Audited entities subjected to the audits by the State Audit Office:
• State institutions;
• State and local government companies or private companies as per Law "On State and local government shares and companies";
• Local governments and their established institutions and companies;
• Other companies, associations, foundations and natural persons, if they are entitled to act with or store State or local government resources, are financed by State or local government resources and carry out State or local government procurement;
• Beneficiaries of resources allocated by the European Union and other international organizations or institutions and included into the State budget or local governments budgets.
Planning of the Audits
– The audits are performed in accordance with the State Audit Office Annual Audit Plan approved by the State Audit Office Council.
– The State Audit Office Annual Plan is elaborated on the basis of audit priorities approved by the State Adit Office establishing:
• particular audit issues;
• calendar time planned for the audit;
• planned man - hours;
• financing nesessary for performance of the audit.
– The State Audit Office performs audits in accordance with the international auditing standarts recognized in the Republic of Latvia:
• INTOSAI (International Organization of Supreme Audit Institutions), which indicates, that each supreme audit institution has to decide on how to estalish the materiality level and audit assurance level.
• IFAC (International Federation of Accounts), which are standarts of International Federation of Accountants.
92% is the assurance level according to which the State Audit Office operates. Thus it make the audit risk 8%, for its part the materiality level is 0,5% of total expenditure of the financial statement, where four or more financial statements are consolited and 1% for other financial statemant audits.
The State Audit Office performs three types of audits:
1. Finacial audits,in the framework of which auditors assess:
– if there are no significant errors or discrepancies in the financial statemants,
– if preparation of the financial statement is made in accordance with the requirements of the regulatory enactments and accounting
standarts, and express opinion on the financial statements.
The State Audit Office may provide the follownig audit opinions:
• Unqualified audit opinion is given if the auditor concludes that the financial statemants in all significant aspects provide true and fair view in
accordance with the requirements set for financial statements;
• Qualified audit opinion is given if the auditor concludes that unqualified opinion cannot be provided or if disagreement with the management
of the audited entity or limitions of the audit volume are not of such significance and do not have such deep impact on financial statements
in order to provide adverse audit opinion or disclaimer of giving audit opinion;
• Adverse audit opinion is given if the auditor concludes that impact of disagreement on financial statements is so significant that qualified
audit opinion cannot be provided in order to explain misleading or incomplete nature of the financial statements;
• Disclaimer of giving audit opinion is given if the result of audit compency restriction is so significant and has such influence, that auditor
could no have acquired sufficient amount of adequate audit evidence and therefore cannot give the opinion on financial statements.
2. Legality audits, in the framework of which auditors assess correspondance of transactions and activities of the audited entities to the regulatory enactments and planned results.
3. The goal of performance audits is to provide information on efficiency of utilization of the State and local government resources and management of propety. During performance audits the auditors examine economy, efficiency and productivity of the audited entities.
During performance of the audits the following audit stages are observed:
• Audit planning stage, during which such audit approach is developed, which ensures collection of corresponding, sufficient and
credible audit evidence in order to provide opinion on the financial statement. During this stage audit plan and detalied audit program is
developed. Distribution of work among the members of the audit working group is done and time resources are defined. In the audit planning
stage the auditor acquires understanding on activities and according internal control systems of the audited entity, as well as establishes
materiality level and identifies significant risks.The audit planing process of the State Audit Office ensures unified aproach, which provides
that audits are performed in accordance with the same auditing standarts and reach the determined audit assurence level;
• The audit evidence collection stage, during which corresponding, sufficient and credible audit evidence is collected and summarized,
in order to provide an audit opinion. The audit evidence may be collected using different methods and audit procedures (control procedures
inspection, detailed inspections and relying on the work of the qualified auditors);
• Audit conclusion stage, during which the achieved results are assessed, findings are summarized, conclusions are made, recommendations for elimination of detected deficiences are prepared, as well as audit report is developed and approved and opinion is provided.
At the end of the audit supervision of detected deficiences elimination is performed, during which Head of the audit working group observes audites entity's reporting on the implemention of audit recommendations according to the timetable.
Organization of the Audit Work
In the State Audit Office audit work is distributed among audit departments, which are comprised of audit sectors. Audit working groups are formed for implementation of the audit work.
Audit departments -> Audit sectors -> Audit working groups for performance of particular audits.
Head of the Sector:
– Appoints head of the audit working group and members of the group;
– Examines and approves each audit plan;
– Supervises the audit evidence collection process;
– If necessary participates in the performance of the audit;
– Examines and approves draft audit reports before they are sent to the audited entity for rendering explanation;
– Provides information to the Head of the Audit Department on regular basis.
Head of the audit working group manages the audit.
The audited entity is entitled to express its opinion on draft audit report in writing, as well as render explanations.
The audit is conclused by arrival of the audit department's decision on audit report and audit opinion and on report by the audited entity on approval of timetable for implementation of audit recommendations.
The State Audit Office sends the approved documents to the audited entity. After the documents come into force the State Audit Office also sends an inromative report on the audit and the copy of the audit report to sector minister and to the Minister of Finance.
If the State Audit Office considers deficiencies disclosed in the audit being significant violations of the regulatory enactments, relevant information is prepared and sent to law enforced institutions and the State Audit Office employees keep track of the activities performed by these institutions.
Audit Quality Control
In order to provide quality of the audit work and the results, the State Audit Office has defined standard approach for provision of audit guality control.
In the framework of audit quality control the State Audit Office performs the following:
• Quality promotion activities, which include assessment of audit documentation in the course of the audit and rendering assitance to
auditors with regard to methodology;
• Quality control inspections for closed audits.
Carrying out quality control inspections enables assessing organization of the audit work and identifying best practise