Planning for Management Audit
Janak Raj Gautam
Ex-Deputy Auditor General
An attention to here:-
• ‘Mutual experience benefits all’ INTOSAI motto
• Auditing has its own principle roots of logic,
ideas and methods following through accounting
route .
• 'Auditing is a professional career rather than a
job'
• Truth is more important than the facts.- Frank
Lloyd Wright
• Audit proceeds through interaction between
people but not being a mechanical process.
• "Use common sense and courtesy throughout
audit."
Session outlines
Method
Time From
outlines
Brain-storming 10
Participants
Mgmt auditing and verification base
Inter-action in
group
10
TrainerParticipants
Question-answer: discussion
Case-studies
20
Participants
A case study on Mgmt audit
Presentation
of power-point
30
Trainer
Mgmt audit, audit scope, purpose,
techniques and procedures of Mgmt
audit.
Experiencesharing
10
Participants
Exposing their own experiences.
Questionanswers
10
TrainerParticipants
On presentation, participants’ queries
Auditing
Auditing is a systematic and independent
examination of data, record, statements, operations
criteria and performance . During the course of
audit, an auditor examines the evidences, acts, rules,
and following work process, if any query, not settled,
is communicated through the auditor’s report.
Mgmt audit is looking at personnel files also to
make sure they're complete and consistent regarding
to balance of work load, duplication of tasks ,
overlaps and gaps in functions of the employee.
“ An Auditor is not a Trouble maker
but a Trouble shooter as well as a
Value adder”
Purpose of this Session
We try to understand the planning for
management audit in this session. After this
session, management auditors are able to know
the planning process practically and implement
the plan in management auditing circumstances
through these topics:Process for Planning for management audit
Skills needed for developing Planning for
management audit
Best practices and standards for implementation
and monitoring of management audit
Mandate
Limitation - Matters within the domain of the Public Service
Commission.
Ministry of General Administration -It may supervise, monitor
and evaluate the civil employees in service have carried on
through the prevailing law and other administrative rules and
procedures.
Direction -In making such supervision, it appears that
departmental action is to be taken against any civil employee, it
may also recommend for such action.
Annual report- It shall submit an annual report thereof to the
Government of Nepal.
Mandate
General Administration may carry out casual
management audit of all bodies of the
Government of Nepal on rotational basis.
The Ministry may order to subordinate
departments and agencies to carry out
management audit and to submit a report
thereof.
The audited bodies shall show records and
documents for management audit
Segregation of definition of Auditing
– Examination: A periodic examination of the
documents , records and compliance of rules .
– Verification of the any performance or non
performance with comply with established concepts,
principles, standards, legal requirement of the
organisation.
– Responsibility: It is carried out by an expert group of
auditor
assuming
legal
and
professional
responsibility. .
9
Weakness of current Management audit practices
• Duration be fixed that Fiscal years plus to
the date of examine.
• Remarks, suggestions and irregularities
are only in paper, but are not move forward
to due process for implementation or an
action to the non-performers.
• The audit should focus to the jobs or task
not completed ; the rules and procedures
not followed by staff , both should be
disclosed in the report , but auditor much
more concerns to the institutional side.
Weakness of current Management
audit practices…..
• Good points should not be exposed but in the
directives ‘better practices’ and ‘strengths’
should be disclosed.
• Section Officer, presenter, wrote report to
Secretary to the Ministry, in the cover letter,
it is better to write ‘Examiner’ in ‘Mgmt audit
directives, 2067’.
• In the report, there are more statements,
however, only a few remarks.
Activities
The auditor shall undertake the activities for
preparation of mgmt audit. Mgmt audit initiates
from the point where mgmt control begins.
The auditor shall set the scope, risks and its
prioritization, timing and extent of audit, and
that guides the development of the audit plan
schedule, approval from proper authority.
Unsystematic practices, errors, mistakes and
violence of rules should be exposed and
recommendations for future prevention.
Limitations of Management audit
• It is conducted not as a fashion but as a
compliance with Provisions of the act.
• Audit results are used to be ignoring in
implementation.
• It needs careful, adequate time and
requires competencies of the audit team.
• This audit focus on functions , authority,
responsibility , duty actions of person and
evaluation of the same but not to focus on
systems according to mandate.
Process of Planning for mgmt.audit
• collect organizational information in order to
assess risk, define objectives and determine
scope of audit
• identify important aspects of the audited entity
environment.
• develop an understanding of the functions and
its responsibility relationships;
• identify key management systems and controls to
carry out a preliminary assessment to identify
strength and weakness;
• review internal audit and final audit report if it
needs.
Process of Planning for mgmt.audit…
• Determine the most efficient and effective audit
approach;
• Maintain appropriate documentation of the audit
plan and proposed fieldwork highlight special
problems foreseen when planning audit;
• Prepare a budget and a schedule for the audit;
• Formation of the team of staff for auditing
considering auditor’s professional capacity
for judgment in a team.
• Make a review of plan by senior whether
appropriate action has been taken on previous
audit findings and recommendations .
Planning process for auditing…
• Mgmt. auditor may revise the plan during the audit
when necessary with reasons for such changes
consider the form, content and users of audit report.
• Eventually, it uses to determine the nature, timing and
extent of audit procedures with respect to:
– Knowledge of the Entity
– Management control and risk assessments .
– Consideration of laws and regulations
– Using the work of an expert and some others
– Coordinate the work be performed
Planning an audit benefits the auditor to:
• facilitate to devote appropriate
attention to important areas
• help auditors properly organize and
manage the audit engagement to
perform in with efficiency.
• assist in the selection of team
members with appropriate levels of
capabilities, competency to respond to
risks, and proper assignment of work
among them.
Planning an audit benefits the auditor to:
• facilitating the direction, supervision and
review of team members and their work.
• coordinate the work done by other
auditor and experts.
• assist to identify and resolve problems on
a timely basis.
• ensure that policies and procedures are fair
and consistent across the organization and
strengthen employee satisfaction.
Planning skills
Planning is one of the skills that is a must in
every audit , so Management audit is not an
exception. Planning for management audit
begins just after completing the previous year’s
audit. Therefore, management auditor should
prepare strategic audit plan, comprehensive
annual plan and office-wise plan and program
for making audit effective regarding time, cost
and quality. But, mgmt audit program is not
mentioned in the Mgmt Audit Directive, 2067.
Level of mgmt and Skill extension
Mana
Auditing functions
gemen
t Level
Top
Planning,
executing
monitoring,
and
reporting finally
Middl Controlling, directing,
e
supervising, reviewing,
and
reporting
preliminarily
Opera Primarily checking and
tion
examine
papers,
documents, spots, and
statements
Areas of audit skill extension
Human Skill Technic
al Skill
Conceptual Skill
Conceptu
al Skill
Human Skill
Human
Conc Skill
eptual
Skill
Technical Skill
Technical Skill
Skill and competency
The audit should be performed and report be
prepared with due professional care by persons
who have adequate training, practical experience
and competency as well as supervision from the
seniors.
The essential planning skills in mgmt audit are
Conceptual, Human, Technical are the main that
include Leadership, judgmental Coordination,
Procedural, Problem solving, Discussion,
functional, behavioural, Analytical, Professional,
Reporting, Management, Reviewing.
Mgmt audit report
The Ministry shall publicize the annual report of
the management audit submitted to the
Government and send the same to the
audited body. Then, it shall be the
responsibility of the Chief of Office to make
clearance of remarks, suggestions or
irregularities mentioned in such a report
within the period so specified. If not,
departmental action be taken.
.
Characteristics of the
Report
• Accurate: With facts and figure
• Clear: Language and message simple to
understand
• Conciseness: Avoid unnecessary long
• Courteous: The language used in the report
must be polite
• Completeness: The information and facts
should be complete
• Consistency: in language, format and
message
• Timely: issuing or presenting to the mgmt for
corrective action
Templates of an Audit Report
•
•
•
•
•
•
•
•
•
Title
Addressee
Description of the audited entity
Audit objectives, scope and methodology
Audit Limitation
Audit findings
Conclusions and recommendations
Management’s response
Signature and Date of report
Please, ANY QUESTIONS ?
Thank you for your
Passionate and Joyful
Participation.