Audit strategy

Audit Strategy 

 There is no denying the fact that in changing circumstances and the expansion of cost centers, the demand for audit has been tremendously enhancing day by day in public sector. In order to conduct a systematic audit as a tentative audit plan is inevitable and side by side purpose and scope needs to be considered where required manpower is mandatory to be allocated according to work load. It is important to gear up audit in MOHFW and to make certain effectual periodic monitoring of financial and management activities in the sector, audits of the Programme needs to be promulgated by an authorized government audit Institute under TORs acceptable to the DPs. The private auditing firm needs to be appointed by MOHFW following a competitive selection process in accordance with the “Guidelines: Selection and Employment of Consultants by World Bank Borrowers”; IDA will oversee the selection process on behalf of the DPs. GOB officials will be involved and will facilitate the conduct of the audits, in the sense that the auditing firm hired from the private sector has proper access to GOB records. The semi-annual audit reports (for July-December) will be submitted to the DPs by the end of February, and the semi-annual audit reports (for January-June) by the end of August. The audit report is an important management tool for financial control of the respective sectors and for the Annual Programme Review (APR), and for taking timely corrective measures. Suffice it to say that audit influences living standard of human society as well as it ensures value for money audit like economy, efficiency and effectiveness & good governance. Audit acts as a safeguard of government assets and properties. Due to existence of Audit of health sector, control is being strengthened and awareness among Line Directors under HNPSP is being created and transparency in carrying out Government rules and regulations while incurring expenditure of the government is being ensured systematically. This Audit Strategy for the continuous audit of Health, Nutrition and Population Sector Programme (HNPSP) shall guide the audit team members to carry out an independent audit and make them capable of delivering an opinion to the Principal Accounting Officer on the whole of project’s risk management, control, governance and implementation. The purpose of the Strategic Audit Plan is to:  Identify all the areas of HNPSP activities that require auditing over the assigned period.  State how the HNPSP’s key control systems, corporate governance arrangements and risk management processes will be reviewed.  State how the audit service will be provided, and establish the resources and skills required to meet audit objectives.  Set out the relative allocation of resources between the work to obtain assurance on the control systems and any work to provide advice.  Assist the overall control and direction of the work. Programme Activities The HNPSP consists of 38 programs, which are undertaken with a view to achieving the priority objectives of HNPSP stated above. Each program has its separate operational plan and principal activities. Implementing agencies Ministry of Health & Family Welfare and its attached departments such as Directorate General of Health Services, Directorate General of Family Planning, Directorate of Nursing & Education, Directorate of Drug Administration, National Institute of Population Research &Training, Programme Management Unit of National Nutrition Programme, Construction Management & Maintenance Unit, NIPORT and Public Works Department are implementing the Programme with its present set up throughout the country. Some other ministries like Defense and Railways are also involved with public sector Health, Nutrition and Population programmes. Management of HNPSP The implementation agencies as mentioned above are implementing and managing individual components/programme of the HNPSP as per set guidelines and principles. There are 38 operational plans based on major programme areas. The 38 programme areas of HNPSP and the central activities are being implemented under the direct supervision of MOHFW.To manage implementation efficiently one operational plan has been prepared for each program area and each program area is being controlled by a Line Director. There are about 1440 cost centers under the 38 LDs which have Drawing and Disbursement Authority (DDA) and most of these cost centers are located at district and upazilla level. These cost centers receive cash allocation from the LDs and they are involved with apart from medicines and MSR (Medical Surgical Requirement). Such medicines and MSRs are often allocated from the LDs as well as non- HNPSP allocation from the government. Audit of HNPSP Similar to other public service programmes, the external audit of HNPSP is undertaken by Comptroller and Auditor General (C&AG) Foreign Aided Project Audit Directorate (FAPAD). The Financial Management and Audit Unit (FMAU) within the umbrella of Ministry of Health and Family Welfare (MoHFW) are mandated with the compilation and consolidation of the financial reports and audit of the financial affairs. Audit-Key Focus The proposed audit is not a traditional audit strictly understood in the sense of the term, but seeks to provide reliable information to the stakeholders on whether the funds are generating good value for money. The principal objectives of the assignment are:  Assessment of control environment and adequacy of the systems and tools established, risk management systems and their management.  Assessment of use of the resources for the intended purpose, and whether funds spent provided good value for money.  Training needs assessment and a plan to support Financial Management and Audit Unit (FMAU) in building sustainable capacity with a view to enabling it to independently undertake audit from 1 July, 2010. Scope of Audit The audit shall principally focus on evaluating the risks exposures relating to the programme’s governance, operations and information systems based on the following criteria.  Reliability and integrity of financial and operational information  Effectiveness and efficiency of operations  Safeguarding of assets  Compliance with laws, regulations and contracts Audit Approach The audit shall be carried out in accordance with Guidelines issued by the Institute of Auditors and INTOSA .As the audit intends to assess whether the funds spent provided good value for money, the audit approach will not only focus on assessment of efficiency and effectiveness of the systems and procedures in place but also how effectively they are put in practice. From the above viewpoint, it is evident that Audit is mandatory in order to control the government assets and properties and in order to gear up the core audit system under HNPSP, the following steps need to be taken : 1. The scale of man days need to be set in respect of audit of the Units according to volume of work load and size of the management. 2. The present outsourcing system need to be revised by incorporating experienced and efficient people relevant to audit and accounts with the working groups of the ministry. 3. The existing system of outsourcing has negative impacts in respect of auditing procedure followed by the Chartered Accountants as they are not well conversant with the system of government accounting as well as auditing for which it needs to be updated. 4. The auditable documents need to be identified and approved by the competent authority. 5. It is important to conduct review on completion of core audit Audit plans should be dealt in such manner at which auditors are able to detect any form of irregularities like theft, fraud, misappropriation and failure to recover the government money. Audit should identify the risk areas and accordingly audit should be conducted. Without unfairness and intolerance to the rights of DPs to carry out their own audits, MOHFW and the DPs have agreed to common external audit arrangements, covering all funds available for the completion of the Programme, in respect of the source of funding. Audits will be carried out by the Comptroller and Auditor General (C&AG) of Bangladesh in accordance with the “Statement of Audit needs” agreed between C&AG and the DPs and in accordance with international auditing standards, consistently applied. The audit report will contain a separate opinion as to whether the financial statements submitted during the fiscal year, together with the procedures and controls involved in their preparation, can be relied upon to support the transactions and balances of the FOREX and other Accounts, and the contributions of GOB and the DPs. External Audit will observe Control System of the Management and scrutinize transactions covering the whole area of irregularities regarding sanctions, appropriation, technical, financial and administrative control. In the past, the DPs have not always complied with the reporting requirements of the MOHFW on the Programme expenditure directly incurred by the DPs or by their appointed consultants. As a result, the audit could not verify the authenticity of the Direct Project Aid (DPA) expenditure in the financial Statements. This has resulted in a huge number of pending audit objections now awaiting settlement. In the future, the C&AG will qualify the audit report to exclude expenditure for which the documentation is with the DPs. The audit report will be submitted to the Chair of the HNP Consortium within six months of the end of each fiscal year. The Chair will distribute the audit report to the DPs and collect their comments. The Chair of the HNP Consortium will provide joint comments to the MOHFW within two months of the receipt of the audit report. Any audit findings related to corrupt practices will be dealt with by the Bank’s Anti-corruption Unit in accordance with its procedures.