The International Training Programme on 'Audit of Public Enterprises' organised by the Comptroller and Auditor General of India during January-February, 1988 afforded ample opportunity to the participants to study the systems and procedures as well as the institutional arrangement .for the audit in each other's countries. The programme brought together 34 participants from 20 countries. As part of the programme the participants from each country were required to present their country paper covering the audit system in general and the system of audit of public enterprises in particular. The country papers evoked interesting discussions which brought to sharp focus the similarities and differences in the systems. This paper incorporates a comparative study of the country papers in the light of the discussions that followed their presentation.
In most countries there is an unified audit of the state and para-statal authorities by a single agency. This agency is differently designated as Comptroller and Auditor General in India and Zimbabwe; Auditor General in Bhutan, Botswana, Malaysia, Malawi, Nepal, Papua New Guinea, Sierra Leone, Sri Lanka, Thailand, Uganda and Zambia, Board of Audit and Inspection in Korea, Dewan of Audit (The People's Committee for follow-up) in Libya; Audit office in Maldives and Central Organisation for Control and Audit in Yemen Arab Republic. There is a separate organisation for the audit of Public Enterprises called Auditor General for Corporations as distinct from the Controller and Auditor General in Kenya and Audit Corporation as distinct from the Controller and Auditor General in Tanzania. The Supreme Audit Institution is independent of the Executive, the head of the Institution being appointed by the Head of the State or the Parliament in all the countries except in Afghanistan, where the appointment is made by the Minister of Finance and in Papua New Guinea where it is made by the Prime Minister. In Afghanistan the audit institution is part of the Ministry of Finance.
In Tanzania, though the audit of parasitical organisations is conducted by the Tanzanian Audit Corporation, the accounts of any body corporate established by or under law assisted by public funds of the United Republic shall be audited by the Controller and Auditor General if the National Assembly by resolution so directs. Further the .Controller and Auditor General is empowered after consultation with the Audit Corporation's Board give to the Board directions as to the exercise and performance of the functions of the corporation, and the Board shall give effect to such directions.
Accounting and Pre-audit: Among all the countries represented in the programme only in India and Maldives the accounts of government are compiled and maintained by the Supreme Audit Institutions; in India i these are now done only for the States and not for the Union. The accounts of payments and receipts rendered by the various authorities of government are compiled and consolidated. The actual receipts and payments as well as their initial accounting are not handled by the Audit Institutions. The mere compilation of accounts could thus be regarded as a function that does not dilute the independence of audit. There is no pre-audit of contracts for purchases and works as well as of claims before these are processed. This appears to be so in other countries as well except in Libya where a system of pre-audit of contracts is prevalent.
Exchequer control: Under the parliamentary system no money can be withdrawn from the national exchequer without. authorisation by Parliament. In some countries the Supreme Audit Institution regulates the drawal of funds against each grant authorised by Parliament. Although such an arrangement was contemplated in
India and the Head of the Audit Institution was designated as Comptroller and Auditor General of India, he has not so far been entrusted with the responsibility of exchequer control whereas the Controller and Auditor General in Kenya, the Controller and Auditor General in Tanzania, the Auditor General in Uganda and the Comptroller and Auditor General in Zimbabwe regulate the releases from the exchequer.
Power of Surcharge: By and large, the Supreme Audit Authorities have no power of enforcing recovery of losses and irregular payments. As an exception, the Comptroller and Auditor General in Zimbabwe and the Dewan of Audit (The People's Committee for Follow up) in Libya have such a power of surcharge. In Zimbabwe the power of surcharge is confined to sums not collected or accounted for or the amount of any deficiency in or improper payment not -duly vouched or loss or destruction of public moneys as the case may be. But in Libya the power of surcharge extends to cover cases of damages to stores and properties. In Sri Lanka, the Auditor General has the power only in relation to his audit of local bodies and universities in terms of the relevant ordinances and Acts governing them. In Tanzania, though the Controller and Auditor General does not have powers of surcharge, he is empowered to disallow any payment made without due authority.
Audit of Private Sector: In general the audit authorities base their findings on the accounts, records and information furnished by the auditees and the audit is confined to the public sector. In Thailand, however, the Auditor General is empowered to summon a person to testify as witness in his examination or to deliver any account, document or other evidence concerned or presumed to be concerned with an audited agency to supplement his consideration. In Papua New Guinea and in Zimbabwe, the Comptroller and Auditor General can examine any person on oath. In Bhutan though the Auditor General does not have the discretion to investigate any matter outside the public sector, he can do so on command of the King. Similarly, in Yemen Arab Republic, the Central Organisation for Control and Audit has to extend its enquiry to the Private Sector if instructed to do so by the President or the Prime Minister. The position is the same in Zambia where the Auditor General can go into the accounts of a private concern at the request of the President, in Public interest. In Libya the Dewan of Audit (The People's Committee for Follow-up) can audit the accounts of a Private Sector enterprise in case instructed by the People's Congress or People's General committee or if the enterprise is guaranteed by the state of a minimum profit or the enterprise receives direct aids, grants, concessions or loans from the State and the contracts thereof stipulate such audit. In India too the audit of a private body or authority could be entrusted to the Comptroller and Auditor General in public interest by the President or Governor under Section 20(1) of the Comptroller and Auditor General's (Duties, powers and Conditions of Service) Act, 1971, although no such entrustment has been made so far.
Power of Prosecution: The Supreme Audit Institutions, generally, are not empowered to prosecute any one for any act of omission and commission noticed in the course of audit. Any disciplinary action or launching of criminal prosecution needed is followed up by the executive authorities. There are however notable exceptions. In Afghanistan, the audit agency being a part of the executive, serious cases of misappropriation and misuse of money noticed in audit are to be reported to the Attorney General's department for further investigation and prosecution in a court of law as necessary. In Bhutan, though the Auditor General is independent of the executive, he can prosecute the offending government employees on Command of the King. In Yemen Arab Republic, the Central Organisation for Control and Audit has the power to submit reports directly to courts of law to try cases of grave misappropriations and frauds. In Libya, the Dewan of Audit (The people's Committee for Follow up) is empowered to refer cases of criminal offences directly to courts of law and to refer other offences to the Financial-offences Supreme Disciplinary' Council.
Specialist assistance in audit: In most countries public audit is not confined to regularity and compliance checks. It extends to cover the economy, efficiency and effectiveness examination. There has necessarily to be a multi-disciplinary approach to an examination of this kind associating experts in relevant disciplines. In India a beginning has been made way back in 1969 in setting up Audit Boards associating experts for comprehensive appraisal of public enterprises. Extension of this to other audits is also under consideration. In the meantime services of experts in economics, statistics and costs have been obtained on secondment from specialist services for government, to enrich audit. In Korea the Board of Audit and Inspection has technical and legal experts on its rolls to tender advice in connection with audit. In Sri Lanka the services of a Civil Engineer has been enlisted by the Auditor General to review Civil Engineering matters taken up for audit. In Yemen Arab Republic also assistance of technical and legal experts are available to the Audit Institution. In Zambia, the Auditor General is empowered to engage specialists on consultancy basis to assist in audit. In Tanzania also, the Controller and Auditor General is enabled to avail himself of the specialist assistance as required.
Internal Evaluation: In view of the accountability that inevitably attaches to any one who has authority and the increasing emphasis on value for money there is obviously need for evaluation of the working of the Supreme Audit Institution itself. In India, there is an inbuilt system of independent audit and inspection of the offices within the Indian Audit and Accounts Department. In Korea, the Board of Audit and Inspection and in Libya, the Dewan of Audit (The People's Committee for Follow Up) have separate planning and evaluation divisions. Likewise, in Yemen Arab Republic the Central Organisation for Control and Audit has a Planning and Evaluation department. This kind of institutionalised arrangement within the Supreme Audit Institution is of great help in toning up the Institution.
Form of Enterprises: World over, all economies today are mixed economies, though the mix of the private and public sectors may vary. Public enterprises are essentially instruments of governments and controlled by it, but these have a degree of autonomy that is unavailable to departments of government. Mainly these take the form of statutory corporations established by or under Acts of Parliament. However in some countries the company form as in private sector has also been adopted. This is so in India, Nepal and Zimbabwe.
Audit of the enterprises through private Auditors: In India Government Companies as a distinct class of Joint Stock Companies was first recognised under the Companies Act 1956. These companies where the contribution of governments to the paid up share capital is 51 percent or above are primarily audited by Chartered Accountants appointed by government on the advice of the Comptroller and Auditor General of India who is empowered to give directions to them and to undertake a supplementary audit as well as to comment on or supplement to their reports. Wherever the audit of statutory corporations is entrusted to him he is generally the sole auditor. In Libya, audit of public enterprises is the responsibility of the Dewan of Audit (The People's Committee for follow up). However the Dewan may engage private auditors on contract basis. In such a case, like in India, the Dewan is empowered to give directions to them and to undertake a supplementary audit as well as to comment on or supplement their report.
In Sierra Leone, audit of public enterprises is conducted by Chartered Accountants appointed by the Boards of Directors after prior approval by the Auditor General and copies of the audit reports are sent to him for examination and comments before presentation to Parliament. In Maldives and Malaysia the audit is conducted by the Supreme Audit Institutions by engaging private auditors on contract basis. In Nepal and Papua New Guinea also, most of the enterprises are audited by private auditors under the Auditor General's directions. In Botswana the enterprises are invariably audited by private auditors who submit their reports for review by the Auditor General who may at his discretion undertake supplementary audit. The audit responsibility is shared with private auditor in Kenya, Sri Lanka, Malawi, Uganda, Zimbabwe and Zambia.
Scope of audit: The scope of audit of public enterprises varies from purely regularity and compliance audit in Afghanistan, Botswana, Malaysia, Korea, Maldives. Papua New Guinea, Sierra Leone and Yemen Arab Republic to comprehensive audit covering performance review in the rest of the countries; the emphasis may differ as for instance in Zimbabwe there is greater stress on financial audit. In general the audit conducted by private auditors, either on their own or on behalf of the Supreme Audit Institution , is of the nature of regularity and compliance check.
Audit Reports: The audit reports on public enterprises as other reports -submitted by the Supreme Audit Institutions are usually placed before Parliament. However, in Afganistan, these are placed before the President and in Bhutan before the King. Where these are placed before Parliament, these are examined for appropriate recommendations by a parliamentary committee called Public Investment Committee in Kenya, Public Accounts Committee there being no separate committee on Public Enterprises, in Malawi, Papua New Guinea, Uganda, Botswana and Zimbabwe, Committee on Parastatals in Zambia, Committee on Public Enterprises in Sri Lanka, Parastatal Organisation Committee in Tanzania and Committee on Public Undertakings in India. However, in Maldives, Parliament refers the reports to a committee of officers from Finance, Audit and Planning departments for suitable action. In Thailand, though individual audit reports on public enterprises are not placed before Parliament they are subject to parliamentary scrutiny and examination and highlights of these reports are included in the annual reports of the Auditor General to the Parliament.
In terms of the number of enterprises, the investment in them and their spread there is perhaps no parallel to the Indian situation among the other countries represented in the Training Programme. In India there are over 1000 public enterprises in which about 820 billion rupees have been invested by governments of the Union and the States. The commercial audit in India has been quite well developed and the unique system of appraisals of public enterprises through Audit Boards was of great interest to the participants from other countries who had also a lot to share with their Indian colleagues on the programme. The success of the programme lay in the participative aspect of it and sharing of experiences making for mutual professional enrichment.
(This paper is based on an analysis attempted by a Committee of the participants comprising Mr. S.W. Seneviratna (Sri Lanka), Mr. E.R. Soloman (India), Mr. S.G. Njoroge (Kenya), Mr. Thomas Holland (Papua New Guinea) and Mr. L.W. Tapera (Zimbabwe)).