GOVERNMENT and DEPARTMENTS AUDITING FOR PUBLIC MANAGERS

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The Auditor-General's Department in Pakistan is responsible for the audit of Government Departments, Agencies and Enterprises. The public managers in these organizations come across government auditors quite often. The purpose of the present paper is to introduce basic concepts of government auditing to the public managers. The papers consist of three parts. Parts one, offers a brief introduction to government auditing, and discusses the Auditor-General's role in public accountability and a broad outline of the Auditor-General's department. Part two focuses on the relationship of government auditors with public managers and gives some suggestions for a greater harmony in their mutual relationship.

Since the extent of audit coverage is closely linked with the efficiency of internal control, part three of the paper defines the concept of internal controls and the responsibility of the public managers regarding this control.

In the Indo-Pak sub-continent the first Auditor-General of India was appointed by the Governor General of India in 1858. In 1919 constitutional reforms took place and it was decided that the Auditor General of India would be appointed henceforth by the Secretary of State of India. In 1935 it was decided that the Auditor General would be appointed by the Monarch. In 1947 when Pakistan came into being the role of the Auditor General was the same as defined in the 1935's Government of India Act.

ACCOUNTABILITY CYCLE

IN A DEMOCRATIC SETUP

LEGISLATURE

Reports back authorise

PAC GOVERNMENT

Audits executes

AUDITOR-GENERAL

SCOPE OF GOVERNMENT AUDITING.

Over centuries the scope of government auditing has been evolving. Traditionally, the government auditors have examined the accounts in the general framework of legality, regularity and propriety. Legality refers to the authority which government departments have over the use of funds. This authority is given by the legislature. Regularity refers to compliance with rules and regulations framed in the light of the law of the land. The government auditors see if the public functionaries abide by these rules. Propriety refers to the appropriateness of public expenditure. The propriety of certain expenditure is determined in the light of prevalent customs, ethical norms and accepted values of the society.

However during the last few years (since mid-seventies) the scope of auditing has expanded. It now includes performance auditing and performance evaluation as well.

Performance auditing focuses on the management of resources in the general framework of economy, efficiency and effectiveness. The auditors see that the Government departments and agencies:

acquire resources on the most economical conditions.

Utilize these resources most efficiently; and

Achieve the planned goals effectively.

This expansion in the scope of government auditing has been widely accepted all over the world. A large number of countries have amended their auditing laws to legitimise this change. The professional bodies of government auditors and accountants have proclaimed their support to this concept. A growing number of Supreme Audit Institution have started performance auditing, although its precise nomenclature varies from country to country.

Performance evaluation refers to an independent examination of managerial operations and their results in respect of public enterprises in the general framework of economy, efficiency and effectiveness.

In Pakistan the Auditor General's department introduced this concept and extended it to government departments in 1981. At present the department carries out a number of performance evaluations and performance audits every year. The reports of these studies are placed before the Public Accounts Committees (PACs). The PACs have often appreciated these reports and have recommended increasing their number, in view of their practical usefulness.

Before we proceed further we shall like to make a small clarification.

In Pakistan, the Auditor General's department makes a distinction between performance auditing and performance evaluation, although in some countries these terms are used interchangeably. Performance evaluation in Pakistan means assessment of the entire range of managerial operations of public enterprises in the broader framework of economy, efficiency and effectiveness. Therefore, the broad difference between performance auditing and performance evaluation is that the former examines government departments while the later concentrates on public enterprises. Another fine difference is that the performance auditors also carry out verification of the management data before analysing it. In the verification of the management data before analysing it. In the case of performance evaluation the management data are accepted as valid on the assumption that external auditors have audited them.

RELATION WITH CORPORATE AUDITING.

Although government auditing is older than auditing in business sector, yet the academic development of the subject of auditing took place mostly in the latter area. Auditing grew as a profession with reference to business corporations. It developed into a branch of knowledge mainly with the same reference. Universities all over the world started offering courses on auditing which focussed on the private sector. Professional associations of auditors also identified themselves mainly with the business sector. Therefore, an ordinary person tends to perceive auditing in relation to the corporate sector only.

During the last few centuries when auditing was evolving as an academic discipline, there were not many significant developments in government auditing. The practice government auditing lagged behind the academic growth in the discipline. But recently academic activity in government auditing has been quite brisk mainly because the size of public sector has increased and expectations of the public from government auditors are mounting. Government auditors have started defining and re-defining the scope of their work. In this perspective it will be interesting to have a cursory look on the relationship of government auditing with corporate auditing.

First, the government auditing derives its mandate from the Constitution of the country while corporate auditing is carried out in the light of Companies Act of the country.

Second, the government auditors besides attending to the truth and fairness of accounts also look into legality, regularity and propriety of government transactions. Thus they comment on waste, inefficiency and impropriety in financial management. The corporate auditors focus on truth and fairness of accounts, though they also look into compliance of rules in a limited way.

Relation with Corporate Auditing

Government Auditing.

Corporate Auditing.

¤ Derives its mandate from the

Constitution of the country.

¤ Derives its mandate from Companies Act and Character of the Corporation.

¤ Scope covers, besides attesting to proper presentation of financial statements, an opinion on compliance to rules, regulations and canons of propriety.

¤ Scope covers only attesting to fairness and truth of the financial statements.

¤ Detection of fraud and report on waste and misuse is still a primary concern.

¤ Primary concern is expression of an opinion on the financial statements, although remains alert to fraud, misuse and waste.

¤ Professional bodies recognize performance auditing as a legitimate domain.

¤ Performance Auditing may be done as a special assignment on request.

¤ Results of audit are reported to the legislature.

¤ Results of audit are reported to the shareholders.

¤ Carries out audit of rules as well.

¤ Accepts rules as given and does not question them.

¤ Gives constructive suggestions for improvement.

¤ Does not give suggestions for improvement.

Third, the stage at which practice of government auditing is today, detection of fraud is still the primary concern of the auditor. It is because the state of internal controls in government departments, especially of Third World countries, is far from satisfactory. But the corporate auditors have redefined their role. Their major concern is not to detect frauds but to express opinion on the truth and the fairness of financial statements, although they remain alert to any possible situations of fraud.

Fourth, recently the scope of government auditing has expanded to include performance auditing. The corporate auditors do not carry out performance audit as a matter of course. They may do so, if specifically required by a client.

Fifth, the results of government audit are reported to the legislature which makes recommendations for corrective action. The corporate audit report is placed before the shareholders of the company.

Sixth, the government auditors also audit the propriety of rules. The rules and regulations in the government are issued by numerous authorities and agencies. At times these rules may violate the general framework of financial control or defeat any of the internal controls visualised by the government's system of financial administration. Therefore, the Government auditors also examine and comment on various rules and regulations issued by government departments and agencies. The corporate auditors do not concern themselves with the propriety of rules. They take them as given and watch for their compliance.

Seventh, government auditors are part of the process of public accountability. While the executive departments are responsible for rendering accounts, the auditors are expected to assist management by constructive advice for improvement. Of course, the executive departments are not obliged to accept this advice but would be held responsible if he weaknesses persist.

OBJECTIVES OF GOVERNMENT AUDITING.

The main objectives of government auditing are as follows:

to judge and report whether the financial statements of the government are properly expressed.

To see whether the auditees followed the rules and regulations as intended by the legislature and the government.

To assess whether the audited entities followed canons of financial propriety in carrying out various transactions.

To reveal violations of authority, regularity and propriety early enough to enable the government to (a) take corrective action (b) receive compensation for losses (c) prevent future occurrence of waste, abuse and inefficiency.

To assess whether the auditees managed human and material resources with due regard for economy, efficiency and effectiveness.

THE AUDITOR-GENERAL OF PAKISTAN.

a) Accountability Process: The Auditor General's department is an important element in the well know 'accountability cycle'. The accountability cycle has four elements: (a) the legislature (b) the executive (c) the Auditor General (d) the Public Accounts Committee. Conceptually, it refers to the supreme authority of the legislature to levy taxes and to approve budget of the government. The budget proposal is prepared by the executive and is placed before the legislature for approval. After approval of the budget, the executive of the state is responsible to execute it and to prepare its accounts. The Auditor General is required to audit the accounts and report back to the legislature through Public Accounts Committee. The Public Accounts Committee examines the Auditor General's report and calls upon the executive departments to explain any deviations from authority, rules and propriety. The Public Accounts Committee, after listening to these explanations, makes recommendations to the legislature for the future. This completes the accountability cycle.

Independence of audit: Conceptually, auditors should be independent of the executive. They should not be responsible for the auditee operations or for the upkeep of accounts. Unfortunately, in Pakistan, so far government auditing is concerned the ideal situation does not prevail. The pre-independence British colonial government made accounting and auditing as the joint responsibility of the Auditor General. But after Pakistan came into being, this impairment of Auditor General's independence became subject to discussion at several forums. As a first measure programme was launched in 1970 to hand over accounting to the executive departments. As a result a number of executive departments started maintaining their own accounts. The process of separation of audit from accounts did not continue after brisk initial start because of several administrative and organizational problems. Ultimately, in 1984, the Government of Pakistan Constituted a Committee under the Chairmanship of Mr.A.G.N.Kazi to review the scope and organization of the Auditor General's Department. The Kazi Committee made several recommendations in 1984. One of these recommendations related to the separation audit and accounts. Keeping in view the organizational upheaval that a one-step separation of audit from accounts could cause, the Committee recommended that the two functions should be separated within the Auditor General's Department. The recommendations of the Kazi Committee were put into practice in 1988 when the department of the Auditor General underwent a major re-organization. At present all the offices of the Auditor General's department have been segregated into audit offices and accounts office. The head of an audit office is a Director General (B-20) or a Director (B-19) of Audit. The head of an accounts office is an Accountant General (B-20) OR A Director (B-19) of Accounts.

This is also a transitory phase. The ultimate shape of the department will emerge when all the accounts offices are taken over by the executive and the Auditor General is made responsible solely for auditing.

c) Functions and Powers of the Auditor General of Pakistan: The Constitution of Pakistan, 1973 defines the role of the Auditor General as follows:

"169. Functions and Powers of the Auditor-General: The Auditor General shall, in relation to:

the accounts of the Federation and of the Provinces; and

the accounts of any authority or body established by the Federation or a Province.

perform such functions and exercise such powers as may be determined by or under an Act of Parliament and, until so determined, by Orders of the President".

"170. Power of the Auditor General to give directions as to accounts: The accounts of the Federation and of the Provinces shall be kept in such form and in accordance with such principles and methods as the Auditor General may, with the approval of the President, prescribe".

"171. Reports of the Auditor General: The Reports of the Auditor General relating to the accounts of the Federation shall be submitted to the President, who shall cause them to be laid before the National Assembly and the reports of the Auditor General relating to the accounts of a Province shall be submitted to the Governor of the Province, who shall cause them to be laid before the Provincial Assembly".

These functions and powers of the Auditor General regarding audit have been elaborated in the Audit and Accounts Order, 1973 (President's Order No.21 of 1973). Article 11 of the Order says:

"11. Audit.- (1) It shall be the duty of the Auditor General ;

to audit all expenditure from the revenues of the Federation and of the Provinces and to ascertain whether money shown in the accounts as having been disbursed were legally available for and applicable to the service or purpose to which have been applied or charged and whether the expenditure conforms to the authority which governs it;

to audit all transactions of the Federation and of the Provinces relating to debt, deposits, sinking funds, advances, suspense accounts and remittance business;

to audit all trading, manufacturing and profit and loss accounts and balance sheets kept by order of the President or of the Governor of a Province in any department of the Federal Government or of a Province; and

to audit the accounts of any authority or body established by the Federation or a Province.

and in each case to report to the President or, as the case may be, to the Governors on the expenditure, transactions or accounts so audited by him.

The Auditor General may, with the approval of, and shall if so required by, the President or the Governor of any province, audit and report on;

the receipts of any department of the Federal government or, as the case may be, of the Province; and

the accounts of stores and stock kept in any office or department of the Federal Government, or, as the case may be, of the Province.

DEPARTMENT OF THE AUDITOR GENERAL OF PAKISTAN.

The Auditor General of Pakistan carries out the above functions through his department. The Auditor General's department consists of the following organizations;

Auditor General's Office (Secretariat of the Department).

Accounts Offices.

Audit Offices.

Evaluation Offices.

Other offices.

AUDITOR GENERAL'S OPERATIONS

a) Accounting and Payments: The primary accounts are prepared by the Treasuries and District Accounts Offices. These offices are responsible for making payments after pre-audit of claims. Pre-audit refers to the checks exercised by accountant before making payments. Pre-audit, therefore, is basically an accounting function. It does not absolve the Auditor General of the responsibility of statutory audit. Therefore, statutory audit is carried out for all those transactions which may have been checked in pre-audit. These accounts are compiled by various Accountants general's offices. The accounts prepared by departmentalised accounts offices also form part of the accounts of respective Province or the Federation. A compilation of accounts is prepared by each Accountant General for the Province and by the Accountant General Pakistan Revenues for the Federation. The accounts are published in the form of "Appropriation Accounts" and "Finance Accounts". The Auditor General also publishes combined Finance and Revenue Accounts, which contain comparative accounts of all the Provinces and the Federation.

The Accounts Offices also keep service record of gazetted officers and financial record of all government servants. They also authorise pension claims.

b) Auditing: The Auditor General's department has organised its auditing function as below:-

Audit of Receipts and Payments: This is carried out at two levels:

Central Audit.

Local Audit Inspection.

Central Audit: Central audit is a post-audit function which is carried out in the offices of Directors General or Directors of Audit on an on-going basis. Usually the accounts are test checked. A special type of post-audit is also known as concurrent audit. In concurrent audit, auditors sit in the executive offices and audit all payments as and when they take place.

Local Audit Inspection: Local Audit Inspection is carried out at the premises of the auditee. Most of the public managers come across auditors when they come for local audit inspection.

Performance Auditing: The Auditor General's Department has started since 1981 performance audit of development projects. At present special teams carry out performance audit. The performance audit ends up with a performance audit report, which highlights strengths and weaknesses of the project.

Most of the time the performance auditors deal with project's executive staff.

c) Performance Evaluation: Since 1978 the Auditor General's Department has started performance evaluation of public enterprises as well. The evaluation is carried out in the general framework of economy, efficiency and effectiveness. The public managers in government offices do not come in contact with the performance evaluators. However, managers in the public enterprises are quite familiar with them.

PUBLIC MANAGERS AND GOVERNMENT AUDIT

Public managers come across government auditors at least once a year. Since the drawing and disbursing officers (DDO) in each organisation are responsible for the upkeep of initial accounts of all receipts and payments in a government organisation the auditors look up to them for all assistance during an audit assignment. Most of the DDOs have subordinate staff consisting of accounts clerks, cashiers or divisional accountants. But the DDOs are responsible primarily for the proper maintenance of all books and records.

Following are some of the suggestions for coping with the auditors when they visit a government department or agency.

1 PREPARING FOR GOVERNMENT AUDIT.

The government audit starts with a letter from the Director General of Audit intimating the proposed dates of audit and the names of auditors. As soon as this letter is received the DDOs should start preparing for the audit.

Some of the steps as follow:

a) They should immediately inform the head of the organisation about the coming audit and arrange to call a meeting of the concerned officers. The meeting should be presided over by the head of the organisation. The objective of the meeting should be to apprise everyone about the importance of audit, to complete all records, to nominate a subordinate for supply of record and co-ordination with each branch and to submit the completed record to the head office by a target date. The DDO should play an active role in organising this meeting. He should brief the organisation chief about the expected co-operation from all branches.

b) The DDO should review the condition of all records. The incomplete books should be quickly completed. The missing documents should be arranged.

The DDO should nominate a subordinate from his staff to act as co-ordinator between auditors and other branches of the organisation.

2. ARRIVAL OF AUDITORS.

The DDO should draw a tentative programme of the field visits of the auditors. This programme should be discussed with the auditors on the very first day. After finalizing the field visit programme, the DDO should inform all the field organizations and try to get a confirmation.

The auditors should, normally, have their own arrangements for boarding, lodging, transport and office stationery. It is part of their professional conduct to bear the expenses relating to the above items. But sometimes they need some assistance in booking rest-house or arranging a cook to prepare meals for them. The DDO should help them as a courtesy but in no case should offer to pay for their expenses.

The DDO should make proper arrangements for the office accommodation of the auditors. The office space for the auditors should contain all the record usually needed by the auditors.

RELATIONS WITH AUDITORS.

The DDOs should establish a frank and free dialogue with the auditors. In the very beginning, they should offer to provide the needed information. This helps developing a proper environment for both parties. If the auditors perceive that the auditors are hiding or withholding certain information, they become sceptical which in turn puts the auditees off. Thus a cumulative effect takes place and the whole audit exercise becomes a drudgery both for the auditors and the auditees.

WORKING ARRANGEMENTS.

As soon as the auditors arrive, the DDOs should agree with them the working arrangements. It is preferable if the DDOs insist that the auditors pass on their observations daily.

As soon as an audit observation is received the DDOs should try to give or arrange a reply, preferably on a daily basis so that at the close of the next day the previous day's observations are sent back to the auditors. For this promptness the DDOs would need the help of the head of the organization. The subordinate responsible for co-ordination should chase the audit observation to its final reply. The DDO should keep a temporary log book showing all unanswered audit observations.

The DDOs should keep on discussing the various audit observations on a daily basis. They should try to satisfy the auditors by producing necessary evidence.

DOCUMENTS NEEDED.

Documents and Records often Asked for by Auditors.

The government auditors visit the units where government funds are expended at least once in every year but in some cases auditors visit the units once in two or three years. However, in cases where irregularities are prevalent, or where misappropriation or embezzlements are suspected, a sudden audit can also be conducted. Following are some of the crucial documents or files which a DDO must try to keep up-to-date at all times:

Cash-Book;

Log-Book, (for materials, equipment, e.g. vehicles, etc. and their use).

- File on previous audit visits, remarks, or observations (if any);

Office copies of pay bills, and all other forms of bills;

Acquittance roll register on the above item;

Service books of staff;

Attendance register of the establishment;

Contingent bills;

Contingent expenditure register;

Contingent vouchers;

File on quotations;

Cuttings from newspapers on tenders or supplies;

Dead stock register;

Service/laboratory/agro-tech, or other specialised registers;

Service stamp register;

Despatch register;

Daily collection book;

Budget file;

Expenditure statement file;

Receipt statement file;

Newspaper etc. Accounts register;

Library allowances file and library stock register;

Security bonds etc.

File of typewriter/duplicator;

Photocopy machine's life history;

Telephone trunk-calls register;

Hostel accounts register;

Order book, etc.

CORRECTIVE ACTION.

Some audit observations could indicate loose internal controls or faulty working procedures. The DDOs should take immediate steps to review and revise the existing procedures and implement new procedures to safeguard public assets. Whenever possible, such a step should be taken while the auditors are present.

If the auditors point out some recovery, and the DDOs are convinced that it is in fact due, they should take steps to start the recovery immediately.

FAREWELL MEETING.

The DDOs should insist on a farewell meeting with the auditors in the presence of the head of the organization and other branch heads. The DDO should organise this meeting. They should request the auditors to invite some senior officer from the audit office to attend this meeting. The head of the audited organization should take the initiative and ask the Director of Audit to visit and discuss the provisional audit report. The farewell audit meeting should be arranged and attended by the head of the organisation. The DDOs should realise that the audit teams usually consist of junior personnel and they would insist to keep some of the audit observations "alive", even though they are convinced of their falsity. Therefore, senior personnel from the audit office should be involved in the farewell meeting. The senior people in the audit office usually have the competence, imagination and courage to settle the audit observations if they are baseless. This also provides them an opportunity to know the weaknesses of their own staff.

AUDIT REPORT.

The auditors send their report after sometime. The usual procedure is that the auditors send a draft report to their head office where this report is reviewed for consistency, validity and materiality. The audit office issues the report to the auditee for an initial reply. As soon as the report is received from the audit office, the DDOs should arrange to send its reply within the time allowed. If necessary, the DDO should organise a discussion with the audit office at different levels. A failure to react to the audit report invites the audit office to raise the level. The matter is ultimately referred to the Secretary of the Department.

ADVANCE PARAS.

Sometimes, the auditors like to issue an Advance para (AP) before the formal issue of the report by the audit office. The APs often relate to matters of serious nature involving frauds, embezzlements, recurring over-payment or irregularities of a continuing nature. The APs are issued to invite the attention of the auditee for an immediate action. The DDOs should take a prompt action on all APs and should see what procedural changes would be necessary to rectify the situation.

DRAFT PARAS.

The Audit Reports, after passing through the rigmarole of replies and counter-replies "mature" into Draft Paras (DPs). The DPs are the potential contents of the Auditor General's report to the legislature. Therefore, they would be a source of embarrassment or punishment for the persons responsible. The DDOs should make all efforts to get DPs settled, failing which the head of the Department (usually the Secretary to the Government) would have to explain it before the Public Accounts Committee (PAC) of the Parliament.

THE PAC AND AFTERMATH.

The PAC issues directives for corrective action. Some of them may be relating to the DDOs work, like affecting some recovery. The DDOs should comply with these directives, since the next audit team would review action taken on the PAC directives. The Auditor General presents a report to the PAC which states the extent of compliance of its previous directives. Non-compliance leads to punitive action at the highest level.

INTERNAL CONTROL SYSTEMS AND THE PUBLIC MANAGERS.

Internal Control system have a close relationship with the work of auditors. Since it is not possible for auditors to carry out cent-per-cent checking they formulate their opinion by examining a sample of transactions. The question as to how large should be the sample is answered by the auditors in the light of their preliminary testing of the internal controls. If the internal controls are highly reliable and efficient, the sample size for detailed audit is small. But if the internal controls are weak for detailed audit is small. But if the internal controls are weak or unreliable the sample size increases. In case the internal controls are missing altogether, then the auditors carry out hundred per cent checking.

In the following paragraphs we shall discuss the concept of internal control systems and the role the public managers can play to install them.

INTERNAL CONTROL SYSTEMS.

The Concept:

Internal control systems are procedures installed within an organization to ensure correct and timely record of information, compliance of rules, regulations and policies, safeguard of assets and prevention of abuse, fraud and waste of resources. These controls are enforced by the organization and all the employees are supposed to observe them. A most common example of internal controls is separation of indenting, purchasing and payment functions.

Adequacy of Internal Controls.

An adequate internal control system is the one which provides an in-built signaling mechanism that will enable prevention or detection of errors or frauds by employees in the normal course of operations.

Responsibility.

The top management in each department is primarily responsible to design and implement an effective system of internal controls. While designing such a system, the management takes into account the policies, rules, regulations and guidelines issued by the government or other agencies affecting their work. For example in every department the accounting controls would be taken from the procedures lay down by the Auditor General. At the organizational level the DDO in each executive office is responsible to receive and disburse public funds and to render an account of the receipts and payments. Functionally, therefore, he has the responsibility of instituting minimum internal controls necessary to detect fraud, waste and abuse of public funds.

d) Reasonable Assurance.

Although public managers are responsible to institute internal controls to safeguard public funds yet these internal controls are intended to provide a reasonable and not an absolute assurance against waste and abuses because, the controls also have a cost. Beyond a certain point controls tend to become counter-productive and uneconomical.

OBJECTIVES OF INTERNAL CONTROLS.

Internal controls have the following objectives:

All financial transactions should be recorded correctly and promptly.

Public assets are safeguarded.

The government rules should be compiled with.

The policies of the department are followed.

The department's operations are carried out economically and efficiently.

TYPES OF INTERNAL CONTROLS.

Internal controls are of two main types:

Financial controls.

Administrative or operational controls.

Internal Control System.

¤ Correct and prompt record of events.

¤ Safeguard of public assets.

¤ Compliance to rules.

¤ Adherence to public policies.

¤ Economic and efficient operations.

The financial controls (also known as accounting controls) focus on safeguard of assets and proper preparation of accounts. The administrative or operational controls apply to those activities, which lead to the authorisation of transactions, and events based on compliance with establishment policy and procedures.

The Treasury Rules and General Financial Rules refer to various financial and accounting controls to be exercised by public managers. A Handbook for Drawing and Disbursing Officers published by Establishment Division (1978) also summarises the controls to be observed by a Drawing & Disbursing Officer. Each department issues its manuals and procedures which describe various controls to be exercised by the public managers.

ELEMENTS OF INTERNAL CONTROLS.

What are the main elements of an efficient internal control system?

An efficient internal control system should have the following elements:

Elements of Internal Controls

¤ Organisation plan.

¤ Independent checking of one person's work by another.

¤ Segregation of functions.

¤ Accounting procedures for correct and timely record.

¤ Documentation of policies and practices.

¤ Only authorised access to assets and facilities.

¤ Training of manpower.

¤ Standards of efficiency.

Organisation Plan: The organisation plan should provide for a clear-cut delegation of authority and individual responsibility. The line of command should be clear and preferably shown in organization charts. Everyone should know his or her responsibility and authority.

Effective checks: The duties and responsibilities should be assigned in such a manner that work of a person is checked independently by another person.

Segregation of functions: There should be segregation of authorisation, operation, and payment functions. The procedures should be clear as how to initiate an activity; who will authorise it; who will carry it out; who will make payment and who will record it in accounts. All accounting entries must be duly authorised before they are entered.

Accounting: The accounting of operations should be current, accurate, clear, reliable and useful. Necessary procedures should exist to make accounting satisfactory in this sense.

Documentation: The organisation should document all its policies, regulations and practices and all concerned should be aware of them. The documents may also include position descriptions, pre-numbered forms, dual recording of valuable negotiable instruments, and periodic verification of the existing recorded resources.

Authorised Access: There should be clear procedures for access to the organisation's resources. Only authorised persons should have access to resources. It reduces the risk of loss. Restricting access to resources depends on the vulnerability of resource and perceived risk of loss, both of which should be reviewed periodically.

Trained Personnel: The ultimate success of all control systems depends on the availability of trained and qualified personnel. An effective control system attempts to place competent people at appropriate positions. It presumes the existence of suitable procedures for recruitment, training and supervision of the personnel.

Standards of Efficiency: The management should lay down standards of efficiency for staff and equipment. These standards may be set out in operating budgets, periodic plans, and technical manuals and through other means. There should be continuous monitoring and evaluation of the performance of the personnel and equipment against the standards set. Internal audit can also be a mechanism to reveal deviations from standards of efficiency.

5. SOME SUGGESTIONS FOR PUBLIC MANAGERS.

The detailed procedures for safeguarding of resources and maintenance of accounts are available in Government Treasury Rules and Accounts Code Vol.I-IV of the Auditor General. The following guidelines intend to invite the attention of the public managers to their daily "household chores".

¤ Informal Review: The public managers should informally walk around the office where the staff is working. It keeps them informed of the happenings in the office. It keeps the employees on the alert.

¤ Check-list of Controls: Each public manager should prepare a checklist of various controls. The checklist should mentioned the following:

Various reports to be prepared.

Various checks to be exercised daily, weekly, monthly or quarterly.

Various returns to be submitted to outside agencies including statement of accounts.

Outstanding letters to be replied.

¤ Environment: The public managers should ensure that the following:

Arrangements for external security are adequate. All locks are operational and only authorised persons have keys.

Arrangement for daily closing and opening of office, stores etc., are satisfactory.

¤ Cash Management: Following general guidelines should be kept in view:

Minimise cash payments.

Deposit all collections daily. All excess cash should also be deposited daily.

Replenish imprest as frequently as possible.

Make surprise checks of the cashier.

Carry out periodic review of the cash book.

Reconcile accounts with the Accountant General's office on a regular basis.

¤ Stock Verification: The public managers should organize a periodic verification of all consumable and non-consumable stores and stocks. The verification should carried out by persons not involved in the safe-custody or accounting of records.

¤ Rotation of Duties: The public managers should rotate the staff on various seats. It minimizes the chances of fraud and abuse.

CONCLUDING REMARKS.

Government auditing plays a vital role in enforcing public accountability. Public managers in executive departments and agencies meet government auditors quite often during their tenure. A proper understanding of the role of government auditors helps the public managers cut down physical and psychological costs to a minimal.

It is important to realize that both the government auditors as well as public managers operate in public interest. Sometimes their short-term interest may be in conflict. In such a situation, nothing helps more than mutual communication at different levels. Communication often helps resolve the conflict and paves way for a smooth and congenial relationship among auditors and auditees.

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