Public Audit

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 FOR FINANCIAL AUDITS

While performing audit in accordance with 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 statements 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 statements, including disclosures, and whether (consolidated) financial statements 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 statements. 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 the audit of the current financial statements 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

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.