High quality audit to enforce strict financial discipline is the focus of ongoing reforms at the auditor-general’s department.

With a top-down approach, the performance of senior audit officers is evaluated on how effectively they execute audit plans.

While audit has significantly helped increase recoveries, the performance of field audit offices, it is hoped, may improve further with a reward system. The finance division has been approached to allow a 20pc incentive allowance for audit employees following a remarkable increase in recoveries to the tune of Rs81bn in 2015-16.

The improvement was brought about by a series of systemic reforms, initiated by the incumbent Auditor-General of Pakistan (AGP), Rana Assad Amin, to promote transparency and accountability in government transactions.

The prime objective of an audit is to ensure the sanctity of the federal and provincial governments’ budgets is preserved, as prescribed by the financial rules and regulations governing the disposal of expenditure and revenue.

The improvement was brought about by a series of systemic reforms to promote transparency and accountability in government transactions

To this end, the AGP had to initiate a series of short-term as well as sustainable reforms. This was done by reintroducing the element of risk-based auditing with an emphasis on examining systemic issues. A reshuffling of senior management officers was done to place competent officers in field offices. To encourage ‘whistle-blowers’, a dedicated helpline was set up at the AGP’s office.

The first-ever Strategic Plan (2015-19) advocates a paradigm shift in the approach to special audits, for which field offices were allocated at least 30pc of their resources. And a grade-21 position was created to implement and monitor performance, forensic, IT, banking and environmental audits.

Audit of the provincial governments is also being given special attention by reaching out to authorities at the highest level to revive public accounts committee sessions.

After a lapse of more than three years, the publication of the annual performance report of the department has been resumed. To quote the Annual Report 2015-16, the cost-benefit ratio has touched a record high of 1:21. This means that for every rupee spent on audit, Rs21 was recovered. This ratio had dwindled to Rs12 in 2014-15. Total recovery for the year 2015-16 was Rs81bn as compared to Rs40bn during 2014-15, a 100pc increase.

For capacity building of its professionals, the department’s first ever human resource management (HRM) strategy has been developed. It addresses the key issue of recruiting the right people for the right job. Audit and accounts officers are now being trained in emerging areas including forensic, environmental and performance audits.

For IT-based systemic reforms, the department is working in collaboration with development partners such as JICA, ADB and the World Bank. With USAID’s cooperation, 307 officers of the AGP’s department and controller-general of accounts will benefit from foreign and local training facilities in areas such as risk-based auditing and forensic auditing by May.

Besides, special incentives and opportunities are being offered to the audit and accounts officers to seek professional certifications at local institutions. A special research wing has been established in audit and accounts academy at Lahore.

The AGP website will soon be converted into a web portal involving online interaction among various wings of the AGP headquarters, besides real-time linkage with the prime portal of ECOSAI (Economic Cooperation Organisation Supreme Audit Institutions).

MoUs have been signed with the Supreme Audit Court of Iran and Turkish Court of Accounts for conducting cooperative audits, peer reviews, mutual visits and joint training programmes.

A special intervention was made for improving service delivery for pensioners. Finance Minister Ishaq Dar recently approved the auditor-general’s system reform recommendations for easier processing of pension payments.

Despite its constitutional independence and autonomous status, the department relegated to subordinate position vis a vis the finance division. This anomaly was creating a conflict of interest.

To strengthen its mandate, the department has proposed suitable amendments in the Auditor General’s (Functions, Powers and Terms and Conditions of Service) Ordinance, 2001.

The department accords special priority for the promotion of IT in audit activities. Procurement of IT-based audit management system is planned to produce high quality audit reports with real-time monitoring and tracking of audit observations at the highest level.

This system will also help in eliminating the element of ‘discretion’ at the lower levels. For quality assurance and other interactions, a video conferencing system will be installed by the end of this month. This will bring economy and efficiency in the centralised monitoring of audit planning and execution.

The writer is director-general to the Auditor-General of Pakistan

Published in Dawn, Business & Finance weekly, February 13th, 2017