-Scope of Audit

The scope of audit varies from purely financial to one that responds to be growing complexity of
government operations. On a regular basis the COA conducts, financial audit, compliance audit, and
comprehensive or performance operations audit. Every review, examination or evaluation performed
outside regular audit activities may be referred to as special audits.

 Financial Audit

The purpose is to check financial records to determine whether funds were spent legally, whether
receipts were properly recorded and controlled, and whether financial records and statements are
complete and reliable. The financial audit still must determine, however, whether or not there has been
theft by government employees or their confederates, although this part of the task will be minor for
agencies with strong internal control units.

 Compliance Audit

This audit concentrates on establishing compliance with appropriation law and on determining whether
financial reports prepared by the operating agency are accurate and reliable.

 Comprehensive, Performance or Operations Audit

This is primarily conducted on a post-audit basis. It has the advantage of depth, visuality, and objectivity.
It is goal-oriented and is necessarily preoccupied with the goals and objectives of the expenditures of
funds or property. It covers financial, compliance, and performance audits.

Comprehensive audit has the advantages of going beyond legality of transactions, completeness of
documents, and compliance to rules. Much more is looked into. It looks into manpower utilization,
overstaffing, underutilization, misutilization or nonutilization of manpower. It looks into project
evaluation before and after construction. It goes into uses and maintenance of government property,
not just pricing and compliance with rules in purchases acquisitions. In revenue audit, it determines
whether or not the amount collectible has been collected, not just whether accounts are properly
receipted for, recorded, accounted for and deposited.

 Management Audit

This audit focuses on efficiency of operation, including utilization and control of resources. The stress is
on managerial aspects, including such concerns as duplication of effort utilization of resources, and
mismanagement of equipment, supplies, stocks, etc. The audit is more concerned with waste of
government resources than on the theft aspects of a financial audit.
  Program Audit

This examines the extent to which desired results are being achieved and whether there might be lower
cost alternatives to reach the desired results. An important focus of program audit is whether objectives
of the program are being met.

 Special Audit: Cash Audit

Cash examination is a requisite for the completion of a regular audit, and no audit can be complete
without the conduct of a cash examination. While this is the case, there is what is called a special audit
for cash. The purpose of a special audit for cash is to conduct an examination on suspicion that the
treasurer has probably stolen some money and a special team is assigned to conduct an examination.

 Inventory Audit

An audit of inventory is normally done by the management. Upon request of the agency, the COA
performs an inventory audit as a special engagement. According to Commissioner Alberto P. Cruz
(1990), the audit of inventory in the government is more difficult than an inventory in the private sector
for the simple reason that the government does not have efficient system of control over its assets. He
observed that in the government, the Memorandum Receipts that we use as evidence of accountability
of persons receiving the property are not pre-numbered. Pre-numbering of forms is a means control.

 Fraud Audit

In the course of performing a general audit, the audit team would sometimes come across indications of
fraud. In the private sector, the management is immediately informed, and in the normal course of
things would instruct the audit team to go ahead, pursue and report. In the government, a new audit
team is created to pursue cases of fraud.

To illustrate the scope of an audit, let us consider a public works department’s appropriation to
purchase asphalt. A financial audit would consider whether the agency had an appropriation for asphalt
purchase, whether the asphalt purchased was actually delivered, whether approved practices were
followed in selecting a supplier, and whether agency reports showed the correct expenditure on asphalt.

A management audit would consider whether the asphalt inventory was adequately stored, whether the
inventory was adequate or excessive, and whether other methods of selecting a supplier would cause
cost to be lower. A program appropriate use the community resources and would be less costly than
other highway department. When all audit have been completed, the budget cycle is complete for that
fiscal year.

 Revenue Audit
Audit of revenue involves the examination and settling all accounts pertaining to revenues and receipts
of the government agencies, including government-owned or controlled corporations and all local
government units. The conduct of revenue audit is mandated in COA Resolution No. 95-208. The subject
of revenue audit are primarily the Land Transportation Office, the Bureau of Customs and the and
Bureau of Internal Revenue as well as all other concerned government agencies and units involved in
the collection of revenues, including taxes, fees, charges and penalties.