RTI, MUMBAI / CH 61 REPORTING PROCESS DAY 6 SESSION NO.1 (THEORY ) BASED ON CHAPTER 6 PERFORMANCE AUDITING GUIDELINES

RTI, MUMBAI / CH 62 Learning Objectives In the last 5 days we have discussed about the salient features of the Performance Auditing, Auditing standards and mandate, Strategic planning and selection of subjects, Performance audit and implementation plan. We have also discussed the Evidence and documentation in Performance Auditing. Today we will be discussing about the Reporting process in Performance Auditing in two theoretical sessions.

RTI, MUMBAI / CH 63 Cont… In the first theoretical session we will discuss:  Characteristics of good report.  Focussed Reporting  Reporting process: Discussion papers and Risk involved with discussion papers  Discussion papers and audit observations  Exit conference & Field audit report  Draft performance audit report

RTI, MUMBAI / CH 64 Cont… In the second theoretical session we will discuss:  Level of details in the report  Forwarding of the draft report & response of the entity  Observation of the SAI headquarters on draft report & second journey of the report to SAI headquarters  Final report: its contents, structure and data contained in the report  Enhancing the presentation & readability of the report  Quality assurance of reporting

RTI, MUMBAI / CH 65 Characteristics of good report The audit report should be complete i.e  all pertinent information required to satisfy the audit objective, the scope, criteria, evidence, conclusions and recommendations should be available in the report;  The obligation for the audit report to be accurate implies that the evidence prescribed is true and the conclusions are correctly portrayed;  The objectivity of audit report is ensured through fair conclusions and balanced content and tone;

RTI, MUMBAI / CH 66 Cont…  The audit report is convincing if the results of audit are presented persuasively and the conclusions and recommendations followed logically from the facts presented;  The report should be clear, which signifies that it should be easy to read and understand;  The report should be concise, which requires that the report should be optimum size, no longer than necessary to convey the audit opinion and conclusions;

RTI, MUMBAI / CH 67 Cont…  A report is balanced if it does not focus on criticism alone but contains fair assessment or evaluation, which would mean that good performance should also be reported;  Consistency of the report is secured by ensuring that it does not contain contradictory findings or conclusions in similar contexts or the conclusions on the same segment in different sections or parts of the report are not incompatible;

RTI, MUMBAI / CH 68 Cont…  The report is constructive if it manifests a remedial approach rather than a critical approach and includes appropriate recommendations;  The report adds value to the entity, if it is timely; and  The acquiescence to the report, including of the audit conclusions and recommendations grows with display of entity cooperation, entity responses, audit methodology, audit criteria, and evidence, etc. within the performance audit reports.

RTI, MUMBAI / CH 69 Focussed reporting  While writing the various reports, it is important to keep the final report in mind. Thus, all forms of reports (discussion papers, audit observations, and draft field audit report) leading to the finalisation of the drafts audit report should be focussed on the final output and therefore, should be complete and self- sustaining, as far as possible, within the limitation of the responsibilities and accountability of the individual field units and the data held by them.

RTI, MUMBAI / CH 610 Cont…  It will be expected that the entity response by way of confirmation of the facts and figures and acceptance of audit findings and conclusions are sought/obtained at each stage to minimise the unresolved issues at the stage of development of the draft performance audit report.

RTI, MUMBAI / CH 611 The reporting process Reporting process begins with discussion papers,navigates through the stages of  Audit observation  Exit conference/interview  Field audit report  Draft performance audit report  Forwarding of the draft report  Response of the entity

RTI, MUMBAI / CH 612 Cont…  Observation of the SAI headquarters on draft report  Second journey of the report to SAI headquarters  Final Report.

RTI, MUMBAI / CH 613 Discussion Paper  Discussion papers serve to confirm the facts with the entity  Help in development of audit findings  Recommendation by exploring significant early findings and recommendations with the entity and obtaining its preliminary response  Discussion papers may contain suggestion after their approval by the group supervisory officers or the Accountant General, as per the procedure followed by the respective Accountants General.

RTI, MUMBAI / CH 614 Cont…  It may lead to early implementation of SAI recommendations and can, thus, contribute to improving public administration.  In such cases, it would be appropriate to mention in the report that, during the audit, the SAI raised a specific issue to which the entity took remedial action.

RTI, MUMBAI / CH 615 Discussion papers and audit observations  Discussion Papers  issued early in the process of developing audit observations  May not as precise as audit observation  Contains more details  Audit Observation  Developed towards the close of the audit of the entity  It is precise Whether the matters contained in a discussion paper should necessarily be followed up through issue of audit observation or may be taken directly to the draft local audit report may vary from case to case.

RTI, MUMBAI / CH 616 Exit conference/interview  Audit observations form the basis of the formal exit conference/interview with the entity chief at the conclusion of the audit of each field unit.  It assists the entity in providing its comments for consideration in preparing the field audit report or the draft performance audit report, as the case may be.  Ideally the audit observations should contain the bulk of the information, findings, conclusions and recommendations and they may differ from the field audit report or draft performance audit report, only to the extent warranted by the entity response.

RTI, MUMBAI / CH 617 Field audit report  The Accountants General may determine if it will assist in development of the draft performance audit report by way of ensuring acceptance of the audit findings, and conclusions as well as other facts and figures by the head of each unit audited, in so far as they relate to the particular field unit.  However, since the audit is conducted in a multi- layered and some times variously controlled environment, the Accountants General may determine the level of units to whom the field audit reports are to be issued.

RTI, MUMBAI / CH 618 Draft performance audit report  The draft performance audit report provides the first opportunity to the Accountant General as well as to the entity to view the full context of audit findings.  The draft performance audit report should be prepared exactly similar in form and content as the final report with the exception that the entity may expect details to enable it to provide a response.  It is important that the draft report describes the objectives and scope of the audit to enable any reader understand the purpose of the audit.

RTI, MUMBAI / CH 619 Session Summary In this session we discussed: Characteristics of good report. Focussed Reporting Reporting process: Discussion papers & Risk involved with discussion papers Discussion papers and audit observations Exit conference & Field audit report Draft performance audit report