1.

Accounting policies to be followed in public sector accounting a)cash basis: whether accounts have been prepared under cash basis b)Consistency-whether accounting policies have been applied consistently over the period c)IPSAS-whether accounts have been prepared under International Public Sector Accounting standards

2. Audit risk= Risk aspects faced by auditor while conducting audit work Composed of: inherent risk+ detection risk+ control risk Inherent risk; can not be controlled by entity eg iflation Detection risk; refers to auditors ability to detect material misstatements in the accounts Control risk: can be controlled by entity 3. Audit evidence can be gathered through conducting two types of tests a)test of controls;..Here auditor only asses the strength/weakness of the control established by management eg the payment system.. b) Substantive test: this is the test of transactionsauditor examines the transaction from inception to completion.usually done only when test of controls suggest weakness in the controls

4. Characteristics of an effective system of internal control I public sector: Whether there is, A)segregation of duties B)authorization and approval c)competent and honest staff d) independence e)sound accounting policies

5. Responsibility of Internal auditors in government sector a)approve audit plans B)co-ordinate audit programs between internal auditors and external auditor(CAG) c)advice accounting officer on how to deal with issues raised in CAG report D)advice accounting officer on preparation of financial statements C)assess the effectiveness of of internal controls

Audit committee-public sector formation Composed of Meeting Appointed by Reports to Under public finance act Senior executives of ministries or departments At least quarterly Accounting officers and one member from outside Accounting officer

Audit committee-private sector By the discretion of shareholders Non-executive directors of the BOD regularly By BOD BOD

6. Functions of audit committee(public sector) a) To meet at least quarterly b) Approve audit plans of departments c) Review of all internal and external audit reports d) Advice accounting officer on actions to take on issues raised by CAG report e) Co-ordinate audit programs between internal audit and CAG

7 .Duties of CAG Under constitution A)authorize any withdraw of funds from exchequer account/consolidated fund( account maintained by BOT where all govt money is kept) B) satisfy him self that any money taken from consolidated fund is used for the intended purpose C) audit and report on all govt accounts-at least once every year

Under public finance act 2008 .To examine,audit and report on a) b) c) d) e) All ministries and government departments All public authorities and other bodies All person responsible for collection and custody of public monies Any authority authorized to receive monies for public purpose Any authority which receives money from consolidated fund

8.Powers of CAG a) to call upon any public officer to give explanations or give information b)to search with out any payment/fees any document/record from any public officer c)to seek professional opinion from attorney general or any other qualified personnel d) authorize any eligible person to be appointed/registered as auditor of a company to carry out work on his behalf

9. List of statements and schedules that accounting officers (permanent secretary-ministry) should submit to CAG (external auditor) for audit Statements: a)statement from the minister: explain abt mission,vision etc b)statement from permanent secretary: give overview abt the budget allocation C) statement of management responsibility d)cashflow statement e) statement of cash receipts and payments f)statement of comparison of actual and budgeted amounts

schedules a) b) c) d) e) Statement of vote accounts: like balance sheet Cashflow statement Statement of revenue Statement of cash receipts and payment Statement of losses

10. audit report: Report prepared after completion of audit assignment. It gives opinion whether the financial statements give a true and fair view Contents: a)tittle,addressee, b)introductory paragraph

c)statement of resposibilty of management and auditor d)scope paragraph e)opinion paragraph

Types of audit report A) Un-Qualified report/opinion: auditors conclude that the financial statements give a true and fair view and that the accounts are free from material misstatements B) Qualified report/opinion: where auditors are unable to say that the financial statements are free from material misstatements and bias. they conclude by saying that the accounts do not give a true and fair view Types of qualified report 1. Adverse opinion: when the financial statements as a whole contain material misstatements 2. Disclaimer opinion: when there is lack of sufficient and appropriate audit evidence in relation to the whole set of financial statements 3. Except for opinion: when the misstatement or lack of evidence is small and not so material. Here auditor say that the financial statements give a true and fair view except for a certain misstatement or lack of evidence

N.B: Emphasis of matter paragraph: is an additional paragraph which can be added after opinion paragraph when auditor want to draw attention of shareholders to certain events of going concern.eg information about a pending case/investigation against the company.its not an opinion and not meant to override the audit opinion already provided.