Audit Manual – Chapter 1 1-1
1. ORGANISATION AND PURPOSE OF THE
MANUAL
1.1 Purpose of the Audit Manual
1.1.1 The purpose of this Audit Manual is to provide DAGP auditors with a set of
modern auditing standards, concepts, techniques, and quality assurance
arrangements that are consistent with international standards, for auditing
entities in the Government of Pakistan. The Manual covers the entire audit
cycle from planning to follow up.
1.1.2 This Audit Manual lays out what is expected of the auditors of the
Department of the Auditor-General of Pakistan (DAGP). It provides the
standards by which the audits are to be conducted. It provides guidance
with regard to the methods and approaches to audit that can be applied by
the auditors in carrying out their duties.
1.2 Types of audits dealt with
1.2.1 This Manual focuses on regulatory audit, as defined by INTOSAI Auditing
Standards, which have been adopted by the Department of the Office of the
Auditor-General of Pakistan.
1.2.2 Regulatory audit embraces:
a) Attestation of financial accountability of accountable entities, involving
examination of financial records and expression of opinions on financial
statements;
b) Attestation of financial accountability of the government administration as
a whole;
c) Audit of financial systems and transactions, including an evaluation of
compliance with applicable statutes and regulations;
d) Audit of internal controls and internal audit functions;
e) Audit of the probity and propriety of administrative decisions taken within
the audited entity; and,
f) Reporting of any other matters arising from or relating to the audit that
DAGP considers should be disclosed.
1.3 Audit entities dealt with
1.3.1 DAGP’s mandate includes the audit of federal, provincial and district
government accounts which encompass government ministries, departments
and agencies, self-accounting entities and exempt entities. The types of
entities being audited include financial institutions, commercial entities,
public utilities, and tax-collecting entities.
Modern auditing
standards, concepts ,
techniques, and
quality assurance
arrangements are
consistent with
international
standards,
DAGP’s mandate
includes federal,
provincial and
district government
accounts.
Audit Manual – Chapter 1 1-2
1.4 Accounting Responsibility Structure of the
Government of Pakistan
1.4.1 The following is a brief summary of the accounting structure of the
Pakistan government.
a) Federal government. The Controller General of Accounts (CGA) has
primary responsibility for the completeness and accuracy of the
Federation’s financial statements. Reporting to the CGA, the Accountant
General Pakistan Revenues (AGPR) is responsible for the centralised
accounting and reporting of federal transactions. Additionally the AGPR is
responsible for the consolidation of summarised financial information
prepared by federal self-accounting entities.
b) The AGPR receives accounts and reports from the sub-offices of the AGPR,
district accounts officers, principal accounting officers of self accounting
entities, federal treasuries and the State Bank of Pakistan/National Bank of
Pakistan. The AGPR, in turn, provides annual accounts to the CGA.
c) There are AGPR sub-offices in each of the provinces that act as the district
accounts officers in respect of federal government transactions.
d) Provincial governments. The CGA also has primary responsibility for the
completeness and accuracy of the financial statements of the provincial
governments.
e) Reporting to the CGA, the accountant general of each province is
responsible for the centralised accounting and reporting functions within
his/her respective province.
f) District governments. Each province is divided into districts. The district
coordination officer of each district is the principal accounting officer of
that district. The district coordination officer is supported by executive
district officers who, in turn, supervise offices headed by drawing and
disbursing officers.
g) Principal Accounting Officers (PAOs). Each ministry and department has a
PAO. For the self accounting entities, the PAOs have been delegated
authority to maintain their own accounts. They provide monthly accounting
data to the AGPR and to the accountant generals.
h) District Accounts Officers (DAOs). The DAOs are responsible for the
accounting functions of the districts. They have authority to pre-audit bills,
issue payments, and record government transactions at the district level.
They receive reports from the drawing and disbursing officers and bank
scrolls from the State Bank of Pakistan/National Bank of Pakistan. They
report district and provincial transactions to the Accountant General
responsible for the province in which their districts are located. They also
report federal transactions to the AGPR.
i) Departmental treasuries. Departmental treasuries are established to record
specific accounting transactions such as income and sales taxes and
customs duties.
Audit Manual – Chapter 1 1-3
j) Drawing and Disbursing Officers (DDOs). The DDOs are responsible for
the accounting, cash and personnel functions of specific entities. They
submit bills for pre-audit to the district accounts officers, and report to the
district coordination officer of each district. They also report to the
principal accounting officer of his/her entity.
1.4.2 DAGP’s mandate includes the audit of the entire process described above.
1.5 Stages of audit work dealt with
1.5.1 The manual covers the entire audit cycle for both the financial attestation
and compliance with controls aspects of regulatory audits, including
planning, fieldwork, evaluation of findings, reporting and follow up. While
many of the same procedures apply to both attestation and compliance audit
activities, sometimes different approaches are required to meet specific
audit objectives. Where this is the case, the different approaches are
described. This Manual also deals with such quality assurance techniques
as supervision and review.
1.6 Organisation of the manual
1.6.1 The Manual begins with several Chapters that provide background material
on audits in general, DAGP’s mandate, and the auditing standards adopted
by DAGP.
1.6.2 This is followed by a discussion of DAGP’s management structure and the
annual planning process by which DAGP establishes its departmental goals
and resource needs.
1.6.3 The auditors’ responsibilities through the complete audit cycle - the
planning, fieldwork, evaluation, reporting and follow-up of individual
audits – are presented using a framework adopted, in one form or another,
by many SAIs and private sector audit firms around the world. This
framework integrates the auditing concepts for all phases of the audit.
1.6.4 Throughout the manual, various quality assurance procedures are
introduced. The Manual concludes with a summary of these procedures.
1.6.5 The Manual also contains a number of annexes that provide additional
details and guidance material on specific matters, as well as a glossary of
the terms used.
1.7 Links to other guidance material
1.7.1 This manual is supported by a standard audit working paper kit and a set of
tailored audit programme guides. This Manual also makes reference to
other DAGP documentation in existence at the time that this manual was
produced.
The manual covers
the entire Audit
Cycle.
1.8 Standard audit working paper kit
1.8.1 The kit includes standard audit programme guides, checklists and forms,
and a table of contents that follows a suggested standard working paper
indexing scheme.
1.8.2 The kit also includes samples of the various supervision instruments used in
DAGP.
1.8.3 Audit guidelines for specialised areas
1.8.4 This Manual and the standard audit working paper kit are applicable to the
regulatory audits of all audit areas. These documents are complemented by
tailored audit programme guides that show how the concepts in the manual,
and the programmes, checklists, forms and supervision instruments in the
working paper kit, are applied to perform financial audits in certain specific
audit areas.
1.9 Need for professional judgment
1.9.1 Despite the detailed guidance presented in this manual, professional
judgment is always required. It is not possible to present guidance material
in sufficient detail to eliminate the need for professional judgment and
general knowledge of auditing theory. Nor is it possible to select one audit
approach and mandate its use in all circumstances.
1.9.2 There are many possible approaches to obtaining the required level of audit
assurance, each appropriate in certain circumstances. The auditor must be
prepared to consider the circumstances of each audit and determine the best
approach.
1.10 Updating the Audit Manual
1.10.1 DAGP’s work, like the work of any SAI, continues to evolve.
Consequently, this Manual should be periodically up-dated to ensure that it
reflects the current policies and procedures of the office and to provide the
most appropriate assistance to the auditors. Each auditor is therefore
encouraged to identify areas in which the Manual requires updating or
enhancement.
1.10.2 With appropriate up-dating, this Manual will continue to provide a clear
statement of the authorities, responsibilities and policies of DAGP and a
practical guide to auditors as they carry out their responsibilities in a
professional and conscientious manner.
Despite the guidance
presented in this
manual, professional
judgement is always
required.
This manual should
be periodically updated
to ensure tha
tit reflects the
current policies and
procedures.
