PUBLiC Sector enterprises in Bangladesh include nationalised banks and financial institutions, autonomous and semi-autonomous statutory bodies and all other enterprises with the government having 50 per cent or more shares. Government has a huge involvement in terms of grants, subsidies, and liabilities in this sector having an explicit impact upon the economy of the country. Public Sector Auditing is, therefore, one of the important tasks that the office of the C&AG is engaged in.
With the changing public sector governance environment due to global competitiveness and greater use of information Technology (iT), government auditors need to tailor audit approaches suited to the dynamics of contemporary operational situation. Need to establish strong corporate governance standards is a constant pressure on public sector auditors. it is necessary, therefore, to provide tools and strategies to fulfill the increasing demands on the modern day Public Sector Auditor.
Challenges to the Public Sector Auditing are :
+ Selecting the right kind of auditing e.g. Financial auditing, issue based Auditing or Performance Auditing;
+ Assessing internal controls properly;
+ Disappearing documentation in an electronic age;
+ Detecting fraud and other financial irregularities in large organisations;
+ Maintaining and enhancing professional expertise;
+ Framing of appropriate audit plan incorporating effective audit strategies;
+ Assuring high quality auditing;
+ Producing quality assured Audit Report useful to the Parliament and other stake-holders.
Financial or traditional auditing focusing on compliance with budgetary and financial regulations do not fulfill the requirements of total assessment as to the cost-effectiveness of the enterprise which needs to be gradually substituted by strong in-built internal
Auditing System. This is greatly lacking in the Public Sector Enterprises where the existence of internal Audit is not adequate in most cases.
issue based auditing covering a number of organisations at a time with as many audit parties could bring out meaningful output. System loss, Public Wastes, Procurement weaknesses, Poor inventory control etc. could be substantive areas for issue -based auditing.
+Performance auditing measures the extent of outputs achieved against the targets of goals, money and time. it could be carried out on the organisation as such or one or a number of important issues of the same organisation. Also called Value for Money audit, Performance audit has to a great extent wider purview in the Public Sector Auditing of Bangladesh inquiring into economy, efficiency and effectiveness of public spending. Some of the pertinent queries to be answered in this regard are :
+ Should performance audit be about accountability for the past or about improving the future?
+ Why does performance audit not examine success rather than failure?
+ How performance audit can help to bring about real improvements in public sector provision?
+ is performance audit compatible with innovation and creativity?
+Performance audit has to address the following issues : :
+ Performance audit plan is an essential element of the accountability process in all public jurisdictions;
+ Difficulties of negotiating the grey area between investigating performance and commenting on policy implementation matters.
+ implications on performance audit when decisions are difficult to be
separated from implementation;
+implementing an effective performance audit programme to add value to the public sector administration and accountability.
+ Assuring quality performance audit, audit of performance indicators (Pi) in the public sector has to be taken into cognizance in full scale. Audit of Pi relates to the performance management and reporting framework as pre-eruptive evaluation of the performance assessment. The following issues are important in this regard :
+ Developing effective performance information to assist, measure and report on the performance of government agencies;
+ Purpose of Pi auditing;
+ Guidelines for auditing public sector's Pis;
+ Making performance information and Pis work in coherence in the public sector.
Globalisation, the connected economy, technological innovation, industry consolidation and other unrelated factors have made the public sector operational environment increasingly complex creating newer risks for the management. ineffective management of these risks could result in strategic misalignment, narrowing margins and operating losses, product failure and potential litigation - all of which have significant impact on public value. it is necessary, therefore, to fix up an Enterprise Risk Management (ERM) audit strategy to assess the effectiveness of corporate governance processes and risk management activities.
+information Technology (iT) Risk Assessment and information System (iS) auditing for the Public Sector have assumed growing necessity in our country. The following issues are
important :
+ A practical approach to public sector enterprise-wide iT risk assessment;
+ Developing a risk-based iS audit work-plan;
+ integrated auditing approachputting iT risks into the right operational context.
+ Audit impacts of commercial confidentiality as and when appropriate in the public sector involves the following issues :
+ increasing incidences of commercial confidentiality in the public sector;
+ Audit implications of commercial confidentiality;
+ Preparing audit reports that explore the relevant issues without disclosing commercially sensitive information;
+ Establishing an accountability
frame-work that will balance government's requirements for accountability to the use of public resources and commercial interests.
Collaboration with the Private Sector Auditing Profession through exchange of information and expertise may help strengthen Public Sector Auditing of Comptroller and Auditor General. Experience of the Private Sector Enterprises with regard to internal Controls, internal Audit, Performance budgeting etc. may also help CAG's audit to recommend improvements in the Public Sector Enterprise management in those important areas. Recently a presentation on "Bank Loan Management and the internal Audit
perspective in Grameen Bank" in CAG's office by the Dy. Managing Director of Grameen Bank demonstrated how a highly skilled, proactive and field oriented internal Audit structure has ensured a viable and productive banking by complementing the management's efforts of maintaining a sustainable framework through Enterprise Risk Management and keep vigilance on the performance indicators.
CAG office has taken full stock of the public sector auditing perspectives and is in the process of fixing up appropriate audit strategies to carry out effective audit and recommend necessary measures to improve upon the Public Sector Enterprise Management. Recently announced short, mid, long and CAG's tenure term Work Plans encompass strategies to produce quality assured audit report in which Public Sector Enterprise auditing has been duly prioritised.
Asif Ali is Comptroller and Auditor General, Bangladesh.