Auditing Oversight in Public Sector Organizations

Auditing Oversight in Public Sector Organizations

We live in an age of intense and continuously heightened vigilance regarding the activities of public sector organizations. The pressures, risks and challenges facing the public sector are both growing and evolving and the machinery of accountability has grown increasingly elaborate at the federal, provincial and municipal levels. For accountability to work properly, all parties to the accountability relationship–departments, crown corporations and public authorities, external and internal auditors, and oversight bodies–play important and interdependent roles. Working together, they are the foundation for an accountable, transparent, well-governed and high-performing public sector. Oversight is a critical governance function performed by boards of directors, committees, councils, and other bodies. Oversight refers to the actions taken to review and monitor public sector organizations and their policies, plans, programs, and projects, to ensure that they:

• are achieving expected results;
• represent good value for money; and
• are in compliance with applicable policies, laws, regulations, and ethical standards.

Effective oversight has never been more important to the success of public sector organizations. Public spending increasingly happens outside traditional models of departmental/ministerial accountability and governance. In many jurisdictions, governments have divested themselves of direct program delivery by:

• delegating the delivery of programs and services to newly created agencies, boards or authorities; or
• outsourcing the delivery of programs, services or capital projects to private sector partners, through public-private partnerships or other types of contractual agreements.

This creates new risks that must be managed and mitigated. It also creates new opportunities for internal auditors. By conducting audits of oversight bodies and functions, internal auditors can play an important role in helping public sector organizations to achieve a balance between risk and controls, efficiency and costs. Through their reports, auditors can:

• identify the causes of breakdowns in oversight (audits of oversight are often conducted after a significant failure, crisis, or scandal);
• highlight weaknesses and inefficiencies in oversight regimes (thus helping auditees to prevent breakdowns in oversight);
• point to best practices;
• make recommendations for improvements; and
• help departments, agencies, boards and authorities to improve their oversight performance and avoid repeating past mistakes.

This presentation will highlight aspects of CCAF’s ‘Practice Guide to Auditing Oversight’. This Guide has been developed to provide public sector auditors with current guidance that will help them plan, carry out and report on audits that focus on the effectiveness of oversight bodies and functions.