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AUDIT PROFILE
The Audit Office of the Republic of Cyprus

By Sp. Christou F.C.C.A. Deputy Auditor -General of the Republic

1.    General

In Cyprus, the first Auditor was appointed in February 1879, and at the early stages he was also the Accountant and member of the Executive and Legislative Councils of the island. In 1883, the duties of the Auditor/Accountant were separated into two, viz that of the Auditor and that of the Accountant. The Auditor, who always was a British Officer, was called the Director of Audit and was the head of the Audit Department.

 

Mr. Sp. Christou

With the independence of Cyprus in 1960 there has been a change in the name and structure of the Office and the duties, powers and functions of the Auditor-General and his Deputy are described in Articles 115-117 of the Constitution of the Republic, which read as follows:

Article 115

(a)    The President and the Vice-President of the Republic shall appoint jointly two fit and proper persons one to be the Auditor-General and the other to be the Deputy Auditor-General:

Provided that the Auditor-General and the Deputy Auditor-General shall not belong to the same Community.

(b)    The Auditor-General shall be the Head and the Deputy Auditor-General shall be the Deputy Head of the Audit Office of the Republic which shall be an independent office and shall not be under any Ministry.

(c)    The Auditor-General and the Deputy Auditor-General shall be members of the permanent public service of the Republic and shall not be retired or removed from office except on the like grounds and in like manner as a judge of the High Court.

Article 116

(a)    The Auditor-General assisted by the Deputy Auditor-General shall, on behalf of the Republic, control all disbursements and receipts and audit and inspect all accounts of moneys and other assets administered, and of liabilities incurred, by or under the authority of the Republic and for this purpose he shall have the right of access to all books, records and returns relating to such accounts and to places where such assets are kept.

(b)    The Auditor-General assisted by the Deputy Auditor-General shall exercise all such other powers and shall perform all such other functions and duties as are conferred or imposed on him by law.

(c)    The powers, functions and duties of the Auditor- General provided in this Chapter may be exercised by him in person or by such subordinate officers acting under and in accordance with his instructions.

(d)    The Auditor-General shall submit annually a report on the exercise of his functions and duties under this Chapter to the President and the Vice-President of the Republic who shall cause it to be laid before the House of Representatives.

Article 117

(a)    The Deputy Auditor-General shall have such powers and shall perform such functions and duties as normally appertain to his office and also shall, subject to the directions of the Auditor-General exercise all the powers and perform all the functions and duties vested in the Auditor-General under the provisions of this Constitution or by law.

(b)    The Deputy Auditor-General shall act for the Auditor-General in case of his absence or his temporary incapacity to perform his duties.

II.    Other Audits

Apart from the audit of Government accounts, the Auditor-General is responsible, pursuant to the provisions of various laws or by administrative arrangement, for the audit of the accounts of Statutory Bodies, Local Authorities and of a number of Special Funds, such as the Central Bank of Cyprus, Cyprus Ports Authority, Cyprus State Fairs Authority, Land Consolidation Authority, Cyprus Grain Commission, Cyprus Theatrical Organization, Cyprus Organization for Land Development, Cyprus Tourism Organization, Agricultural Insurance Organization, Housing Finance Corporation, Vine Products Commission, Sewage Boards, Water Boards, Advocates Pensions Fund, Industrial Training Authority, Cyprus Sports Authority, Electricity Authority of Cyprus, Cyprus Broadcasting Corporation, Cyprus Inland Telecommunications Authority, Olive Products Commission, Cyprus Dairies Industry Organization etc.

III.    Structure of the Audit Office

With the sole purpose of increasing audit efficiency at the highest possible level the Audit Office has been divided into two Divisions and five Branches each one headed by a qualified accountant. Under the charge and administration of each Branch come two or three sections each one headed by a Senior Auditor or an Auditor, who are Senior Officers properly equipped with adequate practical auditing and accountancy experience. In the Audit Office there is also the Technical Audit Services Unit which is responsible for the audit of public construction works, and is headed by two Civil Engineers.

Presently, the total number of personnel employed by the Audit Office on audit activities is 83. The staff is classified as follows:

1    Auditor-General
1.   Deputy Auditor-General
2.   Senior Principal Auditors
6.   Principal Auditors
8.   Senior Auditors
8.   Auditors
14. Examiners of Accounts 1st Grade
39. Examiners of Accounts 2nd Grade and 3rd Grade
2.   Technical Audit Officers
1.   Senior Audit Technician
1.   Audit Technician

Another fourteen officers are employed in the Administration and Registry Units, performing clerical, typing and accounting duties.

The total budgeted expenditure for 1984 amounts to £558,480.

IV.    Scope of audit

In the past the primary task of the Auditor-General was to carry out regularity audits which included, inter alia, the conformity of administrative action with law, the budget and all relevant accounting, financial and administrative regulations and procedures, the verification of vouchers supporting revenue and expenditure and the discovery bf arithmetical errors, frauds etc.

After independence, there has been a great change in the economic development of the State and in the size and complexity of Government and Public Corporations activities. Public officials, the House of Representatives and the general public want to. know whether public funds are handled properly and in compliance with existing laws and whether government programmes are being conducted efficiently, effectively and economically.

This demand for information has widened the scope of auditing so that such auditing no longer is a function concerned primarily with financial operations. Instead, auditing now is also concerned with whether Government Departments, Ministries and Public Corporations are achieving the purposes for which programmes are authorised and funds are made available, are doing so economically and efficiently and are complying with applicable laws and regulations.

Auditing is an important part of the accountability process since it provides independent judgments of the credibility of public officials' statements about the manner in which they have carried out their responsibilities. Auditing also can help decision makers improve efficiency, economy and effectiveness of governmental operations by identifying where improvements are needed.

In more specific terms, the constitutional and legal provisions envisage that the Auditor-General of the Republic has to examine the governmental programmes, functions, and activities in order to satisfy himself that:

  1. all reasonable precautions are taken to safeguard the collection of public funds;
  2. all revenues are collected in accordance with the provisions of relevant laws, regulations or directions;
  3. all expenditures are incurred in the most economic and effective way;
  4. all sums appropriated are spent for the services and purposes for which they have been approved and that the expenditure incurred conforms to the authority which governs it;
  5. all assets are being properly maintained, physically inspected and their existence verified, and
  6. there are adequate and effective internal controls.

V.    Sampling Auditing

Many years ago the volume of government activities was very small and it was possible for the Auditor-General to carry out a full audit. Over the years, however, especially after independence, there has been a shifting of emphasis because the size and complexity of such activities have grown to a tremendous extent and under these circumstances it was far more difficult for him, who is the Head of an arithmetically small Service, to carry out full and all embracing regularity, financial and operational audits at all levels of Government. Instead, test audit techniques have been developed and applied with satisfactory results, with greater concentration towards the examination of the scope and efficiency of internal control procedures. The sampling auditing also gives the Auditor-General sufficient time to exercise his judgement and assess and appraise the achievements and consequences of administrative conduct by such wide criteria as efficiency and economy.

VI.    Audit of capital projects.

With the employment of technical staff in the Audit Office, the audit of capital projects is now being carried out in a programmed and scientific manner.

The purpose of this type of audit is to verify that the projects have been planned, designed and executed satisfactorily and in accordance with the technical terms, the specifications and generally in the most economical way. The audit covers, inter alia, the feasibility studies, the terms and technical specifications and drawings, the budgeted expenditure, the invitation and award of tenders, the interim payments and Final Accounts. In addition, spot inspections of the various projects are carried out by the technical staff for ensuring that the works are executed in accordance with the provisions of relevant contracts.

With technical audits, as in the case of other types of audit, the Auditor-General's purpose is not to substitute or minimize the responsibility of the audited agencies, who remain entirely responsible for the execution and supervision of the capital projects. The Auditor-General's task is confined to basic auditing duties as defined in the Constitution.

VII.    Spot-audits

Basically, the audit of the accounts of Government and of Public Corporations is carried out on the spot, half-yearly or yearly. Spot-audit helps the audit staff to acquaint themselves with the circumstances and the environment, and facilitates the discussion of various points with the responsible officials. It also enables the audit staff to have access to the files, documents, minutes and other records of the audited agencies.

VIII.    Reporting

On the completion of an audit all matters raised are discussed with the responsible officials and the respective finding and recommendations are submitted in writing to the head of the audited agency for necessary action. The most important matters are also included in the quarterly reports to Ministers and House of Representatives and the Annual Report which is prepared in accordance with the provisions of Article 116 of the Constitution of the Republic.