Standards and guidelines for international accounting and auditing in the public sector have been established by three key professional bodies with international membership. This paper, prepared by the Public Expenditure and Financial Accountability Program Secretariat, provides a factual overview of the core standards.
The three main areas covered are: public sector financial reporting and accounting; external and internal auditing in the public sector and internal control. The paper gives a brief description of each of the three professional bodies: The International Federation of Accountants (IFAC) and its Public Sector Committee (PSC), the International Organization of Supreme Audit Institutions (INTOSAI) and The Institute of Internal Auditors (The IIA). This is followed by a section outlining standards in the areas mentioned above. The final part identifies two further sources of standards and guidance in the field. The aim is to present a broad picture, and no attempt is made to analyse the standards.
The international professional bodies are groupings of national professional organisations. They adopt standards and principles which are intended to guide the conduct of their members. Each has a different focus:
- IFAC is a federation of national professional accountancy organizations, with 156 member bodies in 114 countries. Its areas of operation include auditing, financial and management accounting, and public sector accounting.
- INTOSAI is the professional organisation of 185 supreme audit institutions in United Nations countries. These institutions play a major role in auditing government accounts and promoting sound financial management and accountability.
- The IIA is the primary international professional association dedicated to promoting and developing the practice of internal auditing. Its mandatory standards and code of ethics apply to members in both the public and private sectors.
Current international standards for public sector accounting and auditing are based on various broad principles including independence, objectivity and due professional care. An overview reveals that:
- Financial reporting and accounting standards are mainly set by IFAC. By the end of 2002, it had issued 20 standards addressing the presentation, form and content of financial statements, disclosures and the accounting treatment of different transactions, assets and liabilities.
- Work is also underway to produce a standard on the financial reporting of development assistance by recipients.
- For external auditing, INTOSAI has published a set of standards for government audits, which reflect the consensus among its members on best practice.
- IFAC has also issued auditing standards, which were developed for the private sector, but are relevant to all financial audits. It plans to work with INTOSAI to expand their scope to cover public sector organisations.
- Internal auditing standards have been issued by the IIA. While these apply to its public and private sector members, they do not cover all issues of importance to public sector internal audit.
- Internal control is a tool intended to ensure that management objectives are being achieved. Standards and guidelines have been developed by the above three bodies, all of which are concerned with auditing control systems.
