Canadian International Development Agency Agence canadienne de développement

Canadian International Development Agency Agence canadienne de développement international Internal Audit and International Development Address by Nicole Mendenhall, CIDA 20 th ICGFM International Conference Miami, Florida May 8, 2006

Canadian International Development Agency Agence canadienne de développement international Evolution of Internal Audit in Canada 1962 – Glassco Commission – recommended internal financial audit in departments Late 1970 s - MBO adopted in the Government 1979 – Lambert Commission – need to expand internal audit beyond finance 2

Canadian International Development Agency Agence canadienne de développement international Evolution of Internal Audit in Canada Early 1990 s - Results Based Management introduced in Government 1994 - Review Policy – integration of audit and evaluation 2004 – Sponsorship & the Gomery Commission 2006 – Internal Audit Policy 3

Canadian International Development Agency Agence canadienne de développement international 4 Evolution of Audit Focus in CIDA Late 1990 s - CIDA starts its change from a project to a program focus 2003 to now – country program audits Introduction of the management accountability framework as the basis for audits Internal audit now taking an outward or international view

Canadian International Development Agency Agence canadienne de développement international Country Program Audits An integrated holistic approach Assessing systems and processes in place to support aid effectiveness Governance, accountability, stewardship, risks Policy dialogue – plans, systems, etc Local ownership & capacity building 5

Canadian International Development Agency Agence canadienne de développement international 6 The Provision of Assurance Chief Audit Executive provides assurance on individual audits; management of risks; and the functioning of fundamental controls The Chief Financial Officer provides assurance that the financial controls are working The Auditor General provides assurance on the Financial Statements of the department / ministry

Canadian International Development Agency Agence canadienne de développement international The Challenge of Assurance in International Development Donor internal audit work in a multi-donor environment Each donor is not solely accountable for the delivery of its aid dollars – joint or shared accountability is the norm 7

Canadian International Development Agency Agence canadienne de développement international 8 Assurance in a Multi-donor Environment – a question How can internal audit give assurance that funds are well managed and controlled, that they are being used for the purposes intended, that the progress towards results and the use of funds are properly linked when each donor has no direct control, the funds are pooled, and accountability is shared?

Canadian International Development Agency Agence canadienne de développement international The Challenge for Donor / Recipient Internal Audit Paris Declaration reinforced the need for program based approaches with the recipient in the “driver’s seat”. National and multilateral donors fund long term programs developed by the recipient Acceptance of recipient systems Common reporting and audit rules Mutual accountability 9

Canadian International Development Agency Agence canadienne de développement international The Gaps in Assurance Although aid is harmonizing – gaps in assurance remain Definition of mutual accountability – to whom? – by whom? Management accountability frameworks are not commonly understood and accepted Risk management – need for commonly accepted risks & risk mitigation strategies 10

Canadian International Development Agency Agence canadienne de développement international 11 The Gaps in Assurance Donor internal audit cannot and should not unilaterally audit a multi-donor program Currently, audits planned are financial mostly done by the recipient’s “supreme auditor”

Canadian International Development Agency Agence canadienne de développement international Meeting the Challenge Is there a will in the donor/recipient community to perform internal audits of program based approaches? Is there a will for donors/recipient countries to strengthen the function of internal audit? Is there a will to share the results of internal audits? 12

Canadian International Development Agency Agence canadienne de développement international The Question How can Internal Audit ensure that donor/partners meet fiduciary obligations vis-à-vis their respective population? 13