The Constructive Audit Reform: Deepening and Enhancing the Audit

The audit revolution: Going out to the field, and broadening the audit types

  • State Comptroller Matanyahu Englman in preparation for completing the “constructive audit reform” emphasizes, among others, the audit quality and its thoroughness in evaluating the core activities of the audited bodies.

  • The comptroller has directed his office to broaden and deepen the audits of financial reports of government ministries, which in the past few years have been limited, and that from now on will be performed using a broad evaluation of central components of the financial reports and comparison to international processes, when necessary.


State Comptroller Matanyahu Englman has directed his office to act in accordance with international standards and broaden and diversify the types of audits, among which are: field audit, financial audit, performance audit, IT audit and others.  Broadening and diversification of audits will be performed in accordance with Israeli law requiring financial audit, efficiency and utility alongside compliance and integrity.

In this framework, recently the comptroller even decided to update audit programs authorized in the past and to ascertain that they provide a response to all audit types, deal with the core activities and evaluate risks and future challenges.

Field audit in terms of “there is nothing better than seeing for yourself”

Led by the comptroller, the professional teams have significantly broadened their “going out to the field” actions and holding face to face meetings with the audited bodies. Field audit includes orientation days, tours and observation in government and local authority offices and enables audit teams to meet the management of bodies and ministries (e.g., Ministry of Finance and the IDF) and to learn firsthand about their various actions, targets and programs. The objective is to focus the audit on the core activities.

Field audit also includes meeting the public at different service centers and customer reception points (e.g., the service centers of the National Insurance Institute) and distributing questionnaires about the quality of the service being provided – public participation will focus the audit work on the issues that are, “in the public’s eyes”, essential.

Compliance Audit – A traditional audit methodology

Compliance audit is a traditional audit methodology that evaluates whether the activities of an audited body meet the “normative infrastructure” established for these activities. Under this definition, the “normative infrastructure” includes, among others, laws and regulations, regulatory directives, guidelines, principles and agreements that guide proper governance in the public sector.

As mentioned, in line with “the constructive audit reform”, Comptroller Englman has directed that alongside “compliance audit”, treatment of issues related to the economic efficiency of the audited bodies’ activities must be broadened and the increased added value of the audit be presented. Likewise, the teams have been instructed to focus on additional aspects beyond classical compliance features, and to perform a cross-cutting comparison between Israel and the rest of the world as well as evaluate the impact of the activities being assessed in the audit on national level challenges and targets. 

Financial audit

Financial audit enables a broad, comprehensive and deep view of the various programs and, in practice, examines whether the information appearing in the financial reports of the audited body are in line with the appropriate reporting framework. The audit findings reflect the reliability of the information in the financial reports and whether they are erroneous as a result of mistakes or fraud. To deepen the audit, the trends and risks shown in the report will be analyzed by conducting a cross-cutting comparison of components of the financial reports that will be demonstrate the added value of state audit from an overarching perspective.

  • In this context, it is noted that the comptroller recently directed his office to broaden the audits of government ministries, which in the past few years have been limited, and that from now on will be performed using a broad evaluation of central components of the financial reports and comparison to international processes, when necessary

IT audit

IT audits evaluate the computerized systems of bodies, including audits of cyber areas, with an emphasis on the field of information security, which constitutes a core issue among the activities of audited bodies in the modern technological era. The audit teams will work to increase the use of advanced computerized tools in the audit work that will allow analysis of the basic data held by bodies, so that audit teams do not have to rely only on reports and data provided by the audited bodies.

  • In this framework, the comptroller has instructed his office to expand and deepen the scope of IT audits to include auditing the cyber field, which in his view, constitutes one of the future’s primary challenges.

Performance audit

In the framework of performance audits, the audit teams examine whether the activities of the audited body are being carried out in line with effective and efficient principles and whether there exists room for improvement. The audit will assess if the audited body’s performance conforms to the standards (“audit yardstick”), present and analyze the factors for deficiencies in the activities, if any, and recommend ways to repair the failings and improve performance.

Consequently, for example, when auditing a regional water corporation, the comptroller instructed that regarding one deficiency on a regional level that emerged in the report, the recommendation should be to conduct a general reorganization, from the broad perspective of streamlining and making improvements on a national level.