Feroz Ahmed Mir, Shafat Yehya
Social responsibility has been an accepted convention in India for ages although most often its manifestation was to be found in philanthropy and community welfare initiatives. Nowadays public expenditure has increased and how the money is spent and the quality of services it provides is an important issue to users of public service and simultaneously tax payers including management. The Audit Institutions play an important role in enhancing good governance for public assets, to foster integrity, transparency, accountability within the public entities. The Internal Audit function is a key component of Public Financial Management.Directorate of Audit and Inspections has been conducting internal audit Of Government Departments of Jammu and Kashmir since 1996.
Introduction and Vision
Directorate of Audit and Inspections has been created in the year 1996 under the Administrative control of Finance Department with a view to enforce financial discipline and accountability in the Government Departments.
The Directorate has been instrumental in bringing the financial discipline and accountability. In recent times, Internal Audit concept has undergone a sea change to its definition and scope of coverage. The modern approach suggests that internal audit should not be restricted to compliance and proprietary related issues alone, but also on issues such as cost benefit analysis, resource utilization, systemic improvements and performance enhancements. The Risk Based Internal Audit approach requires that internal audit, in conjunction with implementing agencies, undertakes a risk assessment exercise of their projects, schemes and activities. This measure is a paradigm shift in approach and calls for induction of better skills and knowledge levels.
Latest Developments aimed at strengthening the internal audit institution:
The strengthening of the public institutions requires the administrative willingness, high-level commitment, in-depth knowledge, and extensive support and assistance. The authorities in the Finance Department undertook a slew of reforms to make the Directorate of Audit & Inspections more vibrant and more adaptive to the contemporary challenges. Information Technology (IT) is now pervasive in Government functions. Though manual transactions do co-exist in less numbers they have been substantially replaced by digital transactions. The new approach of audit has to cover the traditional areas and the new / emerging technology areas in order to establish the overall compliance with the audit objectives. Some of the worth mentioning reforms are:
New Types of Audit:-
As an adaptive strategy to overcome the constraints for physical audit of records in an Auditee entity in situations like Covid-19 Pandemic and, more importantly, to bring an element of technological intervention in Audit exercise so as to eliminate physical visits, reduce auditor-auditee interface and ensure optimal use of time and resources, the Audit organization shall shift to e-Audit in a gradual manner. An e-audit platform shall be devised through NIC for this purpose and e-audit commenced on pilot basis in at least fifty offices during financial year 2020-21.The Audit organization shall exclusively shift to e-audit mode in a phased manner in next 3 years.
A concurrent audit is a systematic and timely examination of transactions to ensure accuracy, authenticity, compliance with procedures and guidelines.The auditors while conducting snap audit of an entity for a defined period, shall invariably undertake concurrent evaluation of systems, process and procedures of the auditee to examine compliance to rules and regulations during the current fiscal, especially in respect of procurements, works or activities where irregularities have been observed during examination of previous records.The auditee can be given on-spot instructions/guidelines for taking necessary corrective measures. The concurrent audit evaluation should form a specific, significant part of the audit report.
The treasuries occupy a pivotal place in the fiscal environment of the Government as guardian of state exchequer, since all payments / disbursements on behalf of Govt. (except off- treasury transactions) are made through treasury system.As such, the audit also should pay special focus on evaluation of treasury functioning as a part of audit plan, especially towards the closing of the financial year.Since the bills presented for payment at treasuries are to be submitted to the Accountant General along with monthly accounts as per fixed time lines, the audit of treasury should be planned in such a manner that the records are available for scrutiny, without disturbing treasury functioning.The audit teams shall examine on sampling basis that receipts and payments made at the treasury are strictly limited by the provisions of the Treasury Code and other prescribed financial rules, orders and guidelines issued in this regard from time to time.The Audit officer shall obtain the system generated list of payments from Treasury Net and apply his professional judgment for putting to critical examination bills passed for payment so as to ascertain that the bills passed through requisite checks at various levels. The audit should give focused attention to bills pertaining to high budget/risk prone DDOs like, Works Divisions and departments involving huge procurements. The bills passed for payment should be thoroughly checked with regard to implementation of rules/regulations pertaining to AA/ TS/ e -tendering, procurement through GEM and observance of provisions of GFR.
Concurrent Audit of Languishing Projects:-
To pace up the developmental works, the government has decided to hold the audit of languishing projects in Jammu and Kashmir.The finance Department has constituted District Level committees to monitor implementation of languishing projects.
The audit teams have to conduct physical and financial audit of all the projects.
Each team shall furnish audit report of projects being implemented in their respective districts through district development commissioner to the chairman Jammu and Kashmir Infrastructure Development Finance Corporation (JKIDFC Ltd).
After 24 years of the establishment of Directorate of Audit and Inspections, the Government of Jammu and Kashmir has come out with Audit Manual, which besides delineating role and responsibility of the Audit Organization contains detailed guidelines and procedures to be followed in conduct of audit and drafting of reports.
Moreover, the Manual outlines the professional standards to be maintained by the audit personnel and prescribes a mechanism for audit follow-up and review at various levels so that audit exercise is taken to some result oriented conclusion. The Manual will be applicable for audit of all Government departments, Public Sector Undertakings, statutory authorities, Government corporations and other entities which are under its administrative control.In the Manual, enough thrust has been laid on e-audit as an adaptive strategy to overcome the constraints for physical audit of records and to bring an element of technological intervention in audit exercise so as to eliminate physical visits, reduce auditor-auditee interface and ensure optimal use of time and resources.The Manual Focuses on system strengthening which will include review of established systems like accounting procedures, procurement procedures/methods, internal control mechanisms and any other system operating in the auditee.Internal Audit shall also support in building capacities of the accounts and financial management within the auditee. They should facilitate skill transfer by sharing of knowledge on better accounting practices.
Audit Monitoring and Follow up Cell:
For effective monitoring and follow up of the Audit Reports there shall be an Audit Monitoring and Follow up Cells (AMFC) at the State and Divisional Level.
To achieve the desired results standing Internal Audit Review Committee (IARC), has been constituted vide Government order No 160-FD of 2014 dated 03.07.2014, under the Chairmanship of Administrative Secretary to Govt. Finance Department.
The Way Forward:-
Some more reforms in InternalAudit institution both at policy and operational levels will steer it towards the path of achieving financial discipline where future of government financial system will be more clear, vibrant and dynamic in its functioning and operation. Some of the Reforms suggested are:
Development of a Dedicated Online Portal(APMC) for Tracking the Audit Paras:
The APMS (Audit Para Monitoring System) is to provide a Management Information System (MIS) for strengthening, streamlining and speeding up the task of submission of audit reply and ATNs on audit paras.It is expected that with the Development and operationalisation of the web based Audit Para Monitoring System (APMS) for timely/expeditious submission of Audit Reply, ATNs( Action Taken Notes) on audit paras by all Departments there will be a considerable improvement in the matter of reduction of the pending audit paras.The advantage of the portal is that at a glance the pending paras of each Department-wise can be pulled out/the pendency noted, conveyed to the concerned.In order to implement the regulationson Audit and Accounts (Amendments) 2020 and smooth rollout of APMC, the Finance department should nominate,Directorate Of Audit & Inspections as Nodal Agency as Nodal agency.
Audit of Local Self Government Institutions at District level:-
With the strengthening of grassroots democratic decentralization and consequent devolution of financial resources to the local self government institutions, the audit of these bodies at District level by District Audit offices is need of the hour.Theobjective is to evaluate the functioning of theLocal self Government Institutionsand to see whether the developmental and welfare functions vested in these institutions and the financial and controlling powers entrusted to them are being executed effectively, efficiently and in accordance with directions in Acts, Rules and Orders.
While concluding it is stressed that internal audit has reached to the stage where it needs renewed efforts at each level to set the wheels running towards the new horizon of transparency and accountability. With sea change in the field of Information Technology, the policy level decisions are also seeing a manifold change. Switch over from archaic files to IT based portals and online software has been the soul of reforms happening in the union territory of Jammu & Kashmir.
(The authors are District Treasury Officer, Kulgam and Deputy Director Budget.)