Regularity & Performance Audit

Transcription

1 Regularity & Performance Audit Lasbela University of A,W &Marine sciences Balochistan By Mahfooz Ali Khan Date 24th May,2011

2 Definition What is Audit? An independent examination for expression of Opinion on the Financial Statements of an entity by an appointed Auditor in pursuance of that appointment and in compliance with relevant statutory obligation. In general, the Mechanism within the process of Accountability whereby the performance of those in control of the resources of an organization is checked or monitored by or on behalf of interested parties.

3 What are Accounts? Facts about Monetary matters Data pertaining to financial transactions for a particular period Financial record compiled for decision makers A process of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events, which are, in part at least, of financial character and interpreting results thereof covering a specific period

4 Why do we require Audit? Tool of Accountability Monitoring tool in the hands of decision makers Statutory & Legislative requirement Articles 168 and 171 of the constitution of Islamic Republic of Pakistan provides and Authorizes the Auditor General of Pakistan to Audit the Accounts of the Federation and the Provinces Article 171 of the Constitution provides for constitution of Public Accounts Committee

5 Kinds of Audit Audit against provision of funds Audit against sanctions Audit against Rules and Regulations (Regularity Audit) System Based Audit Value for Money Audit or Performance Audit or 3E Audit o Economy o Efficiency and o Effectiveness

6 Performance Audit Value for Money Audit Performance Audit 3 E Audit Economy Efficiency Effectiveness

7 Internal Controls The plan of an Organization and all coordinate methods and measures adopted within the organization, to safeguard its assets, check the accuracy of its accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies.

8 Organizational Structure Defining Objectives Grouping related activities Defining and assigning commensurate authority Maintaining proper span of control Providing minimum number of managerial levels Separating line and staff functions Delegating authority Recognizing individual status of employees Specifying jobs

9 Elements of Internal Controls Organizational Structure Procedures Physical facilities Accounting and other Records Reports Standard of Performance Internal Auditing

10 Standard of Financial propriety I. Every public servant is expected to exercise same level of vigilance in respect of expenditure from public money, as a person of ordinary prudence would exercise in respect of expenditure of his own money II. The expenditure should not be prima facie more than the occasion demands III. No authority should pass any orders, which will be directly or indirectly to his own benefit Cont--

11 ..Continued Contracts--- General Principles Contracts can be entered into only by those who have been empowered to do so. The following general principles should be followed by all authorized who have to enter into an agreement. The terms of contract should be precise and definite Before the contracts are finally drawn, legal and financial advice should be obtained Standard forms should be adopted and terms should be subjected to detailed prior scrutiny The terms of contract once entered into should not be materially varied except with the prior consent of the competent authority

12 Standard of Financial Propriety IV Public money should not be utilized for the benefit of a particular person or section of the community V The amount of the allowances should be so regulated that it is not, on the whole, a source of profit for the recipient ----Cont

13 Contracts..Continued Any uncertain or indefinite liability or any un-usual condition should be avoided, unless authorized by the competent authority Whenever practical an advantageous contract, should be placed, only after inviting open tender While selecting tenders for acceptance, the financial status of the bidders should be considered In absence of formal contracts, written agreements be drawn for safety In case government property is involved, safeguard thereof be ensured For long-term agreements, revocation or cancellation clause be inserted in the agreement

14 Responsibility of DDOs Specific Responsibilities of DDOs o To exercise vigilance on petty contingent expenditure o To observe Rules regulating Contingent Expenditure and to draw amount which is required for immediate expenditure o To keep expenditure within sanctioned budget o To keep contract contingencies within the contract grant