Regularity & performance audit (mcmc)
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This document discusses the purpose and history of auditing. It begins by defining what accounts are - records of financial transactions over a period. It then discusses the origins of audit activities from the start of business enterprises and governments. The document defines an audit as an independent examination of an entity's financial statements by an appointed auditor. Audits are required for accountability, as a monitoring tool for decision makers, and due to statutory and legislative requirements. The document outlines different types of audits and discusses internal controls and their elements, including organizational structure and procedures.
Regularity & performance audit (mcmc)
- 2. Why Audit? By Mahfooz Ali Khan Date 28th February,2014 Participants of 17th MCMC, KARACHI
- 3. 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
- 4. Historical Background of Audit The origin of Audit activity Start of Business Enterprises Government Audit Audit in modern democracies
- 5. 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.”
- 6. 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
- 7. 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
- 8. Performance Audit • Value for Money Audit • Performance Audit • 3 E Audit – Economy – Efficiency – Effectiveness
- 9. 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’.
- 10. Elements of Internal Controls Organizational Structure Procedures Physical facilities Accounting and other Records Reports Standard of Performance Internal Auditing
- 11. 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