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 Supreme Audit Institution carry out audits based on The INTOSAI Framework of Professional Pronouncements consisting of the INTOSAI Principles (INTOSAI-P), the International Standards of Supreme Audit Institutions (ISSAIs) and Guidelines (GUID).

 
AUDITOR’S RESPONSIBILITY IN PERFORMING FINANCIAL AUDIT

Illustration: Auditor’s responsibility for financial audits

While performing audit in accordance with International Standards on Auditing and International Standards of Supreme Audit Institutions, during the entire audit we make professional decisions and observe the principle of professional scepticism. In addition:

  • We identify and assess the risk of material misstatement in (consolidated) financial and budget execution reports due to fraud or error, design and conduct procedures as a response to such risks and collect sufficient appropriate audit evidence to support our opinion. The risk of material misstatement resulting from fraud is greater than the risk of material misstatement as a result of errors, as fraud may include deceit, counterfeiting, deliberate omission, misinterpretation or disregard of internal controls;
  • We assess the internal control of audited entities (group of entities) so that we can plan audit procedures that are appropriate in the circumstances and not so that we can express an opinion on the effectiveness of the internal control of the entity (group of entities);
  • We assess the adequacy of the accounting methods used and the validity of the accounting assessments and related management disclosures;
  • We assess the overall presentation, structure and content of (consolidated) financial and budget execution reports, including disclosures, and whether those reports contain underlying transactions and events in a manner consistent with the concept of fair presentation.

When conducting group audit, we also collect sufficient appropriate audit evidence of entities’ financial information or activities within the group to give an opinion on the group consolidated financial and budget execution reports. We are responsible for managing, supervising and implementing the group audit. Only we are responsible for our opinion on the audit.

We also inform those in charge of management about the scope and timing of the audit and significant audit findings, including important internal control deficiencies that we detect during the audit.

Among the matters about which we inform those in charge of management, we distinguish those that have been the most important in performing the current financial audit and which are considered to be the main elements of auditing. We describe such matters in the audit report if the law or legal act does not prevent such disclosure from the public, or if, in very rare circumstances, we find that the subject matter should not be presented, because it can reasonably be expected that the negative consequences of such presentation will outweigh the benefits to society.

PLANNING OF PUBLIC AUDIT

Illustration: 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

Illustration: 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

Cooperation icon

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.

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News

Picture for National Audit Office: National Audit Office: Port of Klaipėda would add even more value if it improved its infrastructure and land managementThe state of the quays of the Klaipėda State Seaport must be improved, the management and control of the port’s land must be improved, and decisions on the need for reserve areas and their annexation to the port must not be delayed. This was revealed by the National Audit Office’s audit “Infrastructure Management of Port of Klaipėda”.

Klaipėda State Seaport is Lithuania’s most important and largest transport centre, connecting sea, land and rail routes from east and west. The territory of the port covers 554.1 ha of land and 31,734 ha of water area. More than 800 companies are directly involved in port activities, generating over 58,000 workplaces and 6.1% of the country’s GDP. The port handles an average of around 45 million tonnes of cargo per year.

The audit results show that the condition of the port quays should be improved, a quarter of them were still in an unsatisfactory condition in 2021, limiting the ability of the land lessees to carry out cargo handling, shipbuilding and ship repair activities at full capacity. Some of the buildings held in trust by the Port Authority were not used for port activities because they were abandoned, dilapidated or unfinished.

In order to ensure the efficiency and effectiveness of the port, it is important that the activities of the lessees of the land are related to the port’s goals and objectives. However, according to the auditors, 43% of the land lease agreements did not specify the specific port-related activities (e.g. ship repair, ship handling, etc.) that the lessees undertook to perform. In 57% of the land lease agreements, the turnover commitments for the lessees do not show the extent to which their activities have contributed to the performance of the port. Some of the lessees did not fulfil their obligations without any consequences, even though the law stipulates that the port has the right to terminate the lease agreement early.

“Current practice does not ensure that all lessees of port land contribute as much as possible to the port’s operational objectives. As the port’s territory is limited and there is a shortage of vacant land, it is important that those who lease land contribute to achieving the port’s targets and maximising its benefits,” says Giedrė Piktelytė, Principal - Auditor and Audit Team Leader. 

Implementation of the recommendations made by the National  Audit Office will result in the more efficient management of the Port of Klaipėda’s land and infrastructure, and the lessees of the port’s land will contribute effectively to the achievement of the port’s operational objectives. It has been agreed with the Klaipėda State Port Authority that the implementation of the recommendations will reduce the number of quays to be improved by 3.6 km by 2032. The aim is also to ensure that all land lease agreements specify the specific port-related activities to which the lessees have committed themselves.

Picture for National Audit Office: until we start monitoring air quality in all the most polluted places in the country, we cannot talk about a clean and safe environmentThe National Audit Office’s audit of ambient air condition assessment has shown that although the State’s priorities are declared to be focused on a clean and safe environment, with the aim of reducing the amount of air pollution harmful to people’s health by half in Lithuania’s towns and cities by 2030, there is still a lack of systematic and comprehensive monitoring of the ambient air condition. Without such monitoring in all Lithuanian municipalities, it is not possible to take effective measures to reduce air pollution.

The National Audit Office notes that the monitoring of ambient air quality at three levels, i.e. State, municipality and economic entity, is necessary to fully assess air quality. 51 municipalities do not perform continuous air quality monitoring at the national level, although in 11 of them, additional analyses of particulate matter concentrations in 2019 showed that concentrations of these pollutants exceeded the World Health Organisation’s recommended standards in all the municipalities audited. 29 municipalities do not perform air monitoring at either State or municipal level, therefore their residents cannot be assured of the quality of the air they breathe.

According to the World Health Organisation, particulate matter is the most harmful air pollutant to human health, and even very low concentrations are harmful. Chronic particle exposure increases the risk of cardiovascular and respiratory diseases or lung cancer. However, today the authorities responsible for air monitoring do not have enough up-to-date, detailed data on air quality in all municipalities in Lithuania, and the population is not informed about increased air pollution. In this situation, it is difficult to reduce air pollution,” said Audit Team Leader Rasa Pupeikytė-Usačiova.

Identifying all polluting companies and ensuring that they monitor and report on air pollution is a crucial factor in reducing air pollution. However, the exact number of such polluters and the environmental impact of their activities are still not known.

The National Audit Office has made recommendations to the authorities responsible for environmental monitoring (the Ministry of the Environment and the Environmental Protection Agency) to improve the three-level monitoring of the ambient air condition and to make appropriate decisions on pollution management. The implementation of the recommendations of the National Audit Office would ensure systematic monitoring of the ambient air condition in all polluted areas, and the results of the monitoring will be conveniently systematised and used to develop measures for air quality management and air pollution reduction.

Picture for The organisation of official statistics has been assessed by the National Audit Office: improvements are still neededOfficial statistics provide relevant, high-quality and reliable data that are crucial for evidence-based policy-making, however, the current organisation of official statistics does not guarantee that management decision-makers can make full and prompt use of these data, according to the National Audit Office’s audit Organisation of Official Statistics.

In Lithuania, 19 institutions are responsible for the production of official statistics, and the Lithuanian Department of Statistics is the coordinating body for the organisation of official statistics. In 2021, EUR 10.6 million was allocated for the organisation of these statistics and 234 statistical surveys were carried out.

Qualitative statistical data are based on an appropriate methodology that ensures data accuracy and relevance. “Almost a third of the statistical surveys for 2019-2021 were carried out in the absence of, or according to methodologies that were not harmonised with the Lithuanian Department of Statistics. The role of the Lithuanian Department of Statistics should be strengthened, as its greater involvement in all statistical surveys could improve the quality of the data,” says Audit Team Leader Kristina Vaivadienė.

The publication of all official statistical information on the Official Statistics Portal would ensure the quality and relevance of data and promote their use for decision-making. The audit found that a quarter of the statistical surveys carried out are not published on the portal, and in a third of cases, the reasons for the revision are not given when revising the data entered. 

Statistical surveys are included in the official statistics programme when they are commissioned by European Union legislation, laws of the Republic of Lithuania and government resolutions. The audit found that a quarter of the investigations between 2019 and 2021 were not commissioned by this legislation. The inadequate legal basis does not ensure that the programme is designed to meet the needs of the State as set out in legislation.

The National Audit Office has made recommendations to help ensure the quality of official statistics and information on statistical surveys, to improve the efficiency of the production of official statistics and to reduce the burden of statistical reporting on respondents.