The SAI is established under a constitution by an Act of Parliament/Legislative body. Parliament selects Head of SAI. The mandate of the SAI's President can be terminated-:
There are no qualifications prescribed for appointment of the head of SAI. The head of SAI is appointed for a fixed12 years tenure And/or up to a prescribed of tenure and age limit of 70 years old.
The various conditions of service of the head of SAI to secure independence are:
The SAI is absolutely independent of the other branches, is separated from them. The budget of the SAI is a separate chapter within the state budget, Therefore, it has financial independence. The Parliament decides on the allocation of the resources. The draft budget, submitted to the Parliament is of course a result of long-lasting harmonisation's, discussions, which the SAI can influence. In addition, there is a legal provision, according to which "the resources required for the adequate operation of the SAI are to be ensured" (it could refer to this, if resources were not sufficient). Means of securing the SAI's accountability:
1. The financial statement of the SAI, as a separate chapter of the state budget ("separate head" within the state budget).
2. Annual report (on the activity of the SAI)
3. Report of an independent auditing company (private company selected by public procurement)
The SAI's jurisdiction extend to the following:
Foreign aids and grants belong indirectly to the audit scope of the SAI, because such resources are usually used and supervised by government agencies, entities, etc (and not by "non-state stakeholders"). Government investments in abroad (implemented as minority share holder can be audited only under certain circumstances.
The jurisdiction over regulatory bodies rests mostly with the responsible ministries, government agencies. However, such bodies can be audited indirectly, through auditing the activity of ministries, government agencies.
If auditors find it necessary to requisition all the records, they have the right to do so - even if the records contain data of state or official secret. SAI has no powers to enforce or initiate enforcement action to secure access to needed records, which are not produced.. It has powers to seal, search and seize documents and other related items where it is considered necessary for its audit and inspection. SAI has no powers to seek testimonials of the persons concerned with audit and inspection. SAI can seek co-operation of person other than the agencies subject to audit and inspection. The SAI does not instruct the investigating agencies, but informs them on the disclosed or suspected offences. SAI Hungary is not a Court. The SAI has nothing to do with claims of interested persons in connection with official actions, duties and behaviour of persons subject to audit and inspection. To decide on the claims is the task of courts, the "Judicial Branch".
SAI has the authority to dispense with, in whole or part, the audit of National, Provincial and local Government accounts and other related matters. Some of the SAI's audits focuses only on certain "activity" segments" of the auditees. If the SAI examines the primary education of the country it does not audit the whole financial management of the authorities or that of the Ministry of Education. SAI cannot take punitive action and/or impose surcharges. It has powers to access the computer systems of the auditees and the power to download and use electronic data either in site or off site. SAI also has powers to review the development of computer systems by auditees and suggest/enforce any controls. SAI has a role in the commissioning of other external auditors engaged by the auditee for meeting any statutory requirements. If such external auditors are engaged, SAI can make preliminary proposals for signing contracts with them.
The SAI prescribed Financial, Compliance, Performance & EDP audit in its scope of audit. The aspects of the SAI's auditing work (expediency, efficiency, effectiveness, regularity) are mentioned in the "Act on the Supreme Audit Office". Thus, the different types of audit are practically determined by law. SAI conducts Pre audit. One of the duties of our SAI is to comment on the draft of the state budget. This work of the SAI might be regarded as a special pre-audit. Financial and performance audit methodology of the SAI is based on European Implementing Guidelines for INTOSAI Standards (prepared by the European Court of Audit) and the "best practice" followed by the NAO (United Kingdom). SAI does not discharge judicial functions. SAI is required to follow specific standards, practices and guidelines in conducting audit and reporting. It can also consult and/or collaborate with other countries/SAIs and international organisations on matters relating to audit. Conducting joint/co-ordinated, etc. audits with other countries, working out methodologies, exchange of audit experiences and experts, attending conferences, etc.
SAI can engage consultants and/or obtain professional services in conducting audit. It can report on acts that infringe upon State economic interest like mass embezzlement of State assets, serious losses and wastes. The SAI does not require that any fraud or embezzlement be reported mandatory by auditees. Before finalising the audit report, findings have to be forwarded to the auditee. The auditor has 15 days to accept or deny the explanations of the auditee. Before the preparation of the SAI's annual report the auditees are instructed to fulfil the recommendations. If they fail to do it, it will be noted in the annual report. SAI has no role on the disposal or the action taken on audit findings. SAI can present an interim report before rendering an annual report on the examination of the closing of accounts of Central, Regional and Local governments. This interim report is exclusively for internal use. Thus, auditors can get familiar with the content and make comments. SAI has powers to share its audit reports with the public and media only after formal reporting.
In the case of Financial Statement audits SAI has no the power to amend accounts. SAI has an advisory role. "The State Audit Office shall express its opinion on the reasonableness, expediency and completion of the government programmes and capital investment forecasts involving state commitment, submitted to Parliament."
"In the course of its audit, the State Audit Office shall follow up the observance of the state accounting order, shall express opinion on and countersign the proposals for further development, and shall make such proposal."
SAI is constituted as an audit office with monocratic status i.e. with an Auditor General or equivalent as head. SAI has its own Metropolitan Office and County Offices (29) and Regional Offices (6). They constitute part of the organisation, they belong namely to the "Major Directorate of Local Government and Regional Audit". SAI is empowered to engage external auditors/agencies/consultants as required.
SAI can not expend resources budgeted independently as per act on the order of the State Household (1992) and in the government decision (1998). SAI has full independence in forming its work plan. Recruitment conditions are mostly determined by the Act on the SAI . The conditions of service of the staff are determined by the Organisational and Operational Statute of the SAI, which is result of in-house decisions, considerations, i.e. not prescribed by law. SAI is subject to an independent audit. A private auditing company, which is selected by the "Public Accounts" Parliamentary Committee in the framework of public procurement reports annually on the financial management of the SAI. This is not an obligatory audit. The annual report of SAI is submitted to the Parliament.