Audit Process - Harword Academyharwordacademy.com/wp-content/uploads/2019/05/presentationona… · This report is issued by director audit to the DCO for replies form the officers

Audit Process

BY

CH. MUHAMMAD AZAM ARSHAD

DEPUTY DIRECTOR AUDIT (RTD.)

What is Audit

An official inspection of an individual's or organization's accounts,

typically by an independent body.

Audit includes an examination of the books of accounts, other

documents, stores, assets etc. relating to the receipts and expenditure of

the Government, with a view to ensuring that rules and orders framed by

the competent authority in regard to financial matters have been followed;

that expenditure has been incurred with due regularity and propriety; that

assets have been properly utilized and safeguarded, that public

resources have been used economically, efficiently and effectively, and

that the accounts truly represent facts.

Audit Intimation

ToThe Head Master,Govt. High School Dunya PurDistrict Lodhran

Subject: Annual Audit for 2015-2016

Annual Audit and Inspection of your school for the above said periodwill be carried out on or after 04.05.2016. Relevant record may please bekept ready and concerned officials should remain present during audit. Yourown presence will be appreciated as important points could be discussed.

AuditOfficer

Requisition No.

Kindly arrange following record for audit & inspection

I. Cash Book

II. Contingent Register

III. Deposit Chalans

IV. All bills for the month of May and June 2016

V. Pay bills for July, August 2015 and January 2016

VI. Service Books

VII. Reconciliation Statements

Audit Officer

Observation

Observation is audit findings after the examination of record. It is dually

numbered, dated and signed by the Head of the Audit Team or his

Assistant. It is to be replied in 24 hours. The reply is in few words and is

recorded on the body of the observation.

Model Observation

Doubtful issuance of Electric Material from store –Rs.1, 030,840 During the examination of stock registers of DO Parks & Gardens it was observed that lightening items were frequently issued which normally work for years? Store keeper was asked to get show the replaced old material. The physical position was found as under;

Shortage by old electric Material

Name of Item Quantity

issued from stock

Quantity of used stock

Shortage Rate Cost

Igniters 188 47 141 500 70,500

Energy Savers 473 187 286 300 85,800

Capacitors 187 103 84 885 74,340

Choke 400 watt 206 65 141 4,700 662,700

Bulb Rod 400 watt

172 62 110 1,250 137,500

Total 1,030,840

Reply of DDO: The matter will be enquired from electrician and store keeper.

Para

It is observation which was discussed with DDO, not settled in mutualdiscussion and included in report of the Audit Team. It comprises: -

Reference of Rule, which has been violated.

Detail of violation.

Reason of occurrence.

Results of violation/deviation of rules.

Reply of Drawing & Disbursing Officer.

Comments of the Audit.

Model Audit Para

Excessive Expenditure on Electricity Rs.1, 944,483

According to Government of Punjab Finance Department Notification

No.FD.SO (GOODS) 44-4/2011 dated 23.07.2011, Departments shall prepare

special plan for energy conservation to save un-necessary expenditure on

account of telephone, electricity and gas charges.

It was observed during the audit of TMA Khanewal that excess electricity units were

consumed in 2011-12 as compare to 2010-11 which involved excessive expenditure

of Rs.19, 44,483, the detail is given in Annexure-E

Audit is of the view that due to weak internal controls austerity measures were not

observed.

This resulted in excessive expenditure of Rs.1,944,483

Reply of the DDO: - The use of electricity was made at the time of dire need

Audit recommended regularization of expenditure besides appropriate action against

responsible.

Types of Para

Ordinary Para The para in which routine violation is pointed out which has no serious losses.

Advance Para The para in which a serious irregularity has been pointed out that resulted huge bad results.

MEFDAC Para The para which was not settled in DAC but not selected for inclusion in Audit Report and referred back to DAC.

Proposed Draft Para The para which was discussed in Departmental Accounts Committee Meeting and was not settled and proposed for inclusion in Audit Report of the Department.

Audit Para The para which was not settled in repeated meetings and selected for inclusion in Audit Report of the Department.

Audit Report

This is report comprises audit findings in following shape.

Section-I It is presents position of previous audit paras.

Section-II It presents position of present audit.

Audit activity Introduction of Audit team, duration of audit activity, priorityareas, and who was Head of the Office.

Part I This pertains to serious irregularities. The paras in this part arecalled Advance Paras.

Part II This part of AIR ( Audit & Inspection Report) contains routineirregularities.

Part III This part contains test “Audit Note” if issued by audit.

General Remarks General Comments offered by the audit on the wholeentity audited.

Reply of the Audit and Inspection Report

Audit report is issued to DDO and his two next higher authorities for

their information and necessary action which they deem appropriate.

The usual time given for the replies is 15 days.

Verification of the Replies

On the receipt of the replies of DDO, Audit Officer issues a schedule of

verification of replies. DDO alongwith his record attends Audit Officer as

per Schedule. Audit Officer again examine the record and record its

recommendation against each reply.

Departmental Accounts Committee (DAC)

& SDAC

These are the committees which discuss and take

decisions on the Ordinary and Advance Audit Paras of

the department. This comprises DCO (District

Coordination Officer) as Chairman, Head of the

concerned Departments as member and Director Audit

as Member. Separate meetings are held for Advance

Paras and ordinary/routine paras. These committees are

authorized to settle the Advance or ordinary paras.

IMPORTANT: No para will be settled without the consent of

audit

Draft Audit Report

This report is issued by director audit to the DCO for replies form the

officers in his command. DCO calls replies from concerned offices and

sends to Audit Office. Audit Office again issues a schedule for verification

of replies. All departments again go to Audit Office with record for

verification and same process is adopted by Audit Office.

DAC on Draft Audit Report

Those audit paras which could not settled, are once again discussed with

their final outcome. Almost all justification / defense and actions are taken

at this stage. some paras are settled at this stage.

Audit Report

This is final report containing unsettled paras of serious irregularities. This

report is presented to Nazim in case of District, Governor in case of

province and President in case of Federal Govt. Department wise paras

are given separately.

Public Accounts Committee

This is a committee whose head is appointed from opposition of the Govt.

to strengthen accountability.

The composition of the committee is

Chairman Parliamentarian from the opposition

Member Secretary of the Department

Member Director General of Audit in case of Province and

Auditor General in Federal Govt.

Final Authority to settle, to take action against responsible is Chairman PAC.

Thank You!

Queries???