Abstract

This paper aims to identify the term Audit which is a way to calculate the income and expenditure of governmental accountancy and supervising the legal use of budget that are given by government in various sectors. The framework of Comptroller and Auditor General in Bangladesh is described in article 127-132 in the Constitution of the Peoples Republic of Bangladesh. Auditing helps to ensure transparency and accountability of an organization. But the process of auditing has to face with some problems and in this paper we tried to identify some problems of Commercial Audit Office, Sylhet and give some suggestion based on the identified problems.

Introduction
Initially auditing enlisted principally as a way to maintain governmental accountancy and record keeping was its pillar. In the early industrial revolution from 1750 to 1850 auditing started its evolution into a discipline to detect fraud and financial accountability. During this period of time, business was expanded. In the early 20th century, the independent auditors report involved the reporting practice of auditors who submitted reports of their findings and duties which was standardized as representatives for the companies overall performance. This was a more convenient and affordable alternative and it required less time as opposed to a standard audit which involve examining every case was proving to be time consuming and to expensive. Due to the increase in demand for auditors, a testing process was developed. Auditors had developed a method which involved selecting strategically.

Origin of the word (Audit)

The word audit is originated from the Latin word audire which means to hear. In the earlier days, wherever there is suspected fraud in a business organization, the owner of the business would appoint a person to check the accounts and hear the explanation given by the person responsible for keeping the account and funds. In those days, the audit is done to find out whether the payments and receipts are properly accounted or not.

Definition of Auditing
The term Auditing has been defined by many famous scholars. Some of the definitions given by authors are as followsAuditing is a systematic examination of the books and records of a business or the organization in order to ascertain or unify and to report upon the facts regarding the financial operation and the result thereof According to Montgomery An audit is an examination of accounting records undertaken with a view to establishing whether they correctly and completely reflect the transactions to which they relate. In some instances, it may be necessary to ascertain whether the transactions themselves are supported by authority. According to Lawrence R.Dicksee Auditing concerned with the verification of accounting data, with determining the accuracy and reliability accounting statement and reports According to R. K. Mautz It is clear from the above definitions that auditing is the systematic and scientific examination of the books of a accounts and records of a business so as to enable the the financial state of affairs of the auditor to satisfy himself that the balance sheet and profit and loans accounts are properly drawn up as to exhibit a true and fair view of business and profit or loss for the financial period.

The meaning of Auditor

An auditor in general engages in the evaluation of an organization, system, process, project or product. Auditors tasks are performed to ascertain the validity and reliability of information; also to provide an assessment of a system's internal control. The goal of an auditor is to express an opinion on the person/organization/system in question, undervaluation based on work done on a test basis. Due to practical constraints, an audit seeks to provide only reasonable assurance that the statements are free from material error. The meaning of auditor can be described by the following explanation1. Auditor is an accountant who conducts an audit to verify the accuracy of the financial records and accounting practices of a business or government. 2. An auditor is engages in an independent assessment of the fairness by which a company's financial statements are presented by its management. 3. The task of an auditor is to determine the quality of financial & operational/administrative control by examining and evaluating the records, system and procedure, operations and activities of an organization. 4. An auditor has to be straightforward, honest, independent and sincere in his approach to this professional work. That is why everybody relies on auditors determination on the reliability of the financial and operational control of an enterprise. 5. An auditor needs to follow a certain guidelines and standards. Standard is the means of judging the level of professional competence and the degree of consistency attained by auditors in the performance of their duties. Now it is clear that the importance of auditor is so vast that it is much more important in an organization in order to run it efficiently, effectively and in an orderly manner.

Types of Auditors Involved in the Current Days Auditing

There are two types of auditors who are basically involved with present days auditing practices:

Auditor

Internal
Figure: Types of Auditor

External

1. Internal Auditor- Internal auditors are employees of a company hired to assess and evaluate its system of internal control. To maintain independence, they present their reports directly to the Board of Directors or to Top Management. They provide functional operation to the concern. Internal Auditors are employees of the company so that they can easily find out the frauds. 2. External Auditor External auditors are independent staff assigned by an auditing firm to assess and evaluate financial statements of their clients or to perform other agreed upon evaluations. Most external auditors are employed by accounting firms for annual engagements. They are called upon from the outside of the company.

Common types of Audit in Practice

1. Single Audit The Single Audit is a rigorous, organization-wide audit or examination of an entity that expends funds received for its operations. The Single Audits objective is to provide assurance to the US federal government as to the management and use of such funds by different recipients. The Single Audits must be submitted to the Federal Audit Clearinghouse along with a data collection form.

2. Clinical Audit Clinical Audit is defined as "a quality improvement process that seeks to improve patient care and outcomes through systematic review of care against explicit criteria and the implementation of change". The key component of clinical audit is that performance is reviewed (or audited) to ensure that what should be done is being done, and if not it provides a framework to enable improvements to be made. 3. Computer Security Audit A computer security audit is a manual or systematic measurable technical assessment of a system or application. Manual assessments include interviewing staff, performing security vulnerability scans, reviewing application and operating system access controls, and analyzing physical access to the systems. Audit reports or using software to monitor and report changes to files and settings on a system can include personal computers, servers, mainframes, network routers, switches. 4. Conformity Assessment Audit It is any activity to determine, directly or indirectly, that a process, product, or service meets relevant standards and fulfills relevant requirements. Conformity assessment activities may include: Testing Surveillance Inspection Auditing Certification Registration Accreditation

Conformity assessment activities

5. Environmental Audit Environmental audits are intended to quantify environmental performance and environmental position. In this way they perform an analogous function to financial audits. An environmental audit report ideally contains a statement of environmental performance and environmental position and also defines what needs to be done to sustain or improve on indicators of such performance and position. Environmental 6

Auditors can get certified through written exam and acceptance of the Environmental Auditor Association code of ethics. 6. Financial Audit Financial audits are typically performed by firms of practicing accountants due to the specialist financial reporting knowledge they require. The financial audit is one of many assurance or attestation functions provided by accounting and auditing firms, whereby the firm provides an independent opinion on published information. 7. Internal Audit Internal auditing is a profession and activity involved in advising organizations regarding how to better achieve their objectives. Internal auditing involves the utilization of a systematic methodology for analyzing business processes or organizational problems and recommending solutions. Professionals called internal auditors are employed by organizations to perform the internal auditing activity. The scope of internal auditing within an organization is broad and may involve internal control topics. 8. Performance Audit Performance audit refers to an examination of a program, function, operation or the management systems and procedures of governmental or non-profit entity to assess whether the entity is achieving economy, efficiency and effectiveness in the employment of available resources. The examination is objective and systematic, generally using structured and professionally adopted methodologies.

Constitutional framework of Auditor-General in Bangladesh

Auditor-General is an important person of Bangladesh who shall be appointed by the president. Many functions are done by Auditor-General for the welfare of administration of Bangladesh. Establishment of office of Auditor General: In article 127 we can see, a. There shall be a comptroller and Auditor-General of Bangladesh (here in after referred to as the Auditor General) who shall be appointed by the president.

b. Subject to the previsions of this constitution and of any law made by parliament, the conditions of service of the Auditor-General shall be such as the president may by order determine. Functions of Auditor-General: In article 128 we can know about the functions of Auditor General: The public accounts of the Republic and of all courts of law and all authorities and officers of the government shall be audited and reported on by the Auditor General and for that purpose he or any person authorized by him in that behalf shall have access to all records, books, vouchers, documents, cash, stamps, securities, stores or other government, property in the possession of any person in the possession of any person in the service of the republic. The auditor General, in the exercise of his functions under the above clause, shall not be subject to the direction or control of any other person or authority. The term of Auditor-General office: We can know about the term of office of auditor general in article 129: The auditor general shall hold office for five years from the date on which he entered upon his office. He holds office till sixty-five years. The auditor general shall not be removed from his office except in like manner and on the like ground as a judge of the Supreme Court. The auditor general may resign to the resident by writing under his hand. On ceasing to hold office the auditor general shall not be eligible for further office in the service of the republic. Acting Auditor General: In article 130 it is cleared about Acting Auditor General. If any time when the office of auditor general is vacant, or the president is satisfied that the auditor general is unable to perform his functions on account of absence, illness or any cause, the president may appoint an acting Auditor General. Form and manner of keeping public accounts: Article 131 the public account of the Republic shall be kept in such form and manner as the Auditor General may with the approval of the president prescribe. 8

Report of auditor General to be laid before Parliament: In Article 132 we can see that, The reports of the Auditor General shall be submitted to the president and president helped them to be laid before Parliament.

Organizational structure of Audit Department in Bangladesh

The main purpose of government audit is to ensure transparency and accountability in the use of resource in all types of government management. In that case, the organogram or structures of the Audit Directorate is closely established. The organizational structure of Audit Department in Bangladesh is given below-

Figure: The organizational structure of Audit Department in Bangladesh Source: http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd

Practices of Auditing in Bangladesh

Auditing is a systematic process of objectively obtaining and evaluating evidence, regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria. It is an independent examination of financial statements or related financial information of an entity. The results of the examination are finally expressed in the form of a specific opinion communicated to the relevant parties. At present, Bangladesh follows ISA guidelines in auditing. Auditing practices are regulated by1. The Companies Act (1994) 2. The Banking Companies Act (1991) 3. The Insurance Act (1938) 4. The Securities and Exchange Commission Act (1993) 5. The Securities and Exchange Rules (1987) 6. The Foreign Donations Regulation Rules (1978) and 7. The Co-operative Societies Ordinance (1984) The practice of audit department has been incorporated under the audit portfolio of the Comptroller and Auditor General (OCAG) since 1999. The audit directorates and training academy placed under the OCGA areCommercial Audit Local Audit Works Audit Foreign Aided Project Audit The Audit Directorates and Training Academy Civil Audit Railway Audit Performance Audit Post, Telephone and Telegraph Audit 10

Defense Audit Mission Audit Financial Management Academy (FIMA)

Problems of Audit Department, the context of Commercial Audit Office, Sylhet

The vision of the Office of the Comptroller and Auditor General of Bangladesh is attaining accountability and transparency in Public Financial Management for achieving good governance and the mission of the office is conducting effective audit of public sector operations for optimum utilization of public resources providing reliable and objective information to assist in establishing accountability and transparency in government activities. But through the processes of running these activities, an office related to auditing has to face with some problems. Here we studied about the Commercial Audit Office Sylhet and identified some problems of it. We also tried to give suggestion for overcoming the problems. First we have to know what commercial audit is.

Commercial audit
The Commercial Audit Directorate was set-up in 1956 by the government of Pakistan to undertake audit in state-owned commercial organizations. Following the independence of Bangladesh, at present, all autonomous and semi-autonomous public enterprises, government-owned commercial bodies having minimum 50% government share are audited by the directorate. The main responsibilities performed by this directorate are1. To conduct audits of the initial and final accounts of all government commercial organizations. 2. To ascertain the financial statements that presents a fair and accurate financial position of the above organizations. 3. To prepare a general financial statement incorporating a summary of the accounts of statutory bodies and public enterprises.

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4. To review the work done by external and internal auditors and to assess the performance made by government own commercial undertakings.

Identified problems of Commercial Audit Office, Sylhet

1. Lack of manpower: The first identified problem of Commercial Audit Office is a very common problem of any government office that is the lack of manpower. There are a huge number of employees those are not presented in their posts. The number of stuffs is much less than the number of available posts. The present number and the strengths of post by the organogram of stuffs of the Commercial Audit Office are given belowDesignation Deputy Director Superintendent Accounts Officer Auditor Typist MLSS Total= Present number of stuff 1 3 14 6 0 2 26 Strengths of post by the organogram 1 35 15 70 1 8 130

2. Imbalance between Officer and Auditor: Accounts officers are supervising a very few number of auditors. New recruitments of auditors are not given after 1989 in the initial levels. 3. Accommodation problem: This office is suffered by accommodation problem for a long time. There is no guest house for the VIPs and sufficient chambers for the employees.

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4. Lack of security: The employees are not properly secured to run their duties. They are forcing by the higher administrative and political powers to make the reports in their favor. Here the accountability and transparency can not be ensured. 5. Analogue Auditing system: The system or process of auditing is run by very old method. There is a little touch of digital system in the overall process. There are only 2 computers in the office so that the chance to digitalize the process is very few. 6. Complex system: Since the auditing process of this office is not digital, it has become very complex and lengthy system. Every steps of auditing process are taking much more time so the valuable times are wasting. 7. No internet connection available: There is no internet connection in this office and the office does not have any e-mail address or personal website address. So information getting and sending process can not be done through the internet. 8. Insufficient training process: The computer training program of the stuff is not sufficient. The program is arranged only for 7-10 days and it is mainly area based. However, the right employees do not always go to the training program because of their unwillingness. 9. Absence of sufficient qualified staff: The absence of sufficient qualified staff is created partially and the ability to be qualified is naturally limited. It is making the activities related to auditing process of the office more complex. 10. Absence of Risk Assessment: The assessment of risks associated with a process should be a part of the initial audit planning stage. It is perceived to identify each individual risk affecting the office and debating the relative priority of each risk. So here absence of risk assessment is creating the lack of efficiency and effectiveness.

Suggestion for overcoming the problems

1. New recruitment of the employees should be given as soon as possible for removing the lack of manpower. A good news is the process of new recruitment is running by our government and the appointment will be given in the coming 30 th December of this year. 2. For reducing the accommodation problem, specific needs of the office should be remarked and proper finance should be distributed to accomplish the needs. 13

3. Proper security of the employees should be given and they need to be closely supervised so that no administrative and political power can force them to make any false report. Thus the accountability and transparency can be ensured. 4. More computers need to be available for making the whole process digital and simplified. For that reason, separate consultants are appointed by the government to simplify the process. 5. Internet connection should be given and the office needs to get its personal e-mail address and website address. 6. Sufficient training program should be available for the employees and it is needed to be ensured right persons are taking the training or not. 7. Use of outside experts in audit is necessary. These experts can be external service providers, independent contractors, or an independent internal resource for a specific project. 8. Initial risk assessments can be made general in nature. It can be helpful to obtain advice from subject matter experts. The focus of the audit should always include the highest risk areas at a minimum.

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Conclusion
After all discussion, it can be said that in todays world auditing has become an incorporated segment of the association. All association wants auditing not only for avoidance and recognition of fake but in addition for organizational effectiveness. Auditing plays an essential part to appropriately finish the accounting records and timely preparation of the consistent financial information. Auditing provides support to the whole organization in such a way that it serves both the external and internal users. For internal users it provides information to manager to make judgment and for external user it provides guarantee that the financial report is all right and out of any kind of material misstatement. However, there are several common problems shared by many audit departments such as Commercial Audit Office as mentioned before. But the problems can be minimized by taking some proper steps that were also suggested in this paper.

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Reference
1. Carmichael, D.R. & Willingham, John J. (1979), Perspectives in Auditing, NewYork: McGraw-Hill Book Company. p.8, 10, 55 2. Commercial Audit Office, Sylhet 3. Lee, T. A. (1988), The Evolution of Audit Thought and Practice, New York: Garland. p. 3, 5, 6 4. Pinkney, A. (1966), An Audit Approach to Computers, London: The Institute of Chartered Accountants Press. p.11 5. Staub, Walter A. (1942), Auditing Developments during the Present Century, Harvard University Pres. p.15, 17, 26, 29 6. The Constitution of the Peoples Republic of Bangladesh, (2011) 7. http://www.banglapedia.org/httpdocs/Atlas/bangladesh.htm 8. http://www.cagbd.org/in.php?cp=feedback 9. http://www.en.wikipedia.org/w/index.php 10. http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd

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