Operating environment and resources

The audit and monitoring work of the National Audit Office of Finland (NAOF) focuses on topics and themes that are significant for central government finances and society, and on material risks related to central government finances.

Operating environment and the risks related to it

The National Audit Office has identified such risks to the state’s financial management and central government finances in the years to come as can be impacted by auditing. We have identified especially the following key risks to the state’s financial management: the automation of financial processes, the outsourcing of functions, and the operation of the performance management system.

We have identified the risks to central government finances by analysing the vision of the future laid out by the Prime Minister’s Office. The NAOF has assessed the vision of the future particularly from the perspective of the future development of central government finances and the societal impact of audits. The following risks were identified: needs for taxation adjustments, competence development and maintenance, and decision-making capability.

In addition to the identified risks, the NAOF actively monitors changes in the operating environment, general government calculations, verified information, and future scenarios and phenomena that will have an effect on the organization of audit work. In this monitoring, the NAOF cooperates closely with the supreme audit institutions (SAIs) of other countries.

The Covid-19 pandemic has extensive impacts on the operating environment. Central government’s responsibility is highlighted in the measures taken to solve the economic crisis. In practice, central government is responsible for Covid-19-related costs, for supporting citizens and businesses to overcome the economic crisis, and also for the demand-based stimulus needed by the economy. This means a completely exceptional use of state resources and expansionary fiscal policy, which should, however, be followed by measures taken to strengthen public finances as the situation returns to normal.

Finland’s public finances are forecast to show a deficit for a long time. The ageing population, the decreasing the birth rate, and the high level of structural unemployment cause pressures for indebtedness to persist in the long term. Other major risks to the Finnish economy continue to include the level of state guarantees and other contingent liabilities, and the significant interest rate risk related to the rapidly grown government debt. Therefore, success of the major structural social reforms launched during the government term plays a key role for the stabilization of public finances. These reforms include, in particular, the health and social services reform, the rescue services reform, the social security reform, and the reforms related to continuous learning.

In the NAOF’s view, conditions for launching the health and social services reform and the rescue services reform are in place. However, it is not yet known whether the growth of costs will be curbed and the risk of over-indebtedness of regions managed successfully; much depends on the solutions taken in the regions during the reform, the functioning and steering of the funding model, and the success of the assessment of service needs.

From the perspective of the implementation of the UN Sustainable Development Goals (SDGs), it is important that Supreme Audit Institutions (SAIs) contribute to the national implementation through their audit work. The National Audit Office will direct its audit work at the risks it has identified in the implementation and strive to take special account of the challenges caused by political coherence.

Administrative structures and operating models should be developed in accordance with the public administration strategy in order to respond to long-term pressures for change in a front-loaded manner. Cross-sectoral efforts, the demolition of silos, a phenomenon-based approach, and the assessment of long-term impacts of policy measures must be supported by up-to-date audit information. Constructive audit work can support the reform of public administration and structures, as well as innovation. The National Audit Office believes that digitalization, experimental culture and networking offer important opportunities and strives to support the renewal of public administration with its audit work and by setting an example.

The competence of the NAOF’s personnel will be developed diversely to ensure that we can manage the risks identified in the operating environment. The NAOF develops its own operations actively in order to be able to offer its stakeholders with more up-to-date and relevant information. At the same time, we will strengthen citizens’ trust in good governance.

Impact portfolio

The impact portfolio provides an overall picture of the audit types and topics and of the main risk areas identified in the NAOF’s risk analysis. The impact portfolio shows on an annual level how the NAOF will target its audit topics to the main risk areas. The impact portfolio also shows the audit type or monitoring activity the NAOF will use to conduct the audit.

The impact portfolio illustrates how the NAOF will target its audit topics to the main risk areas. More detailed information on the contents of the impact portfolio can be found in the Excel file Impact Portfolio 2021 below the figure.
Figure: Impact portfolio 2021

Impact portfolio 2021 (Excel)

Spending calculation of the operating and financial plan, OFP calculation, and human resource framework

The spending calculation for 2021–2025 (Appendix 1) assesses the total value of the budget proposals per year. The calculation indicates how much of the budget proposal is allocated to salaries, office rents, and other operating expenses. The operating and financial plan (OFP) calculation (Appendix 2) also indicates VAT expenses and changes in expenditure in 2021–2025. Human resources are allocated by function in compliance with the 2021–2025 human resource framework (Appendix 3). The human resource framework indicates the expected trends in salary expenses and person-years during the planning period.

Planned allocation of appropriations in 2021. Salaries and fees EUR 12,939,010. Other operating expenses EUR 3,517,750. Rents for premises EUR 583,000.
Figure: Planned allocation of appropriations in 2021


Number of personnel on 30 November 2020: 163. Of these employees, 134 were in a permanent public-service employment relationship, 29 were in a fixed-term public-service employment relationship, 15 were on a leave of absence from a permanent public-service employment relationship, and two were trainees.
Figure: Personnel status on 30 November 2020