MWP - USAID Power Distribution Improvement Plan _PDIP_ by hcj

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									PAKISTAN - US ENERGY PROGRAM



     Workshop
 Internal Audit Manual
        Update
       9 September, 2011
                                                                     PAKISTAN - US ENERGY PROGRAM

                                                                                          Agenda
MWP – USAID POWER DISTRIBUTION IMPROVEMENT PROGRAM




                                                     •   Welcome
                                                     •   Internal Audit Manual Update
                                                           • Introduction
                                                               • Current Manual
                                                               • Weaknesses
                                                                     • Limited application
                                                                     • Compliance with laws, regulations, organizational policies and procedures
                                                                     • Internal controls over financial reporting
                                                               • Proposed internal audit manual framework
                                                           • Discussion
                                                           • Final Internal Audit Manual Framework
                                                     •   Independent Auditor’s Comments in Letter to BODs
                                                     •   Co-Sourcing
                                                     •   Independent Auditor’s Annual Audit Report
                                                                    PAKISTAN - US ENERGY PROGRAM


                                                              Independent Auditor’s Comments
MWP – USAID POWER DISTRIBUTION IMPROVEMENT PROGRAM




                                                     •   The opinion letter of one external auditor in its letter to the DISCO BOD
                                                         reminds the DISCO that “.. the Board’s responsibilities include..maintenance of
                                                         adequate accounting records..internal controls, ..the selection and application
                                                         of accounting policies,..safeguarding of the assets of the Company and
                                                         prevention and detection of frauds and irregularities..”.
                                                     •   In a separate comment from another external auditor in its letter to the DISCO
                                                         BOD it states “..Our review of internal audit function revealed that it is not as
                                                         effective and independent as it should be, especially when compared to
                                                         international standards..the department has no means to ensure the future
                                                         compliance made and disciplinary actions taken by management to
                                                         remove/settle the internal audit findings..we recommend that the BOD
                                                         evaluate the internal audit function to strengthen this activity and
                                                         independence..”
                                                                   PAKISTAN - US ENERGY PROGRAM


                                                                                  Co-Sourcing
MWP – USAID POWER DISTRIBUTION IMPROVEMENT PROGRAM




                                                     •   Co-sourcing is a partnership between the DISCO and an outside vendor, a
                                                         professional audit service provider. An audit firm is chosen, which works with
                                                         and often alongside—but doesn't replace—the existing internal audit staff
                                                         based on specific skills needed to get the job done. When the project is
                                                         finished the audit firm's job is over.
                                                     •   Co-sourcing is different consulting because the DISCO’s personnel play an
                                                         ongoing role in the project. In a typical consulting project, a consultant comes
                                                         into a company, plans and performs a specific task and then presents a report,
                                                         working independently most of the time. In a co-sourcing arrangement, the
                                                         DISCO staff takes an active part in project planning and decision making and
                                                         may participate in preparing the final report. Instead of relinquishing control
                                                         over an activity DISCO managers involved in co-sourcing actively manage and
                                                         work alongside the specially skilled outsiders.
                                                            PAKISTAN - US ENERGY PROGRAM
MWP – USAID POWER DISTRIBUTION IMPROVEMENT PROGRAM




                                                                  Co-Sourcing (cont’d)
                                                     • Provide additional resources for an internal audit manual with
                                                       an expanded scope.
                                                     • Introduce a higher level of expertise to the internal audit
                                                       function.
                                                     • Establish a reliable and independent internal audit resource
                                                       which can report directly to BOD Audit Committee.
                                                     • Provide training to DISCO internal audit staff.
                                                                PAKISTAN - US ENERGY PROGRAM
MWP – USAID POWER DISTRIBUTION IMPROVEMENT PROGRAM




                                                     Independent Auditor’s Annual Audit Report
                                                     • Responsibility of management to establish and maintain a system
                                                       of internal controls.
                                                     • Expand the scope of the annual audit.
                                                     • Report on compliance and internal controls over financial
                                                       reporting.

								
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