The Audit Process PRESENTED BY:

The Audit Process The are three (3) stages in the audit process: Planning Stage Execution Stage Reporting Stage

The Audit Process 1.Planning Stage The Auditor General’s Office has three types of plans: The Long Term 5 year Strategic Plan The Annual Plan and The Individual Audit Assignment Plans

The Audit Process Planning Stage Cont. The 5 year SP gives the strategic direction of the OAG in the next 5 years. In order to operationalize the SP, each department in the OAG prepares an annual operational plan. To implement the Annual Plans, audit departments prepare individual audit assignment plans The annual operational plans are prepared based on the audit risks identified by each department. The Clients are profiled according to the risks.

The Audit Process Planning Stage Cont. The individual audit assignment plans are done after a thorough assessment of risks in the organization. Prior to the commencement of the assignment, an engagement letter is sent to the auditee. The letter specifies: The client’s and the auditor’s responsibilities towards the engagement,the timeframe for the engagement. The Controlling Officer/CEO is required to countersign the engagement letter as an agreement over their responsibilities. An entrance conference is arranged where the auditors explain the expectations and the purpose of the engagement.

The Audit Process 2. Execution Stage Once the planning has been completed, the plan is executed. The plan is executed through a series of audit programmes drawn up on each individual audit component identified during the risk assessment. Conclusions are derived from the execution of the audit pragrammes. During the execution of the audit programmes, oral inquiries are made in order to confirm the correctness of the facts gathered.

The Audit Process 2. Execution Stage Cont. Where no satisfactory explanations are given by management, preliminary audit queries are raised in writing. The preliminary audit query is addressed to the Chief Accountant. Upon conclusion of the execution stage, an exit meeting is arranged with the Controlling Officer. During the exit meeting, the Controlling Officer is briefed over the findings arising from the audit.

The Audit Process 2.Execution stage Cont. The audit queries come about as a result of the Controlling Officers not following the necessary regulations and procedures. Audit queries are raised based on the information obtained and the evidence The audit evidence should be sufficient, reliable and relevant.

The Audit Process 3. Reporting Stage The unresolved issues during the audit are put in a management letter addressed to the Permanent Secretary/CEO. The management letter highlights the: Observation Risk associated with the observation and Recommendation to address the risk The Permanent Secretary is given 30 days to respond. If a response is received, a verification is done and an updated status given.

The Audit Process 3. Reporting Stage Cont. Where no response is received after 30 days, a reminder is written. If no satisfactory explanations to the management letter are received, the report is upgraded to an Audit Reference Sheet. The Audit Reference Sheet is addressed to the personal attention of the Controlling Officer. The Controlling Officer is given 14 days in which to respond. If no satisfactory explanations to the matters raised are received, the report is upgraded to Draft Annual Report Paragragh (DARP).

The Audit Process 3. Reporting Stage Cont. The DARP seeks the Controlling Officer to confirm the correctness of the facts reported. It is signed by the Auditor General. The Auditor General gives the Controlling Officer 14 days in which to respond. Where satisfactory responses are received, the facts are amended accordingly. All unresolved issues from all Ministries are then consolidated into the Auditor General’s annual report on the accounts of the Republic for the year then ended.

The Audit Process 3. Reporting Stage Cont. In accordance with the provisions of the Constitution, the Auditor General’s Report for the preceding year is presented to the President by the 31st of December of the following year. The President through the Vice President submits the report to the Speaker for tabling. Once the report has been tabled, it becomes a public document.

The Audit Process 3. Reporting Stage Cont. The Public Accounts Committee (PAC) considers the report and makes recommendations to the main House. Once the recommendation of the PAC have been adopted by the main House, the Ministry of Finance is required to prepare Treasury Minutes within 60 days. The Treasury Minutes state the action taken arising from the recommendations of the PAC. All outstanding recommendations are reviewed during the next audit circle and included as an appendix in the next Auditor General’s report.

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