1. Public Sector Auditing Practices in Nepal
Chandra Kanta Bhandari, FCA

2. Session Overview
Auditing Concepts; broader definition, types, elements /parties
Public Sector Auditing Frameworks and Practices in Nepal
Irregularities; amount by type
Audit of State Owned Enterprises
Other relevant matters

3. AUDIT ???? Examination, verification, evaluation or confirmation of:
Reliability & Fairness of financial transactions and reports,
Effectiveness of internal control system,
Value Adding principle of Value for Money
Meeting objectives and expected outcome
Sustainability in meeting the challenges
Establishing accountability
Promoting transparency
Strengthening Integrity

4. Audit: Three Party Relation
It begins with a three party relationship.
Entity
Professional Accountant/Auditor
User of Subject Matter

5. Audit: Three Party Relation contd…
Entity
Professional Accountant
Data
Against suitable criteria
Systems & Processes
Evaluate/Measure Subject Matter
Behavior
User of Subject Matter

6. Audit: Three Party Relation contd…
Entity
Professional Accountant
Data
Against suitable criteria
Systems & Processes
Evaluate/Measure Subject Matter
Behavior
Express an opinion / conclusion on level of assurance about subject matter
“FA- presented fairly, in all material respects” or “true and fair view”
User of Subject Matter

7. Audit: Three Party Relation
Entity
AUDIT APPROACH & Methodology
Professional Accountant
Data
Against suitable criteria
Systems & Processes
Evaluate/Measure Subject Matter
Behavior
Express an opinion / conclusion on level of assurance about subject matter
User of Subject Matter

8. Framework for Public Sector Auditing in Nepal
Constitutional Provisions
Audit Act, 1991
Financial Procedural Act, 1998
Other Laws

9. Constitutional Provisions
AG receives its legal mandate through The Constitution of Nepal.
Part 22 of the constitution in Article 240 and 241 contains provisions relating to:
appointment of AG, terms of office, remuneration, functions, duties and powers of the AG
AG is empowered to carry out audits of the accounts of :
the office of the Prez and Vice-prez, the Supreme Court, Federal Legislature-Parliament, Provincial Parliament, Provincial Government, Local Bodies, Constitutional bodies and their offices, the courts, the Office of the Attorney General, Nepal Army, Nepal Police or Armed Police Force including all federal and provincial government offices and other entities as per prescribed in Laws
in such manner as may be determined by law, with due consideration given to the regularity, economy, efficiency, effectiveness and the propriety thereof.

10. n]vfk/LIf0fsf] pB]Zo M
lgsfosf] cfly{s ljj/0fn] ;Dk"0f{ cfly{s sf/f]jf/ / l:yltsf] ;xL / oyfy{ lrq0f u5{ jf ub}{g eGg] ;DaGwdf k/LIf0f u/L :jtGq /fo JoQm ug{] .
a:t' tyf ;]jfsf] ;fj{hlgs vl/b nufot ;fj{hlgs lgdf{0f sfo{x? cfly{s sfo{ljlw P]g, ;fj{hlgs vl/b P]g tyf lgodfjnL nufot ;fGble{s sfg"g Pj+ ;fj{hlgs lgdf{0f lgb]{lzsf jf cGo ;DalGwt lgb]{lzsfsf k|fjwfgx? adf]lhd ;DkGg eP gePsf]] k/LIf0f ug{] .
;fj{hlgs >f]tsf] k|of]u ldtJooL, bIftfk"j{s tyf k|efjsf/L ?kdf u/LP gu/LPsf] ;DaGwdf k/LIf0f ug{] .

11. n]vfk/LIf0f k|sf/ / n]vfk/LIf0fsf] pB]Zo
n]vfk/LIf0fsf] k|sf/ cg';f/ n]vfk/LIf0fsf] d"Vo pB]Zo km/s x'G5 .
t/ ;j} k|sf/sf n]vfk/LIf0f cfjZostf cg';f/ 5'§f5'§} jf ;+u} ug{ ;lsG5 .
n]vfk/LIf0fsf] k|sf/ / d"Vo pB]Zo h] ;'s} ePtfklg n]vfk/LIf0fsf] k|lqmof w]/} xb;Dd ldNbf]h'Nbf] x'G5 . To;sf vf; lqmofsnfk dfq km/s x'g ;S5g .

12. n]vfk/LIf0f k|fo M # k|sf/n] ug{ ;lsG5 M
n]vfk/LIf0f k|sf/ M
n]vfk/LIf0f k|fo M # k|sf/n] ug{ ;lsG5 M
lalQo n]vfk/LIf0f
lgsfosf] cfly{s ljj/0fn] ;fj{hlgs ;]jf jf a:t'df u/LPsf vr{x?sf] ;xL / oyfy{ lrq0f u5{ jf ub}{g eGg] :jtGq /fo JoQm ug{] .
lgoldttfsf] n]vfk/LIf0f
;fj{hlgs ;]jf tyf sfo{x? k|rlnt P]g, lgod jf lgb]{lzsfsf k|fjwfgx? adf]lhd ePsf] jf gePsf] k/LIf0f ug]{ .
sfo{d"ns n]vfk/LIf0f
ldtJooLtf, sfo{bIftf / k|efjsf/Ltfsf] b[li6|sf]0f af6 k/LIf0f ug]{ .

13. n]vfk/LIf0fsf] b[li6sf]0f
lgoldttf,
ldtJooLtf,
sfo{bIftf,
k|efjsfl/tf /
cf}lrTo
g]kfnsf] ;+ljwfg / n]vfk/LIf0f P]g -k|yd b'j}df oL b[li6sf]0f cg';f/ n]vfk/LIf0f ug'{kg]{ s'/f pNn]v 5 .

14. n]vfk/LIf0f ;DjGwL tl/sf M
n]vfk/LIf0f sf] bkmf # M n]vfk/LIf0f ;DaGwL t/Lsf M
n]vfk/LIf0f ug]{ ;/sf/L sfof{no, g]kfn ;/sf/sf] k"0f{ jf clwsf+z :jfldTj ePsf] ;+ul7t ;+:yf jf cGo ;+:yfsf] ;a} jf tL cGtu{tsf s'g} OsfO{dfq 5gf}6 u/L cfly{s sf/f]af/ / ;f];Fu ;DalGwt cGo lqmofsnfkx?sf] Ps Ps u/L jf aLr aLrdf 58\s] u/L jf s]xL k|ltzt dfq k/LIf0f ug]{ u/L n]vfk/LIf0fsf] tl/sf, If]q / cjlw tf]sL clGtd n]vfk/LIf0f ug{, To;af6 k|fKt ePsf tYox? bzf{pg, To;df cfnf]rgf ug{ / cfly{s ljj/0f pk/ cfjZostfcg';f/ /fo;lxtsf] k|ltj]bg ug{ ;Sg] .
g]kfn ;/sf/åf/f cg'bfg k|fKt u/L ;+rfng ePsf sfo{qmd tyf cfof]hgfsf] l:ylt tyf n]vf;DaGwL sfuhft h'g;'s} avt x]g{,
;/sf/L sfdsf] 7]Ssf lng] lgdf{0f Joj;foL / cfk"lt{stf{ jf ;/sf/L sfdsf] lhDdf lng] ;+:yf jf JolQmnfO{ ;d]t To:tf] 7]Ssf jf cfk"lt{ jf cGo ;/sf/L sfd;Fu ;DalGwt sfuhft, cfGtl/s /fh:j sfof{noaf6 s/ k/LIf0f ePsf kmfOn tyf yk k|df0f sfuhft k]z ug{ nufpg,
n]vfk/LIf0fsf] sfddf s'g} ljz]if1sf] ;]jf pknAw ug{ / cfjZos k/]df plrt kfl/>lds lbO{ s/f/df sfd nufpg .
n]vfk/LIf0f ul/g] lgsfon] ckgfPsf ;"rgf k|ljlwdf dxfn]vfk/LIfs jf dxfn]vfk/LIfssf] sfof{nosf sd{rf/Lsf] kx'Fr x'g] .

15. n]vfk/LIf0f ;DjGwL tl/sf M
n]vfk/LIf0f ug'{kg]{ lgsfosf] ljQLo n]vfk/LIf0fsf] cltl/Qm sfo{d"ns, ;"rgf k|ljlw, ljlwlj1fg, n}lus, jftfj/0fLo h:tf ljifosf] n]vfk/LIf0f ug{ ;Sg] . -bkmf #s= ljljw ljifosf] n]vfk/LIf0f_
n]vfk/LIf0f ug'{kg]{ lgsfosf] ;fdlos n]vfk/LIf0f ug{ ;Sg] . -bkmf#v=;fdlos n]vfk/LIf0f_
o;/L ul/g] n]vfk/LIf0fsf] ljlw, tl/sf, If]q / k/LIf0f ug]{ s'/fx? dxfn]vfk/LIfsn] tf]lslbP adf]lhd x'g] .

16. n]vfk/LIf0fsf] ljlw k|0ffnLsf] d"Nof+sg n]vf clen]vsf] k/LIf0f
kmfO{n / sfuhftsf] k/LIf0f
:ynut cjnf]sg tyf lg/LIf0f /
cGo pko'St ljlw

17. n]vfk/LIf0f cfwf/x? ;/sf/L gLlt, ah]6, sfo{qmd, lgb]{lzsf,
;fj{hlgs vl/b P]g tyf lgodfjnL,
cfly{s sfo{ljlw P]g tyf lgodfjnL,
;fj{hlgs lgdf{0f lgb]{lzsf,
lgdf{0f sfo{ ;DjGwL :jLs[t gd{z,
lhNnf b/ /]6,
Jfflif{s sfo{qmd,
cfof]hgf k|ltj]bg jf cjwf/0ff kq,
bft[;+:yf Pj+ /fi6| ;+u ul/Psf ;Demf}tf,
lgdf{0f Joj;foL;+u ul/Psf] ;Demf}tf
cGo ;DjlGwt P]g lgodx?

18. Matters to be examined

19. Matters to be examined contd…

20. a]?h' Criteria Condition
cfly{s sfo{ljlw -b_ æa]?h'Æ eGgfn] k|rlnt sfg"g adf]lhd k'¥ofpg' kg]{ /Lt gk'¥ofO{ sf/f]af/ u/]sf] jf /fVg' kg]{ n]vf g/fv]sf] tyf clgoldt jf a]dgfl;a tl/sfn] cfly{s sf/f]af/ u/]sf] egL n]vfk/LIf0f ubf{ cf}+NofOPsf] jf 7x¥ofOPsf] sf/f]af/ ;D´g' k5{ .
a]?h' = n]vfk/LIf0fsf] cfwf/ / n]vfk/LIf0fjf6 b]lvPsf] Joxf]/f ljr km/s ePsf] cj:yf
;}4flGts a]?h' / nutL a]?h'
Criteria
Condition

21. a]?h'sf] lsl;d / o;sf] cj:yf -%#cf}+ k|ltj]bg @)&@_

22. a]?h' n]Vbf Wofg lbg'kg]{ s'/fx?
Effiffut s'/fx? M :ki6tf, ;/ntf, a'lemg], ;Gt'lnt
$ l; sf] cfwf/df n]Vg] M
Criteria (What should be)
Condition ( What is)
Consequence (What will happen because of condition)
Cause (What is underlying cause behind having this condition)
l; klg n]Vg ;s]df /fd|f] x'g]
Corrective Action (Recommendation)
Commitment (Response from audited agencies)

23. n]vfk/LIf0fsf k|lqmofut s'/fx?
z'?df n]vfk/LIf0f k|j]z a}7s .
ulDe/ q'6L b]lvPdf lar lardf hfgsf/L u/fpg] . 5nkmn ug]{ .
cGtdf alxu{dg a}7s . of] a}7ssf] dfO{Go'6 clgjfo{ .
k|f/lDes n]vfk/LIf0f k|ltj]bg hf/L .
#% lbgleq k|f/lDes n]vfk/LIf0f k|ltj]bg pk/ k|ltlqmof .
;Dk/lIf0fsf] nflu cg'/f]w ug{ ;Sg] .
!% lbg leq ;Dk/lIf0fsf] hfgsf/L lbg'kg]{ .

24. Auditing Standards applied
Government Auditing Standards issued by the AG and other subject matter specific audit guides
Policy Standard,
Operational Guide (recently replaced by Financial Audit Manual)
Revenue Audit Guide,
Procurement Audit Guide,
Donor Funded Audit Directives,
Administrative Expenses Audit Guide
Performance Audit Guide,
Basically guided by INTOSAI Pronouncements referred as INTOSAI Professional Pronouncement Framework (IPPF)

25. Audit Flow Planning Pre-Planning Execution
Annual Audit Plan
Ministry Level Audit Plan/ Sectoral Audit Plan
Quality Control & Assurance
Entity Level Audit Plan
Pre-Planning
Planning
Execution
Reporting & Follow up

26. Audit Process Flow at Entity level Audits

27. Audit of State Owned Enterprises
Fully owned public enterprises by the Office of auditor General or by the professional Accountants (CAs/ RAs) appointed by the AG as his assistant
Substantially owned public enterprises – audited by the auditor recommended by the AG and appointed by the AGM of respective enterprise

28. Latest Developments- Recognition of SAIs
UN Resolution A/66/209
recognizes SAIs can accomplish their tasks objectively and effectively only if they are independent of the audited entity and protected against outside influence and
also recognizes role of SAIs in promoting the efficiency, accountability, effectiveness and transparency of public administration.
The Sustainable Development Goals ( ) comprises 17 goals and 169 targets, whereas goal 16 "[...] build effective, accountable and inclusive institutions at all levels" is of special importance for SAIs.

29. Latest Development - others
OAGN has started Engaging Civil Society Organizations (CSOs) in its audit process
OAGN is trying to aligning its standards in line with ISSAIs
GoN has decided to use Cash Based IPSAS as its Financial reporting Framework
Treasury Single Accounts is being used in all District Treasury Offices

30. Case

31. Query ?????????
Discussion

32. THANK YOU VERY MUCH !!!