Audit Process

BY
CH. MUHAMMAD AZAM ARSHAD
DEPUTY DIRECTOR AUDIT (RTD.)
 What is Audit

 An official inspection of an individual's or organization's accounts,

typically by an independent body.
 Audit includes an examination of the books of accounts, other
documents, stores, assets etc. relating to the receipts and expenditure of
the Government, with a view to ensuring that rules and orders framed by
the competent authority in regard to financial matters have been followed;
that expenditure has been incurred with due regularity and propriety; that
assets have been properly utilized and safeguarded, that public
resources have been used economically, efficiently and effectively, and
that the accounts truly represent facts.
 Audit Intimation

 To
The Head Master,
Govt. High School Dunya Pur
District Lodhran
Subject: Annual Audit for 2015-2016
Annual Audit and Inspection of your school for the above said period
will be carried out on or after 04.05.2016. Relevant record may please be
kept ready and concerned officials should remain present during audit. Your
own presence will be appreciated as important points could be discussed.

Audit
Officer
 Requisition No.

 Kindly arrange following record for audit & inspection

I. Cash Book
II. Contingent Register
III. Deposit Chalans
IV. All bills for the month of May and June 2016
V. Pay bills for July, August 2015 and January 2016
VI. Service Books
VII. Reconciliation Statements
Audit Officer
 Observation

 Observation is audit findings after the examination of record. It is dually

numbered, dated and signed by the Head of the Audit Team or his
Assistant. It is to be replied in 24 hours. The reply is in few words and is
recorded on the body of the observation.
 Model Observation
Doubtful issuance of Electric Material from store –Rs.1, 030,840

During the examination of stock registers of DO Parks & Gardens it was observed that
lightening items were frequently issued which normally work for years? Store keeper was
asked to get show the replaced old material. The physical position was found as under;

Shortage by old electric Material

Quantity Quantity
Name of Item issued from of used Shortage Rate Cost
stock stock
Igniters 188 47 141 500 70,500
Energy Savers 473 187 286 300 85,800
Capacitors 187 103 84 885 74,340
Choke 400 watt 206 65 141 4,700 662,700
Bulb Rod 400
172 62 110 1,250 137,500
watt
Total 1,030,840

Reply of DDO: The matter will be enquired from electrician and store keeper.
Para

 It is observation which was discussed with DDO, not settled in mutual

discussion and included in report of the Audit Team. It comprises: -
 Reference of Rule, which has been violated.
 Detail of violation.
 Reason of occurrence.
 Results of violation/deviation of rules.
 Reply of Drawing & Disbursing Officer.
 Comments of the Audit.
 Model Audit Para
Excessive Expenditure on Electricity Rs.1, 944,483

According to Government of Punjab Finance Department Notification

No.FD.SO (GOODS) 44-4/2011 dated 23.07.2011, Departments shall prepare
special plan for energy conservation to save un-necessary expenditure on
account of telephone, electricity and gas charges.

It was observed during the audit of TMA Khanewal that excess electricity units were
consumed in 2011-12 as compare to 2010-11 which involved excessive expenditure
of Rs.19, 44,483, the detail is given in Annexure-E

Audit is of the view that due to weak internal controls austerity measures were not
observed.

This resulted in excessive expenditure of Rs.1,944,483

Reply of the DDO: - The use of electricity was made at the time of dire need

Audit recommended regularization of expenditure besides appropriate action against

responsible.
 Types of Para

 Ordinary Para The para in which routine violation is pointed out which
has no serious losses.
 Advance Para The para in which a serious irregularity has been pointed
out that resulted huge bad results.
 MEFDAC Para The para which was not settled in DAC but not selected
for inclusion in Audit Report and referred back to DAC.
 Proposed Draft Para The para which was discussed in Departmental
Accounts Committee Meeting and was not settled and proposed for
inclusion in Audit Report of the Department.
 Audit Para The para which was not settled in repeated meetings and
selected for inclusion in Audit Report of the Department.
 Audit Report
This is report comprises audit findings in following shape.
 Section-I It is presents position of previous audit paras.
 Section-II It presents position of present audit.
 Audit activity Introduction of Audit team, duration of audit activity, priority
areas, and who was Head of the Office.
 Part I This pertains to serious irregularities. The paras in this part are
called Advance Paras.
 Part II This part of AIR ( Audit & Inspection Report) contains routine
irregularities.
 Part III This part contains test “Audit Note” if issued by audit.
 General Remarks General Comments offered by the audit on the whole
entity audited.
Reply of the Audit and Inspection Report

 Audit report is issued to DDO and his two next higher authorities for
their information and necessary action which they deem appropriate.
The usual time given for the replies is 15 days.
 Verification of the Replies

 On the receipt of the replies of DDO, Audit Officer issues a schedule of

verification of replies. DDO alongwith his record attends Audit Officer as
per Schedule. Audit Officer again examine the record and record its
recommendation against each reply.
Departmental Accounts Committee (DAC)
& SDAC

 These are the committees which discuss and take

decisions on the Ordinary and Advance Audit Paras of
the department. This comprises DCO (District
Coordination Officer) as Chairman, Head of the
concerned Departments as member and Director Audit
as Member. Separate meetings are held for Advance
Paras and ordinary/routine paras. These committees are
authorized to settle the Advance or ordinary paras.
IMPORTANT: No para will be settled without the consent of
audit
 Draft Audit Report

 This report is issued by director audit to the DCO for replies form the
officers in his command. DCO calls replies from concerned offices and
sends to Audit Office. Audit Office again issues a schedule for verification
of replies. All departments again go to Audit Office with record for
verification and same process is adopted by Audit Office.
 DAC on Draft Audit Report

 Those audit paras which could not settled, are once again discussed with
their final outcome. Almost all justification / defense and actions are taken
at this stage. some paras are settled at this stage.
 Audit Report

 This is final report containing unsettled paras of serious irregularities. This

report is presented to Nazim in case of District, Governor in case of
province and President in case of Federal Govt. Department wise paras
are given separately.
 Public Accounts Committee

 This is a committee whose head is appointed from opposition of the Govt.

to strengthen accountability.
 The composition of the committee is
Chairman Parliamentarian from the opposition
Member Secretary of the Department
Member Director General of Audit in case of Province and
Auditor General in Federal Govt.
Final Authority to settle, to take action against responsible is Chairman PAC.
Thank You!

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