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PIFRA
Audit and AccountsIssuesChallenges
Audit and AccountsAudit and AccountsIssuesIssuesChallengesChallenges
Khuram Khuram farooqfarooq, PMP, PMPDirector PIFRADirector PIFRA
[email protected]@[email protected]@hotmail.com
PIFRA
6 Domains of change and its management
7 Going Forward
AgendaAgendaAgenda
3 PIFRA- Design, Objectives and Basic Concept
5 Audit Objectives, Vision and Achievements4 Vision of Financial Management, Status and Roadmap
2 Issues and Challenges1 Context of Audit and Accounts
PIFRA
Context of Audit and AccountsContext of Audit and Accounts
Fundsauthorization
AuditReport
AG
P Line D
epartments
MOF/Legislature
CGAFinancial Reporting
Execution
Process Technology PoliciesPeople
PIFRA
Inconsistent processes
Chart of accountsChart of accounts-- Transparency of informationTransparency of information
Institutional Arrangements of AccountingInstitutional Arrangements of Accounting
Budget execution reports
Accounts- IssuesAccountsAccounts-- IssuesIssues
Project Accounting
Accuracy, reliability, comprehensiveness, timelinessAccuracy, reliability, comprehensiveness, timeliness
Reconciliation Liabilities, Assets, Commitments
Integration of budgeting with accountingIntegration of budgeting with accounting
Capacity of accounting officialsCapacity of accounting officials
Revenue accounting, Bank reconciliation
PIFRA
Capacity of auditing staff
Modern tools and techniquesModern tools and techniques-- CAATS/AMSCAATS/AMS
Transaction based audit approachTransaction based audit approach
Audit- IssuesAuditAudit-- IssuesIssues
Time lag in the discussion of reports at PACTime lag in the discussion of reports at PAC
Audit MethodologyAudit Methodology
Weak Internal ControlsWeak Internal Controls
PIFRA
PIFRA II: DesignPIFRA II: DesignPIFRA II: Design
PIFRA II
$ 94 m
FABS
(Financial Accounting and
Budgeting System)
Capacity Building
Of
OAG
(Office of the Auditor General)
Capacity Building of
CGA
Project Management
Support
AGP/CGA/MOF
PIFRA
ObjectivesObjectivesObjectivesAccurate, timely public financial informatioAccurate, timely public financial informatio
--Efficient resource management Efficient resource management --Improved fiscal spaceImproved fiscal space--Increased international credibilityIncreased international credibility--Improved Investor ConfidenceImproved Investor Confidence
Strengthened internal controls- Increased trust and confidence
Better quality audit through risk-based approach - Improved support for legislative oversight through PAC- Strengthened accountability framework- Increased confidence in audit process
R/3 other International Standards ComplianceInternational Standards Compliance••GAAP, IPSAS II, ISA, bestGAAP, IPSAS II, ISA, best--practicespractices
PIFRA
Process -New Accounting/Auditing Model
ImplementationImplementation-- Technology and Capacity BuildingTechnology and Capacity Building
RestructuringRestructuring
Separation of Audit and Accounts
Basic ConceptBasic ConceptBasic Concept
o/o CGA Created 2001
PIFRA
MODIFIED CASH BASISACCOUNTING
CASH BASED ACCOUNTING
ACCRUAL ACCOUNTING
International Public Sector Accounting Standard (IPSAS II) Compliance
IPSASCASH BASIS ACCOUNTING
PIFRA
Vision- Financial Reporting by CGAIntegrated, On-line, Real-Time, Govt-wide, multi-tieredVisionVision-- Financial Reporting by CGAFinancial Reporting by CGAIntegrated, OnIntegrated, On--line, Realline, Real--Time, Time, GovtGovt--wide, multiwide, multi--tieredtiered
DAO/TMAs
DAO/TMAs
DAO/ TMAs
District/Sub District/Sub districtdistrict
ProvincialProvincial
FederalFederal
DAOsDAOsDAOs
AG
AGPR
CGA
Roll up
and
Roll up
and
aggr
egati
on
aggr
egati
on
PIFRA
Productive Sites- Province WiseProductive SitesProductive Sites-- Province WiseProvince Wise
NW
FP
Punj
ab Sind
h
Bal
uchi
stan
PIFRA
Outcome Indicators FABS-Roadmap Outcome Indicators FABSOutcome Indicators FABS--Roadmap Roadmap
May 2005PIFRA I
30 Sites
25 sites
Aug 06 Sep 06 Dec 07
All NWFP +30 % Punjab)
All Punjab/Sindh
Baluchistan….
PIFRA
Objectives- Audit ComponentObjectivesObjectives-- Audit ComponentAudit Component
Availability of audited accounts to the PAC within 12 Availability of audited accounts to the PAC within 12 months of financial closemonths of financial closeAssurance to the stakeholders about the reliability of Assurance to the stakeholders about the reliability of the financial statements and Controls the financial statements and Controls Enhance trust and confidence of the stakeholders in Enhance trust and confidence of the stakeholders in the audit process through adoption of best practicesthe audit process through adoption of best practicesPAC reporting by exceptions through focus on only PAC reporting by exceptions through focus on only the critical risks in the accountability processthe critical risks in the accountability process
PIFRA
Vision- Risk based audit and IT ToolsVisionVision-- Risk based audit and IT ToolsRisk based audit and IT Tools
District Audit
Federal Audit
Auditor GeneralOf Pakistan WAN
Auditee 2 Auditee 1
Pre-defined verifications
by audit
Centralized Planning and Coordination
Of audit
Systems based IT
Audit
Expenditures,Salaries, vendor
data available on line
Use of Modern Audit Tools,
methodologies
Shift towards risk based auditing
PIFRA
Implementation Status of AuditImplementation Status of AuditImplementation Status of AuditDeveloped New Audit Methodology:
Sector wise audit guidelines developedSector wise audit guidelines developed
Financial Audit Manual developedFinancial Audit Manual developed
Electronic working paper kit developedElectronic working paper kit developed
Procured audit management and CAAT softwareProcured audit management and CAAT software
Live IT audit at 10 sitesLive IT audit at 10 sites-- A historical landmarkA historical landmark
Trained 100 master trainers on IT based Audit ToolsTrained 100 master trainers on IT based Audit Tools
Developed AMIS ArchitectureDeveloped AMIS Architecture
ReRe--engineering audit process: engineering audit process: Systems analysis doneSystems analysis done
Web Portal: Transparency: Concept paper doneWeb Portal: Transparency: Concept paper done
PIFRA
Domains of ChangeDomains of ChangeDomains of Change
Technology
Business Process Change Management
Re-structuring
Coverage
Capacity Building
The human dimension
PIFRA II
PIFRA
SAP IntroductionSAP IntroductionCreative Usage
Creative Usage
ResistanceResistanceBoycottBoycottR
esul
ts /
Suc
cess
/ P
erfo
rman
ceR
esul
ts /
Suc
cess
/ P
erfo
rman
ce
Organizational StructureWorkflowCooperation / CommunicationQualification / Competencies
Old SystemsOld Systems
Stagnation IntegrationChange
Management
Goal: Creative Usage via constant Change ManagementGoal: Creative Usage Goal: Creative Usage via constant Change Managementvia constant Change Management
Conservative UsageConservative Usage
PIFRA
Next Challenges: Data and adoption of new processessNext Challenges: Data and adoption of new Next Challenges: Data and adoption of new processessprocessess
Budgeting at spending levelBudgeting at spending level
Project AccountingProject Accounting
GP Fund and PensionGP Fund and Pension
Bank data for reconciliationBank data for reconciliation
Additional HR data for HRMIS of provincesAdditional HR data for HRMIS of provinces
Debt Reconciliation between CGA and EADDebt Reconciliation between CGA and EAD
Receipt accounting through CGAReceipt accounting through CGA
PIFRA
Going Forward- Fundamental IssuesGoing ForwardGoing Forward-- Fundamental IssuesFundamental IssuesProposed Mitigation actionProposed Mitigation actionIssueIssue
Current Civil Service HR Policies
Promotion Policy
Professionalism
Retention
Objective Performance Benchmarks
Develop benchmarks for audit
Remuneration, Professional Growth, etc
IT Security Govt. wide IT Security manual: IT Division
Resistance to adopt new systems Continued Executive Support