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

(A) Regularity audit embraces:

(ISSAI 100 Para 39)

1. Financial Attest Audits:

(a)
(b)
(c)

Attestation of financial accountability of accountable entities, involving examination of financial

records and expression of opinions on financial statements;
Attestation of financial accountability of the government administration as a whole;
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.

(B) Performance Audit:

(ISSAI 100 Para 39)

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.

The 3Es what do they mean?

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.

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!

Performance Audit
Selection Criteria
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
Phases
Planning the Audit

Fieldwork / Execution
Evaluation
Reporting
Follow-up

Planning Phases

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.

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.

Reporting Phases

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

Follow-up 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.

Performance Audit Cycle