Planning for Management Audit

Janak Raj Gautam Ex-Deputy Auditor General

An attention to here:-• ‘Mutual experience benefits all’ INTOSAI motto• Auditing has its own principle roots of logic, ideas

and methods following through accounting route . • 'Auditing is a professional career rather than a job'• Truth is more important than the facts.- Frank

Lloyd Wright• Audit proceeds through interaction between

people but not being a mechanical process.• "Use common sense and courtesy throughout

audit."

Session outlinesMethod Time From outlines

Brain-storming 10 Participants Mgmt auditing and verification base

Inter-action in group

10 Trainer-Participants

Question-answer: discussion

Case-studies 20 Participants A case study on Mgmt audit

Presentation of power-point

30 Trainer Mgmt audit, audit scope, purpose, techniques and procedures of Mgmt audit.

Experience-sharing

10 Participants Exposing their own experiences.

Question-answers

10 Trainer-Participants

On presentation, participants’ queries

Auditing

Auditing is a systematic and independent examination of data, record, statements, operations criteria and performance . During the course of audit, an auditor examines the evidences, acts, rules, and following work process, if any query, not settled, is communicated through the auditor’s report.

Mgmt audit is looking at personnel files also to make sure they're complete and consistent regarding to balance of work load, duplication of tasks , overlaps and gaps in functions of the employee.

“ An Auditor is not a Trouble maker but a Trouble shooter as well as a

Value adder”

Purpose of this Session

We try to understand the planning for management audit in this session. After this session, management auditors are able to know the planning process practically and implement the plan in management auditing circumstances through these topics:-

Process for Planning for management audit Skills needed for developing Planning for

management audit Best practices and standards for implementation

and monitoring of management audit

Mandate

Limitation - Matters within the domain of the Public Service Commission.

Ministry of General Administration -It may supervise, monitor and evaluate the civil employees in service have carried on through the prevailing law and other administrative rules and procedures.

Direction -In making such supervision, it appears that departmental action is to be taken against any civil employee, it may also recommend for such action.

Annual report- It shall submit an annual report thereof to the Government of Nepal.

Mandate

General Administration may carry out casual management audit of all bodies of the Government of Nepal on rotational basis.

The Ministry may order to subordinate departments and agencies to carry out management audit and to submit a report thereof.

The audited bodies shall show records and documents for management audit

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Segregation of definition of Auditing– Examination: A periodic examination of the

documents , records and compliance of rules .– Verification of the any performance or non

performance with comply with established concepts, principles, standards, legal requirement of the organisation.

– Responsibility: It is carried out by an expert group of auditor assuming legal and professional responsibility. .

Weakness of current Management audit practices

• Duration be fixed that Fiscal years plus to the date of examine.

• Remarks, suggestions and irregularities are only in paper, but are not move forward to due process for implementation or an action to the non-performers.

• The audit should focus to the jobs or task not completed ; the rules and procedures not followed by staff , both should be disclosed in the report , but auditor much more concerns to the institutional side.

Weakness of current Management audit practices…..

• Good points should not be exposed but in the directives ‘better practices’ and ‘strengths’ should be disclosed.

• Section Officer, presenter, wrote report to Secretary to the Ministry, in the cover letter, it is better to write ‘Examiner’ in ‘Mgmt audit directives, 2067’.

• In the report, there are more statements, however, only a few remarks.

Activities The auditor shall undertake the activities

for preparation of mgmt audit. Mgmt audit initiates from the point where mgmt control begins.

The auditor shall set the scope, risks and its prioritization, timing and extent of audit, and that guides the development of the audit plan schedule, approval from proper authority.

Unsystematic practices, errors, mistakes and violence of rules should be exposed and recommendations for future prevention.

Limitations of Management audit• It is conducted not as a fashion but as a

compliance with Provisions of the act. • Audit results are used to be ignoring in implementation.• It needs careful, adequate time and requires competencies of the audit team.• This audit focus on functions , authority,

responsibility , duty actions of person and evaluation of the same but not to focus on systems according to mandate.

Process of Planning for mgmt.audit

• collect organizational information in order to assess risk, define objectives and determine scope of audit

• identify important aspects of the audited entity environment.

• develop an understanding of the functions and its responsibility relationships;

• identify key management systems and controls to carry out a preliminary assessment to identify strength and weakness;

• review internal audit and final audit report if it needs.

Process of Planning for mgmt.audit…

• Determine the most efficient and effective audit approach;

• Maintain appropriate documentation of the audit plan and proposed fieldwork highlight special problems foreseen when planning audit;

• Prepare a budget and a schedule for the audit;• Formation of the team of staff for auditing

considering auditor’s professional capacity for judgment in a team.

• Make a review of plan by senior whether appropriate action has been taken on previous audit findings and recommendations .

Planning process for auditing…

• Mgmt. auditor may revise the plan during the audit when necessary with reasons for such changes consider the form, content and users of audit report.

• Eventually, it uses to determine the nature, timing and extent of audit procedures with respect to:– Knowledge of the Entity–Management control and risk assessments .– Consideration of laws and regulations– Using the work of an expert and some others– Coordinate the work be performed

Planning an audit benefits the auditor to:

• facilitate to devote appropriate attention to important areas

• help auditors properly organize and manage the audit engagement to perform in with efficiency.

• assist in the selection of team members with appropriate levels of capabilities, competency to respond to risks, and proper assignment of work among them.

Planning an audit benefits the auditor to:

• facilitating the direction, supervision and review of team members and their work.

• coordinate the work done by other auditor and experts.

• assist to identify and resolve problems on a timely basis.

• ensure that policies and procedures are fair and consistent across the organization and strengthen employee satisfaction.

Planning skills Planning is one of the skills that is a must in

every audit , so Management audit is not an exception. Planning for management audit begins just after completing the previous year’s audit. Therefore, management auditor should prepare strategic audit plan, comprehensive annual plan and office-wise plan and program for making audit effective regarding time, cost and quality. But, mgmt audit program is not mentioned in the Mgmt Audit Directive, 2067.

Level of mgmt and Skill extension

Management Level

Auditing functions Areas of audit skill extension

Top Planning, executing monitoring, and reporting finally

Conceptual Skill

Human Skill Technical Skill

Middle

Controlling, directing, supervising, reviewing, and reporting preliminarily

Conceptual Skill

Human Skill

Technical Skill

Operation

Primarily checking and examine papers, documents, spots, and statements

Conceptual Skill

Human Skill

Technical Skill

Skill and competency

The audit should be performed and report be prepared with due professional care by persons who have adequate training, practical experience and competency as well as supervision from the seniors.

The essential planning skills in mgmt audit are Conceptual, Human, Technical are the main that include Leadership, judgmental Coordination, Procedural, Problem solving, Discussion, functional, behavioural, Analytical, Professional, Reporting, Management, Reviewing.

Mgmt audit reportThe Ministry shall publicize the annual report of

the management audit submitted to the Government and send the same to the audited body. Then, it shall be the responsibility of the Chief of Office to make clearance of remarks, suggestions or irregularities mentioned in such a report within the period so specified. If not, departmental action be taken.

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Characteristics of the Report

• Accurate: With facts and figure• Clear: Language and message simple to

understand• Conciseness: Avoid unnecessary long• Courteous: The language used in the report

must be polite • Completeness: The information and facts

should be complete• Consistency: in language, format and

message• Timely: issuing or presenting to the mgmt for

corrective action

Templates of an Audit Report

• Title• Addressee• Description of the audited entity• Audit objectives, scope and methodology• Audit Limitation• Audit findings• Conclusions and recommendations• Management’s response• Signature and Date of report

Please, ANY QUESTIONS ?

Thank you for your

Passionate and Joyful Participation.