Role and Responsibilities of Internal Auditors in Government

Role and Responsibilities of Internal Auditors in Government By: Sh. Ramesh Hada & Sh. S. C. Jain

Internal Audit ? The Institute of Chartered Accountants of India (ICAI) defined internal audit as “an Independent management function, which involves a continuous critical appraisal of the functioning of entity with view to suggest improvements thereto and value to and strengthen the overall governance mechanism of the entity, including the entity’s strategic risk management and internal control system”.

Basic Type of Services • Assurance Services: are the internal auditor’s objective assessment of evidence to provide an independent opinion or conclusion regarding processes, system or mechanism put in place by the executive to ensure achievement of objectives and accomplishment of goals. • Advisory Services: are focussed on positive recommendations to improve performance and/ or controls and are generally performed at the specific request of the government agency.

Performance : reasonable assurance that • Objectives (Programs/ Plans/Business) - achieved; • Information (Financial/Managerial/Operating) - accurate, reliable, and timely • Resources - acquired economically; used efficiently • Assets – safeguarded • Compliance - policies, procedures, contracts & applicable laws regulations;

Roles and Responsibilities 0 f Internal Auditors in Government

Objectives : of Ministries / Departments 1. Proper Management – Public resources & government authority while ensuring compliance with laws, regulations, policies and procedures. 2. Ensuring reliability – Financial reporting 3. Ensuring operational efficiency and effectiveness

Accounts of GOI § Payment and Accounting functions decentralised § Departmentalisation of accounts – 1976 § Controller General of Accounts (CGA) Ø Maintains technically sound accounting system in the Departmentalised accounting offices Ø Establish Internal Audit set up in the Ministry § Secretary - Chief Accounting Authority of Ministry; Assisted by Integrated Financial Advisor § Chief Controller of Accounts (CCA) – heads Separate accounting divisions

Internal Audit Wing (IAW) & its Coverage • • Headed by CCA Works under supervision of FA Assists Secretary in discharge of his related responsibility Jurisdiction of IAW of a Ministry Ø Principal Accounts Office Ø Pay and Accounts Office Ø Office of DDO Ø Implementing Agencies for various schemes of Ministry / Deptt. Ø All Grantee institutions

Mandate of IAW • Audit mandate - clearly defined requirements of IA • Internal Audit Charter Ø Documents the audit mandate and powers granted to achieve stated objectives Ø Defines the framework of IAW operation Ø Establishes functional and administrative reporting of IA Ø Establish the position of IA within Ministry Ø Serves as foundation for Annual Audit Plan

Audit Committee • Constituted in each Ministry • Function- provide effective oversight mechanism for functioning of IAW • Secretary of the Ministry – chairperson of the Audit Committee • FA – vice – chairperson of the Audit Committee • CCA / CA – convenor / Member – Secretary • Program Division – heads as a member

Internal Audit Management Team • Ministry should have an Internal Audit Management Team • Closer supervision of the Internal Audit function of the Ministry • Ensure quality assurance in audit • The Management team headed by CAE & comprise key functionaries of accounts and audit wing of Ministry

Audit Teams and Staff • The audit teams would comprise regular internal audit staff posted in the Internal Audit Wing of the Ministry. • Staff from PAO not directly involved with payment and accounting of the audited unit. • Other officials of the ministry who may be considered necessary and consultants who may be hired as appropriate and necessary to deliver the audit program. • Teams would conduct internal audit as per the approved program.

Function of Internal Audit Management Team • Serve as a forum for discussion and cross-fertilization of ideas to improve quality of Internal audit. • IAMT meet regularly to discuss execution of approved annual audit plan of Ministry • Coordinate the work program of different teams and also decide upon the approach to various audits. • Guidance and Advisories to audit team • It also discuss and decide to improve performance of Internal auditors

Responsibilities of IAW in Govt. Ministries • Prime function to verify the accuracy and completeness of accounts. • Prescribed audit checks, howsoever routine nature, regularly applied. • Serious irregularities or defalcations are discovered as a result of proper application of routine checks

Responsibilities and duties • Study of accounting procedures prescribed for the department to ensuring they are correct, adequate and free from defects/lacunae • Watch over implementation prescribed procedures & order issued from time to time • Scrutiny and check of payments and accounting work • Investigation of important arrears in accounting • Coordination with other Ministries and CGA regarding IA procedures • Periodical review of all records • Pursuance/ settlement of objections taken in test audit notes by statutory audit

Public Expenditure Management System • System of “Checks and Balances” to ensure the executives are discharging their duties efficiently and effectively Ø Internal Audit in Government expected to play significant role in improving: ØQuality of public expenditure ØProper implementation of rules and procedures ØMaintenance of proper records ØAccuracy in expenditure reporting ØEfficiency and economy in public expenditure ØPropriety of expenditure ØEffectiveness of expenditure ØProper realization, accounting & reporting of Revenue Receipts