Regularity & performance audit (mcmc)
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Transcript of Regularity & performance audit (mcmc)
Why Audit?
ByMahfooz Ali Khan
Date 28th February,2014
Participants of 17th MCMC, KARACHI
What are Accounts?
• Facts about Monetary matters
• Data pertaining to financial transactions for a particular
period
• Financial record compiled for decision makers
• A process of recording, classifying and summarizing in a
significant manner and in terms of money, transactions and
events, which are, in part at least, of financial character and
interpreting results thereof covering a specific period
Historical Background of Audit
The origin of Audit activityStart of Business EnterprisesGovernment AuditAudit in modern democracies
What is Audit?
• Definition
“ An independent examination for expression of Opinion on the Financial Statements of an entity by an appointed Auditor in pursuance of that appointment and in compliance with relevant statutory obligation.”
“ In general, the Mechanism within the process of Accountability whereby the performance of those in control of the resources of an organization is checked or monitored by or on behalf of interested parties.”
Why do we require Audit?
• Tool of Accountability
• Monitoring tool in the hands of decision makers
• Statutory & Legislative requirement
– Articles 168 and 171 of the constitution of Islamic Republic of
Pakistan provides and Authorizes the Auditor General of
Pakistan to Audit the Accounts of the Federation and the
Provinces
– Article 171 of the Constitution provides for constitution of Public
Accounts Committee
Kinds of Audit
Audit against provision of funds
Audit against sanctions
Audit against Rules and Regulations (Regularity Audit)
System Based Audit
Value for Money Audit or Performance Audit or 3E Audit
o Economy
o Efficiency and
o Effectiveness
Performance Audit
• Value for Money Audit
• Performance Audit
• 3 E Audit
– Economy
– Efficiency
– Effectiveness
Internal Controls
The plan of an Organization and all coordinate methods
and measures adopted within the organization, to
safeguard its assets, check the accuracy of its accounting
data, promote operational efficiency and encourage
adherence to prescribed managerial policies’.
Elements of Internal Controls
Organizational Structure
Procedures
Physical facilities
Accounting and other Records
Reports
Standard of Performance
Internal Auditing
Organizational Structure Defining Objectives
Grouping related activities
Defining and assigning commensurate authority
Maintaining proper span of control
Providing minimum number of managerial levels
Separating line and staff functions
Delegating authority
Recognizing individual status of employees
Specifying jobs