Financial audit

The purpose of a financial audit is to ensure that regulations on the state budget and central government finances are complied with, and that correct and sufficient information on the profit, expenditure and financial position of the central government and its accounting offices is provided in reports. Financial audits result in concrete corrections and actions to develop the central government.

An audit supports the fulfilment of Parliament’s budgetary and legislative power and appropriate internal control, compliance with the principles of good governance and fiscal principles, as well as the efficiency and development of administration. An audit also supports administration under the Government in the management of central government finances and promotes the sharing of good practices.

Scope of financial audits

NAOF annually audits the financial statements of the central government and its accounting units, i.e. ministries and other agencies and institutions. In addition, NAOF audits the financial statements of three funds outside the state budget (Fire Protection Fund, Oil Protection Fund and State Television and Radio Fund) and prepares audit reports on them. During audits, NAOF also analyses systems used in the state’s financial and HR administration. NAOF conducts approximately 70 financial audits every year.

During an audit, the following areas are reviewed in organisations being audited:

  • budget procedures

  • setting of financial goals

  • final accounts

  • annual report

  • internal control procedures

  • compliance with the budget and key budget provisions

The need for an audit is determined according to the significance of the entity considering the management of central government finances and financial statements and the risks involved. Another key factor is the impact of the entity on public decision-making.

On the basis of an audit, NAOF issues a statement on:

  • whether financial statements have been prepared as required in regulations

  • whether the review of statements and notes provides correct and sufficient information about the finances of the accounting unit and the state

  • whether correct and sufficient information about operational efficiency has been presented in the annual report

  • whether internal control has been arranged properly in the agency or institution being audited

  • whether the budget and key financial regulations have been complied with

Guidelines for financial audits and quality assurance

Financial audits are based on NAOF’s audit guidelines issued on the basis of section 20 of the Act on the National Audit Office. NAOF applies the ISSAI standards of the International Organization of Supreme Audit Institutions (INTOSAI) to these audit guidelines.

NAOF has also defined quality requirements for its audit guidelines. Quality is ensured by means of risk analyses, audit plans, audit process management and the evidence, clarity and uniformity of statements issued on audit reports. Computer-aided methods are used in all financial audits.