Strengthening Public Sector Accounting and Auditing

1. Strengthening Public Sector Accounting and Auditing

2. The Need for Reforms – IPSAS Implementation • Government as the leading user of IPSAS standards will therefore require to undertake massive capacity building to enlighten its accountants on IPSAS. • This would be a challenge both in terms of capacity building costs and in terms of the required change management issues from the traditional cash accounts to a more business like accounting under accrual basis IPSAS. • Capacity building will likewise require to be undertaken to ensure that it does not become an implementation drawback. • The adaptation of new financial reporting framework will herald significant changes to the systems and process of financial reporting by the government.

3. Limitations • CAG audit approach has been essentially conventional and traditional, focused only on review of transactions for compliance with specified rules and regulations. • Bangladesh Accounting and Auditing System are unable to produce timely and comprehensive reports. • Materiality review tests are limited. • Public Audit has failed to achieve the desired objective and credibility impact. • The Information provided to parliament through annual audit reports was of limited use.

4. Limitations • There is no objective implementation of IPSAS in Government Accounts. • Accrual Accounting has not been adopted or implemented in any form or manner by the CAG office in Government Account. • there has not been any tangible development towards PPP for Government Auditing in Bangladesh.

5. Limitations of OCAG • Lack of freedom to hire suitably qualified, trained staff to meet the needs of his office. • The Ministry of Finance has control over the CAG budget. • C&AG office is not outside the ambit of the Government Bureaucracy. • Responsibility for both Audit and Accounts is a conflict of interest. • Audit Staffs are not adequately qualified and trained. • Training and Professional developments are not systematic.

6. Limitations of OCAG • Audit Methodology is deficient and yet to be modernized. • Audit Planning, evidence and quality control are weak. • Audit Scope is limited as performance audit is not carried out. • Audit reports have limited usefulness to meet the user needs- • The number of reports is too large, too detailed and often late, and • Report focuses on trivial issues and there is no systematic follow-up.

7. Challenges in Public Sector Accounting & Auditing • Ability to provide timely, relevant, and reliable financial information that is needed to support all fiscal and budget management, decision making, and reporting processes; • Improving the financial governance arrangements for public corporations; • Improving the financial reporting of public corporations; • Application of a code of conduct and characteristics of public sector accountants; • Improving public expenditure management practices;

8. Challenges in Public Sector Accounting & Auditing • Formatting a strategic planning for the Supreme Institution; • Adaptation of Cash basis IPSAS and international standards; • Transition from Cash basis IPSAS to the Accrual based IPSAS; • Implementation of the standards in public agencies; • Modernizing of Public sector auditing; • Transparent and effective financial reporting;

9. Challenges in Public Sector Accounting & Auditing • Timely and accurate information to the stakeholders; • Parliament support over the rules and regulations; • Strong project management, monitoring and review procedures.

10. Capacity Building and Institutional Development of CAG Bangladesh • To ensure the freedom to CAG office in recruitment of suitable staff; • To enhance the tenure for the CAG; • To seperate the audit and accounting functions of the CAG office; • Undertaking Professional development of CAG staff; • Parliament voting to the CAG budget; • Timely preparation and submission of audit reports; • Enhancing quality of Audit and its effectiveness;

11. Capacity Building and Institutional Development of CAG Bangladesh • Modernization of financial audit; • Shift of emphasis from transaction based financial audit to that based on performance and results; • Update and modernize the manuals; • Introduce performance/ value for money audit; • Develop human resources management strategies to meet newer and emerging needs; • Improve the image of audit nationally and internationally as a strong oversight institution for good governance; • Regional and international cooperation for the benefits of SAI Bangladesh.