Over the years the nature and technique of auditing has undergone lot of changes in developed as well as in some developing countries. The ripple has also touched Bangladesh. As a result, new ideas and techniques are replacing old ones in audits carried out by audit directorates under the Office of the Comptroller and Auditor General of Bangladesh. The quality of audit report is also showing an upward trend which can be further enhanced through brush up of the present planning process of an audit.
In our country automation is fast replacing manual input of data in financial activities necessitating modification of existing audit techniques and adoption of new ones. Along with new techniques, in-depth knowledge of the organisation being audited -- its operation and management activities, functional bottlenecks, professional risks, expected outputs, monitoring process, reports and returns etc., -- is very much essential to make the audit report a standard, meaningful and purposeful one. These days emphasis is shifting gradually from compliance and regulatory audit to value for money /performance audit. The more the auditors will know about the organisation being audited, the more successful they will be in their effort of producing a quality audit report and making life easy for themselves.
Compliance or regulatory audit can be carried out by knowing the financial rules and regulations involved. Here the main emphasis is on proper spending of budgeted amount as per rules. But these days Public Accounts Committee of Parliament is more interested to know about organisational goal achievement i.e., whether goal has been achieved efficiently, economically and effectively by the organisation and in case of failure, the reasons behind. So, to be able to comment on these, auditors must know organisation's modus operandi, the resistance and bottlenecks faced during day to day activities and so on. Comments made without properly weighing all these factors will be not realistic.
At present audit plan is prepared mainly on the basis of annual budget of the organisation/office. In most cases, permanent file of the organisation is either not maintained or incomplete. Consequently, audit plan prepared on the basis of insufficient information has many deficiencies. To ensure quality audit plan, sufficient time and energy must be given in its preparation. Procedure mentioned below will remove deficiencies commonly found in the prevailing audit plans.
Before starting audit, first all published documents of/on the organisation, study reports prepared by internal as well as external sources on any particular issue or activity and other relevant records should be collected and preserved in the permanent file to make it up to date. At the same time all latest reports, returns, instructions; annual budget and other documents needed for making an audit plan should be collected. Next, the audit team should visit the organisation to know its actual working condition and functional scenario which can be visualised through discussion and interaction only. Being outsider the audit team may not know some vital information, disclosed or undisclosed, regarding day to day activities of the organisation which comes to the surface only during interaction. This will also give the audit team an opportunity to verify its understanding of a particular issue and prepare audit plan and audit programmes accordingly. Such evaluation at the early stage of audit is vital because if the audit team comes to know these during actual audit work, it may be too late for taking remedial action and may affect both audit plan and audit programmes badly.
In the third step, on the basis of impression gathered through interaction and review of documents collected, a preliminary audit plan may be prepared. In the fourth step, this preliminary audit plan should be discussed by the audit team with responsible persons of the organisation and amended as required to fix lapses, if any. An interesting point to note here is that though interaction takes place with the auditable organisation, the audit team is not bound to accept their views. Basically, the actual planning remains in the hands of auditors and their authority is not diluted at all rather by discussing the plan with the organisation a feeling is created in their minds that they are also part of it. This makes a lot of difference in their attitude towards audit team and subsequent audit activities and facilitates proper rapport between the two parties thereby ensuring quick supply of relevant records to the audit team at the time of audit, which is not the case always these days.
However, at present in most cases this interaction aspect in audit plan preparation either gets less attention from the persons concerned or is ignored. But it is a very vital step in the whole audit process and must be followed in letter and spirit in all cases particularly while auditing big organisations/important offices. Ideally, proper planning may require 30-35 per cent of the total man days of an audit team. But it is worth doing because a well prepared audit plan needs less time for field study and testing.
Besides, experiences have shown that auditees are not always allergic to audit teams but sometimes they also welcome them because they (the auditors) can bring those anxieties of auditees to the notice of higher authorities which they (the auditees) themselves are hesitant or unable to do for administrative or other reasons. So, in such cases interaction at the planning stage is a blessing rather than a burden. Therefore, a final audit plan prepared on the basis of both interaction with the auditee and review of documents will ensure its quality, easy rolling out and preparation of a quality audit report at the end.
The writer is retired Deputy Comptroller and Auditor General (Senior).
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