AUDIT PROFILE
Audit Bureau, Kuwait

The Establishment of the Audit Bureau

Article 151 of the Constitution of the State of Kuwait, has provided: "There shall be established by law a commission for the financial control, and its independence shall be safeguarded by the law and it shall be attached to the National Assembly. It shall assist both the Government and the National Assembly in collecting the State revenues and expending of funds within the limited Budget allocations. The commission shall submit to both the Government and the National Assembly an annual report on its activities and findings."

On July 7th, 1964, Law No. 30 for the year 1964 was issued, establishing the Audit Bureau in the State of Kuwait. Its First Article provides: "There shall be established an independent commission for financial control which shall be called The Audit Bureau and shall be attached to the National Assembly".

The Audit Bureau's Objectives

The main objective of the Audit Bureau is to maintain an effective control over Public Funds: to safeguard them, prevent any misuse and verify their proper utilization for the purposes they have been allocated for.

Through performance of its control activity, the Audit Bureau has concentrated on the creation of a full conviction in the audited bodies that the Audit Bureau is not looking for errors or deviations, but aims primarily at the maintenance of public interests by safeguarding public funds and efficiently utilizing them for the aspects they have been allocated for. The Audit Bureau has been able, through its constant cooperation and understanding and through communication with these authorities, to organize their financial and accounting transactions and devise suitable solutions in order to reach the exemplary objective.

The Authorities Subject to the Control of the Bureau

The following authorities are subject to the financial control of the Bureau:

The Ministries, Departments and Public Agencies which constitute the administrative system of the State.
The Municipalities and all other local bodies that have a public legal entity.
Public commissions, establishments and organisations attached to the State, or the municipalities or the local bodies that have a public legal entity.
Companies and establishments in which the State or any other legal entity holds a share of not less than 50% of their capital or guarantees them a minimum profit.
Companies licensed to utilize or manage one of the State public utilities or granted a concession to utilize any of the natural resources in the State.

The Functions of the Bureau

Regarding the Government Sector, the Bureau's control includes:

Revenues.
Expenditures.
Personnel Affairs.
Tenders, practiced-tenders, contracts and commitments
Imprests, public stores and warehouses, their branches and the like.
Settlement accounts of imprests, safekeepings, current accounts and regular accounts.
Advances and loans granted by the State or one of the establishments or agencies having a public legal entity or granted in their interest.
The ways in which the State funds are invested.
The final accounts of the financial year ended for each of the State, the public bodies and establishments whose budgets are regulated by laws.
All accounts, or any other work entrusted by the National Assembly or the Council of Ministers for examination and checking.
Administrative, financial and accounting by-laws.

The Bureau's control includes, furthermore, in regards to public establishments and companies the following :

Public establishments and companies accounts in accordance with the procedures and situations they adopt in the preparation of their accounts according to the nature of their business activities and within the limits of the provisions, by-laws and orders regulating their operations.
Checking the reports of the share-companies external auditors and of the reports of the Boards of Directors.

Furthermore, the Bureau passes its comments resulting from its checking of the establishments and companies accounts, to the supervising administrative authority concerned and to the Ministry of Finance and Economy.

As regards to share-companies, the Bureau passes its comments to their Boards of Directors not less than thirty days before the meeting of the General Assemblies. The Boards of Directors shall present such comments during the meetings of the General Assemblies.

The Control Procedure Practised by the Bureau

The Bureau follows two procedures of financial control:

a) A Prior control in which the tenders for supplies and public works are subjected to examination, and every proposition, agreement or contract the conclusion of which may entail rights, or financial commitment on the State or any other public legal entity if the value of a single tender, commitment, agreement or contract is upwards of a hundred thousand dinars.

The law obliges the concerned directions not to engage in any commitment or conclude any contract until they secure the approval of the Audit Bureau. In this case the Audit Bureau will not issue its approval until it investigates the subject papers, ."verifies that the allocations earmarked in the budget allow for engagement or conclusion, and that all procedures required have been taken into account in compliance with the established financial regulations and rules.

b) A Subsequent control that takes place subsequent to commitment or expenditure, including all financial dispositions made within the authorities subject to the control of the Bureau.

How the Bureau Exercises its Functions

The Audit Bureau performs its functions by means of inspection, examination and checking. However, surprise inspection may be exercised. These functions are entrusted to the Technical Staff of the Bureau, each of whom must hold high qualifications in Law or Commerce, or the equivalent, from university faculties recognized by the competent authorities in Kuwait.
The Audit Bureau notifies the respective authorities subject to its control either promptly at the time an error or deviation is found, if correction is deemed necessary to make a quick correction which could not be postponed, or through the periodic reports sent to those authorities concerned at the end of the fiscal year containing important comments on their activities and dispositions performed.'
At the end of each fiscal year the President of Audit Bureau compiles an annual report about each of the final accounts of the State; the Public Authorities and Establishments whose budgets are regulated by laws. In that report the Bureau reveals its findings and contradictions in opinions between the Bureau and those directions subject to its financial control.

This report is submitted to the Head of the State, the National Assembly, the Council of Ministers and the Minister of Finance and Economy.

The Relationship between the Bureau and the National Assembly

The Audit Bureau is an independent institution attached to the National Assembly. Its financial control exercised on public funds is considered part of the control exercised by the National Assembly on the Executive Authority.
The President of the Audit Bureau submits to the National Assembly, at the opening of the nearest ordinary session of each chapter, an annual report on the accounts of the previous fiscal year of the State, Authorities and Public Establishments budgets which are regulated by laws. Such report discusses the findings and contradictions of opinions that may arise between the Bureau and, bodies subject to its financial control.
Art. (34) of the law of establishment of the Audit Bureau stipulates that "the President of the Audit Bureau shall be appointed by Amiri Decree upon nomination of the Speaker of the National Assembly, approval of such nomination by the Assembly in a closed session after approval of the Council of Ministers". Also Art. (38) stipulates that "the Undersecretary and the Assistant Undersecretary of the Audit Bureau shall be appointed by Amiri Decrees upon the nomination of the President of the Bureau and the approval of the Speaker of the National Assembly and the Council of Ministers".
Heads of each of the Financial and Economic Affairs and the Legal and Legislative Affairs Committees of the National Assembly are appointed members in the Supreme committee formed and chaired by the President of the Bureau. This committee deals with the personnel affairs of the Bureau and has the authorities stated in the laws and by-laws pertaining to the Council of Ministers and the Civil Service Commission in regard to the personnel affairs of the State.
Art. (75) of the Law of Establishment of the Audit Bureau Stipulates that "the President of the Bureau shall prepare the draft budget of the Bureau in agreement with the Speaker of the National Assembly."
The National Assembly may entrust the Audit Bureau with the duty to examine and check any account or other duties other than the accounts of those directions subject to its control as defined in the amended law of the establishment of Audit Bureau.

The Relationship between the Audit Bureau and the Ministry of Finance & Economy

According to the Legislative Decree No. 31 for the year 1978, pertaining to the rules of the preparation of public budgets and control over its execution and the final accounts, the Ministry of Finance and Economy is the only direction responsible for definition of the* form of public budgets and final accounts for the State and other attached and independent bodies. Furthermore, the Ministry issues circulars regarding the execution of the budgets. Consequently, the Audit Bureau has a close connection with the Ministry which is maintained through cooperation and coordination in order to secure the proper implementation of the financial instructions by those bodies subject to control, and devise suitable solutions for the problems that may face these bodies during implementation. The Bureau, also, participates with the Ministry in the various committees which are formed every now and then to discuss and develop financial legislations whenever it is found feasible and impending.

The Relationship between the Audit Bureau and the legal Advice and Legislation Department

A close relationship is maintained "between the Audit Bureau and the Department of Legal Advice and Legislation embodied in the following:

The President of the Legal Advice and Legislation Department is a member in the Supreme Committee formed and presided over by the President of the Audit Bureau. This committee concerned with the personnel Affairs of the staff of the Audit Bureau. It is empowered by authorities regulated by laws and by-laws issued by both the Council of Ministers and the Civil Service Commission in regard to the Civil Servants of the State in general.
The President of the Legal Advice and Legislation Department, also, presides over the Disciplinary Tribunal that tries the members of the technical staff of the Audit Bureau.
The President of the Legal Advice and Legislative Department presides over a Disciplinary Tribunal which includes a member of that department. This Tribunal deals with the disciplinary cases raised by the President of the Audit Bureau against Senior Staff members of the State for their financial deviations which they may commit.
The Undersecretary of the Legal Advice and Legislation Department presides over a Disciplinary Tribunal which includes also a member of that Department. This Tribunal tries disciplinary cases raised by the President of the Audit Bureau against the rest of the Government employees for their financial deviations which they may commit.

The Relationship between the Audit Bureau and the Civil Service Commission

One function correlates the duties of both of the Audit Bureau and the Civil Service Commission, and that is, the decisions pertaining to the personnel affairs of the various State Administrations, Authorities and Public Establishments. The Civil Service Commission is involved in the verification of compliance of these decisions with the law before those are being endorsed and issued. The role of the Audit Bureau begins after these decisions are being endorsed and issued; thereafter, the Bureau examines these decisions in order to verify their financial appropriateness.
The Head of the Civil Service Commission is a member of the Supreme Committee formed and presided over by the President of the Audit Bureau. This Committee is involved in the personnel affairs of the Staff of Audit Bureau. It has the authorities regulated by laws and by-laws issued by the Council of Ministers and the Civil Service Commission regarding the personnel affairs of the Civil Servants of the State.
The Undersecretary of the Commission is a member of the Disciplinary Tribunal which tries the Technical Staff of the Audit Bureau.
The Undersecretary of the Civil Service Commission is a member of the Disciplinary Tribunal which tries disciplinary cases raised by the President of the Audit Bureau against Senior Staff members of the State for financial deviations which they may commit.
A representative from the Civil Service Commission is a member of the Disciplinary Tribunal which tries cases raised by the President of the Audit Bureau against the rest of the Government employees' for financial deviations which they may commit

The Relationship between the Audit Bureau and the Central Tenders Committee

In accordance with Law No. (37) for the year 1964, regarding the establishment of the Central Tenders Committee, and as amended, this Committee is responsible for the whole procedures of the public

tenders for all government administrations. Meanwhile, Law No.(30) for the year 1964 regarding the establishment of the Audit Bureau, and as amended, imposes a prior control over the public tenders in which the value of any one is upwards of a hundred thousand dinars. Such prior control is exercised after the CTC's award decision of a tender, and before conclusion of any contract. Through the practical application of those two Laws, a complementary interrelation has been established between the Bureau and the Central Tenders Committee. This interrelation is aimed at the maintenance of a fruitful cooperation to safeguard the public funds and dispense them economically and properly for the achievement of the predetermined objectives within the specified financial allocations of the budget.

The Relationship between the Audit Bureau and the Bodies subject to its financial control

The Audit Bureau's control, basically, aims at maintaining the public funds, and not to look for errors and deviations. Taking this into consideration, the relationship between the Audit Bureau and those bodies subject to its control is governed by full cooperation. It offers assistance to these bodies to follow the best and correct systems in their accounting and financial transactions. It also exchanges opinions and concepts with these bodies in order to attain the suitable solutions which fit each body, provided that these do not contradict laws, by-laws and instructions.

AUDIT PROFILE Audit Bureau, Kuwait