1. Dimension of Audit Damodar Pudasainee Assistant auditor general
Office of The Auditor General

2. Audit Examination of Accounts
evaluation of a person, organization, system, process, project or product.
Audits are performed to ascertain the validity and Reliability of information, and also provide an assessment of a system's internal control.
Contd:

3. Audit Independent evaluation of financial transactions
It is generally a post-mortem activity
It is an integral part of financial administration

4. An Audit is an examination of such records to establish their reliability and reliability of statements drawn from them.
A.W.Hanson

5. The goal of an audit is to express an opinion on the Financial Statements

6. Types of Government Audit
Pre Audit
Internal Audit
External/Final Audit

7. Internal Audit
Internal auditors support managers in monitoring and controlling an organization's behavior and performance against agreed constraints and objectives
Report to internal managers or ministries.
Internal auditors are employees of a company hired to assess and evaluate its system of internal control.

8. External/Final Audit
External auditors oversee a wide range of activities, including the audit of financial statements and the legality and probity of transactions.
External Auditors are independent staff assigned by an auditing office/ firm to assess and evaluate financial statements .
Report to Board of Directors/Parliament

9. Performance Audit Full scope Audit Value for Money Audit
Comprehensive Audit

10. THREE E'S Plus
ECONOMY
EFFICIENCY
EFFECTIVENESS
COMPLIANCE
PROPRIETY

11. Emerging trends Transparency and Accountability in auditing
Performs their duties under legal framework.
SAI make their mandate, responsibility, mission and strategy
Adopt audit standards and processes and methods that are objective and transparent.
High standard of integrity and ethics for staff of all levels
Communicate widely and timely on their activities and audit results.

12. Emerging trends.... 2. Separate compliance auditing report
Compliance Audit report for parliamentary decisions, law, legislative acts, policy.
Compliance auditing include both the aspects of regularity and propriety.
Audit criteria might already be defined by national legislation.
SAI promotes good governance by defined by identifying and reporting deviations from criteria.
Peer review
Communication Strategy

13. Emerging trends….
3. Separate financial, compliance and performance auditing
Prevailing practice of including all types of issue in the same report.
Different comities have been introduced the practice of separating three audits

14. Emerging trends…. 4. Cooperative Audit
Cooperative audit is carried out by two more supreme audit institutions, Joint team
Parallel/ Concurrent Audit Mission: A decision is taken to carry out similar audits.
Coordinated Audit Mission: A coordinated audit is either a joint audit with separate audit reports or parallel audit with single audit report.

15. Emerging trends…. 5. Citizen Participatory audit
Involving citizen or civil society organization (CSO)
Mainly involved in performance auditing to identify risk area and collect evidence.
Methodology use -Focus group discussion, Interview etc.

16. Emerging trends…. 6. Risk based approach 6.1 Strategic Level
Volume of Transaction
Value of Transaction
Complexity of system
Sensitivity
Control Environment
6.2 Individual Level
Inherent risk
Control environment and control procedure
Control risk
Detection risk

17. Emerging trends…. 7. Other Audit Disaster Audit
Debt Audit
Environment auditing
Audit of Privatization
IT Audit
Auditing policy
System audit
Sectoral Auditing, technical audit, energy audit, medical audit, forensic audit, management audit
Concurrent auditing
Leadership auditing
Financial Accountability assessment

18. Audit Procedure n]vfk/LIf0f
Audit Plan
sfof{Gjog Verification Evidence Gathering
k|ltj]bg Reporting Preliminary Final Annual
u'0f:t/ ;dLIff Quality Review
;+k/LIf0f cg'udg Follow up
lgsfosf] hfgsf/L Discussion document overview
Audit Procedure

19. Supreme Audit Institutions
Watch dog of public purse/Taxpayer’s friend
Existence in every country all over the world for final/external audit
Role is to Provide independent assurance to Parliament on the Financial Statements of the Audited Entity.

20. Constitutional Provision
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, remunerations, functions duties and power of the AG
The office of the president and vice- precedent, the system court, federal legislative- parliament, provincial parliament, provincial government, local bodies, constitutional bodies and their office of 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 propriety.

21. Auditor General as an Independent Institution
Appointed by the President on the recommendation of the Constitutional council.
Fixed term of office.
Removal on the grounds as of the judge of the Supreme Court.

22. Auditor General as an Independent Institution
Ineligible to hold government post after retirement.
Remuneration and facilities guaranteed by separate Act
Expenditure charged to consolidated fund
No reduction of OAGN vacancies without AG’s Consent

23. Auditor General as an Independent Institution
Code of ethics for staff
Full Access to information
Hire professional consultant for audit.
Prescribes Accounting formats.
Submits annual Report to the President

24. Accountability Framework
President
Constituent Assembly
Annual Report
PAC
Auditor General
Ministries
Issuance of Audit Report
Financial Statement/Collection of information

25. Sources of Audit Mandate
Constitution of Nepal
Audit Act, 1991
Audit methodology
Matters to be Audited
Scope of Audit
Powers to issue directives
Other Special Legislations

26. Scope of Audit Constitution of Nepal Public Audit:
Supreme court, Constituent Assembly, Constitutional bodies, Nepal Army, Nepal Police, Local bodies, Provinces, All Government Offices and Courts.
Boards, Committees, University etc. specified by Legislation
Other Services:
Fully State Owned Enterprises (SOEs)
Provide consultation to government substantially owned entities for appointment of Statutory Auditors
Issue Directives on audit methodology to be applied.

27. OAG/N Strategic Direction
Vision – Enhance Good Governance through Accountability and Transparency in the Public Sector
Mission – Provide Trustworthy, Effective and Independent Audit Service for the Efficient Management and Utilization of Public Resources

28. Audit Objectives and Policies
To promote Accountability and Transparency
To bring forth economy in the mobilization of public resources and enhance efficiency
To enhance effectiveness in public entities
To improve and assure clean practices in the working system of administrative, financial and managerial system

29. Audit Objectives and Policies
To assist in compliance of the existing laws
To encourage abandonment of the discretionary work style
To recommend practical suggestion for improvement by identifying weaknesses and lacunae in the existing approach, process, practices and legal provision, and
To encourage the practice of taking action against delinquents and rewarding the excellent performance

30. Types of Final/External Audit
Financial/Compliance Audit
Covers more than 6 thousands Cost Centers
Boards, Committees, Universities
Performance Audit (PA)
Audit of Entity, program, project and activities
About 10 topics/Issues are audited every year

31. Audit Process - Planning & Execution
Preparation of Annual Schedule of Audit Operation and sent to all secretaries and concerned ministry
Audit planning
Assessing the volume of work
Determining Audit Approach and focus area for the year
Setting of Audit criteria
Preparation of Audit Program

32. Audit Process
Audit Planning  Audit Execution Audit Supervision Audit Report Follow Up

33. Audit Process - Planning & Execution
Approval of Audit Planning Memorandum
Audit Execution
Field Based audit (Single Audit Team and Multiple Audit Team)
Finalization of Audit by reviewing Internal audit report
Appointment of Auditor of the Statutory audit of SOEs

34. Audit Process- Reporting
Parliament
Auditee
PAC Hearing
Discussion wih Auditee during audit
Considering the response report finalized and submitted to president
Discussion with Auditee on Preliminary Draft Audit Report by holding Exit meeting
After AGs clearance copies of Final Draft Report is sent to secretaries of concerned Ministry for confirmation/response
Issue preliminary audit report (PAR) to Audited entity for response & copies sent to controlling authority
Panel discussion on Draft Annual Report incorporating AG’s comments
Important issues are picked up from PAR & Preliminary Draft of Annual Report is prepared for AG’s Review

35. Audit Impact
Audit Recoveries of over payments and under assessment of taxes
Improvement of Legislation and procedures
Compliance in presentation of Financial Statement is encouraging in recent years
Timely response on presentation of financial statement and Audit Report
Settlement of queries better compared to previous years

36. Relation with Public Account Committee
Active participation in PAC hearings
Depute staff to PAC or Legislative Committee for review purposes
Clarify and brief audit issues to PAC members
Review of action taken by Entities on the decision of PAC through follow up process

37. Audit Recommendation for improvement in Financial Management
Develop and adoption of Accounting Standards and Improvement in Accounting System
Bring all financial transaction (including foreign assistance) in the purview of budget
Initiate timely to get pending reimbursable amount from donors
Reconcile Revenue Account with Central Bank
Revise PWD norms
Increase People’s participation in social programs
Depute medical expert in accordance with approved post and provide adequate medical equipments for service delivery

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50. Thank you