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The Office of the Auditor General of Norway

Topic: Prevention and detection of irregularities including corruption

Presentation by Dag Nenningsland, Assistant Director General

28.10.2009

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The Office of the Auditor General (OAG)• Supervisory body of the Norwegian

Parliament - established in 1816

• Act of 7 May 2004 relating to the OAG

• The OAG has approximately 500 employees

• The OAG has an independent status vis-à-

vis government administration

• The OAG reports the results of its auditing

and monitoring activities to the Norwegian

Parliament.

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Through auditing, monitoring and guidance ensure that:

revenues are paid as intended

assets are administered in a sound financial manner, and in keeping with the Parliament’s decisions and intentions

The OAG’s paramount purpose

R

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Reporting to the Parliament

Document no. 1• Financial audits and

Corporate Control

Document no. 3 series• Performance audits

Document no. 2• The OAG’s annual

report

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The Parliament’s Standing Committee on Scrutiny and Constitutional Affairs:

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• § 9: The OAG’s duties etc.:

• ”The OAG shall through auditing contribute to the prevention and detection of irregularities and errors.”

Act and Instruc-

tions relating

to the OAG

Auditing

standards

in

the OAG

Guidelines for

financial

auditing

General

Guidelines and

Framework for

auditing

Guidelines

for

corporate

control

Guidelines for performance

auditing

Act relating to the OAG

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• No. 6: ” When planning and performing audit procedures and assessing and reporting the results of these, auditors shall assess the risk that there may be irregularities”

Act and Instruc-

tions relating

to the OAG

Auditing

standards

in

the OAG

Guidelines for

financial

auditing

General

Guidelines and

Framework for

auditing

Guidelines

for

corporate

control

Guidelines for performance

auditing

Audit standards of the OAG

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• Prevention and detection of irregularities is relevant for all types of audit

• In 2007 the OAG introduced Supplementary guidelines on prevention and detection of irregularities

Act and Instruc-

tions relating

to the OAG

Auditing

standards

in

the OAG

Guidelines for

financial

auditing

General

Guidelines and

Framework for

auditing

Guidelines

for

corporate

control

Guidelines for performance

auditing

The OAGs supplementary guidelines

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• Norway is regarded as being one of the countries in the world with the least corruption in society and business life

• Recently the number of new corruption cases investigated by the police has increased 2004: 2, 2005:21, 2006:22, 2007:34

• Most of the corruption cases in the public sector have taken place in municipalities

• The majority of the corruption cases have been discovered by chance or by media, not by auditors

• Many public entities do not make risk assessment on irregularities including corruption

Corruption in public sector

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4 serious corruption cases in the public sector 2004-2006

• One case in a state entity and three cases in municipalities

• Two of the cases came to light via media, one by information from the tax authorities to the police and one through a money laundering report to the police

• In two of the cases the convicted persons were newly recruited directors, in the other two cases the convicted persons had been in the public entity for a long period

• In two of the cases the convicted persons had persued corruption for many years, with a network of private companies and associates

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4 serious corruption cases in the public sector 2004-2006

• Three of the cases involved men in management positions and internal or external associates

• All the main persons manipulated public procurement contracts

• The proceeds of the crimes included money, equipment, goods and travels. Two of the convicted persons gained illegal profit of millions of Euros

• In each of the cases the public entities’ internal control had serious weaknesses

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• Introduced supplementary guidelines on prevention and detection of irregularities (2007)

• Internal competence building through training and practice, and recruitment of specialists (2007)

• Established an internal group of specialists on prevention and detection of irregularities (2008)

• Instructions from the chief executive officer of the OAG to consider the risk of irregularities for all audited entities (2008)

Initiatives by the OAG against irregularities

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• Established an electronic channel for citizens for submitting information on irregularities (2008)

• Established internal ethical guidelines (2008)

• Established a system and procedures for whistleblowing (2008)

• Established cooperation with law enforcement and other relevant public offices (2008)

Initiatives by the OAG against irregularities

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• According to the Act relating to the OAG § 15, The OAG can make a report to the police if an audit reveals circumstances indicating a criminal offence.

• The OAG can also cooperate whenever relevant with other public supervisory authorities.

• The OAG cooperates with the The Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime (Økokrim)

• The OAG has also established contact with the tax authorities and The Norwegian Labour and Welfare Administration

Corporation with public supervisory authorities

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