Accounting and Auditing
A Diagnostic Tool
for Benchmarking National Standards to
• Developed in 2006 by the Financial Management Unit of
the World Bank South Asia Region as a new diagnostic
tool to assess how well public sector accounting and
auditing practices accord with the IFAC and INTOSAI
• It uses a set of self-assessment questionnaires focusing
on identifying the gaps in the national standards
implemented in each country.
• Tested and applied in the countries of South Asia.
Subsequently modified and used in Azerbaijan and
Colombia (in progress).
Developing the Framework
• The Gap Analysis Framework is based on the ROSC (Report on
Observance of Standards and Codes)-Accounting and Auditing
Framework which summarizes the extent to which countries observe
certain internationally recognized standards and codes in the private
sector. The tool has been suitably modified to the public sector.
• The development of the Public Financial Management Performance
Measurement Framework opened the way for a more detailed
accounting and auditing diagnostic based on IFAC and INTOSAI,
especially when the ISSAI were promulgated.
• Pilots were conducted in two countries – Bangladesh and Sri Lanka
which helped refine the framework based on experience
• Later rolled out to the remaining countries in South Asia and reports
have been completed and are available on the web. Work is in
progress in India where the Government is doing a self assessment.
PFM Framework accounting and
• PI 10. Public access to key fiscal information.
• PI 22. Timeliness of accounts reconciliation.
• PI 23. Information on resources received.
• PI 24. Quality of budget reports.
• PI 25. Quality of annual financial statements.
• PI 26. Nature and follow-up of external audit.
• PI 28. Legislative scrutiny of audit reports.
Questionnaires on country
• 1. The public sector accounting environment ― financial
laws and standard-setting arrangements, educational
requirements for accountants compared with IFAC IES,
ethical requirements compared with the IFAC Code of
• 2. Public sector accounting practices for the general
budget sector if using the cash basis of accounting ―
compared with the requirements of the Cash Basis
• 3. Public sector accounting practices for the general
budget sector if using the accrual basis of accounting ―
compared with the requirements that govern IPSAS
accrual reporting for the public sector.
Questionnaires on country auditing
• 4. Public sector auditing environment ―
compared with the provisions of the INTOSAI
Code of Ethics and the general standards in the
INTOSAI Auditing Standards.
• 5. Public sector auditing practices ― compared
with the field and reporting standards in the
INTOSAI Auditing Standards and the ISSAI.
• 6. Accounting and auditing practices for state-
owned enterprises ― compared with the
requirements of the IFAC International Financial
Reporting Standards (IFRS) and the ISSAI.
Results for Accounting
• All the South Asia countries, except Sri Lanka, will
adopt the IPSAS Cash Standard within the next few
years. Sri Lanka has adopted the accrual basis of
• All the countries in South Asia have expressed a
desire to move in the direction of accrual accounting in
the long run.
• Each country is to establish an accounting standards
committee to issue guidelines on how the IPSAS are to
be implemented within their country.
• The IFAC Educational Standards are being considered
as one of the criteria for staffing the accounting
departments in the future.
Results for Auditing
• The SAIs will need to: (a) modify their audit methodology to be
consistent with the international standards; (b) adopt the IFAC
Educational Standards as the criteria to be followed for staffing;
(c) adopt the more detailed ISSAI auditing standards; and (d)
improve their laws to fully meet the independence standards set
• Programs for change and self improvement need stronger staff
expertise to meet the increasing demands for certification of
annual government financial statements at national, departmental
and provincial levels.
• Most SAIs have little current capacity for handling environmental
and forensic audit.
• There was a general problem of obtaining adequate
implementation of recommendations included in audit reports and
the systems of oversight by the Public Accounts Committees
(PACs) require strengthening.
• Public reporting of audits needed to be much more timely and
Bank Strengthening Programs
• Used available model laws to develop suitable national
• Provided capacity building through integrated
accounting and audit system improvement programs.
• Proposed more rigorous staff appointment, training
and advancement arrangements including adherence
to IFAC Educational Standards for auditors.
• Provided manuals and training for broader themes of
audit (e.g., performance auditing).
• Initiated support to PAC Secretariats in examining
Results in other South Asia
• Afghanistan – IPSAS cash basis accounts, SAI
• Bangladesh – assisting a broad PFM reform program.
• Bhutan - SAI improvement program.
• Maldives – new financial audit methodology supporting a
SAP implementation using IDEA and TeamMate.
• Nepal - SAI improvement program planned.
• Pakistan – A stand alone project (Project to Improve
Financial Reporting and Auditing called PIFRA) is under
implementation for treasury computerization and SAI
• Sri Lanka – IPSAS adopted and SAI improvement
Gap Analysis Reports
• Gap Analysis Framework document and
Country Reports [Afghanistan,
Bangladesh, Maldives, Pakistan, Sri
Lanka, Nepal, Bhutan] are available on the
World Bank web-site.
• Report for Azerbaijan is also available
• The Framework is available for use by any
country or institution