10th ASOSAI Research Project

“Audit to Detect Fraud and Corruption：Evaluation of the

Fight against Corruption and Money Laundering”

SAI India
Country Report
 About the SAI India

• SAI India is headed by the Comptroller and

Auditor General of India (CAG)
• CAG is a Constitutional Authority
• Independence secured through Parliamentary
enactment; DPC Act
• Expenses of his office are charged on the
Consolidated Fund
• Fixed six year term and removal is possible only
through Parliamentary process.
 About the SAI India
Over 146 offices throughout India for Auditing
•Union and State Government
– Expenditure
– Receipt
– Public Sector Undertakings

•Rural and Urban local bodies

We also compile and prepare State Government

Accounts and perform entitlement functions relating
to provident fund, pension and pay.
 Types of Audit
• Performance Audit

• Compliance Audit

• Financial Audit

• Environmental Audit

• Social Audit

• Information Technology Audit

 Audit Reports
• Union Audit Reports are laid before each house
of Parliament
– Civil, Autonomous Bodies, Scientific
Departments, Defence Services, Railways,
Direct taxes, Indirect taxes and Commercial

• State Audit Reports are laid before respective

legislatures
– Civil, Revenue, Commercial and Local bodies
Professional Standards Governing
Auditing and Accounting

• Regulation on Audit and Accounts

• Auditing Standards

• Good practice guides

Role of SAI in Anti-Corruption
• Mainly a preventive role
– Enforcing accountability

– Promoting strong financial management

– Strengthening internal control

– Disclosure of deviations as deterrence

 Role of Audit in Relation to
Cases of Fraud and Corruption
• Responsibility for prevention & detection of fraud
and error rests primarily with the management of
audited entity

• Audit, however ,evaluate and report on the

adequacy of systems in place with the auditee to
prevent, detect, respond and take remedial
measure in relation to fraud & corruption.

• This is integral part of all kinds of audits.

Role of Audit …
• Fraud examination is a part of normal auditing
procedure.

• Audit findings include the cases of presumptive

and suspected frauds when the evidence is clear.

• Audit team put red flags which needs further

investigations by appropriate agencies.

• Audit teams do not make legal determinations of

whether fraud has actually occurred.
Role of Audit …
• Audit teams maintain a attitude of professional
scepticism (questioning mind and critical
assessment of audit evidence) throughout the
audit.

• Audit teams carry out independent risk assessment

and prioritise audit planning.

• Based on risk assessment, they design the audit

objectives & audit procedures so as to secure
reasonable assurance of detecting material
irregularities arising from fraud and corruption.
 Role of Audit …
• SAI India has a dedicated training institute
as Centre of Excellence in ‘Audit of Fraud,
Fraud Detection Techniques and Forensic
Audit’

• It acts as a repository of information on the

subject through developing quality reading
material, case studies research papers .
 Audit Planning
• Independent risk assessment of auditee
organizations by field offices
• Includes information from various sources on
suspected cases of corruption
• High risk areas given adequate attention
– Contracts of service/procurement
– Inventory/Asset management
– Revenue receipts
– Cash management
– Sanctions/clearences
– Areas involving public-private interface
 Fraud indicators
• Control weaknesses
• Inadequate record keeping
• Unusual transactions
• Errors
Complaint & Whistle blower
mechanism
• Robust anti corruption complaint
mechanism
• Complaints possible at every level
• Complaints taken as red flags
• Covered by RTI Act
• Whistle blowing system encouraged
• Facts substantiated in audit
Forensic audit
• No dedicated forensic audit units
• These are formed on need basis in case of
detection/suspicion of fraud/corruption
• Auditors trained in relevant areas
• One dedicated training institute for frauds
and digital forensics
• IT frauds also covered
Fraud Auditing Standards
• AS of INTOSAI suitably adapted
• Provide minimum guidance to auditors on
steps and procedures
• Reporting standards in Auditing
Standards- 2nd edition 2002/Chapter-IV-
Reporting Standards/No.-9
Follow up
• Cases of frauds/corruption are forwarded
to vigilance or investigative authorities
• Information/documentation used by them
for their own examination
• Also checked that after reporting system &
procedures have been modified
• Findings utilized to detect similar acts in
other entities
• Used as case studies for sensitizing
auditors and for their training
Thank you