AUDIT QUALITY MANAGEMENT

FRAMEWORK
VINOD KUMAR SHARMA
CORE FACULTY, RTI JAIPUR
PGDBA (Finance) & CISA (USA)
 INTRODUCTION

• AQMF is based on International Standards of Supreme Audit Institutions

(ISSAI) 140-Quality Control for SAIs.
• ISSAIs are standards on auditing issued by the International Organization of
Supreme Audit Institutions (INTOSAI), of which the CAG is a prominent
member.
 ISSAI 140
• ISSAI 140, based on the key principles of International Standard on Quality Control,
ISQC-1, adapted as necessary to apply to SAIs, establishes an overall framework for
quality control in SAIs.
• This framework is designed to apply to the system of quality control of all the work
carried out by SAIs, (i.e. financial audits, compliance audits, performance audits and
any other work carried out by an SAI).
• ISSAI 140 focuses on the organization at aspects of audit quality operation throughout
SAIs.
• ISSAI 140 sets out that the objective of SAI is to establish and maintain a
system of quality control to provide it with reasonable assurance that SAI and its
personnel comply with professional standards and applicable legal and
regulatory requirements and Reports are appropriate to the circumstances.
QUALITY MANAGEMENT INVOLVES
A SYSTEM COMPOSED OF THE
AUDIT ORGANISATION, THE
AUDITORS AND THE AUDIT
PROCESS ALL WORKING
TOGETHER TO ENSURE TO
PRODUCE OUTPUTS THAT FULFILL
THE REQUIREMENTS OF ITS
STAKEHOLDERS AND GENERAL
PUBLIC.
ELEMENTS OF QUALITY CONTROL

• Leadership and Direction

• Ethical requirements;
• Human resource management;
• Audit performance
• Client and stakeholder relations
• Continuous improvement
 OVERVIEW OF QUALITY MANAGEMENT
ELEMENTS – LEADERSHIP AND DIRECTION
• Tone at the top
• Vision, Mission, Core Values and Auditing Standards
• Strategic Direction & Planning
• Strategic Audit Planning
OVERVIEW OF QUALITY MANAGEMENT
ELEMENTS – ETHICAL REQUIREMENTS
• Integrity
• Independence
• Objectivity
• Impartiality
• Professional secrecy
• Competence
 OVERVIEW OF QUALITY MANAGEMENT
ELEMENTS – HUMAN RESOURCE MANAGEMENT

• Resourcing and Recruitment

• Training and Capacity Building
• Performance Management and Appraisal
OVERVIEW OF QUALITY MANAGEMENT
ELEMENTS – AUDIT PERFORMANCE
• Audit Planning
• Staffing for the Audit
• IT Tools
• Other Tools and Guidance
• Conducting the Audit
• Consultation and Advice
• Evidence and Documentation
• Supervision and Review
• Reporting and Follow-up
 OVERVIEW OF QUALITY
MANAGEMENT ELEMENTS –
RELATIONS WITH AUDITED ENTITIES
AND STAKEHOLDERS
• Communicating Audit Messages
• Relationship between Legislative Committees and SAI
 OVERVIEW OF QUALITY MANAGEMENT
ELEMENTS – CONTINUOUS IMPROVEMENT

• Internal Audit
• Internal Quality Assurance Review
• Peer Review
• Lessons Learned
 LEADERSHIP AND DIRECTION
Tone at the top
•CAG of India and the senior management consisting of DAI/ADAI set the tone at the top by
developing appropriate policies and institutionalising these policies
Vision
•We strive to be a global leader and initiator of national and international best practices in public
sector auditing and accounting and recognized for independent, credible, balanced and timely
reporting on public finance and governance.
Mission
•Mandated by the Constitution of India, we promote accountability, transparency and good
governance, through high quality auditing and accounting and provide independent assurance to
our stakeholders, the Legislature, the Executive and the Public, that public funds are being used
efficiently and for the intended purpose.
 LEADERSHIP AND DIRECTION
Core Values
•Objectivity, Integrity, Reliability, Professional Excellence, Transparency and Positive Approach
Auditing and Professional Standards
•Compliance with the Auditing Standards issued by the C&AG of India is must for all the members
of IA&AD
Strategic Direction and Planning
•Identifying the long term goals of the IA&AD and the best possible approach to attain it
•Strategic Management Unit and Audit Advisory Boards are set up for preparing strategic plans
 LEADERSHIP AND DIRECTION

Strategic Audit Plan

•Different from Strategic Planning
•Identify and select audits with the potential to improve public finance and governance
•Produce a workplan which can be implemented
 ETHICAL REQUIREMENTS

• A code of ethics
• Code of conduct
• Integrity, Independence, Objectivity, Impartiality, Professional Secrecy, and Competence
• Code of ethics applicable to experts etc. engaged by IA&AD
• Rotation of party personnel
• Rotation of staff from one wing to another
 HUMAN RESOURCE MANAGEMENT

Sub elements of Human Resource Management

•Resourcing and Recruitment
•Training and Capacity Building
•Performance Management and Appraisal
 AQMF IS DIVIDED INTO
TWO BROAD SECTIONS :

I. Audit Planning, Execution, Reporting

and follow up.
II. Continuous Improvement through
Technical Inspection, Peer Review and
Lesson learnt Process.
 AUDIT PLANNING
1. Database of auditee.
2. Materiality and Risk Assessment.
3. Audit objections, Scope and
methodology.
4. Focus on criteria.
5. Identification of key risk areas.
6. Scheduling of audit.
 AUDIT PLANNING
7. Training and capacity Building
8. Staffing for the audit.
9. Assignment of personnel
10. Parameters for distribution of work.
11. Standard Formats and check list.
12. Supervision and Review.
 QUALITY ASSURANCE IN PLANNING

• Whether the planning process was timely, comprehensive, based on sound judgments,
appropriately documented and reviewed by suitably experienced staff
 AUDIT EXECUTION
1. Entry conference.
2. Determination of audit approach
3. Audit test through evidence
4. Developing audit opinion/findings
5. Developing recommendations
6. Documentation
7. Supervision of audit.
8. Exit conference.
AUDIT REPORTING AND FOLLOW UP :
1. Reporting for Financial & compliance audit.
2. Reporting for Performance audit.
3. Characteristics of a good audit report.
4. Review of audit findings.
5. Developing audit recommendations.
6. Inventory of recommendations.
7. Follow up of audit outputs.
 RELATIONS WITH AUDITED ENTITIES AND
STAKEHOLDERS

• Communicate Audit Findings

• Relationship between legislative committees and SAI
OVERVIEW OF QUALITY MANAGEMENT ELEMENTS –
CONTINUOUS IMPROVEMENT

• Internal Audit
• Internal Quality Assurance Review
• Peer Review
• Lessons Learned