EAAPAC
EAAPAC TRAINING FOR MEMBERS OF
NEW PACs – JUBA SOUTH SUDAN
February 6 – 8, 2013
External Audit
• Audit Concept:
The word audit comes from the Latin word
"audire" which means to hear or listen.
Translates an old custom: the presenting
problem situations to a wise man who,
after listening attentively, gave his
judgment. The current definition of audit
retained several aspects of this ancient
practice
External Audit……….
• Audit is the review of evidence collected on one or more
aspects of the audited institution according to previously
defined standards and in order to express an opinion.
• The auditor collects empirical evidence on the subject of
audit. For this purpose you can apply various techniques
to collect information and data, for example, interviews,
document review and research.
• The audit may be directed to various aspects of the
institution. For example, it can be a financial audit,
legal/regularity, computer or environmental audit.
External Audit……..
• To form an opinion audit evidence need to be
reviewed against a standard.
• The opinion need to be issued by an auditor
who is recognized as a professional. Audit
opinion gives credibility and confidence in on the
financial reports being audited.
• In many countries there is specific legislation
that recognizes the audit profession and its
institutions
Types of Audit:
•
•
•
•
Financial Audit
Regularity Audit
Compliance Audit
Performance / Value for Money Audit
Types of Audit ……
• Financial
Checks the accuracy and fairness of the financial
statements based on observation of accounting
documents in order to establish the authenticity of
transactions in the books of accounts and consolidated
financial statements;
• Audit observations are recorded in an audit report that
lists all errors and irregularities that were detected and
accompanied by formal opinion on whether the financial
statements give a true and fair view of the financial
position of the Government and if the receipts and
payments have been applied according to the budget
approved by respective authority.
Types of Audit……
• Regularity Audit
Refers to the review, verification and evaluation of
controls and operating procedures of an entity;
• Determines if the following conditions were met: The
expense was authorized by a competent authority?
• The expense was authorized by law and budget and
held in accordance with the terms of the Act?
• Is the expenditure in accordance with the procedures
(rules, regulations and orders) promulgated under the
country's laws and several other public finance
regulations?
Types of Audit……
• Performance
This is a wider examination of the administration,
technical resources and performance of an entity;
• Measures the degree of achievement of the entity's
activities in relation to its objectives;
• It implies that the auditor is familiar with the technical
aspects and management programs – this is a costly
audits;
• Performance audit reports on the following three factors:
Economy, Efficiency and Effectiveness
Audit Opinions:
• Opinion without Qualifications
When the auditor believes that all aspects
mentioned above were all achieved. That
is, there are no material aspects that may
affect the auditor's judgment and the
quality of financial statements
Audit Opinions….
• Emphasis on Matter
When the auditor wishes to emphasize a
particular issue in the financial statements
but that does not affect their opinion itself
(which in these cases is in general
qualified to adverse). This emphasis is
presented in a separate paragraph in the
audit report.
Audit Opinions
• Qualified Opinion
When the auditor believes that the financial
statements and other information results
in a misleading reflection of the facts.
• Adverse Opinion
When the auditor has concerns materially
relevant in relation to the financial
statements and they do not give a true and
fare view.
Audit Opinions….
• No Opinion
When the auditor failed to gather evidence
and insufficient evidence to issue its
opinion. It happens when the auditor does
not have access to all books and records
of accounts and transaction details.
Audit models:
Major Models of Auditor
Westminster or Anglo-Saxon or Parliamentary
• Assume the roles of "driver";
 Requires an active role of Parliament and gives
opportunity for CEOs participation in this way;
 Requires commitment and action of the Government
in implementing the recommendations
Audit models…….
Countries using the Westminster or Anglo-Saxon or
Parliamentary:
UK and most Commonwealth countries including
some countries in Sub - Saharan Africa, Caribbean
and a few countries in Europe and Latin America.
Audit models…….
Judicial or Napoleonic or Francophone
• Public managers are personally liable for acts done;
 The interaction with the Parliament is limited and
only requires the submission of the audit to the
Court of Audit
 Assume also control functions of public
expenditure: prior approval and subsequent review;
 The follow-up implementation of the
recommendations is limited;
Audit Model…..
Countries using the Judicial or Napoleonic or
Francophone
Most francophone countries and a number of Latin
American countries, including Brazil and Colombia,
Mozambique.
Audit models…….
Department or College
 Model very close to the parliamentary model;
 This model is very inclusive
 Executive participation is very high;
Audit models…….
Countries using Department or College
•
Most countries of Southeast and East Asia and a
few Latin American countries such as Argentina.
Thank you
• Ahsante sana