There
is need to depart from the traditional audit philosophy that is reactive,
detective and over relies on end year reviews and embrace tailored control
concept that will enhance real time operational efficiency, proactive and one
that will focus on prevention, detection and correction of errors and
irregularities, embraces information technology and produces accurate, complete
and actionable audit reports.
The
system boasts of advanced medicine yet the populace is on their sick beds! Case
of traditional audit therapy to changing auditee needs and technology! It is not surprising that still the so called "Big Four" still have these defects in their approach! especially when dealing with government entities.
KENYAN POSTMORTEM AUDITS!
The
Public Audit Act 2007 of Kenya gives the Controller of Budget and the
Auditor-General the mandate to audit all public entities and provide a professional
opinion to Parliament at least once every financial calendar year on matters
arising from their audit work. Lately, mainstream media has been awash with
accounts of financial impropriety in a number of public entities running into
millions of shillings as highlighted by the Auditor-General.
A
number of inquests emanating from audit reports are ongoing in Parliament.
However, the frequency by which embezzlement of public resources get reported
across the governance structures leaves one wondering whether compliance audit
approach is effective. To start with, revealed acts of fraud have over 50
percent chance of recurring thus revealing weaknesses and ineffectiveness of
the postmortem audit approach in examining compliance to financial regulations
and procedures in conduct of public affairs.
Incidentally,
as a matter of procedure, much as financial audit is designed to uncover faults
in the public expenditure trail, audit reports generated are expected to
highlight weak points that abet compliance and advice on probable remedies.
That being the case, it is high time relevant authorities reflects and evaluate
on today’s audit trail, systems and procedures
THE SOLUTION;
Following
the establishment of devolved units in 2013, financial audit became more
complex, time consuming and taxing. For this reason, and without pre-emptying
the importance of compliance audit to financial management, the country had
better consider employing financial risk management framework instead. This
approach, assesses risk exposures beforehand capture them for control and put
in place necessary administrative control measures to avert shortfalls.
Again,
the approach deliberately explores appropriateness of applied controls and
systems effectiveness. Actually, risk management involves gaps identification,
evaluation and prioritization followed by coordinated and economical resource
application to monitor and control risk occurrence and or minimize its impact
in case of an occurrence.
Under
this approach, strong internal control systems are advanced in managing
exposure to operational risks through prevention or and early detection and
correction of errors and irregularities. Where established, control systems are
critical in addressing loss of public resources, malpractices and corruption in
public realm.
Additionally,
they lay a foundation of discipline and structures made functional in conduct
of public affairs thus safeguarding integrity, ethical behavior, competence,
participation and responsiveness. Still, it is easier to monitor quality of
formulated controls through regular performance tests and design interrogation.
BOTTOM-LINE;
Basically,
automated audit trail unlike paper based one will reduce use of hard copy
documents, records duplication and avoidance to laid down procedures and rather
make financial operations more effective, financial reporting more reliable and
complete thus guaranteeing compliance to established laws, rules, regulations
and policies.
Only
then, will governance objectives and processes be adhered to.
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