To launch and follow-up a local audit TRAINING LAF 2009

Training LAF Training objectives The persons taking part to this training will be able to:  Define the context of a local audit  Determine the different types of auditing services  Describe the management processes of local audits  Set-up basic terms of references

Training LAF Define the context of a local audit At the request of:  The project management,  The SMCL for specific purposes;  Demanded in the Specific Agreement.  National execution  Other donor (IS projects)

Training LAF Determine the different types of auditing services  Financial Audit  Systems Audit  Financial and Systems Audit  Compliance Audit  Fraud Audit  Different contents: i.e. organisation processes and procedures, compliance of the accounting…

Training LAF Determine the different types of auditing services– FINANCIAL AUDIT  Is conducted to determine whether the overall financial statements (the information being verified) are stated in accordance with specified criteria. The objective is also to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework. It is no longer sufficient for auditors to focus narrowly on accounting transactions. An integrated approach to auditing considers both risks or errors and operating controls intended to prevent errors.

Training LAF Determine the different types of auditing services– SYSTEMS AUDIT  Evaluates the efficiency and effectiveness of any part of an organisation operating procedures and methods and by promoting continuous improvement.  At the completion of an operational audit, management normally expects recommendations for improving operations (i.e. evaluation of the organisation structure, computers operations, accounting process, production methods…).

Training LAF Determine the different types of auditing services - COMPLIANCE  Is conducted to determine whether the auditee is following specific rules or regulations set by some higher authority. A compliance audit could include:  determining whether accounting personnel are following the procedures prescribed by the controller;  reviewing wage rates for compliance with minimum wage laws;  examining contractual agreements with bankers and other lenders to be sure the organisation is complying with legal requirements.  etc

Training LAF Determine the different types of auditing services– FRAUD (Forensic)  Special investigations are performed when there is an indication of:  some form of fraud;  misconduct;  to analyse a specific problem area;  etc..  These audits are tailored to suit the circumstances but would always include a report evaluating the operating policies and procedures of the area concerned so as to minimise the risk of any future frauds/misconduct.

Training LAF Determine the different types of auditing services– FRAUD (Forensic) Fraudulent financial reporting  Involves intentional misstatements, including omissions of amounts or disclosures in financial statements, to deceive financial statement users.

Training LAF Describe the management processes of local audits  Who does what?  Deadlines?  Tools available?  Set-up basic term of references.  BTC with the approval of the SMCL sets-up the terms of references.  Audit Offices that respect the international rules in the auditing services (International Standards of Auditing).

Training LAF Describe the management processes of the local audits (cont.)  Two draft procedures exist (Approval is ongoing!)

Training LAF Set-up basic terms of references It exists a draft of standards terms of references. Those need to be adapted according to the context and the project’s environment. Pay attention to:  The type of auditing service  The auditor’s profile (based on the CV’s)  The mission duration  The audit tasks  The approval of the workplan and the methodology  The context and specific risks of the project

Training LAF State of play: framework contract  Continent: Africa  Three lots: (1) DRC – (2) East Africa – (3) West Africa  Principle: pre-selection of:  One supplier by lot;  The type of auditing services available;  A global standard methodology;  Pre-established prices according to mission’s duration.  Specific terms of references adapted to the context and the needs of the project are set-up  Invitation to tender: 05/06/2009  Services available as from September 2009

Training LAF Questions

Training LAF Assignement  Prepare the terms of references for a complex project in your country  Pay particular attention to the specific elements of your project  To hand over on Monday to your RC

Training LAF