AUDITING FOR COMPLIANCE WITH LEGISLATIVE AND RELATED AUTHORITIES

The Auditor-General performs the external audit function of the examination
of financial statements of the government and its allied activities in a financial
year. The Auditor-General performs post-audit functions. The post-audit refers
to the audit performed after the close of transactions in a particular period; it is
a post-mortem audit. The audit takes place after the end of the financial year.
The appointment, termination and mode of operation of the Auditor-General
are governed by the provisions of the Audit Act of 1956, the Nigerian Constitution
and Financial Regulations of 1976 as amended.

Functions

The `green paper’ on the Role of the Comptroller and Auditor-General lists the
following as the functions of the Auditor-General:

Financial and Regularity Audit

A financial audit is to ensure that:
(a) Systems of accounting and financial control are efficient and operating
properly; and
(b) Financial transactions have been correctly authorised and accounted
for.
A Regularity Audit - is that which verifies that expenditure has been incurred
on approved services and in accordance with statutory and other regulations
and authorities governing them (sometimes called Compliance Audit).

Economy and Efficiency Audit

This is a measurement of how economic resources are efficiently employed
and deployed. It is also to highlight areas of wastes; extravagant or unrewarding
expenditure. It looks into failure to maximise receipts, financial arrangements
that are detrimental to the treasury and weaknesses leading to them.

Effectiveness Audit

This is an examination to assess whether programmes or projects undertaken
to meet established policy goals or objectives have met their respective aims.
It is also called Programme Results Audit. It aims at focused or comprehensive
audit in government.

Value-for-money Audit

This is variously called Performance Audit; or Economy and Efficiency Audit.
The essence is to determine whether an entity is acquiring, managing or utilising
its resources in the most economical and efficient manner. It traces the causes
of any inefficiencies or uneconomical practices. Value-for-money Audit is
defined as an objective professional and systematic assessment of:
(a) The nature and function of an authority’s managerial systems and
procedures;
(b) The economy and efficiency with which its services are processed; and
(c) The effectiveness of its performance in achieving objectives.
Phases of value-for-money audit are:
(a) Proposal Phase: aims at justifying the study of a particular area,
authorise initial resources and determine further considered initial
analysis of financial statistics, audit costs and other performance
indicators.
(b) The Scooping Phase: aims at gathering sufficient details. It embraces
gathering working information, studying related legislations and testing
controls act. At this stage there will be comprehensive management
systems and objective review.
(c) Planning Phase: aims at planning to fully develop identified potentials.
The planning and control processes are properly analysed and methods
of reviewing operating results are examined through analysis of control
and reporting systems.
(d) Implementation Phase: aims at reporting the audit results to those
responsible for receiving or acting on them.
(e) Evaluation Phase: is to evaluate the audit result, methodology and
performance of the audit staff. The focus here will be assessment of
efficiency and effectiveness review. Value-for-money audit aims to
identify ineffectiveness in the system and under-utilisation of resources.

Composition of office of Auditor-General

The Office of the Auditor-General comprises the following directorates:
(a) Personnel Management Directorate
(b) Finance & Supply
(c) Planning Research and Statistics Directorate
(d) Project Monitoring and Evaluation Directorate
The various divisions under the set-up are:
(a) Treasury Accounts, which handles the audit of accounts and financial
statements;
(b) State Accounts, which audits the transactions of Pay Officers operating
in various states;
(c) Public Enterprises, which oversees the audit of parastatals;
(d) Project Audit which investigates justifications of spending on
government projects;
(e) Pension which conducts pre-audit of gratuities and pensions;
(f) Losses and Investigations that handles all cases of loss of funds; and
(j) Annual report and P. A.C., which handle all reports and links with Public
Accounts Committee deliberations.

Audit Queries and Alarms

Audit queries are observations or points raised by the audit in a particular
transaction seeking further clarifications. Such queries raised by Internal Auditor
are pre-audit queries while those raised by the Auditor-General are termed
post-audit queries.
Queries serve as an important part of the mechanism of financial control as
well as valuable means of detecting and preventing errors, fraud etc.
The guidelines on Civil Service Reforms gave prominence to queries by
specifying time limit for replying audit queries and possible sanctions for failure
to respond. Matters on which queries may be raised can be classified as:
(a) Irregularities resulting in losses to the government due to either
fraudulent activity of the functionaries or their negligence or
incompetence;
(b) Irregularities not directly or immediately resulting in losses to
government but which infringe upon budgetary and proper financial
management; and
(c) Irregularities arising through poor or inefficient management and
accounting, which may lead to losses to the government.

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