The full Scope of government auditing includes regularity audit and performance audit

(ISSAI 100 Para 39)

(A) Regularity audit embraces:

1. Financial Attest Audits:

(a) Attestation of financial accountability of accountable entities, involving examination of financial

records and expression of opinions on financial statements;

(b) Attestation of financial accountability of the government administration as a whole;

(c) Audit of financial systems and transactions, including an evaluation of compliance with applicable statutes

and regulations;

2. Additional Compliance:

(d) Audit of internal controls and internal audit functions;

(e) Audit of the probity and propriety of administrative decisions taken within the audited entity; and,

(f) Reporting of any other matters arising from or relating to the audit that the SAI considers should be disclosed.

(ISSAI 100 Para 39)

(B) Performance Audit: Performance audit is concerned with the audit of economy, efficiency and effectiveness.

(ISSAI 100 Para 40)

Basic Concept of Performance Audit

Performance Audit is about audit on Value for Re$ources (VfR);

it is a paradigm shift in Public Financial Management

Evaluating whether an agency, or the operations or activities of

any part of the public sector, is:

achieving its objectives effectively; and doing so:

economically; efficiently; and in compliance with all relevant Acts

The 3Es what do they mean?

Efficient? Maximizing output for any given input

and/or minimizing input for any given level

of output.

i.e. spending Well

Example: SAP system is much efficient and

productive as compare to manual work because it

accelerate process and Quality of service.

Economical? Purchasing appropriate resources (inputs) at

least cost.

Example: Whether Construction of District Accounts

Office building is Completed on time, at least cost

The 3Es what do they mean?

Effective? Achieving Objectives.

Example: Whether PIFRA Achievs its objective.

The 3Es what do they mean?

Performance Audit Features

Economic and effective

Achieve sustainable improvement

Useful (achieve financial impact)

Improve quality of service (time, method of delivery, more for less)

Constructive, fair and objective

On time

Add value!

Special Required Skills for

Performance Audits

Performance Auditors should possess skills in the field of:

Problem formulation

Data collection

Data analysis

Presentation

Marketing

Performance Auditor Role

Performance Auditor have dual role of: Guard dog (we guard public funds)

Watch dog (we guide and give recommendations)

Performance Auditors are not in a

business to criticize Government!

Potential financial, environmental and social risks to the community

High public interest and/or materiality of public resources

Potential for improved resource/financial management

Potential for enhanced accountability

Performance Audit

Selection Criteria

Performance Audit

Phases

Planning the Audit

Fieldwork / Execution

Evaluation

Reporting

Follow-up

The objective of the audit planning stage is for the auditor to determine the tactical audit plan for the audit engagement.

The auditor develops this plan by firstly obtaining a detailed knowledge of the client's business and secondly by identifying the competence and availability of the staff members that will comprise the audit team.

This knowledge includes an understanding of the entity and its environment, including its internal control, sufficient to identify and assess the risks of material misstatement of the financial statements whether due to fraud or error, and sufficient to design and perform further audit procedures.

Planning Phases

Execution Phases

In the execution phase of audit the auditor

implements the audit plan and perform audit

procedures (Test of Controls, Analytical

procedures and Substantive tests etc.)

Auditor gather sufficient appropriate audit

evidence in execution phase to support his

opinion,

Evaluation Phases

By the end of fieldwork stage the auditors will

have completed their audit programmers and

documented the results of their works. Part of

this work have involved the identification of

potential monetary errors , compliance with

authority violations , internal control

deviations,etc.These errors and deviations

need to be dealt with during the evaluation

phase.

AT the last phase Auditor analyze the result of

audit work ,the aggregation of errors and the

auditor's determination of whether the results

are acceptable and then issues an audit report.

The Audit Report may be:

1. Unqualified / Clean Report

2. Qualified Report

Reporting Phases

o Audit follow-up is an integral part of good financial management of public funds, and is a shared

responsibility of executive management officials and

auditors. Corrective action taken by management on

resolved findings and recommendations is essential to

improving the effectiveness and efficiency of

Government operations. Each ministry should establish

systems to assure the prompt and proper follow-up of

audit paras and implementation of audit

recommendations.

o Audit follow-up encompasses all the activities

beginning from the production of AIR (after discussion

in an exit meeting with the auditee and DAC) to the

final printing of report for legislature.

Follow-up Phases

Performance Audit Cycle