General description of the responsibilities of the Board Members and Chief
Executive (or similar person) of State Bodies
and the Comptroller and Auditor General
Introduction
This document has been prepared in accordance with auditing standards to assist
those responsible for governance in State Bodies in understanding financial reporting
and audit responsibilities and should be read in conjunction with the Letter of
Understanding (Engagement) regarding the audit process, which the Office issues
annually. The responsibilities relating to the accounts and audit of government
departments and offices is set out in the annual Appropriation Accounts published by
the Office of the Comptroller and Auditor General.
This document sets out the respective responsibilities of the Board Members and
Chief Executive of State Bodies and the Comptroller and Auditor General (C&AG)
with regard to the

preparation and audit of financial statements

preparation and audit review of the Statement on Internal Financial Control

the concept of propriety and ensuring value for money.
In some instances the governance arrangements within the State Body may vary from
those set out below. For example, some State Bodies may have, in accordance with
law, an Accounting Officer or ‘accountable person’ who has sole responsibility for
preparation of the financial statements and for governance within the Body.
This document is divided into the following sections






The responsibilities of the State Body in relation to the financial statements
C&AG responsibility in relation to the financial statements
The responsibilities of the State Body in relation to the Statement on Internal
Financial Control
Review by the C&AG of the Statement on Internal Financial Control
The responsibilities of the State Body in relation to propriety and value for money
Examination by the C&AG of propriety and value for money issues.
Responsibilities of the State Body in relation to the financial statements
1.1
The Board Members and Chief Executive are responsible for preparing, in
accordance with the relevant legislation, financial statements which give a ‘true
and fair’ view of the state of affairs of the State Body and of its income and
expenditure for the reporting period (or present fairly the net assets or properly
present the receipts and payments).
1.2
They are responsible for maintaining proper accounting records that disclose
with reasonable accuracy at any time the financial position of the Body and
enable it to ensure that financial statements are prepared to comply with
statutory requirements.
1.3
They are also responsible for the safeguarding of assets of the Body and for
taking reasonable steps for the prevention and detection of fraud and other
irregularities.
1.4
When preparing financial statements they should:
1.5
•
select suitable accounting policies and apply them consistently;
•
make judgements and estimates that are reasonable and prudent;
•
state whether applicable accounting standards have been followed, subject
to any material departures disclosed and explained in the financial
statements; and
•
state that the financial statements have been prepared on the going
concern basis, unless it is inappropriate to presume that the entity will
continue in business.
Bodies must also ensure that transactions are regular i.e.
•
amounts expended have been applied by the Body for the purposes
intended
•
transactions recorded in the financial statements conform with the
authority under which they purport to have been carried out.
1.5
The above responsibilities are normally set out in a Statement of
Responsibilities which accompanies the annual financial statements.
1.6
Bodies are also responsible for making available to the C&AG, as and when
required, all accounting records and all other relevant records and related
information, including minutes of all management meetings.
C&AG Responsibilities in relation to the financial statements
2.1
Article 33 of the Constitution of Ireland provides for a Comptroller and Auditor
General and legislation provides the authority for the audit of each State Body.
The scope of audit is determined by:
•
the legislation governing the accountability of, and audit provisions
relating to, the State Body; and
•
auditing standards and related guidance1 promulgated by the Auditing
Practices Board.
2.2
In accordance with the scope of audit the C&AG has a responsibility to report
whether in his opinion the financial statements give a ‘true and fair’ view of the
state of affairs and of the results for the year (or ‘present fairly’ the net assets or
‘properly present’ the receipts and payments), and whether they have been
properly prepared in accordance with relevant legislation and the directions
made thereunder or by the supervising Minister (or by the Department of
Finance).
2.3
The C&AG is also obliged to consider whether in his opinion the expenditure
and income (or net assets, or receipts and payments) presented in the financial
statements have been applied for the purposes intended by the Oireachtas and
whether the financial transactions conform to the authorities which govern
them, and to report on any instances where he is not satisfied on this. In
arriving at his opinion, he is also required to consider the following matters, and
to report on any in respect of which he is not satisfied:
2.4
2.5
•
whether proper accounting records have been kept;
•
whether the balance sheet and income and expenditure account (or net
assets or receipts and payments account) are in agreement with the books
of account;
•
whether he has obtained all the information and explanations which he
considers necessary for the purposes of his audit; and
•
whether the information given in the Annual Report is consistent with the
financial statements (only where the audited financial statements are
published as part of the Annual Report).
The C&AG has a responsibility to report if the financial statements do not
comply in any material respect with Accounting Standards in so far as they are
relevant to the circumstances of the State Body, unless in his opinion, noncompliance is justified. In determining whether or not a departure is justified
he considers:
•
whether a departure is required to give a ‘true and fair’ view,’ ‘present
fairly’ or ‘properly present’ the financial statements; and
•
whether any departure made has been adequately disclosed in the
financial statements.
The C&AG also has a responsibility to:
•
1
include, or refer to, in his report a description of the Board Members’ or
Chief Executive’s responsibilities for the financial statements where the
financial statements or accompanying information do not include such a
description; and
International Standards on Auditing - ISA (UK and Ireland) and Practice Note 10 (I)
•
consider whether other information in documents containing audited
financial statements is consistent with those financial statements.
Conduct of financial audit
2.6
Audit by the C&AG is conducted in accordance with the International Auditing
Standards (UK and Ireland), and includes such tests as to the regularity of
transactions and of existence, ownership and valuation of assets and liabilities
as is considered necessary. The audit obtains an understanding of the
accounting and internal control systems to assess their adequacy as a basis for
the preparation of the financial statements and to establish whether proper
accounting records have been maintained. The C&AG expects to obtain such
appropriate evidence as is considered sufficient to enable him to draw
reasonable conclusions therefrom.
2.7
The nature and extent of audit procedures will vary according to the assessment
of the accounting system and, where the audit wishes to place reliance on it, the
internal control system, and may cover any aspect of the operations that is
considered appropriate. The audit is not designed to identify all significant
weaknesses in the Body’s systems but, if such weaknesses come to notice
during the course of the audit, the C&AG will report them to the Body.
2.8
To assist with the audit of the Body’s financial statements, the C&AG will
request sight of all documents or statements, including the Chief Executive’s
statement and the Board Members’ report, where they are due to be issued with
the financial statements.
2.9
The responsibility for safeguarding assets and for the prevention and detection
of fraud, error and non-compliance with law or regulations rests with the Body.
However, the C&AG endeavours to plan the audit so that he has a reasonable
expectation of detecting material misstatements in the financial statements or
accounting records resulting from fraud, error or non-compliance with law or
regulations, but the audit examination should not be relied upon to disclose all
such material misstatements or frauds, errors or instances of non-compliance as
may exist.
Responsibilities of the State Body in relation to the Statement on Internal
Financial Control
3.1
The State Body is responsible for ensuring compliance with the Code of
Practice for the Governance of State Bodies and in particular for ensuring that
the Statement on Internal Financial Control is in the form set out in Appendix E
of the Code of Practice.
3.2
The Body must provide the audit with such information and explanations as the
C&AG considers necessary. The C&AG may request that written confirmation
be provided of oral representations which the Body has made during the course
of the review. The C&AG will request sight of all documents or statements
which are due to be issued with the statement made on the system on internal
financial control and all documentation prepared by or for the Board in support
of that statement.
Review of the Statement on Internal Financial Control by the C&AG
4.1
The C&AG is required under the Code of Practice to review the Statement on
Internal Financial Control and to confirm that it reflects the Body’s compliance
with the requirements of the Code of Practice. In carrying out this review, the
C&AG will consider if the statement is inconsistent with the information of
which he is aware from the audit.
4.2
The C&AG is not required to form an opinion on the Body’s corporate
governance procedures nor is he required to assess the conclusions reached by
the Body on the system of internal financial control.
4.3
The audit work will be restricted to:
a) assessing based on enquiry of the directors and officials, examination of the
supporting documentation prepared by or for the directors, and the
knowledge obtained during the audit of the financial statements, whether the
Statement on Internal Financial Control reflects the requirements of the
Code of Practice; and
b) assessing whether the disclosure of the processes the Body has applied to
deal with weaknesses in internal financial control that have resulted in
material losses, contingencies or uncertainties which require disclosure in
the financial statements appropriately reflects those processes.
4.4
Audit work is not designed to assess whether the Statement on Internal
Financial Control covers all risks and controls, or to enable the C&AG to form
an opinion on the effectiveness of the Body’s risk and control procedures.
Therefore, audit work on internal financial control will not be sufficient to
enable the C&AG to express any assurance as to whether or not the Body’s
controls are effective. In addition, the audit of the financial statement should not
be relied upon to draw to the attention of the Body matters that may be relevant
to its consideration as to whether or not the system of internal financial control
is effective.
4.5
If the disclosures that are specified for audit comply with the Code of Practice’s
requirements, the C&AG will not report positively to this effect in his report on
the Body’s financial statements. If they do not comply, his report will state that
fact. However, this will not cause him to qualify his opinion on the financial
statements.
4.6
Having finalised the review of the Statement, the C&AG would expect to
communicate and discuss with the Body the factual findings of the review.
Responsibilities of the State Body in relation to propriety and ensuring value for
money
5.1
In conducting their business State Bodies must adhere to expected standards of
propriety.
5.2
Propriety is concerned with the way in which public business is conducted
including any conventions agreed with Dáil Éireann (and in particular the
PAC2), and any guidance issued on governance and ethics. Whereas regularity
is concerned with compliance with appropriate authorities, propriety goes wider
than this and extends to standards of conduct, behaviour and corporate
governance. It is concerned with fairness and integrity including avoidance of
personal profit from public business, even handedness in the appointment of
staff, open competition in the award of contracts and the avoidance of waste
and extravagance.
5.3
Bodies are also required to ensure value for money is achieved in their use of
resources i.e.
5.4
•
that the Body is economic and efficient in the use of its resources; and
•
that proper systems, procedures and practices have been established by
the Body for the purpose of evaluating the effectiveness of the operations.
It is a matter for Bodies to ensure that appropriate systems and are in place to
ensure the propriety of transactions and that value for money is achieved.
Examination by the C&AG of propriety and value for money issues
6.1
When considering the measures taken by Bodies to promote propriety the
C&AG has regard to what is considered generally accepted practice in the
central government sector. To ascertain what is acceptable practice, the C&AG
draws as necessary on guidance issued by Department of Finance or, in the case
of other central government sector bodies, guidance issued by the supervising
government departments. In addition he has regard to recommendations or
expression of opinion made by the PAC as accepted by the Minister for Finance
following consideration of specific cases.
6.2
Where significant concerns regarding the conduct of public business have come
to the attention of the C&AG he may publish a report in accordance with
section 11 of the Comptroller and Auditor General (Amendment) Act 1993.
6.3
Value for money examinations by the C&AG are provided for under section 9
of the Comptroller and Auditor General (Amendment) Act 1993. Such
examinations are conducted on a discretionary basis and are usually focused at
a programme level or on a thematic basis. The results of such examinations are
made public in accordance with section 11 of the Act.
2
Committee of Public Accounts established under standard order 158 of Dáil Éireann