AUDIT STANDARD No. 1 – GENERAL STANDARD ON THE AUDIT ACTIVITY OF THE NATIONAL AUDIT OFFICE
The Audit standard No. 1 sets out the audit activity of the National Audit Office, the stages, approaches and requirementsfor conducting audit.
1. The National Audit Office is an independent state body for external audit of all budgetary and other public funds and activities by virtue of the National Audit Office Act.
2. The National Audit Office performs its audit mandate through carrying out financial audit, which includes financial management audit and financial statements audit, performance audit and other types of audit. The different types of audits can be conducted in combination or separately, depending on the audit objectives.
3. The audits are performed on the grounds of the National Audit Office Act, and in compliance with the requirements of the audit standards and the Audit Manual of the National Audit Office, which are consistent with the INTOSAI audit standards and the Guidelines for their implementation.
4. The audit standards regulate the main principles, requirements and scope of the actions, which should be carried out in the course of audits in order to achieve their objectives.
5.In order to implement the individual audit standards, the National Audit Office adopts an Audit Manual and other audit related internal regulations.
6. In the course of audit activity the professional and ethical principles and standards, set out in the Code of Ethics, shall be applied.
7.The audit process consists of the following stages:
7.1Planning the audit task
During this stage a preliminary study of the auditee is carried out according to the requirements of Standard No.2 and an audit programme is drawn up for implementation of the audit task.
7.2 Performing the audit task
During this stage the audit programme forperformingof the audit task is implemented, examinations are carried out through application of appropriate techniques and procedures, audit findings and evaluations of the audit team are set and audit evidence collected. A constructive dialogue is maintained with the management of the auditeeduring implementation of the audit task, the main issues are discussedand the facts and circumstances reflected in the findings of the audit team are clarified and specified.
7.3 Reporting
An audit report and/or an audit opinion are preparedduring this stage in line with the requirements of audit standards No. 10, 3 or 4 as well as a report on the resultswhich are submitted to the information users according to the approved procedure.
7.4 Follow-up of implementation of the recommendations
The implementation of the recommendationsfor improvement of the management of budget and other public fundsand activities,given in the report on the results,is followed upduring this stage. In case of non-fulfillment of the recommendations, actions provided for in the National Audit Office Act are undertaken.
8. The audit quality at every stage of the audit process is guaranteed by a quality control system.
9.Two main approaches are appliedseparately or in combinationduring implementation of audit tasks:
9.1.System based approach
It is based on the adequate and effective operation of the financial management and control system of the auditee.
9.2 Direct substantive testingapproach
It is based on direct examination of financial and operative information about the auditee.
10.Regardless of the audit approach chosen and applied, it is obligatory to check the adequacy and functioning of the financial management and control system of the auditee.
11. Uponconducting audit tasks,the resultsof the internal audit can be used as well as the results of the activity of other external auditorsor conclusions ofexternal expertsinvolved, inline with the National Audit Office Act.