EUROSAI. Magazine N25 - 2019

eurosai 100 Studies and other articles For several years, we at the SAO of Latvia have been calculating the financial impact on the state and municipal budgets in monetary terms – the additional revenue and savings that our audited entities have achieved through the implementation of the SAO's recommendations. The impact of audit recommendations, which is significant and publicly noticeable, has been identified as one of the strategic priorities in the SAO Strategy, to demonstrate the return on each euro invested in the SAO of Latvia. The impact of audit recommendations implemented in 2018 has resulted in an impact of EUR 25.6 million, reaching financial return at a ratio of 1:4. The recommendation to revise the cost of management arrangements for pension funds has had the largest financial impact on the cost reduction in the budget of EUR 13.9 million. The impact of this recommendation on the state budget will have a significant financial impact of some dozens of millions of euros in the next few years. To maintain financial return target in long-term, the auditors are continuing to develop and improve their skills to identify and calculate the impact of audit recommendations. A few years ago, the SAO of Latvia had developed a methodology for identifying and assessing financial impact. From the auditors' point of view, this type of impact is most easily recognised, calculated, and explained to society. Besides, by developing our financial impact assessment skills, we have concluded that this type of impact is not the only impact of work done by the SAO. Last summer, we collaborated with Loren Yager, an expert at the Center for Audit Excellence (U.S. Government Accountability Office), to evaluate the impact of our audit recommendations, and the decision was made to move forward and extend the impact assessment of audit work to include economic impact as well. There are not many audit institutions in the world that assess financial and economic impact. In this respect, we can be proud – our auditors, in collaboration with a highly regarded expert from U.S. Government Accountability Office, have developed methodology from which, according to the expert, many other countries around the world will be able to learn. The expert has pointed out that SAO of Latvia is in a good position to review and elaborate its impact assessment approach, “The State Audit Office has already accumulated valuable experience calculating the financial impact of its recommendations, based on current guidelines, which are of good quality. You are a modern audit institution that can flexibly adapt to the changing demands of public sector auditing. In addition to the professional experience, there are capable employees in the SAO, as well as strong commitment and support on the top management State Audit Office of the Republic of Latvia MEASURING IMPACT AND RELEVANCE OF WORK PERFORMED BY THE STATE AUDIT OFFICE OF LATVIA the SAO of Latvia had developed a methodology for identifying and assessing financial impact The impact of audit recommendations, which is significant and publicly noticeable, has been identified as one of the strategic

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