Optimizing the Effectivenes of CAPA: Keeping an Eye on Audit Reports Rasheed Draman, Ph.D African Centre for Parliamentary Affairs (ACEPA) Accra, GHANA

The Chain of Accountability

Focus of the Audit Reports Two Key issues: Whether the PAP’s/AU’s financial administration rules and the regulations were followed If any misappropriations, embezzlements, diversions of funds or any kind of financial irregularities or malpractices had taken place during execution of the budget or in the management of an institution’s finances

Audit Opinion

Types of Audit Financial - traditional focus of public sector auditing. Auditor general model - financial audit focuses on the accounts of government departments using sampling techniques. Audit Court Model - emphasis on the legality of spending to see whether government revenue and spending have been used for approved purposes and departments have conformed to laws. Value for money audit or performance audits - ‘Four Es’ economy, efficiency, effectiveness and equity.

Value for Money Audit

Value for Money: The 4 Es Economy - keeping the costs low and minimising the cost of resources used for an activity, having regard to appropriate quality. Efficiency – making the most of available resources. Have resources been put to optimal or satisfactory use or whether the same or similar results in terms of quality and turn-around time could have been achieved with fewer resources. Effectiveness – achieving the stipulated aims or objectives. Goal- attainment concept concerned with the relationship between goals or objectives, outputs and impacts. Are the stipulated aims being met by the means employed, the outputs produced and the impacts observed?

Value for Money: The 4 Es Equity – whether or not resources have been disbursed in a manner that ensures that every section of society benefits.

Value for money’ considerations in the health sector Hospital purchases inputs: staff, equipment, medical supplies Transforms these inputs into outputs in services to community The outcomes are effects on patient health.

‘Value for money’ considerations Performance auditing checks for economy, efficiency and effectiveness in this process, asking, respectively: Are supplies, equipment and staff purchased for cheapest price? (economy); Is adequate number of operations carried out with inputs? (efficiency); Do operations improve patient health? (effectiveness). It can be summarized that the ‘Three Es’ require respectively spending less, spending well, and spending wisely.

Objectives of CAPA’s Review of Audit Reports? CAPA’s ultimate objective is to determine the materiality of findings in Audit Reports through evaluation of: The gravity of the findings of the Reports The frequency of occurrence of particular lapses across different departments The magnitude of public funds involved; and Other administrative lapses which the Committee deems necessary for correction

Issues to look out for in Discussing Audit Reports Issues raised in the External and Internal Audit Reports on Audit Outcomes Issues of financial probity (e.g. fraud), as highlighted in the audit reports or disclosed in the management report or in notes to the financial statements, or that come to the committee’s attention in any other way Compliance with the PAP’s or AU’s financial or related regulations

Issues to look out for in Discussing Audit Reports The interrogation and evaluation of instances of over-expenditure (relative to appropriations), and other instances of unauthorised expenditures and the authorisation or non-authorisation of these expenditures  The interrogation of instances relating to irregular, fruitless and wasteful expenditure  

Issues to look out for in Discussing Audit Reports Supply chain management and procurement, particularly large tenders, large capital projects and Public Private Partnership deals, where applicable The disposal of significant state assets, and any major financial or related losses suffered by the PAP Corporate governance of the PAP and its relevant departments

Issues to look out for in Discussing Audit Reports The extent of any public interest in the issues canvassed in the audit reports.

Final Words: CAPA as PAP’s/AU’s Financial Watchdog As the continent faces ever greater challenges and increasing pressure on its public finances, CAPA’s role will be to warn of risks, provide assurance and offer guidance to PAP and eventually AU policymakers on how to improve the management of public finances and ensure that Africa’s citizens know how their money is being spent. This will be the essence of CAPA’s contribution to strengthening the democratic legitimacy and sustainability of the PAP and the AU.  

THANK YOU!!!