PUBLIC SECTOR ACCOUNTING
7 Brain Hacks To Improve Productivity
Audit and Accountability
• Accountability – financial, legal, programme and management • Accountability framework involves budgeting, accounting and auditing
• Audit – to examine and ensure existence of accountability – provide independent judgment
• To realise governmental accountability, the citizens, their elected representatives and programme managers need information to
assess the integrity, performance, and stewardship of the
government’s activities. Thus, unless legal restrictions or ethical considerations prevent it, audit reports should be available to the public and to other levels of government that have supplied resources.
Nature of External Audit
Independent examination of; and expression of an opinion on the: – financial statements and other financial information;
– or non-financial information (i-the adequacy of internal control system; iicompliance with statutory, regulatory or contractual requirements; iiieconomy, efficiency and effectiveness in the use of resources (‘value-formoney’) and iv- environmental practices)
Public Sector Auditing
• Goes beyond those in the private sector by virtue of statutory or other prescribed duties and obligations
– ‘expanded scope audit’ or ‘comprehensive auditing’. • Public sector auditing involves:
1.Financial and regulatory audit – a) Financial audit; b) Regulatory audit 2.Performance audit –a) Economy and efficiency audit; b)Programme audit
Government Audit Process in Malaysia
• Article 106 Federal Constitution – Auditor General to audit financial statements of each government organisation according to relevant standards and regulations • Federal Constitutions
• Audit Act 1957 – roles, responsibilities, nature of audit, audit process and audit report • Section 9 Audit Act 1957 – Auditor General to prepare Audit Report at the end of audit process – then passed to the Public Accounts Committee
• PAC review the statements and report to provides comments and suggestions on them. 5
Development in Public Sector Audit
Less emphasis on financial and regulatory audits and more on value for money.
Towards performance auditing.
Auditors report on financial statements and make recommendations about how performance could be improved.
Before 1968 – financial and regulatory audit
1968 - 1977 – with emphasis on evaluation audit on selected projects or programmes
Amendment of Audit Act in 1978 – include performance auditing
Value-for-money audit = management audit = operational audit VFM objective is for resources (man, money, materials, machine) being managed with economy, efficiency and effectiveness (3E)
An objective examination of the financial and operational performance of agency, program, activity or function.
Towards identifying opportunities for greater economy, efficiency and effectiveness with which programmes are carried out
Controversies surrounding its introduction – subjective assessment; auditor’s competency etc.
Economy and efficiency determine whether organisation is managing and utilising its resources economically and efficiently in order to achieve programme objectives, cause and effect if inefficiencies and uneconomical practices Effectiveness determines whether desired results or benefits established by legislature, management or other authority are being achieved, whether organisation has considered alternatives that might yield desired results at lower cost
Impact determines effect of...
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