Quarterly Journal of the Office of the CAG
Issue-4 Volume 16 October-December, 2006
Office of the Comptroller and Auditor General of Bangladesh
The honourable members of the Public Accounts
Committee (PAC) of Jatiya Sangsad (national parliament)
led by its Chairman Advocate Harun-Al-Rashid MP visited
the CAG office at the new premises on October 15, 2006
going around the different blocks and exchanging best
wishes with our staff members. It was really a great event
for us to receive the members of the parliament at our new
building which was symbolic of our ongoing stride for
infrastructural development side by side with capacity
At the invitation of the respective Supreme Audit Institutions (SAI) I visited Denmark,
Switzerland and Turkey during 14-26 November, 2006. I met the Danish Auditor General
Henrik Otbo at the National Audit Office (NAO) of Denmark in Copenhagen and held
discussions on bilateral as well as international issues and signed a Memorandum of
Understanding (MOU) incorporating the areas of mutual cooperation between the SAIs of
Bangladesh and Denmark. I was apprised of the fundamentals of NAO, Denmark covering
I attended the following presentations at NAO, Denmark
Certification in Public Sector Audit
Administration and Human Resources
International Cooperation – INTOSAI and Professional Standards Committee
Environmental Auditing at NAO, Denmark
At the invitation of the Danish Auditor General I delivered a presentation on „The Role of
SAIs in Ensuring Transparency and Accountability – Bangladesh Perspective‟. All these
exchanges provided lots of information beneficial for both the SAIs. I called on the Deputy
Chairman of the Danish Parliament Neils Helveg Peterson who explained the working
procedures of the parliament. I also had the privilege of meeting the Chairman of the Public
Accounts Committee Peder Larsen and member Svend Erik Houmand (a former Cabinet
Minister) and held discussions on the following issues of PAC
the responsibilities and activities
the authority – legislation, the style of operation and reporting system
cooperation with the office of the Auditor General
relationship with public media
I visited the office of the Municipal Audit Company Kommuncrenes Revision (KR) in
Copenhagen, an outsourced auditing firm to audit the municipalities where I was briefed on
the following issues
organisation, work and functioning
the Local Government Act
organisation of municipal audit and supervision
KR‟s audit approach
While visiting the Swiss Federal Audit Office (SFAO) in Berne, Switzerland I held important
discussions with the Auditor General Kurt Gruter officially designated as Director. He himself
made two important presentations. On „The supervision over the public finance in
Switzerland‟ he covered the following aspects
the structure and characteristics of SFAO
audit areas, core tasks and working methods
cooperation with the Cantonal (provincial) audit offices
relationship with the parliament
SFAO in the international context
challenges in the future
The Swiss Auditor General in his second presentation on „Who Audit the Controllers:
Experience with the Peer Review (PR)‟ stressed on the following points
definition: ”peer review can be described as the systematic examination and
assessment of the performance of an organisation by other parallel organisations
with the ultimate goal of helping the reviewed organisation improve its policy
making, adopt best practices and comply with established standards and
objectives of PR
possibilities of external evaluation
the recommendations of INTOSAI and EUROSAI
implementation of PR
further course of action
lessons learnt from PR
I informed the Swiss Auditor General about the important role being played by SAI
Bangladesh as the Vice-Chairman of the Peer Review sub-committee of the Capacity
Building Committee of INTOSAI in promoting PR among INTOSAI member SAIs in the spirit
of mutual trust, collaboration and benefit.
While visiting the Turkish Court of Audit (TCA) in Ankara, Turkey I held fruitful discussions
with the President of TCA Mehemet Damar exploring possibility of signing an MOU between
the SAIs of Bangladesh and Turkey. I particularly mentioned of Mr. Damar‟s new role as the
recently elected member of the ASOSAI Governing Board. A presentation at TCA covered
the following aspects
overview of activities
areas of mutual cooperation with SAI Bangladesh
The above visits opened new vistas of international cooperation and understanding for SAI
It was a great privilege for my office to honour the former CAGs of Bangladesh at the new
premises of Audit Bhaban by getting the following opened by them on December 27, 2006
A.K. Azizul Huq - Audit museum and archive
Gholam Kibria - Conference room-1
K.M. Hossain – Rest room cum mini library for the ex-CAGs and the retired audit and
accounts cadre officers
M Hafizuddin Khan - Prayer room
Syed Yusuf Hossain - Canteen
Muhammad Ahsan Ali Sarker - Conference room-2
I ALSO ANNOUNCED THE NAMING OF THE AUDIT BHABAN
AUDITORIUM AS ‘F K M A BAQUI AUDITORIUM’ AFTER THE
FIRST CAG AND THE LIBRARY AS ‘OSMAN GHANI KHAN
LIBRARY’ AFTER THE SECOND CAG, BOTH DECEASED.
OVERWHELMED BY THE WARMTH AND HONOUR EXTENDED BY
CAG OFFICE, ALL FORMER CAGS EULOGIZED THE UNIQUE
OCCASION FOR THE NOBLE GESTURE. I DO BELIEVE THAT THE
PRESENT IS BASED ON THE PAST AND NONE COULD EXPECT TO
GET HONOUR OVERLOOKING THE PAST AND IGNORING OUR
PREDECESSORS. TODAY’S CAG OFFICE IS BASED ON THE
TOILSOME SACRIFICES MADE BY THE FORMER CAGS. WE
SALUTE THEM AND SHALL ALWAYS REMEMBER THEM.
I am very happy to note that the present publication has incorporated some changed
dimensions as I indicated in the previous REVIEW, with most of the articles based on the job
experiences. I thank all contributing with their interesting write-ups.
December 31, 2006 Asif Ali
Comptroller and Auditor General of Bangladesh
1.1 A note on personal accountability by the head of an audit
M. Shahad Chowdhury
The application of on the job training in SAI Bangladesh
Md. Abul Kashem
The Impact of Public Accounts Committee (PAC) Reports on National
Effectiveness of Local Audit activities in the Defence Finance Department
Summary on the Report of the Controller and Auditor General of New
Zealand on “The Treasury: Capability to Recognise and Respond to 18-22
Issues for Māori”
Shish Haider Chowdhury
ASOSAI Group Training Workshop on „How to Develop and Manage
Human Resources to Deal with Emerging Audit Issues‟ – Strategies 23-25
2. November 13-21, 2006 - Tokyo, Japan
S M Rezvi
Maintenance and repair of Coach, Carriage and Wagon at Saidpur
Railway Workshop 26-31
A.K.M. Hasibur Rahman
Action Plan (Detailed Audit Plan) for
Audit of Procurement of Goods (Printing Paper under NCTB) 32-40
Mia Mohammed Mazibul Hoque
A note on personal accountability by the head of an audit
M. Shahad Chowdhury
The three years and four months stay in the office of the Works Audit Directorate allowed me
to gain a unique experience in the ever-challenging field of audit. The period from March 11,
2003 till date when put into perspective deserves a candid note on accountability on my part.
The records and notes will give an insight into the personal performance of a Director
General and help the avid reader to find out ways which need to be traversed in future.
An honest answer to the following questions when viewed in line with CAG‟s strategic plan
and directions will reveal my accountability aspect, as I put it
● How did I fair in the personnel administration?
● How do I evaluate in-house training and presentations/workshops held in the
● Was my participation in audit briefing sufficient for quality assurance?
● Was I personally involved in the conduct of audit?
● Do the records speak of my good performance in the parliamentary
● Is my performance beyond worth mentioning?
● Along with day-to-day office work as a gesture to redress the sufferings of the
pensioners during the period I have approved as many as 59 pension cases of
Audit and Accounts Officers, Superintendents, Divisional Accountants, Auditors,
Assistant Cash Clerks and MLSS. The number of provident fund advance cases
sanctioned was 287. Through 23 office orders 184 Divisional Accountants have
been posted/transferred. During the 3 year period I have attended as many as
● The election of the Works Audit Institute was held recently after a long pause of
● The mosque at the ground floor of audit complex was refurbished
● During this time 6 of staff members have left this world prematurely due to
physical illness or suffering caused by personal ailment
● The files remained on my table for maximum of three days
● A regular watch on important issues including those of pension, increment, time
scale can help redress employee grievance to a great extent. This is the personal
responsibility of the Director General
National Consultant, Financial Management Reform Programme (FMRP) Project
● To do so an individual monitoring format may be developed. Premature loss of 6
staff members have made me believe that the format so developed may also
contain issues of individual woes and agonies of the down the line staff members
● I did not prepare any such format
In –house training, presentation and workshop
● In the directorate there were as many as 103 in house training sessions, where I
have worked as instructor on April 27, 2003; July 12, 2003; January 26, 2004;
August 26, 2004; November 21, 2004; February 16, 2005 and April 28, 2005.
During this period, besides normal courses on rules and regulations some
exceptional courses on issues like developing writing skill, fire hazard
awareness, building and constructions were arranged with the support of
specialists from the Directorate of Films and Publications, Fire Service Academy
and the Local Government Engineering Department.
● The number of presentations during the period was 23. All these presentations
were on CAG‟s publications like CAG NEWS, REVIEW and annual activity
reports. Another remarkable event was organising a seminar on suspense
● Scanty involvement in the in house training programmes do not prove to be
enough in developing the skills of employees
● More direct participation can provide more incentive to the participants and work
as a source of encouragement
● I have conducted no follow up of the impact of in house training programme
● Except two NAO reports no innovative or subject of current concern were
presented in this directorate
● This speaks of less innovativeness of a Director General
● In the process of audit briefing I was directly involved on the following days
August 3, 2003; August 7, 2003; October 28, 2003; February 15, 2004; February
19, 2004; August 19, 2004; October 26, 2004; October 27, 2004; March 23,
2005; February 17, 2005; April 18, 2005; January 1, 2006 and March 23, 2006.
● Intensive briefing can help improve the quality of audit
● Audit briefing should be followed by inspection of audit teams, which I have not
Conduct of audit
● During the period I was personally involved in conducting pre-emptive audit, a
concept propagated by SAI Bangladesh. One such example is the System of Toll
Collection in Roads and Ferries under the Ministry of Communication in May
● To judge the 3 Es of Water and Sewerage Authorities (WASA) of Dhaka and
Chittagong, audit was conducted under my personal supervision from August
2004 to January 2005
● Looking into the environmental aspect of auditing I guided the audit of gardening
and gardeners arrangement of VIP residential accommodations at Minto Road in
● Audit of current problems faced by city dwellers on water logging is underway in
the directorate. The idea selected, chosen and the guiding audit process was
done by me since April 2006
● Special type of audit was conducted on 5 medical colleges in January 2004, four
development authorities in August-September 2003 and stores management of
the Public Works Department were carried out by this directorate in November-
December 2003 where I was personally involved in the audit process
● Developed and initiated an audit programme based on entity wide audit concept
of the Roads and Highways Department in July, 2006
● Compliance audit was the routine work of the directorate
● I tried to bring qualitative change in audit - keeping in perspective the expectation
of the Comptroller and Auditor General
● I believe Directors General should be creative and hard working to be able to
bring any notable change in audit
● With the personal and warm support of the Comptroller and Auditor General, I
had the opportunity to present audit observations as many as 17 times in the
Public Accounts Committee of the 8th Parliament. In addition, I had the
opportunity to attend 10 other committee meetings. During my tenure 7 financial,
3 special, 3 issue based audit and 2 performance audit reports had been placed
before the Public Accounts Committee.
● The experience of presenting audit observations before the august committee
though at times tedious, in the end always proved enriching and rewarding.
Better homework yields better delivery.
● Personal inclination to settle audit objections, if expressed in the presentations
may pose question on the credibility of audit, as I have experienced in one
● Better to remain dispassionate but forceful in the presentation
Accountability beyond works audit periphery
● During the period from March 11, 2003 till date I worked on special assignments
given by the Comptroller and Auditor General like
Re structuring the audit report format
Special audit of accounting system of Senior Finance Controller (Army)
Representing the Comptroller and Auditor General in a seminar on public
private partnership organised by the Institute of Chartered Accountants of
Accompanied the Comptroller and Auditor General in his victorious
achievement as a member of the board of governors of ASOSAI in October,
As Director General, Financial Management Academy (FIMA), on additional
charge, I wound up the special course for officers of the Auditor General‟s
As Director General, FIMA on additional charge, I made arrangement with
three Directors General for attachment of probationers in the audit
directorates for field level experience.
Helped developing documentary on the office of the Comptroller and Auditor
General of Bangladesh and its achievement
As Director General, FIMA I made final arrangement with Grameen Bank for
attachment of Assistant Accountant General probationers
● During the 40-month‟s tenure, my involvement in diverse nature of activities has
been a rewarding experience. I believe personal involvement and inner touch in
the day to day activities by the Directors General can really help achieve the
much desired goal of the Comptroller and Auditor General - quality change in the
● In the end, the score board may show more plus than minus figure. Even though
I do not enjoy complacence of achieving everything.
The application of on the job training in SAI Bangladesh
Md. Abul Kashem
In the present day modern world, the pace of change is consistently accelerating. This brings
with it a continuous need to ensure that skills and knowledge are keeping pace with our
changing work place. Meeting this need is a shared responsibility for employers, employees
and training organisations who must act together in a training partnership. Moreover, people
are the most valuable assets of an institution. Sound human resource management can
provide employees a rewarding and professional environment, as well as maintaining and
enhancing the capabilities of the people. As a result, well-trained and professionally
competent work force plays a significant role in achieving high quality outputs. SAI
Bangladesh is well aware of this issue. The result is the set up of human resource
management function within the Strategic Plan (2003-2006) of the Comptroller and Auditor
General (CAG) of Bangladesh. The strategy of human resource management, the inbuilt in-
house training programme practiced in all offices under SAI Bangladesh, is designed to
create a diverse work force with knowledge, skills and abilities needed to support the
achievements of SAI‟s vision, mission, the core values and the strategic goals. This has
resulted in the preparation of special, issue based and even performance audit reports in SAI
Bangladesh in recent years.
What is training ?
Training is the consistent and effective transfer of appropriate behaviours which lead to the
achievement of predetermined and specified outcome. This definition gives some specific
points which are
● there should be set goals
● these goals need to be achieved
● behaviour of the trainees needs to be transferred
● this transfer be consistent and effective
3. Need for on the job training
The International Organisation of Supreme Audit Institutions (INTOSAI) Auditing Standards
state that SAI should adopt policies and procedures to develop and train SAI employees to
enable them to perform their task effectively and to define the basis for achievement of
auditors and other staff. Keeping this in view, SAI Bangladesh views that training is the
process by which employees acquire the skills needed to accomplish their assigned tasks.
Training activities have very important bearing on the overall quality of audit processes and
outputs. The SAIs need to be knowledge centric organisations with people being the key
assets. Government auditors need to be armed with knowledge and good understanding of
government environment – role of legislature, legal and institutional arrangements governing
the operations of executive and the charter of the public enterprises and of SAI,s auditing
standards, audit methodologies, policies, procedures and practices. The audit methodologies
Senior Finance Controller (Navy)
are changing at a faster pace and new techniques are available in the SAIs like, risk-based
auditing, application of quantitative techniques, increasing use of IT as an audit tool to
improve audit quality. As a result, training has assumed critical importance now a days.
Training activities in the SAIs should encompass the following
● On the job training courses based on individual needs as well as SAI‟s core
curriculum, including financial and performance audit methodologies
● In house seminars and workshops covering a wide variety of topics focusing on
developing a well-rounded work force
● Improving and standardizing courseware to maintain training quality, if
necessary, to outsource development of courseware
● Encouraging and arranging audit employees to enroll in academic institutions to
pursue various disciplines relevant to their work for continuing professional
● Providing opportunity to have work experience in other public or private agencies
or audit offices overseas - in particular, establish exchange placements for SAI
officials with ASOSAI/INTOSAI/developed SAIs to acquire and exchange
knowledge and experience and to gain insights into the operation of other peers
● SAI may accept staff from other agencies and legislative secretariat for
temporary assignment to the SAI to enhance awareness and understanding of
the SAI‟s role and responsibilities
● Providing opportunities to participate in training course, seminars and workshops
arranged by regional/international agencies and other SAIs
● Creating network with outside agencies - domestic and international
● Equipping personnel to audit effectively in new areas such as privatisation,
revenue audit, entity wide audit, sustainable development, environment auditing,
forensic auditing, IT auditing, etc.
● To help newly recruited officers/staff-members to assimilate into the new work
environment, giving an overview of SAI‟s vision, mission, core values, audit
methodologies and techniques, policies, procedures and practices and general
information relating to SAI‟s operating environment
● Audit reports of developed SAIs may be reviewed and discussed in occasional
presentation sessions as a part of knowledge dissemination programme
SAI Bangladesh considers all these issues as part of its training programme. On the job
training encompasses the issues listed above. Hence continuing professional education is
established at each level which is monitored regularly and reviewed periodically by the top
On the job training scenario in SAI Bangladesh
The Strategic Plan (2003-2006) of SAI Bangladesh has taken into consideration all the
issues noted above. Training as a whole and on the job training in particular considers that
each and every issues and action are initiated in all the related areas.
● Financial Management Academy (FIMA) is the main training arm of SAI
Bangladesh. An attempt is underway to make it a “centre of excellence‟‟. The
status of its head has been upgraded recently by placing the Director General
under grade 2 of the national pay scale .
● Under the Strategic Plan (2003-06), the courseware of FIMA has been re-
designed and modified in its nature and duration. The major training modules
have been revised and re-structured
In pursuit of attaining the highest quality, syllabus of the foundation course for the managerial
cadre staff has been brought at par with international standards. While preparing the
syllabus, the SAI consulted the academics and different training institutes and kept into
consideration on the job requirements. Trainers are selected according to their aptitude,
skills and acumen on the subject matters. For different technical topics, external experts are
The course modules have been redesigned giving emphasis more on practice than theory.
The probationary officers have been assigned with on-the-job attachments in different desks
of CAG office along with the theoretical classroom training at FIMA.
These training help newly recruited officers to assimilate into the new work environment of
SAI .This induction programme gives an overview of SAI‟s vision, mission, core values,
audit methodologies and techniques, policies, procedures and practices and general
information relating to SAI‟s operating environment.
● Sub-ordinate Accounts Services (SAS) training module has been improved - the
programme enables the auditors to upgrade themselves and on passing part 1
and part 2 SAS examinations under it. Successful auditors become class II
officers of the audit department.
● Auditors‟ training module has also been revised – the course is arranged to give
newly recruited auditors (and juniors auditors) to have first hand knowledge of
audit and accounts. Refresh course is also arranged regularly to give the staff
members latest information and updated techniques of the related fields.
● Divisional Accountants‟ training module has been reformed – the Divisional
Accountants work in the Public Works Department and Roads and Highways as
well as in Public Health Engineering Department
In addition, FIMA organises a range of short training course to develop essential skills of mid
level officers of the public sectors across the government in government budgeting, auditing
and accounting. The main courses conducted here are as under
● Training in accounting skills and knowledge (TASK)
● Training for excellence in accountable management (TEAM)
● Training in budgeting and accounting system (TIBAS)
● Awareness in audit reforms (AWARE)
● Building essential skills in training (BEST)
Courses for civil servants across the government
● Briefing session for pilot audit teams
● Feedback and lessons learned on pilot audit
● Pilot audit training on procurement
● Financial management and project accounting
● Budget preparation and monitoring
● Advance Information technology
● Basic information technology
● Training of Trainers (TOT)- Building Essential Skills for Training (BEST)
● Government accounting training
● Training for new auditor
● Basic accounting training
● Internal control and audit techniques
● Para accounting course
● Fiscal Economics and Economic Management (FEEM)
FIMA training consists of auditing, accounting, costing, financial management, financial rules
and regulation, IT management and IT audit. In addition, existing government rules and
procedures, general financial rules, fundamental rules and treasury rules. Moreover, defence
finance and railway establishment codes and manuals are also taught.
The most striking feature of SAI Bangladesh training is the in built in-house training
programme initiated under the Strategic Plan (2003-2006). It has got two aspects. These are
● Administrative component - it covers issues of office attendance , conduct rules,
discipline and appeal rules, rules of business, note and draft writing , file
● Professional issues - these include audit and accounts professional issues.
All 56 units under CAG`s control have institutionalised this in-house training and such
training is held regularly. 247, 242 and 258 in–house training courses were conducted in
2003, 2004 and 2005 respectively. Retired officers of the audit department as well as senior
and mid level officers conduct these courses. Practical, realistic, operational and problem
solving issues are discussed in these courses.
In audit offices, issues relating to effective audit are discussed and practiced. It includes
● Understanding the audit entity
● Audit briefing
● Preparation of local audit report (LAR) consisting of
Main audit paras (observations)
● Preparation of audit report - quality assurance
Presentation on Professional Issues
SAI Bangladesh launched a major initiative to upgrade the skills of staff at all levels. As part
of knowledge dissemination, audit reports and annual reports received from different SAIs
were reviewed and discussed in these sessions participated by all level of officers. Important
articles of interest published in different national and international journals were also
reviewed and presented in discussion sessions. As many as 66 presentations on audit
repots of the National Audit Office (NAO), UK and professional issues were held in 2003. 45
presentations on audit reports of SAIs of UK, South Africa, Sri Lanka, Japan, Indonesia,
India, Bhutan, Pakistan, New Zealand and on publications of INTOSAI, ASOSAI and
Government of Bangladesh were held in 2004. In 2005, 48 important articles of interest
published in different national and international professional auditing journals were also
reviewed and presented which were attended by cross section of SAI officials including
SAI Bangladesh officials participates in training courses / seminars held in other SAIs under
INTOSAI/ASOSAI as part of its search to acquire and experience and to gain insights into
the operation of other peers. The year-wise number of such courses and participants are
Year No of courses No of participants
2003 12 12
2004 26 26
2005 10 14
SAI Bangladesh officials also got enrolled in different academic institutions to puruse various
disciplines relevant to their work for continued professional education. Under the Financial
Management Reform Programme (FMRP), a number of SAI officials received on the job
training and conducting entity based pilot audits under the direct supervision of national and
The pro-active initiatives undertaken in formal FIMA training includes more emphasis on
practical rather than theoretical aspects, on the job attachment, regular in-house training with
need based, practical, operational and problem-solving issues, knowledge dissemination
through presentations of professional journals, articles and issues of audit reports of different
SAIs, overseas training and workshops, working experience in other overseas SAIs to
acquire and exchange knowledge and experience. Officials and staff of SAI Bangladesh are
now more equipped with internationally accepted auditing standards, procedures,
methodologies and new areas of audit. Presently, audit planning is more systematic,
execution in field audit is more rigorous and audit reporting is more quality assured.
Moreover, new areas of audit are being covered in the preparation of recent audit reports in
diversified fields. New horizon of audit is opened in new areas such as privatization, revenue
audit, special audit, issue-based audit, performance audit or value for money audit, entity
wide audit, pre-emptive audit, environment audit, IT audit etc. Special mention may be made
of the following
Some major Special Audit Reports : 2003
● Duty Exemption and Drawback Office (DEDO) of the Bangladesh Customs
● Bonded Warehouse-Bond Commissionerate, Dhaka
● Rural Poverty Alleviation Programme of Bangladesh Rural Development Board
● Food godowns of Food Directorate
● Asset Management of Military Estate Office (MEO)
● Management of Hajj Consulate General of Bangladesh, Jeddah
● Construction of Bangladesh High Commission Building in New Delhi, India
Some major Issue Based Audit Reports
● Collection and management of Toll receipt of 13 Bridges and 10 Ferries of Roads
and Highways Division
● Procurement and distribution of Medical Surgical Requisites (MSR) and Diet
Management System of Dhaka Medical College Hospital
● Dhaka City Corporation – Waste Management
● Purchase, lease and management of air crafts by Biman Bangladesh Airlines
Some major Performance Audit Reports
● Performance of Health and Population sector programmes
● Computerised Wagon Control System (CWCS) of Bangladesh Railway
Some Major Issue Based Audit reports of 2004
● Ministry of Water Resources.
● Internal Resources Division, Ministry of Finance
● Ministry of Health and Family Welfare
● Ministry of Science, Information and Communication Technology
● Ministry of Food
● Ministry of Defence
● Energy and Mineral Resources Division
Some major Special Issue based audit reports – 2005
● Store accounts of 18 offices of Dhaka Electric Supply Authority (DESA) under the
Ministry of Energy, Power and Mineral Resources
● Dhaka Custom House and Internal container Depot
● Asset procurement and distribution management of Bangladesh Army, Navy and
SAI Bangladesh is an emerging tiger progressing slowly but steadily. The head of the SAI
and the SAI management set the gear for the organisation. The present CAG launched his
strategic Plan (2003-06) in 2003 and set the tone. The strategy on human-resource
management – the in built training programme specified in the Strategic Plan is creating a
diverse professional work force with knowledge, skills and capabilities to fulfill the SAI‟s
mission and vision. The modified and upgrade formal training as well as in built in-house
training programme for need based, practical, operational and problem- solving issues
opened up new areas for exploration. The overseas training courses, study tours,
attachments, presentation on professional issues have widened our horizon. With increasing
professional skills and knowledge of new areas, we are clearly ahead of many SAIs. Now is
the time for exploration.
The Impact of Public Accounts Committee (PAC) Reports on
The relationship between the Executive and the Parliament is one of inter-dependence
based on mutual trust and confidence. The main purpose of Parliamentary oversight is to
promote a more efficient public management and ensure accountability. For this purpose,
Parliamentary Committees are an important feature of the modern legislature. The ultimate
purpose of all activities is the welfare of the people, to represent their needs, urges and
Parliamentary control over financial management of the government in the Westminister
model of governance involves several components: the preparation of the government‟s
annual public accounts; internal control exercised by the Executives over its financial
transactions; the subsequent audit conducted by the Comptroller and Auditor General
(CAG); and the related scrutiny provided by Parliamentary Committees specially the Public
Accounts Committee (PAC) of the Parliament.
Public Accounts Committee is the principal public sector watchdog institution that plays the
most vital, visible and far-reaching role in ensuring accountability through CAG‟s audit
reports submitted before the Parliament. PAC‟s principal function is to make Executive
accountable for receipt to and expenditure from the public exchequer of the country.
In Bangladesh, the oversight function is expected to be carried out on behalf of the people by
their elected representative – the Members of the Parliament. The first and foremost
watchdog agency in a democratic system is the PAC. In all democracies PAC is the most
important and powerful Parliamentary Committee. It is the duty of the PAC to satisfy itself
the expenditure shown in the accounts as having been disbursed were legally
available for, and applicable to the services or purposes to which they have been
applied or charged
the expenditure conforms to the authority which governs it
every re-appropriation has been made in accordance with the provisions made in
this behalf under rules framed by competent authority
The PAC has its origin and legitimacy in the Constitution of Bangladesh. The Committee is
formed according to Article 76 of the Constitution. As per Section 234 of the Rules of
Procedure of Parliament, the committee shall consist of not more than 15 members, who
shall be appointed by the house, a minister shall not be appointed a member of this
committee and if a member is appointed a minister, he shall cease to be a member of this
committee from the date of such appointment.
Finance Controller, Bangladesh Ordnance Factory, Gazipur Cantonment, Gazipur
3. Report Discussed
The PAC mainly discuss the CAG‟s audit reports and give directives to the executives after
thorough discussion in the meeting. Normally the PAC meets once in a month. There are
huge reports piling before the committee for discussion but due to time constraint most of the
reports are not discussed by the committee. A summary of the discussed and un-discussed
reports up to April 2004 are shown below
Audit Report Submitted Discussed Un-discussed
Performance Audit 5 1 4
Special Audit 87 31 56
Yearly Audit 707 134 573
Total: 799 166 633
4. Working Practice in the PAC
The PAC examines the Appropriation and Finance Accounts of the Republic and discusses
CAG‟s audit reports on ministries, departments, local and para-statal bodies. During
discussion on the accounts and audit reports in presence of CAG, the PAC holds hearings of
the auditee organisations represented by the Principal Accounting Officer (Secretary) of the
respective ministry. He is assisted by the concerned head of the department/office/
organisation. The committee after thorough examinations, reports irregularities and lapses
to the Parliament with recommendations including remedial measures. The executives are
expected to take action on the recommendations of the committee and report back to the
committee on what actions were taken in response to recommendations.
The PAC, for in-depth scrutiny, formed sub-committees for selected important issues and
observations of the CAG‟s audit reports. The PAC of the 8th parliament constituted 10 sub-
committees on observations of the M/O Communication, M/O Housing and Public Works,
M/O Health and Family Welfare, M/O Water Resources, M/O Food and Disaster
Management and Rural Development and Co-operative Division. The sub-committees
submitted their reports to the full committee. The full committee discussed the sub-committee
reports along with the findings and recommendations. In many cases the committee
summoned the accused persons before the committee meeting for hearing. The committee
formed their final recommendation and directives for the executives.
The PAC also took keen interest for implementing their recommendations. There are regular
follow-up agenda in the PAC meetings to see whether the executive agencies are
implementing the PAC recommendations.
5. Steps taken for un-discussed reports/observations
The committee felt that there are huge un-discussed reports/observations before the PAC to
be discussed in the PAC meeting. Due to time constraint it is not possible for the PAC to
clear all the backlog reports/observations. Moreover, each year there are some additions that
makes it impossible to clear the backlog. The PAC has taken the following steps to cope up
with this situation
Directive for tri-partite meeting up to 1999-2000 audit reports and report back to the
CAG may recommend for settlement of observations to the PAC after examining the
The PAC of the 8th parliament settled 165 observations involving Taka 10.20 core
through tri-partite meetings and 752 observations involving Taka 1612.80 core as a
result of recommendations made by the CAG
6. Impact of PAC Activities on National Accountability
PAC activities and their recommendations are placed before the Parliament by their reports.
The recommendations are made public after placing the report before the House. The
following impacts are observed from the recommendations of the PAC reports
Executives are now more active for implementing PAC recommendations due to
regular follow-up meetings
Media coverage is increased that helps more accountability
In-depth studies on various issues by the sub-committees make the executives more
accountable for their activities
Expert help by the CAG office makes the PAC meeting more effective
Regular and effective PAC meetings helps to promote accountability
7. Limitation of the PAC
PAC has the following limitations
Lack of sufficient secretariat support
Huge backlog needs frequent meeting that cannot be arranged due pre-occupation
of the members
Lack of research facilities
Lack of proper follow–up of the recommendations made by the PAC
8. Step Forward
PAC is a vital parliamentary committee for ensuring public sector accountability. Recently a
project has been initiated to strengthen the secretarial support of the PAC. It will increase the
research and follow-up activities of the PAC that will further promote the national
Effectiveness of local audit activities in the Defence Finance
The Controller General Defence Finance (former Military Accountant General) is the
appropriate authority of maintaining the financial accounts of the defence service. The office
maintains the accounts of the defence services. The accounts of the expenditure of a
defence unit or formation is audited by the Local Audit Office (LAO) in accordance with the
instructions laid down in the LAO handbook.
Local audit in the light of financial rules
All expenditure and accounts of the defence services are maintained under the guidance of
financial rules. Financial Regulations Part – I and Part – II are followed in dealing with the
It has been quoted in rule 278 of Financial Regulations Part – I that the Controller of
Accounts will examine and control all the official accounts disbursement and arrange for the
prescribed periodical inception or local audit of the accounts of such units/formations as they
may select. It is also quoted in Rule 91 (2) of Financial Regulations Part – II that store
accounts of units and formations including units of territorial force and Military Engineering
Services (MES) shall be audited locally on monthly, quarterly and half yearly basis by the
local audit officers of the Defence Finance Department according to their programmes. It
means that all expenditures incurred by the defence service will be audited by the Controller
of Accounts and his subordinate offices.
It has also been cited in sub para (3) under Rule 91(2) of Financial Regulations Part – II that
special stock verifications may also be necessary and local audit officer shall also inspect the
accounts of public fund maintained by the units, formations including units of territorial forces
and MES. They have full powers and authority to examine the treasury chest balance,
cheque and accounts and to call for any information relating to accounts, vouchers or
documents that they may require in connection with the accounts of public fund which are
examined by them.
Therefore, all expenditure incurred by the executive authority are audited by the Controllers
of Accounts to ensure that the financial rules and regulations are followed in a proper way.
As a result, local audit is regarded essential and has given a greater importance.
There are four Senior Finance Controller (SFC) offices - SFC (Army), SFC (Navy), SFC (Air)
and SFC (Works) - responsible to carry out the local audit activities since the inception of the
Revised System of Financial Management for the Defence Forces 1982.
SFC (Army) Office
There are seven Area Finance Controller (AFC) offices under the control of SFC (Army)
which are as follows
Join Finance Controller (Army), Dhaka Cantonment
A.F.C (Log)/Dhaka, A.F.C (Savar), A.F.C (Jessore), A.F.C (Rangpur), A.F.C (Bogra), A.F.C
(Chittagong) and A.F.C (Comilla) - These offices perform the audit activities and also inspect
the bills which are locally passed by the Area Finance Controller office.
There is a central LAO under SFC (Works). Respective office is responsible to carry out local
audit of 48 garrison engineering offices.
There is a LAO in SFC (Navy). There are also two Naval LAO officers responsible for
conducting the audit of different units/formations or naval ships and inspecting the store
accounts of the same.
In SFC (Air) office there is a LAO office and there exists 6 air base offices in Bangladesh at
different places as follows
B.A.F Base – Bashar, B.A.F Base – Chittagong, B.A.F Base – Jessore, B.A.F Base – Bogra,
B.A.F Base–Paharkanchanpur, B.A.F Base – Shamshernagar (Moulavibazar). LAO activities
are performed by SLA (Superintendent of Local Audit).
Effectiveness of LAO
Functions of local audit branch regarding the cash and store accounts of army
formations/units have been mentioned in the Office Manual Part-I and Appendix-I issued by
Local audit checklist
General : (Budgeting)
● Is the budget prepared for all significant activities ?
● Is the budget prepared in sufficient details ?
● Is the budget approved by the competent authority ?
● Are the actual expenditures compared with budget estimates at a regular interval ?
● Does the accounting procedure followed by unit differ from that prescribed rules ?
● Are the accounts of the unit reconciled with the concerned FC/AFC ?
● Is the cash balance reconciled with the bank balance ?
● Has the management separate accounting record for cash and store ?
● Does the cash balance of a cash book differ with actual counting ?
● Are all receipt, issue and transfer of stores between depots and /or consuming units
duly accounted for ?
● Are stores issued for consumption exceed the scales authorised ?
● Are the stores issued against a valid requisition ?
● Do physical safeguards over assets exist ?
● Is there any difference between records and physical counts ?
● Have the ledgers been signed by a responsible officer?
● Are competitive bidding procedures used ?
● Are orders split up to avoid higher levels of approval ?
● Are the steps taken to ensure that goods received are accurately counted and
examined to see the quality standards ?
● Is the payment supported by relevant, reliable and sufficient evidences ?
● Are the taxes deducted as per rule ?
● Is the payment made beyond contract rate /contract provision ?
● Is the payment made before they are due ?
● Is the payment made for the goods not supplied ?
● Does the expenditure fall within the limit of financial power of the authority ?
● Is there any monthly ceiling for imprest ?
● Is there any account for imprest indicating receipt, expenditure and balance ?
● Have the validity and entitlement of acquaintance roll been checked ?
● Is there any separate record for each advance ?
● Is the advance drawn against authorised/approved item of expenditure ?
● Are the receipts, expenditures and balances correctly reflected in the accounting
● Are the adjustments against advances valid and timely ?
Accounts of hospital
● Is there any record for admission and discharge ?
● Is there any record for daily expense against each patient ?
● Are there separate records for hospital clothing, medical and surgical equipments,
medical stores, etc.?
● Are there separate records for X-Ray, dental, pathological matters, etc (i.e. receipts
● Is there any register for vehicles ?
● Does the register contain all the expenses regarding repair, maintenance, taxes etc
(except petrol, oil and lubricants) ?
● Is there any log book for each vehicle ?
● Is there record for POL consumption against each vehicle ?
● Does the vehicle register contain the details of equipments, parts, wheel and other
items used for the vehicle with cost ?
According to the LAO Hand Book the local audit and inspection is carried out in
● 1st step :- The function of local audit team
Quarterly inspection team is formed to audit the store accounts of different units and
formations. According to the LAO Hand Book Part II - Para 4, an audit team is formed under
the supervision of a Superintendent as per approved programme.
● 2nd step :- Inspection activities of audit officer or reviews of LAO
After completion of local audit activities the step is taken for store and accounts inspection of
different units and formations by LAO quarterly.
● 3rd step :- S.S.O review action
The SSO review is conducted after the local audit and LAO review inspection is over. The
Deputy Assistant Finance Controller (DAFC) or higher authority conducts SSO Review as
per instructions of LAO Handbook (Para I, 4 -c). The concept of audit of accounts for the
Defence Finance Department was revised in 1982. As per revised system of financial
management the regional Finance Controller has been entrusted with the responsibility to
run the local audit activities of units or formations. Accordingly, the local audit is being done
under the overall control of the Area Finance Controller office.
It is cited in LAO Handbook (Para 8-a) that the responsibility of a local audit officer is
inseparable from that of his staff. Final responsibility for the efficient conduct of local audit,
therefore, always rests with the LAO. In addition to the specific duties laid upon him, a LAO
is expected to conduct the general and intelligent reviews of the audit work of his staff and to
apply surprise check periodically.
The LAO will by personal inspection and supervision satisfy himself that the group
superintendent and LAO staff are carrying out their duties efficiently and he will visit each
units/formations for the review of audit works periodically.
As the LAO office and its activities are now directly controlled by the Area Finance Controller,
the local audit can be more effective and transparent in respect of maintaining the accounts,
refund of money and other audit activities of defence service unit or formation.
It is mentioned here, that SFC (Army) has given more importance to the unit/formation for
auditing imprest money. The payment of pay and allowances of the soldiers of different
units/formations should be executed as per rule cited above. For example, B.F/HB, DSPF,
Contribution and Loan, etc. should be deducted from gross amounts. The net amount of the
salary be paid through Acquaintance Roll, Defence Authority following this instructions. As a
result the government money expenditure is restricted to some extent through the new
system of LAO audit of units or formations.
Measures to be taken for effective LAO activities
● Efficient staff should be posted under LAO and it is necessary to arrange adequate
training for the purpose
● LAO should strictly follow local audit checklist
● There should be bilateral discussions regarding audit observations
● Area Finance Controllers will directly monitor the local audit party
● The local audit office should only perform local audit function and avoid bill passing
and audit function by the same person
● LAO auditors should be provided with sufficient logistic support to conduct audit
Summary on the Report of the Controller and Auditor General of
New Zealand on “The Treasury: Capability to Recognise and
Respond to Issues for Māori”
Shish Haider Chowdhury
A.1 The Māori
1. The Māori are the indigenous people of New Zealand. The name "Māori" originally
meant "the local people" or "the original people". Māori was a word which signified "local" or
"original" - as opposed to the new arrivals - white European settlers to New Zealand. With
the arrival of European settlers, the word Māori gradually became an adjective for the "Māori
2. The ancestors of the Māori were Polynesian people originating from south-east Asia.
Some historians trace the early Polynesian settlers of New Zealand as migrating from
today's China, making the long voyage traveling via Taiwan, through the South Pacific and
on to New Zealand. The anthropologist Thor Heyerdahl, on the other hand, claims that the
Polynesians arrived in the Pacific from America, rather than from the East, as other scholars
claim. Heyerdahl bases his theory on the fact that the kumara (sweet potato), staple
cultivated food crop of the pre-European New Zealand Māori, originates from central South
A.2 The Treasury of New Zealand
3. The New Zealand Treasury, established in 1840, is one of New Zealand‟s oldest
institutions. Initially the Treasury consisted of just a few officials responsible for managing the
Government‟s day-to-day financial affairs. Today the Treasury employs just over 300 people,
is the Government‟s lead advisor on economic and financial policy and has the overall vision
of helping government achieve higher living standards for New Zealanders. The Treasury‟s
role is broad and varied. It manages the public purse, advising on how governments can get
the best quality and value out of public spending. But it also takes a broad view of the New
Zealand economy, developing strategic advice for the Government on its future shape and
4. The Treasury‟s goal is to be a world-class treasury working for higher living
standards for all New Zealanders. Living standards result from a complex mix of economic,
social and environmental factors. The Treasury, as the Government‟s lead advisor on
economic and financial policy, focuses mainly on the economic dimension. The Treasury
prioritises to achieve 5 outcomes e.g. (i) improved overall economic performance; (ii) a
stable and sustainable macro-economic environment; (iii) effective and efficient use of state
resources and regulatory powers; (iv) improved decision-making and performance
management systems; and (v) efficient management of Crown assets and liabilities.
Director, Commercial Audit Directorate
A.3 The Comptroller and Auditor General of New Zealand
5. The office of the Controller and Auditor-General (C&AG) is a statutory office created
by Parliament through the Public Audit Act 2001. The Auditor-General is an officer of
Parliament. In that capacity, the Auditor-General is independent of executive government
and answerable to Parliament. The person holding the office of Auditor-General is
recommended for the position by the House of Representatives and is appointed by the
Governor-General. The person appointed can hold the office for a once-only term of no more
than seven years.
6. In New Zealand‟s system of government, Parliament is supreme – all authority for
governmental activity ultimately stems from Parliament. Public sector organisations are
therefore accountable to Parliament for their use of public resources and powers conferred
by Parliament. As part of its accountability requirements, Parliament seeks independent
assurance that public sector organisations are operating and accounting for their
performance, in accordance with Parliament‟s intentions. There is also a need for
independent assurance at the local level. Local authorities are accountable to the public for
using the resources they fund through rates. The Auditor-General provides this
independent assurance to both Parliament and the public.
B.1 Present status of Māori
7. Māori comprise about 13% of the total population of New Zealand. Key indicators of
social and economic well-being of New Zealand show that compared to the majority of the
population, Māori experience poorer health, lower educational achievement, and higher
levels of unemployment. The reasons for the continuing disparity are complex. Contributing
factors include the state of the economy, job opportunities, personal determination,
educational achievement and the values and choices of individuals and their families. The
Government also influences Māori outcomes through its policies and funding and the way
that public sector organisations (PSOs) prepare policies and purchase and deliver services.
B.2 Mode of Audit
8. The 1998 article of the C&AG set out the processes that public service departments
should follow to be effective for Māori, in the areas of human resources, working
environment, organisational structure, strategic planning, policy advice, and service delivery.
For this particular report, the C&AG audited the Treasury against all these areas except
service delivery, as the Treasury does not deliver operational services. The audit office
modified the expectations from the 1998 article to take account of the requirement for public
service departments to manage for outcomes. The C&AG examined the Treasury‟s some
important areas e.g. (i) processes to become aware of relevant stakeholder issues; (ii)
processes to prepare policy and plans; and (iii) relationships with public service departments.
B.3 Performance Audit
9. The report titled “The Treasury : Capability to recognise and respond to issues for
Maori” is the report of a performance audit carried out by the C&AG under section 16 of the
Public Audit Act 2001. The performance audit examined one or more of the aspects of
performance e.g. (i) effectiveness and efficiency; (ii) compliance with statutory obligations;
(iii) waste; (iv) probity; and (v) financial prudence.
B.4 Expectation from Public Service Departments
10. It is expected that public service departments need to be able to respond effectively
to the Government‟s social and economic goals for Māori, which are encompassed within its
goals to improve social and economic outcomes for all New Zealanders. The Treasury has
significant influence on Ministers‟ and Cabinet‟s consideration of public service departments‟
activities and plans to address issues for Māori, where these have fiscal and economic
B.5 Observation of the C&AG on Māori issues
11. The Controller and Auditor General (C&AG) of New Zealand observed in relation to
state sector implementation of the Government's strategic direction concerning Māori affairs
Māori continue to experience poor outcomes for a number of socio-economic
policy and service delivery Public Service Organisations (PSO) have varying degrees
of capability to be effective for Māori
Māori continue to be under-represented in the public service
12. The Controller and Auditor General (C&AG) wanted to know how well the Treasury is
able to recognise and respond to issues for Māori within the context of its role to improve
living standards for New Zealanders. The C&AG audited the Treasury against its
expectations of the processes that public service departments should follow to be effective
C. Issues for Māori- How to recognise
13. The Treasury does not have formal and ongoing relationship with Māori
organisations and recognise that it has limited expertise to build links directly with Māori. This
is because the Treasury does not deliver operational services. It has appointed a senior
public servant to advise the Secretary to the Treasury on engaging with Māori and provide
leadership to improve the Treasury‟s capability to recognise and respond to issues for Māori.
14. The Treasury has formal plans in place to achieve its strategic outcomes and relies
on aggregated information in using resources and describing, forecasting or evaluating
economic performance. The plans incorporate but do not specifically document issues for
Māori. The organisation-wide Communication Plan, which supports the outcome plans,
identifies Māori as key stakeholders.
15. The Treasury is now taking a more structured approach to engage with Māori. This
has made it receptive to and better prepared to take advantage of opportunities that arise to
communicate with Māori, such as participation in Hui Taumata1 in 2005. The C&AG
encourage the Treasury to continue with its openness in building links with Māori.
A gathering of 450 people on March 1, 2005 at Te Papa in Wellington for three days of intensive
discussion and debate on ways to accelerate Maori economic development and create economic
pathways for the generations ahead.
16. The Treasury‟s medium to long-term plan and annual planning processes are
appropriate for identifying significant issues for Māori and to a large extent rely on public
service departments to identify emerging issues for Māori. Te Puni Kōkiri2 is preparing a
framework, focusing on fostering Māori success, to help public service departments priorities
and address issues for Māori. The Treasury expects that the framework and the empirical
data supporting it, will help the Treasury to focus on areas of greatest importance in
achieving its outcomes.
D. Issues for Māori- How to respond
17. The Treasury approved a Māori Responsiveness Policy Statement and Plan in 2000,
which has been implemented and subsequently revised. The current plan addresses policy
objectives, recruitment and retention issues which are dealt with separately. A cross-
Treasury team (the Māori Responsiveness Group) provides specialist support to the rest of
the organisation and provides leadership on Māori issues. The Treasury has used
knowledge management techniques to improve staff capability to respond to and provide a
coordinated and consistent approach to issues for Māori.
18. The Treasury has introduced a course to help analysts understand and respond to
issues for Māori and using this training, hopes to create a standardised framework for
analysing the issues. The Treasury works closely with public service departments to address
issues for Māori through the provision of second-opinion fiscal and economic advice. It
expects departments to be knowledgeable about issues for Māori. Departments do not look
to the Treasury for expert advice on Māori issues, although the Treasury may ask
departments to confirm that they have taken appropriate expert advice and used empirical
support in drafting advice. As needed, the Treasury may provide departments with
background papers to help them draft advice. Public service departments expect to be
informed about or directly involved in any direct contact that the Treasury has with Māori
E. Preparing Treasury staff for Māori issues
19. The Treasury manages its people strategically and regularly seeks ways to improve
its human resource management to deliver on its outcomes. Initiatives to improve the
Treasury‟s responsiveness to Māori have continued to mature because of the continued
commitment and leadership of the Senior Management Group and chief executive officers
since the late 1990s.
20. The Treasury has the essential systems, structures and processes to be a flexible
and capable organisation that responds to the needs of Māori staff. It has the usual range of
human resources and equal employment opportunity policies and practices expected of a
public service department.
21. Staffs have access to a number of in-house resources to improve their knowledge
and experience of Māori culture and perspectives, which means that Māori staffs are less
often relied upon to explain cultural issues to non-Māori staff. Additional resources are made
available as needed. As the Treasury uses various means to improve its capability to
recognise and respond to issues for Māori, it does not have to rely on increasing its
proportion of Māori staff. Recruitment of Māori staff is in line with projections for 2005.
The Ministry of Māori Development established in 1992 under the Māori Development Act 1991.
22. The Treasury‟s written human resource policies and processes are free of unfair bias
and support its commitment for building and maintaining an ethnically diverse workforce.
However, an external review in 2004 found that there was unintended bias in the
implementation and operation of the policies and procedures.
F. Conclusions and Recommendations
23. The report concluded with the opinion that the treasury and other public department
need to be able to respond effectively to the Government‟s social and economic vision for
Māori. This was a specific case with the Treasury. It provides fiscal and economic advice on
its own account. Also it provides a second opinion to the Government on other public service
departments‟ initiatives having direct relationship with the interest of Māori.
24. The findings of the C&AG show that the Treasury is well placed to respond to the
issues for Māori. This is because of continued support of the competent senior staff of the
Treasury to ensure that the wide range of knowledge possessed by a few experts is
equitably shared throughout the organisation by a range of means. In recognising and
responding to issues of Māori, the Treasury showed their capability. It is expected that the
other departments may find the methods that the Treasury has used to improve the
capability of its staff a useful model for their own efforts to do the same for Māori.
25. The C&AG recommends that the treasury should ensure that new employees,
including managers, are provided with information about the activities and resources
available within the treasury to recognise and respond to issues for Māori.
26. The C&AG also recommends that, when its standardised frameworks for analysing
Māori policy issues are sufficiently reliable, the Treasury draw up a set of competencies to
ensure that there is a common body of knowledge and skills among staff to respond to Māori
ASOSAI Group Training Workshop on „How to Develop and
Manage Human Resources to Deal with Emerging Audit Issues‟
– Strategies for Application
November 13-21, 2006 - Tokyo, Japan
S M Rezvi
An Asian Organisation of Supreme Audit Institutions (ASOSAI) group training workshop on
„How to develop and manage human resources to deal with emerging audit issues‟ was
organised by the Board of Audit of Japan and sponsored by the Japan International
Cooperation Agency (JICA). The workshop was held from 13_21 November, 2006 at the
Institute for International Cooperation (IFIC), Tokyo, Japan. Fourteen officers from eleven
SAIs‟ (Bangladesh, Bhutan, India, Indonesia, Malaysia, Maldives, Mongolia, Nepal, Oman,
Saudi Arabia and Thailand) participated in the workshop.
Lectures : auditing system in Japan
Site visits : local and central government offices
Presentations and discussions
Presentation based on country report
Comparison and analysis of human resources development and
management efforts to deal with emerging audit issues
Formulation of a report on innovative practices
The keynote address was given by Mr Nobuo Azuma, Senior Director, Research and
International Division, Board of Audit of Japan. During the address, apart from giving
information on the mandate and function of the Board of Audit of Japan, issues relating to
human resource management were focused upon.
During the workshop, the representatives of each country made a presentation of a country
paper highlighting the functioning of their SAI and the human resource management
practices in each SAI. These were followed up with discussions. A field study to the Internal
Audit Office of Nara Prefecture was also organised during the workshop.
The following challenges were identified during discussions in the workshop
Information and communication technology audit
More knowledge of English language for better interaction with other SAIs and
other international bodies for knowledge sharing
Director, Mission Audit Directorate
Motivation and incentive for audit personnel
Audit of complex technical projects requiring multidisciplinary knowledge
Increasing and varied expectation of stakeholders from the SAI
These challenges could be met through bridging the gaps in skill and capacity in the existing
human resources through preparing clear strategic plans for recruitment, training,
appropriate incentives and motivations for human resources.
Audit personnel recruited should have the required educational qualifications viz
accounting, finance, business administration, legal, information technology,
engineering, statistics, medicine, etc. so that SAI Bangladesh is able to meet the
increasing and varied expectations of the stakeholders.
SAI, Bangladesh is mostly dependent on a centralised recruitment agency that
recruits for the entire government. Therefore, the skill gap could be bridged by
engaging short term consultants and outsourcing specific assignments in close
association with the SAI‟s audit personnel.
To meet the shortage of human resources, more posts should be created and
recruitments made to meet the challenges posed by new developments in audit
SAI, Bangladesh needs more trained personnel in new and diverse audit areas. Emphasis
should be more on practical on the job training rather than theoretical lectures. Some
recommendations in this regard are as follows
Continued professional education should be emphasised in various areas e.g. IT
audit,, environment audit, performance audit, investigative audit etc. Subject matter
specialists can be engaged in specialised fields of audit e.g. engineering, medicine,
environmental studies, statistical studies etc.
Audit personnel should be encouraged to acquire internationally recognised
professional certifications and higher academic qualifications in their field of expertise
Trainings could be organised to combine theoretical inputs with practical exposure.
These can be organised with the help of educational institutions and professional
auditing firms. Distance learning should be encouraged through structured training
modules developed by different SAIs
Due to increasing interactions between SAIs, English is emerging as the language of
communication. Therefore, training for report writing skills in English should also be
organised. SAI, Bangladesh can develop guidelines on good report writing.
Seriousness in training should be ensured through proper de-briefing exercise before
and after training, assessment and selection of the right people for training.
Trained personnel should be assigned jobs which allow application of the skills
learnt. The expertise gained through training should be disseminated by using such
personnel to train others in the organisation. Training material should be collected
from the trainees and preserved in a centralised training library.
Manuals on different areas of audit should be prepared by SAI, Bangladesh e.g. IT audit,
performance audit, environmental audit, investigative audit etc. If necessary these can be
prepared in consultation with other SAIs. A centralised knowledge pool or database on
existing manuals with appropriate links to online resources/contact persons of different
offices should be created by the SAI and made available on the internet for easy access.
Interaction between SAIs
Bilateral and multilateral interactions between representatives of SAIs at different levels
should be encouraged through meetings and workshops for sharing of knowledge in different
Treatment/ incentives to audit personnel
Performance assessment should be based on detailed performance agreements. To
the extent possible, it should be made objective
Incentives in the form of faster promotions that are performance linked should be
Incentives should be given by SAI for acquiring internationally recognized
professional certification to encourage continued professional education of its
It is extremely important for SAI Bangladesh to improve the audit management system to
cope with emerging audit issues. SAI Bangladesh may accept these recommendations to
improve the audit functions. However, it will require more time and money to implement
these recommendations. Considering all these limitations SAI, Bangladesh may implement
the recommendations in phases to meet the new challenges of emerging audit issues.
Maintenance and repair of Coach, Carriage and Wagon at
Saidpur Railway Workshop
A.K.M. Hasibur Rahman
The main mode of communication in this part of the world is railway. In this region it was the
Eastern Bengal Railway which started the construction of 53.11 km. of broad gauge line
between Darsana and Jagati of Kushtia district. Bangladesh Railway, which covers a length
of 2855 route kilometers and manned by 35,172 regular staff, is a government-owned and
managed transportation agency of the country. Railway operates business 24 hours a day,
365 days a year. Due to the nature of operation, it needs continuous maintenance and repair
of the locomotives, coaches and wagons. Railway workshop at Saidpur started its operation
back in 1870 to fulfill the need of the railway. At present, it is one of the largest railway
workshops in Asia. It also holds the status of a workshop division of Bangladesh Railway.
2.0 BRIEF HISTORY
This workshop originally started as a repair shed for small meter gauge steam locomotive in
the year of 1870. Gradually the shed developed into a repair workshop for meter gauge
locomotive, passenger coach and wagon. Later on, it was planned for repairing broad gauge
passenger coaches in 1944, which became essential after the partition of India. Accordingly
necessary steps had been taken and the repair of broad gauge coach, wagon and steam
locomotives began in the year 1953. Manufacturing of meter gauge passenger carriage
started in the year 1966 in one shop named “Carriage Construction Shop” and continued up
to June 1992. Apart from repair done from revenue budget, 268 no meter gauge coaches
were manufactured against the project allocation.
Production wing of Saidpur workshop produces a large number of spare parts for carriage,
wagon, locomotive and marine vessel. It also produces and repairs spare parts for other
departments of the railway. Besides, the production wing manufactures and repairs different
spares for other government agencies and private parties.
The workshop has an area of 110.2 acre which has 20 acre of covered area and a boundary
wall of 9953 ft. There is 66.64 km of railway track inside the workshop in which 28.31 km of
MG, 11.25 km of BG and rest 27.08 km is of dual gauge.
The workshop operates from Saturday to Thursday in a week. The working hours of the
workshop is 0700 hrs to 1130 hrs in the morning and 1230 hrs to 1630 hrs in the afternoon in
all the weekdays except Thursday in which the workshop operates from 07.00 hrs to 12.30
hrs. Average weekly working hours of one worker is 48 hours and average yearly working
days of the workshop is 285 days.
Assistant Accountant General (Probationer), Financial Management Academy
Organisation Structure of Saidpur Workshop Division
Saidpur workshop runs under the supervision of Divisional Superintendent/Workshop
(DS/W). There are other divisional level officers to help the DS/W to run the operation of the
workshops. There are about 2700 employees working in the Saidpur Railway workshop. A
brief organogram of the workshop is given below
Table 1: Organogram of Saidpur Railway Workshop
WM AEN/IC DEE DMO PE
AWM/R AWM/C AEE JPO APE AWM/M
The main supporting hands of DS/W are Works Manager (WM) and Production Engineer
(PE). WM is Responsible for repair and maintenance (Mechanical) of all passenger carriages
and freight wagons. WM has around 1350 people under him at different shops. On the other
hand, PE is responsible for manufacturing of spare parts for carriages, wagon and
locomotives. Apart from this, he is involved in repair of steam cranes, marine vessels,
different kinds of tools and plants. Normally, schedule repair and maintenance of steam
cranes, plants and machineries of entire West Zone including their foundation, erection and
installation are carried out in Production Engineer‟s shop. There are about 875 worker under
the direction of PE. There is another important division to help the day-to-day activities of the
workshop under Divisional Electrical Engineer (DEE) who is also responsible for electrical
repair and maintenance of passenger carriages. He further ensures power supply to various
workshops, residential areas, Parbatipur Diesel Locomotive Workshop, Parbatipur railway
residential areas and other allied units. DEE has around 400 employees to assist him.
3.0 MAINTENANCE AND REPAIR WORKS AT SAIDPUR RAILWAY WORKSHOP
Maintenance and repair works of rail coaches, wagons and carriages are mainly done here.
Beside this, some spare parts necessary for this maintenance and repair are also produced
and manufactured in this workshop. Every coach, carriage and wagon is scheduled to be
brought to this workshop every year for maintenance and repair works. Each year around
275 BG and 220 MG coaches, carriages and wagon are routine checked or repaired from
here. On an average 2 coaches and 4 wagons are repaired here. It takes about 17 to 32
days for the completion of the repair work of a carriage and wagon. All the maintenance and
repair works of the coaches and wagons are done in 25 different shops. Each shop performs
different functions at the maintenance and repair works. There is about 744 nos. of
machineries and plants in this workshop to do the repair and maintenance works out of
which 41% of the machineries are above 50 years old. There is only 23% machineries which
is within the lifetime i.e. 20 years of age. The repair schedule of carriage, wagon and relief
crane is stated below
Table 2: Repair Schedule of Carriage, Wagon & Accident Relief Train
Lift Enamel (LE) Periodical Overhaul
Period Scheduled Actual Period Scheduled Actual
Type of stock Year working Average Year working Average
time/day working time/day Working
Intercity BG 1 15 21 4 27 22
Intercity MG 1 15 17 4 27 23
Other carriage BG 1.5 15 28 6 27 29
Mail, express, Local MG 1.5 15 27 6 27 29
Saloon BG 2 19 61 8 32 80
Saloon MG 2 19 76 8 32 77
Wagon BG 3.5 6 14
Wagon MG 3.5 5 6
Relief Train BG 4 36 75
Relief Train MG 4 36 65
Source: Statistical report of Saidpur Workshop
Different shops of this workshop perform different functions. Among 25 shops, 11 shops are
under the supervision of WM, 9 are under PE and remaining 5 shops are under DEE. Each
shop is headed by a shop in charge who is a Senior Sub Assistant Engineer (SSAE). These
shops are mainly categorised into two types: Mechanical shops and Electrical shops. The
mechanical shops are either under WM or PE but all the electrical shops are under DEE.
Here are some brief ideas about the activities of some of the shops.
Carriage Shop - All BG and MG passenger carriages are repaired in the shop which
require periodic overhauling or special type of repair
Wagon Shop - All broad and meter gauge freight wagons are repaired in the wagon
Paint Shop - Painting of all passenger carriages, freight wagons, cranes, equipments
and machineries is done in this shop. Different kinds of enamel paint are used in the
outer side of the coaches and aluminium paint is used on the top of the coaches.
Beside this, all the sewing works are done in this shop. There is about 156 people
working against sanctioned post of 265. One BG carriage requires 183 ltr of paint
and painting material costing around Tk 39,000/- and requires 9 days for painting.
One MG carriage requires 143 ltr. of paint at a cost of Tk 29,490/- and time taken for
painting is 9 days. One BG wagon requires 40 ltr. of red oxide paint cost of which is
Tk 2500/- and time required is 3 days. One MG wagon requires 30 ltr. of red oxide
paint costing Tk 1,900/- and time taken for painting is 3 days.
C&W Machine Shop - Repair of all types of wheel of carriage, wagon, crane etc and
testing of vacuum cylinders are done here. This shop is equipped with a lot of
Mill Wright Shop - Repair and maintenance of all plants and machineries of Saidpur
workshop, all loco sheds, TXR depots of west zone are performed in this shop. All
the plants, machinery and equipment of the workshop and outside the workshop for
west zone of Bangladesh Railway are repaired, maintained and installed by
Welding Shop - All kinds of gas cutting and welding works necessary for the repair
and maintenance are done in this shop
Foundry Shop - Spare parts, which are to go under casting process (ferrous and non-
ferrous), are produced in this shop. There are four cupola furnaces for ferrous
casting and four Morgan furnaces for non-ferrous casting in foundry shop. Two
cupola furnace (out of four) have the melting capacity of 5-6 tons per hour, other
having one 3-1/2-4 tons per hour and another one 1-1/2-2 tons per hour. Two
Morgan furnaces have melting capacity of 650 lb. each and another two have melting
capacity of 450 lb each. Besides, there is another furnace for preparing anti-friction
metal (capacity 733 kg). In 2004-2005 about 526 M. Ton of iron is produced in this
Production Machine Shop - Spare parts of carriage, wagon, and locomotives are
manufactured in this shop by machining. The shop completed 658 no of orders in
Smithy Shop - Spare parts for carriage, wagon, locomotive, marine vessel etc are
produced in this shop by forging, stamping and punching. Different type of springs
are examined and repaired. Wire ropes, slings, chains, loco sheds and TXR depots
are also examined and repaired in this shop.
Tool Room Shop - Different kinds of tool, dies, jigs, fixtures, templates etc are
manufactured and repaired in this shop.
Yard Shop - Carriage, wagon, crane etc that require overhauling are received
through this shop from Running Division. After repair, they are returned through this
shop. Shop manufactured items are also dispatched to the concerning sheds, shops,
TXR depots through this shop. All sorts of shunting work inside the workshop and
yard are performed by this shop. Fuel storage and supply to different shops are also
done by this shop.
Loco Machine Shop - Repair of wheels, locomotive, carriage and wagon are done in
this shop in addition to manufacture and repair of some spare parts for them.
Boiler Shop - Though with the phasing out of steam locos, use of boilers have been
reduced, some boilers used for repair of relief cranes and stationeries are still
working in this shop. Some spare parts of carriage, wagon, locomotive and marine
vessel are being manufactured in this shop at present. In addition, some orders for
repair work from outside are also executed here.
Saw Mill Shop - As per demand of different shops, timbers are cut as per design and
size as supplied to them.
Crane Shop - Relief cranes, mobile cranes overhead cranes, traversed traveling
cranes etc are repaired in this shop. All steam cranes of Bangladesh Railway are
repaired and maintained in crane shop under Production Engineer. Out of total 25
steam cranes, 14 are used as relief crane and remaining 11 as mobile crane.
Besides these, there is 1 road mobile crane, 19 overhead cranes and 2 traverses in
Inspection Shop - This is a quality control unit. Quality of carriage, wagon and spare
parts manufactured are ensured by this shop through routine inspection.
GOH Shop - This shop came into existence through introduction of rehabilitation
project of 50 BG carriages in 1988. Presently, all heavy repair of carriages are done
at the GOH shop. It undertakes heavy repair of carriage both under revenue and
Power House Shop - This shop is responsible for electricity supply and distribution to
all railway installations and residential buildings at Saidpur, Parbatipur diesel
workshop and Parbatipur powerhouse colony.
Train Lighting Shop - Periodical overhauling and special repair of electrical system of
passenger coaches are done here. This shop also repairs air conditioner and
Diesel Shop - Periodical overhauling and special repair of diesel engine of different
power cars are done here. This shop also repairs diesel engines of various diesel
Within the period ranging from 1967 to 1992, as many as 268 MG coaches were
constructed, out of which 52 coaches have so far been declared condemned due to various
reasons and the remaining 216 are still in service. At present due to insufficient budget
allocation and lack of required raw materials, no carriage is undertaken for construction.
Recently Bangladesh Railway has procured 50 BG coaches from Indonesian company
named INKA. The price of each coach was Tk 1 crore 54 lac excluding 60% of tax. Already
11 coaches have arrived and final finishing work of these coaches is going on at the Saidpur
As per maintenance schedule, all carriages of mail, express and local trains are to undergo
periodical overhauling (POH) every six years and general overhauling every twelve years.
But mainly due to non-allocation of required budget these maintenance schedules of carriage
could not be maintained as per programme. As a result, every year schedule programme for
repair of a good number of carriages fall behind and such coaches are to run overdue due to
shortage of coaches in the running division. Under these circumstances, there is a
continuous increase in backlog in repair of carriages. On the other hand, the condition of
such coaches deteriorates at a faster rate resulting in a gradual fall in availability of coaches.
4.0 ROLE OF DFA OFFICE
There is an office of the Deputy Financial Adviser and Chief Accounts Officer (DFA&CAO) at
the Saidpur workshop. DFA works as the financial adviser of the executive and scrutinises
proposals of all financial expenditure and procurement. Besides, all payment of workers of
the workshop are made by the office which has strength of around 65 people.
5.0 CONCLUSION AND RECOMMENDATIONS
As an organisation it is necessary to make the railway fully independent in its operation. One
of the main requirements in making railway independent is to provide fully equipped
maintenance and repair workshop. The workshop at Saidpur was built to fulfill overall
requirement of the railway. As of now, the workshop is trying to perform its function and
provide essential support to Bangladesh Railway. However, we are not making full use of the
resources in the workshop. There are some problem in policy making regarding the
workshop. Some recommendations are made here to improve the performance of the
workshop and make it as a profitable organisation.
In Saidpur railway workshop a huge quantity of scrap iron is produced in different
stages of maintenance and repair works. These scrap are not properly disposed of.
which causes environmental hazards. The authority can use theses scraps in a
productive way. These can be used in steel re-rolling mills as raw material.
The capacity of the workshop remains under utilised. The workshop has the capacity
to make new carriages itself in a cheaper way. The authority should give a serious
thought about it.
The machineries in this workshop are not properly maintained. In C & W shop a
machine costing Tk. 22 crore has been remaining in break down position for last two
and half years. It hampers the operation of the workshop. The authority should
consider the problem seriously.
The number of employees and workers required in this workshop are not maintained.
Many of the posts are still vacant. This hampers the workflow of workshop operation.
The problem should be addressed properly.
There is a wide gap between the actual requirement and the allocation of the budget.
It was frequently found that workshop could not fulfill its operational programme due
to the lack of budget. Therefore, authority should adequately allocate budget
according to the requirement of the workshop.
There is a constant labour problem that prevails in the workshop. The workers are
not always satisfied with the administration. As a result, regular activities of the
workshop and the production could not be finished within the schedule time. The
railway authority should give due attention to this problem.
Action Plan (Detailed Audit Plan) for
Audit of Procurement of Goods (Printing Paper under NCTB)
Mia Mohammed Mazibul Hoque
ASOSAI-Sponsored Workshop on Audit of Procurement Process held in Jakarta,
Indonesia from 7-18 August, 2006
The Second Primary Education Development Programme (PEDP-II) is a programme
approach. Its principle focus is to provide quality primary education to all eligible children in
Bangladesh. It is financed by the Government of the People‟s Republic of Bangladesh (GOB)
and 11 Development Partners (DPs). The project is implemented by the Directorate of
Primary Education under the Ministry of Primary and Mass Education. The total financing
involvement of PEDP-II is US$1.8 billion over six years, comprising US$1.1 billion (64%)
from GOB and US$ 654 million (36%) from the Donor Consortium.
1. Programme Arrangements: Procurement under PEDP-II is decentralised. Agencies
involved under this programme are Directorate of Primacy Education (DPE), NCTB and
National Academy of Primary Education. All these agencies carryout procurement in
accordance with agreed Annual Procurement Plan for the respective fiscal year under the
programme. The total estimated value in the Annual Procurement Plan is US$
181,873,369.67 for financial year 2005-06. Procurement under the programme, during the
year mostly involved civil works and goods (books, papers, equipment and materials) and
2 Procurement Responsibility: Directorate of Primary Education is specially
responsible for procurement management and to ensure that procurement procedures
criteria, documentation and timetable agreed with the development partners are complied
with. At the agency level National Curriculum and Textbook Board are responsible for the
procurement of printing paper and text books.
3. Tender Evaluations and Approval Procedures: The provisions in the Public
Procurement Regulations 2003 are supposed to be followed.
4. Financial Delegation of Power: NCTB is to follow the governments revised delegation
of financial powers.
Scope of Audit
As per requirement of the ASOSAI Sponsored Workshop on Audit of Procurement Process
held in Jakarta, Indonesia, the participant from SAI Bangladesh consented to audit of goods
package No. 15 (Twelve Thousand Metric Tons of Wood Free White Printing paper)
procured by the National Curriculum and Textbook Board in the FY 2005-2006. The total
contract value of package no (G) 15 was US$ 77,73,600.00. The audit on the procurement of
goods was to be conducted during August-December, 2006.
Audit and Accounts Officer, Foreign Aided Projects Audit Directorate
Auditing the Planning Process
Auditing starts with identifying the risks associated with the planning process, assessing the
degree of risk in each case and managing the risk by developing an appropriate audit
Audit procedure comprises of developing appropriate audit objectives, selecting a suitable
sample and applying proper audit checks relevant to given risk perception.
● Risk Associated with Procurement Planning - Risk associated with procurement
planning may include
Absence of sound, well established procurement policy and plan
Procurement decisions are made without any reference to the strategic plan,
goals and objectives of the organisation
Requisitions are not sent to procurement office in time by the user offices
The requirements are finalised without consultation with user offices
Requirement assessed without taking into account existing stock levels
Potential suppliers can be excluded due to inadequate market survey
Duplicate requisitions may remain undetected due to lack of monitoring and
inefficient management information system
Time provided for completion of procurement process is inadequate
● Audit objective - Some of the audit objectives in procurement planning could be to
After identifying the risks selected to audit area, auditor should develop audit
objectives to respond to those risks
Planning process is transparent and the manner of assessment of needs and
justification for procurements are fully documented
The procurement planning is efficient and effective to ensure delivery of required
goods on time in a cost-effective manner
● Audit checklist for audit of procurement planning - Auditor should check that
Procurement policy and procedures of the department /organisation conform to
the principles of good procurement i.e. it ensures value for money, economy,
efficiency, effectiveness, competition, transparency, accountability, fairness and
adherence to professional ethics
The organisation/department has developed a long term plan
User needs are timely assessed and procurement plan developed well in
Requirements are correctly assessed by the users
Procurement proposals are initiated, processed and approved by authorised
officers as per their delegated powers
The organisation has an efficient inventory control system to help assess the
requirements correctly taking into account the existing stock levels of
goods/stores being procured
Procurements for same types of goods are consolidated to take advantage of
quantity discounts through bulk procurements offered by the suppliers and obtain
best value for money besides achieving efficiency and cost effectiveness in the
There is no splitting of procurements to avoid sanction of competent authority
Review the estimated cost and verify that procurement decisions at planning
stage are based on whole of the life cycle cost of goods/equipment (present
price, maintenance cost, warranty, training cost, etc) instead of just current
If procurements are funded by an external agency like the World Bank/Asian
Development Bank (ADB), see whether funding agency‟s conditions are taken
into account in planning the procurements
The entire process of procurement planning is properly documented with detailed
justification for procuring high value, complex equipment and systems and bulk
To check whether there is proper delegation of procurement authority
Auditing Technical Specifications
● Risks in Preparation of Technical Specifications - The foundation of good
procurement is the development of good technical specifications. Some of the
possible risks could be
Technical specifications developed/finalised without user consultations
Specifications are issued without taking approval of the authorised technical
Specifications are manipulated to favour certain suppliers
● Audit Objectives for Evaluations of Technical Specifications - To set the audit
objective in auditing the technical specifications, principles like economy,
transparency, fairness, reliability, open effective competition, etc. are very helpful to
evaluate the specifications to see that they conform to regulation and best practice.
Following are some of the audit objectives in auditing the technical specifications
To evaluate the clarity of the technical specifications so that every bidder has the
same understanding of the requirements
To evaluate the suitableness of the specifications with the user‟s needs
To ascertain that the process of finalisation of specification was transparent and
has been properly documented
● Check list for Auditing Technical Specifications - Audit should check whether
Technical specifications state the quality requirements in a clear, concise, logical
and unambiguous manner
Technical specifications are comprehensive and contain all essential and
optional features/ characteristics of the goods/product being procured
No modifications are made to the specifications without prior approval of the
The process of development of specifications is properly documented
Auditing the selection of Procurement Methods
● Risks Associated with the selection of procurement methods - Risks associated with
the selection of procurement methods may include the following
The selected procurement method is decided without considering the factors
and conditions under which the method may be adopted
Agency may misuse of emergency provisions of contracting
Procurement officers may not keep proper and complete documentation
evidencing the process and decision on the selected method
Agency may avoid bidding by giving unjustified repeat orders
● Audit Objectives - The audit objective is to verify that the selected method is
appropriate to the goods being procured to the extent that
it conforms with the rules and regulations
it is the most cost-efficient method to procure the goods
the method ensures best value for money in the procurement, is transparent and
provides equal opportunity to eligible bidders to participate and compete in
method is efficient and effective and ensures delivery of goods in time and as per
● Audit Checklist
Policy on selection of procurement method
Process of the selection of procurement method
Appropriateness of the methods
Value for Money
Conflict of Interest
Auditing the preparations of Bidding Documents
● Risks associated with the preparation of Bid Documents - Common risks which may
exist during the preparation of bidding documents include
Terms of bid are not clear and precise and definite and there is enough room for
Terms of bid are highly favourable to the potential suppliers and the interests of
purchaser have not been protected
Favouritism and conflict of interest between the procuring agency and certain
prospective bidders may exist and this will lead to a discriminatory treatment to
other prospective bidders
● Audit Objectives - considering the various types of potential risks in the preparation
of bidding documents, auditors should establish their audit objectives very carefully.
The possible audit objectives could be
To evaluate whether the preparation of the bidding process takes into
consideration the principles of good procurement.
To evaluate whether the Bidding Documents are comprehensive in scope,
complete in elements and clear in contents
To evaluate whether the Bidding Documents provides all information needed by
To evaluate whether there is any evidence of favouritism and conflict of interest
on the part of the procuring agency and the bidders
● Audit Checklist for Auditing Bid Document - obtain and review the procuring agencies
written policies and procedures describing the process of bid document preparation.
Following checks are considered for auditing bid documents of procurement process.
Auditors should check whether
Terms of bid are clear, precise and definite
Bid document has adequate clauses to cover the purchaser against various risks
Bid validity period is clearly indicated
The amount of bid bond required is given
Evaluation Criteria and Qualifications
Condition of Contracts
Custody of the bidding documents
Auditing the bidding process
● Risks associated with the bidding process - There are several risks associated with
the bidding process. Some of these are discussed below
Information on bidding
Advertising of bid
● Audit Objectives of bidding process - The audit objectives in auditing the bidding
process will be to ascertain the entire bidding process has been conducted in a fair
and transparent manner as per regulations to ensure maximum competition. The
more specific objectives will be
Information on procurement plan
o To review if the Agency has published their procurement plan for the
respective year as soon as possible in order to gather maximum possible
o To review whether the information on procurement plan has been provided in
such a way that it is accessible to all potential suppliers
Invitation to bid
o To review if the invitation to bid has been published in the media as
prescribed in the regulations
o To review if the invitation to bid provided complete enough and clear
information to potential bidders to express their interest
o To review if the invitation to bid has given enough time to the bidders to
submit proper responses relating to the requirements
o To ascertain that late submission are not considered
o No information from the bids is leaked before bid opening
o To review if the Bid Opening has been conducted properly in an open
● Audit Checklist for auditing the biding process management
Information on bidding
o The purchasing organisation/agency has made and published the annual
procurement plan that identifies the goods to be procured, estimated quantity
and method of procurement
Invitation to bid
o Adequate publicity is given to the invitation for bidding /notice inviting tender
as prescribed in regulations
o The potential bidders have been given reasonable time to develop and
submit their response
o All invitees to the bidders conference and other prospective vendors should
receive the same information
o If there is a withdrawal of Submission after the bid opening, the bid security
should be forfeited
o Opened bids are properly secured and sent to bid evaluation committee
without delay after approval of the competent authority.
Auditing the bidding evaluation
● Risks associated with bid evaluation
Justification for accepting or rejecting a bid is not properly recorded
Evaluation may not be fair to all the bidders
All the factor costs are not taken into account in cost comparisons
Technical committee may lack expertise in evaluation of technical systems being
The bid evaluation/purchase committee may accept higher price and may not
have determined the reasonableness of the price offered due to lack of
information, inadequate market survey or otherwise
● Audit objectives - to verify that
Evaluation provides best value for money
The evaluation of bids has been carried out correctly as per approved criteria and
The bid evaluation process is transparent and fair
There are no delays in evaluation
The evaluation committee has required skills, experience and qualifications to
evaluate the bids properly
● Check List for auditing the bid evaluation - Auditors should check and verify whether
All the bids received were considered by the bid evaluation committee
Necessary securities/bonds have been furnished by the bidders
Bids were in order and all bid documents were properly signed by the
Bids received late were not evaluated
Auditing the Contract Awarding Process
● Risks associated in Contract Awarding Process - Following are some of the risks
associated with the contract awarding process
The contract is not awarded to the lowest bidder who provided best value for
Contract is poorly drafted
Government‟s interests were not adequately safeguarded in the conditions of
Contract has been signed without consultation with the legal and financial
Performance security bond is not taken from the supplier
Award of contract has been affected due to conflict of interest or corrupt practices
in the purchase organisation
● Audit Objectives - Audit objectives will focus on the compliance, transparency,
fairness, accountability, value for money, ethical standard etc. and will include
Review if the contract awarding process is transparent and all the decisions and
activities are properly documented
Review that the terms of contract are clear, complete, easy to understand and
Review whether the interests of Government were adequately safeguarded
through protective clauses in the contract relating to performance by the supplier
Review that the contract has been signed with the valid performance security
within the time specified in the bidding document. Delay in signing of the contract
to be examined
● Check list for auditing the award of contract - Depending upon the scope of audit and
risk perception, the auditor should select a sample of contracts awarded by the
purchase organisation during the given period and apply following checks:
o Contract has been awarded to the bid winner who provided best offer in
terms of the prescribed evaluation criteria and satisfied all the technical,
commercial and financial conditions stipulated in the tender document
o The announcement of the bid winner was made immediately on the
completion of bid evaluation and its acceptance by the competent authority.
o Examine cases of non-award of contract to the lowest bidder
Award of contract
o Terms of contract are clear, precise and definite, and there is no room for
o Contract document is prepared by a competent team of officers. Contract
document has been vetted by legal authorities
o Contract document has adequate clauses to protect the interests of the
purchaser to cover various risks including the risk of non-performance by the
o Each page of the contract has been numbered and signed by both the
purchaser and supplier in acceptance of the terms and conditions stated
o Contract has been signed after taking administrative and financial sanction of
the competent authority
o To guard against submission of fake performance bank guarantees, the bank
guarantees submitted by the supplier should be properly verified before
acceptance and award of contract
o There is no splitting of contracts into smaller packages to restrict competition
or avoid taking approval of higher/competent authority
Auditing the Supply and delivery of goods
● Risks associated with the delivery of goods
Goods supplied may not conform to the approved specifications.
No one is assigned the job of receiving goods, checking quantity and inspecting
quality as per contract
Discrepancies noted in the physical verification are not investigated and
Records of supply are not maintained properly
● Audit objectives in auditing supply of goods - to evaluate the process of delivery of
goods and to verify that the system is efficient enough to ensure that:
Only those goods which satisfy technical specifications have been accepted
Defective goods have been identified and replacements claimed within the
Goods procured are delivered within stipulated delivery schedule
The quantity and quality of goods supplied are as stipulated in the contract
● Check list for auditing the receipt of goods - Auditor must check whether
There is a procedure laid down for verifying the quantities of materials at the
time of receipt through counting/ weighing/ measurement and the procedure
has been strictly followed by the receiving/inspecting officers
Cases of shortage of quantity, defects or variations from specifications are
notified promptly to the supplier
The receiving department/officer has sent a copy, of each goods received
note containing its remarks regarding the quantity and quality of the materials
received to the accounts department, purchase department, contract
administrator and stores department
The goods received are sent to the stores or to the requisitioning agency/unit
Complete documentation including warranty papers have been received for
Goods received and accepted have been properly accounted for in store
Where the goods have been delivered by a supplier directly to a third party
(e.g. user in the field), examine the corresponding sale invoice was issued to
such third party/confirmation of receipt of goods received from the third party
Auditing the contract administration
● Risk in Contract Administration - Contract administration may fail to manage contract
properly which may become unworkable leading to serious problems for both parties
e.g. buyer and the contractor. Some of the possible reasons include
Principles of good procurement are violated
Contracts are poorly drafted
Failure of contract control mechanism
Lack of clarity in role, duties and responsibilities
Ambiguity in delegation of powers
Timely decisions are not taken
● Checklist for auditing Contract Administration - Following audit checks are suggested
to verify efficiency and effectiveness of the contract administration
o Contractor‟s performance is monitored on continuous basis
o All the prescribed monitoring reports are submitted regularly by the
concerned agencies and the suppliers. The reports had complete and
relevant information/details to facilitate proper monitoring and review
o Monitoring reports are prompt and efficient
o Progress reports were received, reviewed and evaluated by competent
o The controlling agencies and contract administrator(s) had reliable and up-to-
o Contract administrator is prompt in initiating required action
o Contract conditions are correctly understood and interpreted by the contract
administrator in its implementation
o Notice for unsatisfactory performance of contract was issued in time to the
supplier for rectification/corrective action as per contract conditions
o Proper inspection and testing of goods was ensured before acceptance
o Management information system allows control of expenditure against
budget provisions and sanctions to identify anomalies/irregularities in
recorded expenditure on procurements
o Claims are settled individually and that no duplication of payments occurs
between two or more claims
o Payments were made in accordance with the contract terms
o Payments were complete, arithmetically correct and valid
o Payments were properly approved by the competent financial authority and
recorded and accounted for correctly under relevant heads of accounts as
per accounting principles adopted
o Payments were released only on furnishing of prescribed certificate by the
competent authority/consignee/quality inspector certifying receipt of goods or
services as per quality and quantity notified in the contract
Contract variations and amendments
o Contracts were not amended with the intent of splitting the contract to keep
them with in delegated levels of approval
o Contract amendments were made with prior approval of the competent
Documentation and record keeping
o All important decisions taken by the contract administrator in various events
are properly documented to allow subsequent verification and scrutiny by
other agencies or stakeholders
o Disputes or any disagreements are resolved promptly as per procedures laid
down in the contract in a fair and impartial manner
o An effective system for recording and monitoring frauds exist in the purchase
I have received a copy of the quarterly journal of the office of the CAG (Issue 4, Volume 14
April-June 2006) through the Bangladesh Mission in London.
I was most impressed with the high quality and commendable content and wish to warmly
congratulate you and the team which took great care to compile the materials for publication.
Given my professional interest in advancing the agenda of good governance within the
Commonwealth and particularly, in strengthening the capacity of audit institutions in the Asia
region, I would be grateful if you could include the Commonwealth Secretariat in your mailing
list to receive copies of future journals as well as the CAG NEWS.
This will indeed be a rich commonwealth resource for the benefit of our international readers
who visit our Library.
Mohammed Jasimuddin December 7, 2006
Adviser (Asia Region)
Governance and Institutional Development Division
AUDIT DEPARTMENT, BRUNEI DARUSSALAM
We have received latest publications from your office namely REVIEW and CAG NEWS,
both of April–June 2006. We also received them on several occasions in the past. On behalf
of the Auditor General, I extend our thanks and appreciation for sending these publications to
Brunei Darussalam SAI. We find them very informative in many areas. They are well-
received and widely read by our auditors.
Ahmad Tudin December 12, 2006
Deputy Auditor General