Strengthening SAI capacity to safeguard natural resource governance

Posted by WGEI On Mar 12, 2021

About 3.5 billion people live in countries rich in oil, gas or minerals. With good governance and transparent management, the revenues from extractive industries can have an impact on reducing poverty and boosting shared prosperity, while respecting community needs and the environment.[1] Historically, however, the extractive industries have often contributed to many of the challenges that the sustainable development goals (SDGs) are trying to address such as environmental degradation, displacement of populations, conflict, corruption and the violation of human rights.

In the spririt of INTOSAI-P12 on the Value and Benefit of SAIs – making a difference in the lives of citizens, SAIs are in a position to keep governments accountable for spending state resources responsibly through our audits and related services. Given the grave implications of poorly governed  extractive industries for our citizens and the environment, this is an area where SAIs have a significant role to play.

In the sector of petroleum exploration and production, traditional audits are important but not sufficient. If we want to establish whether a government effectively protects its share of the revenues, we need to go beyond. Therefore a system-oriented performance audit is of significant value.

The Netherlands Court of Audit (NCA) in cooperation with AFROSAI-E and funded by the Netherlands Ministry of Foreign Affairs, developed an online course, How to audit government’s performance in managing oil and gas contracts, which builds on the insights from a regional cooperation project (2018-2021) involving the Supreme Audit Institutions of Kenya (OAG), Mozambique (TA) and Tanzania (NAOT). The course enables auditors to critically look on how to audit government’s performance in managing oil and gas contracts (particularly Production Sharing Agreements).

AFROSAI-E launched the course on its learning platform last year and it is available in English, French and Arabic to auditors from all SAIs globally. SAI auditors from countries that are exploring and producing oil and gas will greatly benefit from completing this free course.

Learners from 128 SAIs around the world have already accessed this course since it’s launch in June 2020. Learners who have already completed the course commented that it enables auditors to gain valuable insight on:

  • The reason why system-oriented approach to performance audits is applicable for oil exploration and production
  • Who participates in the audit process
  • The importance of monitoring costs
  • The characteristics of the proper functioning of the monitoring and accountability system
  • Understand how to formulate the objective of a system-oriented performance audit in cost monitoring
  • Develop audit questions using the input and output model as a tool
  • Identify sources of audit criteria to evaluate the effectiveness of government cost monitoring
  • Examples of solid audit evidence to back up your findings
  • Certain specific problems in an audit on oil exploration and production

Another valuable aspect of the course learners commented on is the practical applications and real-world examples from Mozambique, Kenya and Tanzania on how to audit government performance in managing oil and gas contracts.

Another ALP learner noted that “Although my country does not use PSC, the system-oriented performance audit is particularly useful and the clear approach can be applied in other government contracts. I now have a very thorough knowledge of the sector that can help me understand the stakeholders and the processes involved. I specialised in environmental auditing and the system-oriented performance audit can be especially useful in the assessment of government monitoring of environmental and social impact of extractive industries.” – ALP learner

We want to encourage SAIs and individuals to include the online course: How to audit government’s performance in managing oil and gas contracts on their SAI-level and individual training plans. The four modules of the course only take an hour to complete. Learners who complete the course in full, will hence forth earn a certificate of completion.

To access the course, go to the AFROSAI-E Learning Platform (ALP) at www.afrosai-e-learning.com, register a profile and upon receiving the approval (this can take up to 48hrs) enrol for the course on ALP. If you have any questions on the registration process, refer to our Frequently Asked Questions section on the ALP page.

[1] https://www.worldbank.org/en/topic/extractiveindustries

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