Mongolia -Capacity Strengthening of the Mongolian National Audit Office (2014-2017)

This proposal has two key components. First, to develop an in-house electronic audit management system (utilizing existing ICT platforms, secure through a Virtual Private Network) for financial, compliance and performance audits in accordance with the ISSAIs.
This would strengthen the quality and timeliness of audits, especially those done in remote regional locations. Second, to establish an effective training system across the SAI, through training national instructors, enhancing training facilities and preparing appropriate training materials.
The SAI has previously tried both Teammate and an in-house developed audit system based on Microsoft Excel, but found neither system to provide a cost effective solution to its needs. The total estimated cost for the project is 3.45 million, of which 10% will be provided by the Government of Mongolia.
A copy of the application is available to those interested in providing support. Please contactINTOSAI.Donor.Secretariat@idi.no
Providers of Support:
The SAI CDF approved financing part of this proposal.
Details on the activities proposed for implementation at MNAO with support from the SAI Capacity Development Fund can be grouped in the following five main activities to be implemented over the course of three years (with the approximate budgets identified):
Activity 1: Conduct a peer review of MNAO’s financial audit activities by an experienced SAI using the INTOSAI’s SAI PMF methodology as deemed appropriate (USD 70,000, SAI personnel and travel cost). A peer review has never been performed on MNAO’s financial audit capabilities. MNAO critically needs, and its management supports, a peer review concentrating on its financial audit capacity and related domains. The peer review would provide an objective, third-party assessment of its strengths, weaknesses and priority improvement needs. These priority areas for improvement would then be incorporated in the organization’s CPD strategy and the relevant knowledge and learning program.
Activity 2: In parallel to the SAI peer review, a comprehensive MNAO knowledge and learning  needs assessment will be carried out covering the entire organization, including its local branch office staff (USD 40,000, local consultants). The knowledge and learning needs assessment will be carried out to identify capacity gaps from within the organization. This assessment will cover all MNAO staff, both at the central and local branch offices and utilize various surveying methods such as enquiry, questionnaire, focus group discussions, individual interviews etc.
Activity 3: A comprehensive, needs-driven and sustainable continuing professional development strategy together with a detailed action plan for three years will be developed based on the peer reviews conducted at MNAO and the knowledge and learning needs assessment (USD 40,000, international consultant + local consultant). 
Activity 4: Development of customized training materials tailored to MNAO’s capacity building needs described in the CPD strategy and knowledge and learning program and delivery of the actual training to MNAO personnel during most of the three-year period of the CPD program (USD 210,000, international and local consultants, local and regional training, including some but minimal travel costs). While the specific content and depth of topics to be covered under the training program are largely to be identified and tailored as per the assessments to be carried out, an early indication of capacity gaps reveals such areas as MNAO staff’s knowledge and understanding of the relevant standards, i.e. IPSAS and ISSAIs (IPSAS implementation guidance and training is being developed and delivered by MOF; ISSAI training materials will be translated  into the Mongolian language and adapted for the Mongolia context), quality control, contracting and management of private audit firm engagements, and auditing of the consolidated financial statements of the Government. At the end of project period, training coverage of over 90 percent of the total auditing staff, or approximately 350 auditors, is expected. Training delivery is expected to include innovative modalities such as online/virtual training using a newly established VPN connection available throughout MNAO offices. To minimize project costs, MNAO will seek to utilize, translate and customize for the local context as necessary, existing ISSAI and other training materials that may be available from IDI or other SAIs.
 Activity 5: Technical assistance to establish an efficient and fully transparent and documented procurement process for contracting private audit firms (USD 20,000, international consultant + local consultant/interpreter). As part of the project, the current MNAO practice of engaging private audit firms to conduct the annual financial audits of budget entities and state-owned enterprises on behalf of MNAO will be analyzed to improve documentation and transparency. Such efforts will be timely and beneficial as, in addition to budget entities, IFI-funded projects are starting to engage in a similar practice where MNAO carries out auditor selection for the projects but by following the IFIs’ own procurement procedures. This proposed project will aim at strengthening and streamlining MNAO’s private audit firm selection processes carried out for budget entities and IFI-funded projects. For these audits conducted by private audit firms MNAO will apply its quality control and quality assurance framework, which may need improvement if identified as priority areas of capacity development as per the continuing professional development strategy and the relevant training program.