DEPARTMENT OF THE AUDITOR-GENERAL OF PAKISTAN GUIDELINES FOR THE AUDIT OF DISTRICT GOVERNMENT TO BE USED BY THE DIRECTORATE GENERAL OF DISTRICT AUDITS AND ALL THE FAOs REQUIRED TO CARRY OUT THE AUDIT OF DISTRICT GOVERNMENTS VISION A Model Supreme Audit Institution Adding Value to National Resources MISSION Serving the Nation by Promoting Accountability, Transparency and Good Governance in the Management and Use of Public Resources Integrity Our way of life Quality Core Values Our way of doing business Partnership Our way of interaction Table of Contents PREFACE ................................................................................................................................1 1. INTRODUCTION TO AUDIT GUIDELINES ...............................................................................2 1.1 Purpose of the Guidelines ..................................................................................................... 2 1.2 Guiding Principles .................................................................................................................. 2 1.3 Auditors’ Responsibility ........................................................................................................ 2 1.4 Practical Tools ....................................................................................................................... 3 1.5 Continuous Improvement ..................................................................................................... 3 1.6 Using the Standard Audit Working Paper ............................................................................. 3 1.7 The Accountability Cycle ....................................................................................................... 4 2. OVERVIEW OF THE DIRECTORATE GENERAL OF DISTRICT GOVERNMENT..............................6 2.1. Overview of the Office ......................................................................................................... 6 2.2 Jurisdiction ............................................................................................................................ 6 2.3 Organogram of D.G DISTRICT AUDIT SINDH ......................................................................... 8 3. SCOPE OF AUDIT ................................................................................................................9 3.1 Types of Audits ...................................................................................................................... 9 3.2 Definition of Government Audit ........................................................................................... 9 3.3 Certification Audit ............................................................................................................... 10 3.4 Compliance with Authority Audit ........................................................................................ 11 3.5 Important Audit Components of District Government Audit ............................................. 11 4. PERMANENT FILE OF AUDITEE DEPARTMENTS ................................................................. 14 4.1 Introduction ........................................................................................................................ 14 4.2 The Audit Team’s Responsibility ......................................................................................... 15 4.3 Documentation in Permanent File ...................................................................................... 15 4.4 Update Control Sheet - PF ................................................................................................... 15 4.5 Status of Entity – Form PF-I. ................................................................................................ 15 4.6 Background Information – Form PF-II. ................................................................................ 16 4.7 List of Auditable Locations – Form PF-III. ............................................................................ 16 4.8 List of Bank Accounts – Form PF-IV. .................................................................................... 17 4.9 List of Authorized Signatories – Form PF-V. ........................................................................ 17 4.10 External Factors – Form PF-VI. .......................................................................................... 17 4.11 Accounting Records and Accounting System - Form PF-VII. ............................................. 17 4.12 Key Contacts – Form PF-VIII. ............................................................................................. 19 4.13 Significant Audit Areas – Form PF IX. ................................................................................ 19 4.14 Significant Accounting Policies – Form PF-X. .................................................................. 22 5. AUDIT PLANNING PHASE ................................................................................................. 23 5.1 Introduction ........................................................................................................................ 23 5.2 The Audit Team’s Responsibility in Planning Phase ............................................................ 23 5.3 Documentation in Planning Phase ...................................................................................... 24 5.4 Audit objectives and scope ................................................................................................. 25 5.5 Points for attention at next audit (from last year) .............................................................. 25 i 5.6 Entity communication letter ............................................................................................... 25 5.7 Audit planning memorandum ............................................................................................. 25 5.8 Memorandum on post-planning changes ........................................................................... 26 5.9 Important dates .................................................................................................................. 26 5.10 Tour Programme ............................................................................................................... 26 5.11 Information requested from entity officials ..................................................................... 26 5.12 Materiality assessment form ............................................................................................ 26 5.13 Expected aggregate error and planned precision form .................................................... 27 5.14 Audit risk assessment form ............................................................................................... 27 5.15 Inherent risk assessment form .......................................................................................... 27 5.16 Internal control questionnaire - controls for overall environment .................................. 27 5.17 Internal control questionnaire – general computer controls ........................................... 28 5.18 Internal control questionnaire – application controls ...................................................... 28 5.19 Control risk assessment forms .......................................................................................... 28 5.20 Analytical procedures assurance form .............................................................................. 28 5.21 Source of audit assurance form ........................................................................................ 29 5.22 List of applicable laws and regulations ............................................................................. 29 5.23 Sample selection checklist ................................................................................................ 29 5.24 High value item selection form ......................................................................................... 31 5.25 Key item selection form .................................................................................................... 31 5.26 Sample sizing for tests of internal control ........................................................................ 32 5.27 Sample sizing for substantive tests of details ................................................................... 32 5.28 Checklist of accounting estimates to be reviewed ........................................................... 32 5.29 Points for attention at next audit ..................................................................................... 32 5.30 Audit planning checklist .................................................................................................... 33 5.31 Centrally Led Audit ............................................................................................................ 33 6. AUDIT EXECUTION PHASE ................................................................................................. 34 6.1 Introduction ........................................................................................................................ 34 6.2 The Audit Team’s Responsibility in Execution Phase .......................................................... 34 6.3 Forms and Schedules for Audit Execution Phase ................................................................ 35 6.4 Summary of Analytical Review Procedures Performed ...................................................... 35 6.5 Details of Analytical