The OAG financial audit methodology comprises a set of interdependent audit work steps! procedures that enable the audit teams plan and execute the audit strategy and also conclude and report audit results. The methodology also provides for performance measurement to enable improvement in quality of audit work through identification of training needs and motivation of staff through performance based growth and advancement. The financial audit methodology of the Office is built around the following three key principles:
*INTOSAI auditing standards
* Professional ethics
* Quality assurance and control.
Procedures in the OAG Financial Audit Methodology
The OAG financial audit methodology is comprised of various procedures which represent a categorization of audit steps in partly sequential and most frequently interdependent manner. Every audit team member at the OAG should perform these procedures when carrying out the financial audit of all public entities.
The audit procedures! steps can be conveniently categorised into the 3 broad audit phases! stages as follows:
1. Planning of the audit strategy
2. Execution of the audit strategy
3. Audit conclusion and reporting
The audit procedures, which are discussed in various chapters of this manual, are summarized below:
1. Ascertain terms of the engagement
2. Determine team skills and competence
3. Understand the entity’s business
A review of the business/ operations of central and local government entities (ministries and local government councils) involves assessing the impact of environmental factors impacting on the entities. The audit teams should remain cognizant of the fact that unlike public establishments and projects, central and local government entities are mainly affected by actions or inactions of the government. These entities will consequently not be affected by most external factors.
4. Understand entity wide internal control and the risk of fraud
5. Obtain high-level understanding of the accounting system
6. Follow-up of previous year’s recommendations
7. Identify significant provisions of laws and regulations
In the financial audit of central and local government entities, the audit team should specifically test for compliance with the financial management procedures manual. When testing the entity’s compliance with the manual, the audit team should also assess effectiveness of controls prescribed in the manuals. The audit process with regard to this is highlighted in the above mentioned chapter.
8. Develop preliminary audit strategy
9. Perform tests of controls
10. Update combined risk assessments
11. Perform substantive testing procedures
12. Audit conclusion
13. Assignment reporting
14. Prepare the annual report
15. Measure performance, identify and address improvement areas
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