WGEI Newsletter Issue No. 13 – December 2018

The content of this newsletter

Introduction

  • About this issue

Need to know

  • Underground assets and illicit financial practices brought under the spotlight in Pretoria
  • A holistic approach to audit of extractive industries

Trainings and Events

  • 10th Meeting of the KSC Steering Committee
  • WGEI Steering Committee (SC) Working Meeting, September 2018

Introduction

About this issue: 

Welcome to the thirteenth edition of the WGEI newsletter! In this edition of the newsletter, you can read about Underground assets and illicit financial practices brought under the spotlight in Pretoria, A holistic approach to audit of extractive industries, 10th Meeting of the KSC Steering Committee, WGEI Steering Committee (SC) Working Meeting, September 2018.
Have a nice read!

Need to know

Underground assets and illicit financial practices brought under the spotlight in Pretoria (By Auditor-General of South Africa)

The mining of the world’s assets below the ground has fallen prey to illicit financial flows (IFFs), robbing countries of valuable revenue that could be used for the benefit of citizens. This was the subject of the second annual meeting of the Steering Committee of the International Organisation of Supreme Audit Institutions (INTOSAI) Working Group on the audit of Extractive Industries (WGEI) held in Pretoria from 25 to 27 September 2018.

With representatives of SAIs from nine countries that make up the steering committee of the WGEI in attendance, the objective of discussing IFF was to understand the practice and its impact. In his welcome address, Mr. Jan van Schalkwyk (SAI SA) indicated that countries with large extractive sectors such as Russia, Mexico, Malaysia, Nigeria, Brazil, South Africa and Indonesia are all listed among the top 10 sources of IFF.

Guest speakers from the South African Revenue Service (SARS), the Financial Intelligence Centre of South Africa (FIC) and the Department of Mineral Resources of South Africa (DMR) provided great insight on the types of IFFs, their respective efforts to track and stop it and its impact on extractive industries in particular. Read More…

A holistic approach to audit of extractive industries (By By Allan K. Amanya-SAI Uganda)

The discovery of mineral resources usually promises to bring prosperity in form of higher tax revenue, increased employment, improved infrastructure and trade, greater growth and wealth creation for all. However many resource-rich countries have not lived up to their development potential due to the “resource curse” of the negative effect of natural resources on the economy, society and politics in these nations. Even where the extraction of natural resources has led to economic growth, it has not necessarily been translated into better human development outcomes.

The exploitation of natural resources begins with the government’s decision to extract for jurisdictions where the sub-soil natural resources ownership rights are retained by government. Governments hold the rights to their resource endowments and they decide who should undertake exploration and production of oil, gas and minerals and under what terms. The exploration and production rights may be allocated by the government using various mechanisms which include concession, production sharing agreement, service agreement, and licence based on several investor selection mechanisms which include open door mechanisms ( first come, first served basis or direct negotiations) or through a competitive bidding process. Regardless of the mechanism used to allocate and grant rights for the extraction of natural resources, Supreme Audit Institutions (SAIs) need to focus attention on “Award of Contracts and Licences” a stage considered critical to the Extractive Industries (EI) value chain because a badly negotiated contract has a ripple effect on the subsequent stages of the value chain and could potentially erode the benefits accruing from the exploitation of the natural resources. Read More…

Trainings and events

10th Meeting of the KSC Steering Committee (By Sheilla Ngira, CoP WGEI/ SAI Uganda)

The 10th meeting of the KSC Steering Committee was held in Kampala Uganda from 20th to 22nd August 2018. The meeting was attended by representatives from the SAIs of Uganda, India, France, Indonesia, Philippines, China, and the INTOSAI Development Initiative (IDI), INTOSAI General Secretariat and Professional Standards Committee (PSC). The purpose of the meeting was to receive reports on the activities of the Working Groups (WG) and chart a way forward. The key messages from the meeting included:

  • WG should embrace the INTOSAI Community Portal
  • SAIs should focus on audit of SDGs
  • The Quality Assurance process for all Non-IFPP products should be adhered to
  • WG need to devise mechanisms of engaging more with the INTOSAI regions

INTOSAI Community Portal

The INTOSAI Community Portal is an initiative of the KSC and IDI designed to provide a single online point of access to the KSC and all its Working Groups. Once work is completed, all WG will be required to migrate their websites to the Portal; each WG will have its own page. Users of the Portal will be able to request video conferences, write blogs, participate in a Community of Practice, post exposure drafts and events in the calendar, among others.

Administration of the Portal will be the responsibility of the KSC, while the WG will update the content on their pages, and the IDI will be in charge of outreach support. The Portal is currently in the testing phase. WG and SAIs are encouraged to use the webinar and video conferencing facilities of the Portal.

WGEI is working closely with the KSC Secretariat to ensure that its website is ready for migration to the Portal. Read More…

WGEI Steering Committee (SC) Working Meeting, September 2018 (By Stefanie G. Fernandez- SAI Norway)

The Auditor-General of South Africa (AGSA) hosted the second WGEI Steering Committee Working Meeting, which was successfully held at AFROSAI-E’s premises in Pretoria from 25th-27th September 2018. Some of the main discussions tackled involved the status for the implementation of the WGEI Activity Plan 2017-2019, the rolling-out of WGEI products, and the strategies for engaging WGEI members and INTOSAI regional bodies. The theme of the external speakers’ presentations was “Illicit Financial Flows” with keynote speakers from the Financial Intelligence Centre of South Africa, South African Revenue Services and Department of Mineral Resources of South Africa.

The meeting was attended by the Steering Committee members as well as representatives from the Capacity Building Committee (CBC) and AFROSAI-E. Meeting presentations can be accessed here. Read More…

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