1 / 18

THE PUBLIC SECTOR AUDIT PROCESS

THE PUBLIC SECTOR AUDIT PROCESS. How to engage with relevant audit reports and what the audit opinions mean? Portfolio Committee on DoD Briefing 19 October 2005 RP Mosaka/ C Botes Parliamentary Service Unit Office of the Auditor-General. INDEX. Definition Types of audits

abeck
Download Presentation

THE PUBLIC SECTOR AUDIT PROCESS

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. THE PUBLIC SECTOR AUDIT PROCESS How to engage with relevant audit reports and what the audit opinions mean? Portfolio Committee on DoD Briefing 19 October 2005 RP Mosaka/ C Botes Parliamentary Service UnitOffice of the Auditor-General

  2. INDEX • Definition • Types of audits • The audit process • Reporting

  3. AUDIT PROCESS • An audit can be defined as an official examination of accounts or as a searching examination

  4. AUDIT PROCESS continued… • Objective of audit of financial statements is to express an opinion as to whether statements are a fair presentation • Process is underpinned by attesting whether the controls are in place or not, and if in place, whether they are: • Being implemented (compliance), or • Effective, i.e. whether they are working or not

  5. TYPES OF AUDITS • Comprehensive (Regularity/Financial) auditing • Performance auditing • Forensic auditing • Sustainable development auditing • Integrated auditing

  6. TYPES OF AUDITS continued… Comprehensive Audit • Comprises both financial auditing and the consideration and testing of compliance with laws and regulations • Output of an comprehensive audit is the expression of an opinion of the financial statements of an entity

  7. TYPES OF AUDITS continued… Performance Audit Focuses on evaluating measures implemented by management to ensure economic procurement of goods and services and efficient and effective application of the same – VFM audits Forensic Audit An independent process to prevent or detect economic crime in the public sector

  8. TYPES OF AUDITS continued… Sustainable Development Audit Uses existing auditing disciplines but focuses on the social and environmental aspects of business processes Integrated Audit Independent process whereby the principles of preceding audit disciplines are co-ordinated and incorporated into one process

  9. AUDIT PROCESS AUDIT PROCESS Pre-Engagement Activities Audit Planning Execution Reporting

  10. AUDIT PROCESS Pre-Engagement Activities Audit Planning Execution Reporting • PRE-ENGAGEMENT ACTIVITIES • Consider changes in circumstances of previously audited entities • Consider circumstances of new engagements (identify risks) • Determine skills and competency requirements • Establish terms of engagement and communicate to management

  11. AUDIT PROCESS Pre-Engagement Activities Audit Planning Execution Reporting • AUDIT PLANNING • Obtain knowledge of the business • Obtain understanding of systems and processes • Assess financial risks facing the entity • Evaluate work of internal audit • Evaluate financial management • Formulate audit approach • Communicate audit plan to management

  12. AUDIT PROCESS Pre-Engagement Activities Audit Planning Execution Reporting • EXECUTION OF THE AUDIT • Testing of controls • Detailed test of transactions and balances • Continual communication • Letter to management to highlight key audit findings • Final audit steering committee meeting to clarify findings

  13. AUDIT PROCESS AUDIT REPORT AS OVERSIGHT TOOL Pre-Engagement Activities Audit Planning Execution Reporting • Audit assignment, nature and scope paragraph • common in all reports • Qualification paragraph • findings on which qualified opinion is based • Two types of reports • unqualified • modified

  14. AUDIT REPORT AS OVERSIGHT TOOL continued… Unmodified “clean” report No further audit comment

  15. AUDIT REPORT AS OVERSIGHT TOOL continued… Modified reports Matters that do not affect the auditor’s opinion Additional reporting requirements To highlight a matter

  16. AUDIT REPORT AS OVERSIGHT TOOL continued… Modified reports Matters that do affect the auditor’s opinion Limitation of scope Disagreement with management Effect is so material and pervasive and/or fundamental that auditor is unable to express an opinion Effect is not so material and pervasive and/or fundamental as to require disclaimer of opinion Effect is not so material and pervasive and/or fundamental as to require adverse opinion Effect is so material and pervasive and/or fundamental that auditor concludes that a qualified opinion is inadequate Disclaimer of opinion Qualified opinion Qualified opinion Adverse opinion

  17. AUDIT REPORT AS OVERSIGHT TOOL continued… • Emphasis of matter paragraph • Matters affecting financial statements • Going concern • Fraud or suspected fraud • Matters not affecting financials • Unauthorised expenditure • Irregularities and losses • Weaknesses in internal control • Financial management • DORA

  18. AUDIT REPORT AS OVERSIGHT TOOL continued… • Qualification and emphasis of matter paragraphs important to both PACs and PCs – to ensure that the accountability and oversight loop is complete • For Example - Questions on: • Reasons for shortcomings • Whether poor controls gave rise to losses/irregularities • Steps taken to regularise • Financial misconduct • Departmental investigations • Whether subsequent budgets (and therefore strategic plans) address shortcomings raised/observed before

More Related