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Value for money audit could target VAT

“Economy, efficiency and effectiveness – those are the three E’s of auditing. While Financial Audits focus on the first two, Value for Money Audits however tend to focus on the ‘effectiveness’ in an agency,” said Auditor General, Deodat Sharma, commenting on the Auditor General’s Office move towards more Value for Money (VFM) Audits.

He said that the move is in accordance with mandates of the revised Audit Act of 2004 which calls for both Financial and Compliance Audits as well as Performance and VFM Audits. A pilot Value for Money Audit was executed by the Audit Office last year on the Palms Senior Citizen’s Home for which a report was subsequently released.
A similar audit was also conducted on the Old Age Pension Fund – for which the Audit Office is currently wrapping up the reporting process according to Sharma.
Value for Money Audits take a different approach to assessing the state of an agency as opposed to the Financial and Compliance Audits. According to the Audit Act, the Financial audits look at an agency from the perspective of records, revenues and their compliance with whatever laws and statutes govern that body. A Value for Money Audit, however, is designed to study an agency in terms of the effectiveness with which the body is applying resources as well as the effectiveness of the procedures and internal management of the subject body.
According to Sharma, the Audit Office is not at the point where it can apply Value for Money Audits across the board. As such, deliberation is needed on where the Audit Office can currently use this tool, in this light he pointed out that there is a committee which decides where a Value for Money Audit might be most needed. Sharma noted that the Office is currently undertaking an audit on the National Procurement and Tender Administration Board (NPTAB).
Asked what such an audit entails for a body such as the NPTAB, he said that the auditors would focus on matters such as standardisation of contracts, management at all levels and in all departments as well as evaluations of whether or not the procedures are conducted in accordance with the Procurement Act. He noted that the awarding of contracts will also come under scrutiny as well and at the end of the entire process the information will be compiled and submitted to the Agency’s head, giving them the opportunity to respond to the findings of the Audit and possibly implement corrective measures. The report is then updated accordingly and the results are released.
According to Sharma, a future Value for Money Audit site may be the Value Added Tax Department at the Guyana Revenue Authority. He said this may be used as a starting point since the agency may be too much of a task for the audit teams at present considering the agency’s size.
Sharma added that two key differences between Value for Money Audits and regular Financial Audits are that the VFM Audits tend to take somewhat longer than the regular financial audits.
They are also submitted to the individual agency, each one being a separate and independent publication from the Audit of the Public Accounts released every year by the Auditor General’s Office. He noted that embracing Value for Money Audits are only one step in the growth of the Audit Office, going on to say that he expected to see an increase in the prevalence of these audits over the next few years. “But there are also other Es in the audit profession,” says Sharma who spoke about Environmental and Ethical audits.
Environmental Audits will focus on the use and recording of environmental resources such as forests and mineral resources, they can also be used when an environmental disaster such as the recent BP oil spill occurs as a tool for assessing the impact of such disasters as well as the efficacy of the response to these incidents. He said that such audits are already in use in other countries such as Canada with the wherewithal to undertake them. Sharma pointed out the impacts of such audits on a country like ours where they would let us address destructive logging practices in our forests such as over harvesting of given species. Meanwhile, ethical audits can look at issues such as workplace discrimination, racial hiring and other people-centric trends.
– However, these developments will come later as the Audit Office continues to train its employees in more up to date audit practices. Sharma said that ever since the Audit Office undertook their pilot last year by auditing the Palms Senior Citizens Home, the department has been intensifying efforts to ensure that the VMA teams are better able to handle more audits. (Kaieteur News)

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