Professional Documents
Culture Documents
Objects of Audit:
The main object of commercial audit is to present the owner/owners of
the business a report expressing the opinion on the Financial
Statements prepared and presented by the managers asserting that
they are true and fair.
The Object of Government Audit is two fold;
(i)
On behalf of the National Assembly it has to ensure that money
spend was legally, available for the purpose for which it was
spend and that the expenditure has not exceeded the amounts
authorised for the purpose and;
(ii)
3.
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(vi)
(vii)
(viii)
(b)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(2)
(a)
(b)
(c)
(3)
(4)
(5)
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In the exercise of his functions under subsections (2), (3) and (4)
of this section, the Controller and Auditor-General shall not be
subject to the direction or control of any o ther person or
authority; but nothing in this subsection shall be construed as
precluding a court from exercising jurisdiction in relation to any
question whether or not the Controller and Auditor-General has
performed those functions in accordance with this Constitutions.
2.
3.
(b)
4.
5.
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12.7. Submission of the Audit Report to the National Assembly:On receipt of the Annual Accounts from the Treasury and Accounting
officers within a period of four months (or such other period as the
National Assembly may be resolution appoint) after the end of each
financial year. The controller and Auditor General shall cause them to
be examined and audited and shall, within a period of nine months (or
such longer period the National Assembly may by resolution appoint)
after the end of the financial year to which the accounts relate certify,
in respect of each account, the result of the examination and audit and
the Controller and Auditor-General shall within the period aforesaid
prepare a report upon the examination and audit of all such accounts
and shall transmit this report, either complete or from time in parts, as
may be convenient together with copies of the relevant accounts
certified as aforesaid to the President.
1.
2.
3.
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In Local Authorities
The auditors shall make and sign a report to the Local Government
authority on the accounts and the annual balance sheet and statement
or abstract and one copy each of the report together with the annual
balance sheet and statement or abstract or a copy of it shall be sent to
the Minister the proper officer and the Director who shall table the
report before the council.
The Minister shall submit to the National Assembly a copy of the
annual balance sheet and Statement or abstract and of the auditors on
the Local Authority. Open payment of a specified fees any inhabitant of
the area may be furnished with the Auditors reports and a copy of
annual Balance Sheet and Statement.
(2)
Audit Evidence
Auditing is concerned with the verification of records and
statements. Therefore the auditor tries to trace the original of
the figures appearing in origin the Financial Statements.
Managers report on their work by presentation of Financial
Statements. The question is whether these Statements are the
type that outsiders can RELY ON. The audit report is aimed at
giving assurance on the fairness of the FINANCIAL STATEMENTS.
In order to form on opinion and draw conclusions an Auditor
must obtain RELEVANT, RELIABBLE, AND SUFFICIENT
EVIDENCE. This then suggest that the auditor must strive to
understand the nature of audit evidence and sort out what is
relevant and reliable in the context of the transactions of items
he is examining.
(3)
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iv.
(4)
Testing
To select and examine a representative sample from a
population of similar items. By choosing a random sample, the
result of the test is held to reveal the same characteristics as
would be disclosed by an examination of the entire population.
(5)
Verification
The verification of assets implies an enquiry into the value,
ownership, and title existences and possession the presence of
any charge or lien on an asset. Verification is different from
vouching in that it is concerned mainly with confirming the
value, existence, ownership, completeness and statement
presentation of assets and liabilities while vouching is concerned
with the examination of the correctness and authority of
transactions.
(6)
Certificate Vs Opinion
Distinction between certification and report certificate:
Quite often the term certification conveys the same meaning as
audit report. There is however, some distinction between the
two. When an auditor certifies a financial statement after
verifying certain specific data pertaining their to, the certificate
is used. For example an auditor may certify the value of stocks
or the amount of PAYE payable etc. at request. Therefore a
certificate represents that the auditor has verified certain
precise figures and undertakes to vouch safe their accuracy.
Audit report on the other hand conveys an opinion. It implies
that the audit examined relevant records in accordance with the
generally accepted auditing standards and expresses an opinion
whether or not the financial statements represents a true and
fair view of the Financial position and of the working results of
an enterprise. Since an auditor can not guarantee that the
figures in the Financial Statements are absolutely correct he
cannot certify them.
(7)
Audit Programme
The audit program is a detailed outline of the auditing work to
be performed, specifying procedures to be followed in
verification of each item in the financial statement and giving
estimated time required. Procedures are determined before
audit work and after reach procedure the auditor must initial the
time taken.
The Audit programme services
(i)
as a useful tool both in scheduling and controlling work
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(ii)
(iii)
(iv)
12.8. (6)
Audit Queries
Audit queries are reservations made by the auditor during the audit,
indicating irregularities on the audited accounting records and
statements. The queries are addressed to the offer responsible for
proper Accounting of public money issued for public services and safe
custody.
They present a focus of concern and provide an opportunity for
regularization and correcting the Financial Statements. Failure to
answer audit queries raises doubts on the regularity and priority of
expenditure or safe custody of public Funds. The accounting officer is
expected to open up a register into which all received queries are
recorded showing: Date received; brief description of the auditors
observations; the voucher and code reference; the amount involved
plus a column showing how the query has been handled to finalization.
Each audit query will be processed in a separate file and on finalization
the file shall be closed. Outstanding audit queries attract penalties and
qualification of the Financial Statements.
Following is an extract of the controller and Auditors Generals Report
given as example.
An extract of the Controller and Auditor General is Report.
This extract is given as an example of the Auditors Report on the Public
Accounts:
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The Schedule have been reproduced at the end of this report for ease of
reference.
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5.
Staff:- As in several previous years, the staff position was extremely
critical and with little or no hope of immediate betterment unless the
appropriate Government authorities are prepared to improve the terms and
conditions of services for audit officers to extent where they are at the very
least, comparable to those prevailing at other institutions of a similar nature
in the country. Apart form the steady drained local officers who are
apparently attr4acted by higher remuneration and other benefits elsewhere,
a number of serving expatriate officers have departed because of insufficient
incentives. At present, only three expatriates remain and their combined
wealth of experience will, it is hoped, help the Department to tide over the
difficulties now being encountered, as a result of the increased workload and
the high vacancy factor which is reflected in the following figures for Auditors,
Grade III and above:
Year
1986/87
Approved
Establishment
III
Number
in Officer
76
1987/88
126
75
PUBLIC ACCOUNTS
7.
(a)
Public Accounts Tables: The Tables usually included in this
section showing in summarised from the position of public Accounts could not
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Ministerial Vote
Regional Votes
Development Number
Amount
Of Votes
Of Excess
(Shs.)
Million)
1
5.63
2
1.44
3
7.07
As aginst 43 votes which closed with a total excess of Shs. 1,288.28 million in
1984/85, there was excess expenditure on 32 votes (Supply 29; Development
3) during the year under review amounting to Shs. 1,084.10 million reflecting
a decrease of 15.85 percent on the previous years excess expenditure. The
excess on Supply Vote was significant in the case of Ministry of Defence (Shs.
451.04 million), Ministry of Home Affairs (Shs. 143.26 million), Ministry of
Education (Shs. 66.29 million), Prime Ministers Office (Shs. 65.45 million),
Ministry of Communication, Works (Shs. 55.17 million), National Services
(Shs. 43.94 million), Shinyange Region (Shs. 32.64 million), Judiciary (Shs.
32.64 million), and Tanga Region (Shs. 24.73 million).
In the case of Development Votes, however, almost all the Ministries and
Regions ended with large surpluses (unspent provision) which totalled Shs.
2,117.30 million, representing over one fourth of the approved provision of
these votes.
I have to repeat that the huge savings under the Development Votes year
after indicate that either the estimates are not being framed on a realistic
basis or that the projects are not progressing according to schedule. Also I
have to point that most of the external aid ins channelled by the donors
directly to the projects. However, the value of the aid is generally not charged
as expenditure against the provision made in the Estimates. Nor is the aid
normally received in the form of good, materials equipment etc. fully
accounted for.
The overdraft on paymaster Generals Account by the various Accounting
Officers (Annexure II continued to remain on the high side as shown below:Supply Number Amount
of
Votes
Excess
(Shs.
Million)
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Development Number
Amount
Of Votes
Of Excess
(Shs.)
Million)
Ministerial/
Departments
Regions
21
3,732.11
43.34
17
38
327.93
4,060.04
9
14
15.99
64.33
The large amount of total overdraft is attributable to rise in the Excess Votes
as well as in the advances and imprests remaining uncleared mainly against
the supply votes (within accommodation accounts).
8.
Arrears of Revenue and Appropriation-in-Aid:- As reported by the
Department Officers, the total arrears in the collection of Revenue and
Appropriation-Aid at 30th June, 1986 amount to Shs. 180.37 and Shs. 47.23
million respectively. (Details vide Annexure III).
The bulk of the arrears of revenue was outstanding against the Ministry of
Home Affairs (Shs. 97.01 million) and Ministry of Communication and Works
(Shs. 52.76 million).
9.
Delay in Rendering the Accounts:- Accounts were to be rendered to me
by 53 Accounting Officers (Ministries/Departments: 33 Regions: 20) for the
year 1985/86, the statutory due for their submission being 31 st October,
1986.
There was no improvement in the timely rendition of the Appropriation
Accounts and Statements (in fact the position had worsened) during the year
under review as could be seen from the details furnished below:i. Number of Accounts received on or
before the due date..
ii. Number of Accounts Received by
the end of November..
December
iii. Month of Receipt of the last
Account
10.
1983/84
17
1984/85
9
1985/86
18
10
12
14
4
Aug.
1985
4
Oct,
1986
5
Aug.
1987
Standard of Accounting:
(a)
Ministries/Departments: The accounts of 18
Ministries/Departments have been awarded my certificates of
correctness, the accounts of 2 Ministries have been partly
certified, 2 accounts were not submitted and the remaining 11
have not been certified.
(b)
Regions: Out of 20 regions, the account of 3 regions were
certified, the accounts of 12 Regions were not certified. The
accounts of two regions were not received.
(c)
General: The reasons for the accounts of the 11 ministries and
12 regions, not having been certified, were the existence of
significant errors in the accounts and the common failure to
prepare bank reconciliation statements. Despite my repeated
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12.
13.
(a)
Laxity of Control Over purchase and Accounting of Stores: The
control over the purchase and accounting of stores had shown no sign
of improvement during the year Scrutiny of payment vouchers for
1985/86 and inspections of store records revealed that, contrary to
financial regulations, as against goods for which payment had been
made were not delivered (Shs. 31.65 million), purchases were made
without proper authority from the Regional / Central Tender Board or
the Management Services Unit (Shs. 25.01 million) and stores
purchases, paid for and delivered had not been taken on ledger charge
(Shs. 49.74 million), (For details see Annexure VI (a) to (d).
(b)
Payments made on Pro Forma Invoices: Year in, year out, an
enormous number of payments are being made on the strength of
Performa invoices only. For want of proper invoices, cash sale receipts,
delivery notes etc., it has not been possible to establish with any
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degree of certainty that good paid for and actually been received in all
cases. In 1985/86 alone, such payments amounting to Shs. 18.75
million which suggests that Performa invoices are now becoming the
rule, rather than the exception, in purchases of goods and services. I
view this situation with considerable alarm and fear that unless stores
Regulations are observed to the latter, fraudulent payment and
outright losses will be the order of the day.
(c)
Losses of Cash and Stores:- The continued decline in the
standard of accounting over the few years and the general slackening
of financial control and supervision resulted in widespread in oidence
of embezzlement of cash and stores (Details vide annexure and VIII).
End of Extraction
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