INTOSAI Auditing Standards

1. INTOSAI Auditing Standards • DAY 2 SESSION NO.1 (THEORY) RTI, MUMBAI

2. Learning Objectives • In the previous session we discussed • Mandate for performance audit • Definition of performance auditing, 3 Es concept, Equity and Ethics • Specific nature of Performance Audit • Performance Audit and Programme evaluation • Common types of Programme Evaluation • Performance Audit Process • Expected outcomes of performance auditing. RTI, MUMBAI

3. Contd.. • Objectives of Performance Auditing • Difference between Performance auditing and Financial auditing. • What performance auditing requires from the auditors. • Analyse the performance auditing cycle. • Importance of documentation of decisions at various stages of the performance audits. •  Recognize why the impact of the performance auditing needs to be evaluated. RTI, MUMBAI

4. Learning Objectives • In this session we will discuss : • INTOSAI Auditing Standards • CAG’s DPC Act • CAG`s Auditing Standards RTI, MUMBAI

5. INTOSAI Auditing Standards • INTOSAI-International Organization of Supreme Audit Institutions • Each member country has its own standards • It is not mandatory • But it is the BEST PRACTICES consensus amounting the member countries. • It tends to evolve a current trend issues and concerns in auditing methodology and practices. RTI, MUMBAI

6. History • A committee was set up in May 1984 • Members from Austria, Argentina, Australia, Brazil, Costa Rica, Japan, Philippines, Saudi Arabia, Sweden, U.K. and U.S. constituted the Committee. • Although the word Standards has been used it serves as a guideline as individual SAIs have their own Standards. RTI, MUMBAI

7. Basic Postulates • General Frame work deduced from Lima and Tokyo declarations. • INTOSAI’s own reports and declarations • United Nations Expert Group Meeting in Public Accounting and Auditing in Developing countries • Formed the basic vision towards this endeavour RTI, MUMBAI

8. contd…. • They are the basic assumptions, consistent premises, logical principles, and requirements which help the auditors to form the audit opinion • SAIs are required to adopt all material standards where necessary subject to local differences. • Some standard may not fit in with the SAI’s own standard RTI, MUMBAI

9. Contd… • It is the endeavour of the SAI • To ensure public accountability • Adequate accounting standards • Adequate internal control of the auditees • Adequate safe guards for easy access of the records for audit • Adequate safeguards to avoid conflict RTI, MUMBAI

10. Audit activities • SAIs are set under the Act of the supreme legislature of a particular nation • They deal with the duties, functions, conditions of service of the SAI and its related offices • There exists a relation between the jurisdictional activities and the other activities. RTI, MUMBAI

11. Scope of Govt. Audit • It includes regularity and performance audit • Regularity includes, financial accountability • This involves examination and evaluation of financial records • Attestation of financial administration of the auditee • Test check of statutes and regulations RTI, MUMBAI

12. Contd… • Ascertainment of internal control • Audit of propriety and probity • Audit of economy, efficiency,effectiveness • Reporting on any other matters considered necessary • Checking of financial statements of the auditees for the accuracy RTI, MUMBAI

13. Due care • SAIs are equipped to handle the standards of the various audits. • They should be handled in a professional manner • The audit should be objective • The concern of audit should be to apply the auditing standard RTI, MUMBAI

14. General standards • This deals with the qualification and fitness of the auditor to handle audit in a professional manner • Independence is another standard • The auditor and Sai must be independent • The Sai and auditor should exercise due care to in effectively using the Auditing standard RTI, MUMBAI

15. Contd... • The objective is to conduct an audit objectively and to collect sufficient, adequate and reliable audit evidence to substantiate the audit findings. • Manuals and other writings to support the audit work • Auditor too have sufficient skill to handle the audit subject however difficult it may be. RTI, MUMBAI

16. Independence • The auditor should do his work independently without fear or favour. • Though independent SAI has to work in close liaison with the Legislature. • SAI helps the Legislature in dealing with its reports • SAI also helps the legislature in preparation of the annual financial statements. RTI, MUMBAI

17. Contd… • SAI keeps away from political influence • SAI to observe the dictates of legislation • The legislation should not direct the SAI to plan and conduct the audit as per certain directives. • SAI should have independence in deciding the manner and method of conducting the audits. RTI, MUMBAI

18. Contd… • All the receipts and expenditure of the Govt. would be subject to SAI audit. • But in certain cases other bodies and corporations not having any direct link with the Govt.some times request the Sai to conduct audit • In such cases also it is to be seen that the Auditing standards are kept up RTI, MUMBAI

19. Responsibility of the Legislature • It should provide all necessary help to the SAI in terms of resources and manpower to which the SAI is accountable. • There should not be any direction from the executive in regard to the performance of the audit mandate • SAI to have uninterrupted access to the records for audit purposes. RTI, MUMBAI

20. Contd… • SAI need not be managers to an entity’s execution • Sai may co-operate with bodies having expertise in the matter of audit without affecting the independence of audit. • Competence: • Audit should have competence to handle modern skills and technique of audit. RTI, MUMBAI

21. Competence contd… • The SAIs competence in forming audit opinion, recommendations and conclusions should possess the standard expected of it. • The opinion should be objective and not biased • The SAI should have coherent view amongst the functionaries. RTI, MUMBAI

22. Contd… • In order to maintain the quality of opinion, the SAI should equip itself with the modern techniques, innovations and research • The members should be subjected to periodical sharpening of skills through training, manuals and other publications • Audit planning, structuring of the audits etc should have the necessary logic and standard RTI, MUMBAI

23. Qualification • General standards stipulate that the auditor should have the necessary qualification • Where found deficient, training should be imparted • SAI should have professional development programmes • The SAI personnel have adequate knowledge about the Govt. their system and position RTI, MUMBAI

24. Contd… • SAI should continuously pursue the policy of updating the skills of the personnel through circulars, booklets, manuals, regulations etc. • It should also derive external expertise to enrich its resources There should be good liaison between the audit and audittee RTI, MUMBAI

25. Contd… • SAI should: • Confirm that integral quality assurance processes have operated satisfactorily • The quality of the AR should be ensured • Avoid repetition of weakness • SAI to approve the system of accounting and audit RTI, MUMBAI

26. Field Standard • The auditor should plan the audit for a high quality audit • The work of audit staff should be supervised • Audit should evaluate the internal control • Regularity and financial audits should bring irregularities, illegal acts RTI, MUMBAI

27. Collection of evidence • Competent, relevant, and reasonable evidence should be obtained to support the audit’s findings • In analysing the financial statement the audit should ensure that the financial statements do depict a true and fair view • It also discloses the various areas where the accounts do not disclose the correct accounting RTI, MUMBAI

28. Steps for audit • Plan • Know the entity and projects • Define objective and scope • Define audit approach • Prepare the budget and schedule fr the audit • Identify the staff requirements • Discuss the above with the auditee RTI, MUMBAI

29. Supervision and review • Audit should be supervised to ensure achievement of audit objective • Supervision for method and substance • Ensure that audit is conducted as per the auditing standard • Ensure that the working papers are filed • They contain evidence to support the opinion RTI, MUMBAI

30. Reliability of internal control • Ensure that internal control exists • Ensure that the laws and regulations are properly seen • Ensure that frauds are not taking place • Audit evidence: • All conclusions should be supported by audit evidence RTI, MUMBAI

31. Contd… • Ensure that the evidences reliable, complete and sufficient • Ensure that they support the auditing standards • Helps planning the audit • Help the professional development RTI, MUMBAI

32. Reporting standard • This relates to both regularity audit and certification audit • Findings are to set out in proper form • The opinion should be preceded by a suitable title • The report should be dated and signed • It should contain objective and scope RTI, MUMBAI

33. Contd… • The report should be complete • It should address the auditee • Subject matter should be identified • Legal base should be included in the report • It should conform to the standards • It should be issued within the time frame • Opinion should be expressed in the standard format RTI, MUMBAI