ASSIGNMENT 1

Question 1

Performance Auditing is a recent type of auditing that has its origin from the Public Sector. Performance Auditing came about due to demand from Society (taxpayers) for public sector managers to account for efficacy and effectiveness of public expenditure in view of limited/scarce financial resources, the traditional role of audit could not satisfy society in the manner public finances were utilised and as to whether the intended purpose of the funds were achieved and what impact that achievement had on society.

In this regard, a community in Northern Province had a lot of challenges in managing to live a decent life due to inadequate social amenities.

Following several representations to the government the government provided a budget line to provide a school, clinic, road, farming inputs to support economic activities in the area. For effective construction of the three projects a local committee of five was constituted to oversee the establishment of an operating framework on how these activities could be supported by government. The Logistics Committee was provided with logistical support worth ZMW 50 000 to administer each of the identified projects with strict deadlines for planning purposes broken down as follows; ZMW 30000 for the road, ZMW 10000 for the school, ZMW 5000 for the clinic and ZMW 5000 to assess the number of people requiring support to be assisted with farming inputs.

Review

A review conducted of the Logistics committee over a period of six (6) months during which time the committee was expected to provide a feedback to the government no meetings were held, no reports were issued, and no member of the community was consulted on how they could be provided with the said support from government. An enquiry on how the funds were utilised elicited no response from the committee prompting the community representatives to seek clarification from government on what exactly were the committee expected to do. The government then received several complaints from the community on the fact that the committee had not interacted with them since they were established.

The committee did not put anything in place in line with the set guidelines between government and community through the committee. Notwithstanding, the lack of discernible work it was alleged that all the money provided had been used and that there was no evidence of the money having been correctly used as none of the expected reports were issued to government for provision of the required services.

Follow up

An anonymous letter was written by the community to government for them to send urgently a performance auditor to undertake the audit of the activities of the committee as they felt that the resources as provided by the Government to uplift their living standards were being misused.

As a performance auditor you are assigned to carry out the audit and give a report on your findings to assess the economy and effectiveness of the Logistics Committee in actualising the community concerns to uplift their welfare through the establishment of a school, road, clinic and provision of farming inputs. (40marks)

Question 2

1. Describe the five (5) special features of performance auditing (5Marks)
2. What ideas form the basis of performance auditing? Discuss (5Marks)

Question 3

Public sector management generally displays a combination of two philosophies namely; rule-bound government administration and management by objectives and results. The choice of public management will affect performance auditing. Discuss (20Marks)

Question 4

The INTOSAI General Auditing Standards 200, 2.1 common to SAIs which subscribe to INTOSAI standards are:

'(a) the auditor and the SAI must be independent;

(b) the auditor and the SAI must possess the required competence; and

(c) the auditor and the SAI must exercise due care and concern in complying with the INTOSAI Auditing Standards.

Please elaborate on how this standard can be operationalised in conducting performance or any other audits the SAI undertakes within its mandate.(30 marks)