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Developments in Member SAIs

Australia

We had earlier reported the move towards accrual accounting in the Australian Government in the 1993 issue of the Journal. For the first time in 1994-95, all Federal Departments and Agencies prepared their financial statements on a full accrual basis. In particular, Departments were required to comply with an Accounting Standard on "Financial Reporting by Government Department". The Standard was introduced by the Public Sector Accounting Standards Board (PSASB) for implementation in respect of the first reporting period ending on December 31, 1996, with earlier implementation being encouraged. The Standard requires Government Departments to prepare general purpose financial reports that are useful for making and evaluating decisions about the allocation of scarce resources and which assist in discharge of accountability obligations. The Standard also requires Government Departments to prepare consolidated financial reports in accordance with the Accounting Standard on "Consolidated Financial Reports" and also an operating statement, a statement of financial position and a statement of cash flows.

The PSASB has also issued an exposure draft for an Accounting Standard on "Financial Reporting by Governments". The purpose of this Standard is to set standards for general purpose financial reports of Australian Federal, State and Territory Governments. The exposure draft examines the notion of "control" as the basis for defining the boundaries of the Government reporting entity and requires the report to include all of the government's assets, liabilities, revenues and expenses. The Standard itself is expected to be issued on 30 June 1996 for implementation probably in 1998-99.

The Parliamentary Joint Committee of Public Accounts (JCPA) is taking a lead in these developments. The JCPA examined two Audit Reports on the readiness of agencies to introduce accrual accounting and published its findings in a Report entitled "Accrual Accounting - A Cultural Change" Report No.338. The JCPA considered that agencies faced difficulties because of the low level of efficiency with which they were able to report on an accrual basis and made recommendations for the better use of accrual information.

The JCPA also recently published Report No.341, titled "Financial Reporting for the Commonwealth - Towards Greater Transparency and Accountability". The Report proposed that the Federal Government should commit itself to audited "Whole of Government" reports from 1997-98. Such reports would make it immediately apparent if the asset base of the Government was being run down to fund recurrent spending, to the detriment of future generations. The JCPA also recognised the need for a mechanism for feeding the "Whole of Government" accrual information into financial planning and the Budget.

China

An Indo-China Joint Seminar on "Audit of Public Utilities" was held at Chengde, China from June 26 to July 6, 1995 under the Memorandum of Understanding signed between the SAIs of India and China in January 1992. The Chinese delegation for the Seminar was headed by Madam Zheng Li, Deputy Auditor General, while the Indian side was headed by Mr. P.K. Lahiri, then Additional Deputy Comptroller and Auditor General. At the seminar the Indian delegation presented papers on the following topics :-

• Introduction to Indian Audit System;
• Audit of a railway construction project;
• Audit of funds used for development of public utilities - Indian Railways; and
• Audit of Public Utilities Management.

The Chinese side presented papers on the following topics :-

• Public Utilities Audit in China
• Audit of funds for Public Utilities construction: The practice of Shanghai Audit Bureau; and
• Management Audit of Urban Public Utilities.

India

Mr. C.G. Somiah, Comptroller and Auditor General of India , who has been a member of the United Nations Board of Auditors from July 1993, became the Chairman of the Board from January 1995. During the year 1995, SAI-lndia deputed 34 teams for audit of various UN organisations and peacekeeping missions. As Chairman of the Board of Auditors, Mr. Somiah presented the reports of the Board on the United Nations High Commissioner for Refugees (UNHCR), United Nations Institute for Training and Research (UNITAR) and the United Nations Transitional Authority in Cambodia (UNTAC) for the period ended December 31, 1994 to the Fifth Committee of the General Assembly in November 1995, and responded to comments from member states on the Board's reports . The Comptroller and Auditor General of India was also reappointed to the Board of Auditors by the General Assembly at its Fiftieth Regular Session in November 1995, for a further three year term of office commencing from July 1996.

Japan

The Board of Audit of Japan has been issuing since 1989 the above publication in Japanese which provides a forum for discussions on government audit theory and practices. In March 1994, the Board published the Review's first English version, introducing several articles selected from the original Japanese version. The Board plans to issue one English version every year. This publication presents a cross-sectional view of organisations which have an interest in public auditing activities and includes as participants, scholars in the field of public finance, accounting, public economies and policy science as well as professionals, engaged not only in government auditing but also in accounting, auditing and financial supervision of local bodies. One of the main objectives of the Review is to further theoretical study and enhance international understanding in the field of government auditing. Twelve Japanese issues and two English issues have been published till date.

Pakistan

On February 7, 1995, the Supreme Audit Institution of Pakistan shifted its office to a new building - Audit House- at Constitution Avenue, Islamabad. The Pakistan Audit Department had been headquartered for the last 31 years at Lahore, although it was envisaged that the headquarters of the SAI would be located on a permanent basis at Islamabad, the capital of Pakistan, The foundation stone of the new building was laid in January 1993, and the building was completed in January 1995. Situated close to the seat of the Parliament and the Supreme Court of Pakistan, Audit House is a significant attraction, possessing both grace and grandeur, and symbolises the resolve of the nation towards greater public accountability.

The Social Action Programme (SAP) is a medium-term multi-sector project of the Federal Government of Pakistan, aimed at improving basic social services in a co-ordinated and concerted manner in the areas of primary education, primary health, rural water supply and sanitation, and population welfare. The programme is financed jointly by donor agencies and the Government of Pakistan and has been implemented through line departments throughout the country. The financial monitoring and auditing of the projects being executed under this programme, has been entrusted to the SAI of Pakistan. The reports of the SAI, covering regularity, certification and performance aspects are submitted to the Federal SAP Secretariat for onward transmission to the donors.

As a first step in monitoring the SAP implementation process, a survey was undertaken by the SAI on a sample of school sites, in order to verify that the approved criteria for selection of school sites were being followed. A total of 794 questionnaires were administered all over Pakistan, with the finai analysis being undertaken on 699 questionnaires which were complete in all respects. The report of the SAI on the school site verification survey, which was presented in July 1995 and was appreciated by the donor agencies, included analysis by province as well as by school types, review of site characteristics, findings regarding community perceptions and overall recommendations for improvement.

Papua New Guinea

A new Organic Law on Provincial Government and Local Level Government was passed recently by the National Parliament of Papua New Guinea. The new system enables members elected from the provinces to the National Parliament to be members of the respective Provincial Assemblies, along with Heads of Local Level Governments, Town and Urban Authority and other nominated members. The term of the new Provincial Assemblies is to be co-terminus with the National Government.

In pursuance of the new legislation, amendments have been made to the Public Finances (Management) Act and the Audit Act. The Public Finances (Management) Act has been amended to provide for the establishment of Provincial and District Treasuries and to revamp the accounting system. The amendment to-the Audit Act provides for establishing a Provincial Audit Service in each of the Provinces and appointment of a Provincial Auditor by the Auditor General. The Office of the Auditor General is in the process of establishing the Provincial Audit Offices, based upon feasibility studies of the workload in each province. Ten such offices have been established, in addition to the existing four Regional Offices. Provincial Audit Offices for other provinces and the National Capital District Commission will be opened in due course.

The establishment of the Provincial Audit Offices would bring the audit services closer to the people, and would also assist the management of Government agencies in implementation of recommendations contained in audit reports.

United Arab Emirates

Formation of computer unit

The State Audit Institution of the United Arab Emirates has recently established a separate computer unit with the objective of accumulation of skills in the field of computer audit. The SAI also participated in the workshop on "Audit Testing" held at Cairo in October 1995.