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National Audit Office’s Annual Report to Parliament 2021

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The National Audit Office responds to changes in the operating environment

It is the duty of the National Audit Office to support decision-making by producing topical information on issues that are significant to central government finances and to ensure the accountability of public administration. Since the outbreak of the Covid-19 crisis, we have redirected our audits and their contents and adjusted our working methods. We have strengthened our digitalization expertise, continued to cooperate with our stakeholders over remote connections, and started to assess our practices internally.


The National Audit Office of Finland is an independent audit and monitoring authority, the role and duties of which are laid down in the Constitution of Finland. The National Audit Office is responsible for auditing the management of central government finances and compliance with the state budget, and for monitoring fiscal policy rules. We perform our duties by conducting performance, financial, compliance, and fiscal policy audits, as well as multi-type audits combining these. Multi-type audits combine the methods and data of different audit types and can provide a more extensive overview of the audited entity. The National Audit Office also monitors political party and election campaign funding. Our activities focus on ensuring the cost-effectiveness of the management of central government finances and on promoting trust in the knowledge base of decision-making as well as transparency and sustainability.

We identify and audit essential risks to central government finances

The foundation for the audit of central government finances is formed by annual audits of the final accounts of the state, the ministries, and the government agencies. Our audit work also includes audits whose topics are selected based on the risk analysis made by the National Audit Office and which are implemented with the different audit types or their combinations. Under fiscal policy legislation, it is the duty of the National Audit Office to assess the setting and implementation of fiscal policy objectives. The aim of fiscal policy monitoring is to promote transparent and easy-to-understand fiscal rules as well as stable and sustainable general government finances. Each year we also audit both political party funding and government subsidies granted to political parties, i.e. party subsidies.

During the report period, we conducted a total of 80 audits: 66 financial audits, 8 performance audits, 2 multi-type audits, 3 compliance audits, and 1 fiscal policy audit. In addition, we published two fiscal policy monitoring reports and a report on the oversight of political party funding. Of the working hours spent on audit and monitoring, we spent 88 per cent on auditing and 12 per cent on monitoring.

Of the working hours in core activities, 88 per cent were targeted at auditing as follows: financial audit 41 per cent, performance audit 29 per cent, compliance audit 10 per cent, multi-type audit 6 per cent, and fiscal policy audit 2 per cent. Of the working hours in core activities, 12 per cent were targeted at monitoring and oversight as follows: fiscal policy monitoring 7 per cent and oversight of election campaign and political party funding 5 per cent.
Figure: Distribution of working hours in core activities between audit and monitoring in 2020.

Visualization: Targeting of performance, compliance, and fiscal policy audits at different administrative sectors during the past five years

The figure illustrates how our performance, compliance and fiscal policy audits have been distributed between the different administrative sectors during the past five annual report periods. Select the administrative sector you wish to view in the figure. When you click on an administrative sector, a list of all audits targeted at it per year opens.

Get background information about the visualization here.

The follow-ups showed that 90 per cent of our recommendations had been implemented at least in part.

We monitor the impacts of our audits by conducting follow-ups where we examine how our recommendations have been implemented. On average, we carry out follow-ups two years after the audits have been completed. During the annual report period, we conducted 17 follow-ups. They showed that 90 per cent of our recommendations had been implemented either in full or in part.

The Covid-19 pandemic has redirected the National Audit Office’s activities

Because of the Covid-19 pandemic, we have redirected our audits and focused their content in a new way. In spring 2020, our audit plan was supplemented with audits targeted at the business subsidies granted during the Covid-19 pandemic and at security of supply. In the audit of central government debt management, which was already included in the plan before the pandemic, a decision was made to also examine procedures related to the pandemic and the increased need for borrowing. The experts of the National Audit Office have also written blog posts and produced analyses of the impacts of the pandemic and the financing solutions taken to manage them.

The Covid-19 pandemic has also had a strong impact on fiscal policy monitoring. Because of the Covid-19 crisis, the fiscal policy objectives of the EU framework were not in force. For this reason, the reports of the National Audit Office issued during the annual report period did not discuss compliance with them. The fiscal policy monitoring report of December 2020 and the fiscal policy monitoring assessment of spring 2021 assessed the General Government Fiscal Plans prepared during the pandemic in relation to the requirements laid down by fiscal legislation. Special attention was paid to the fiscal policy measures taken by the Government to mitigate the impacts of the Covid-19 crisis. The reports also assessed the realism of the macroeconomic and budgetary forecasts on which fiscal policy is based and the exceptions made to the validity of central government spending limits. Both reports assessed the Government’s sustainability roadmap, particularly the progress of employment measures and their impacts on general government finances.

A review of the fiscal policy monitoring function of the National Audit Office was completed in June 2021. The review was conducted by the OECD at the National Audit Office’s request. We will utilize the results of the review when organizing, directing, and developing our audit work. In spring 2021, we started to publish a regularly updated business cycle heatmap and a cyclical indicator based on it. We had been utilizing both of them already before in our internal analyses.

Oversight of election campaign and political party funding has improved the transparency of funding

In 2020, we audited several years’ funding of all the parties represented in Parliament as well as certain district organizations and women’s organizations receiving party subsidies. The number of audited entities was 49.

As a rule, parties comply well with funding legislation. However, in district organizations and women’s organizations, in particular, we found considerations on which no statutory disclosures had been filed. The audits have improved the transparency of funding, as several contributions have been reported to the register retroactively.

In autumn 2020, the National Audit Office approved guidelines for filing election funding disclosures in the 2021 municipal elections. The guidelines had to be revised when the 2021 municipal elections were postponed. The updated guidelines are available in the Finlex database and on the website maintained by the National Audit Office at www.vaalirahoitusvalvonta.fi. 

Digitalization also encourages the National Audit Office to develop its practices

During the annual report period, the financial audit function introduced a new operating model where the processes of financial management and compliance with the budget are audited in a centralized manner. The aim of the model has been to respond to the changes in the management of central government finances. The central government applies uniform processes in key issues to financial management, which makes it possible to audit them very efficiently in a centralized manner. The methods of auditing compliance with the budget have also been unified. In addition, financial audits have strived to give more consideration to agency-specific features. The operating model will be further developed in connection with the financial audits of 2021.

Since the end of 2020, we have continued to develop digitalization and data analytics systematically. We aim to build a digital foundation in order to be able to manage all of our activities based on knowledge and strengthen the efficiency and effectiveness of our audit work. At the same time, we will ensure that our activities meet the requirements set by the Information Management Act.

The development work is centred around various experiments, through which we try to find new practices and analysis methods for our audit work. In the audit of the business subsidies granted during the Covid-19 pandemic, for example, we tested using text analytics as the audit method. We have continued the text analytics experiment and extended it to future audits.

Cooperation improves the impacts of our activities

The National Audit Office is in continuous dialogue with its stakeholders. The parliamentary committees and the ministries have utilized the agency’s expertise increasingly during the past few years. During the annual report period, the experts of the National Audit Office issued 30 opinions to parliamentary committees and 14 opinions to ministries preparing Government proposals or to other public administration. Our experts were heard in parliamentary committees 19 times.

The information presented in the figure is disclosed in the text.
Figure: Opinions issued to ministries and Parliament, and parliamentary committee hearings during the annual report period.

International cooperation has continued over remote connections during the Covid-19 pandemic. During the annual report period, we have held the presidency of the Working Group on Environmental Auditing (WGEA) of INTOSAI, the global umbrella organization for supreme audit institutions. In this role, we organized the General Meeting of the WGEA in January 2021 for the first time over remote connections. The number of participants in the remote meeting was historically high.

In EUROSAI, the European Organization of Supreme Audit Institutions, we have been leading a joint Covid-19 project of different countries, together with the SAI of the United Kingdom, which acts as the chair of the project. The countries participating in the project have shared information and good practices on how to audit the measures taken by different states to safeguard the operating conditions of both the economy and healthcare.

The sub-project “Protecting the economy”, led by Finland, found that the measures to support businesses and households have been quite similar in all countries and that audits are targeted at the same topics. In addition to exchanging information on the common audit topics, the countries participating in the sub-project heard in advance about the EU’s stimulus package and its importance. They also received valuable advance information on the audit of the stimulus package to be conducted by the European Court of Auditors.

The National Audit Office assesses its own activities

During the annual report period, the National Audit Office’s own activities have attracted considerable media attention. In spring 2021, the National Audit Office was subject to a special audit, and the Audit Committee examined its financial management and internal control. We have launched a self-assessment of our management system, organization model, and processes, and we have also assessed the appropriateness of our expenses, financial management guidelines, and operating policies.

Additional information on the operations of the national audit office during the annual reporting period

The link below opens a PDF file which includes information on the audit publications of the National Audit Office from September 2020 to August 2021.

Audit publications from September 2020 to August 2021

The financial audit reports are available in Finnish only, with the exception of the State Department of Åland and the final central government accounts and the final central government accounts. The follow-up reports are also available in Finnish only.

Further information

Sanni Hellman
Principal Performance Auditor