4.1Annual Audit Plan
4.1.1In the fourth quarter of the year the NAA compiles the Annual Audit Plan for the next year.
4.1.2The basics for designing the Annual Audit Plan are:
- the list of all audited entities (Art 2 Audit Law of the Royal Government of Cambodia),
- the list of budget volume of these organizations,
- findings and opinions of the auditors of the NAA generated in previous audits,
- information from stakeholders and other external persons and institutions, and
- the comprehensive data base of all facts about the potential audited entities of NAA. The staff of the NAA updates this data base permanently throughout the year. With this data the NAA has a tool to identify areas of materiality and vulnerability and areas of potential improvement.
4.1.3In the Annual Audit Plan, the NAA gives priority to its obligatory audits, which must be undertaken by law, in particular the audit of the yearly draft budget settlement. The audits by request are to be prioritized regarding the financial weight, the audit risks and other criteria of the importance of the planned audit.
4.1.4The Annual Audit Plan lays down:
- the audit subject
- the objectives, scope and limit of audit
- the entities to be audited and to be included into the field work
- the period of time of the audit
4.1.5The objectives of the Annual Audit Plan are:
- to use NAA’s staff efficiently and economically
- to conduct audits pursuant to the standards, transparently and impartially
- to create a precondition for dependable view on public finance management
- to avoid gaps in audit coverage
- to prefer audit subject of major financial volume, but also include subject of minor financial volume in order to safeguard the integrity of administration.
4.1.6The Auditor General decides on the Annual Audit Plan taking into consideration the proposals of the departments of the NAA and the suggestions from outside.
4.1.7The NAA adjusts its Annual Audit Plan with the audits of the past years and the mediumterm audit plan for the next few years.
4.2Preparation of Audit
4.2.1Before the start of the Field Work, the responsible Audit Department prepares the audit with great accuracy and emphasis, as this will be the basis of the audit work and of the success of the audit.
4.2.2The detailed preparation of Field Work assures that an audit of high quality will be carried out in an economic, efficient and effective way and in a timely manner.
4.2.3The auditors analyze all available information on the audited entities and on the audit topic. This helps to disburden the audited entities as much as possible from the inconvenience and costs caused by the audit performance.
4.2.4The audit team determines the Audit Schedule/Individual Audit Plan based on the following:
- Objectives, scope and limit of audit
- the materiality of the audit subject,
- the principal issues to be addressed in the course of audit,
- the auditors to conduct the audit,
- the audit methods to be used,
- the timing of audit work especially the period of field work,
- the entities to be included in the audit, and
- the budget of the audit.
4.2.5The NAA sends the Letter of Notification to the entities to be audited and entities affected by the field work in due time before the start of Field Work. The letter contents the audit topic, the date of beginning the field work, the names of team members, deputy team leader and team leader, and the support requested from the audited entity. If the notification would jeopardize the purpose of the audit, the NAA exceptionally may omit the prior transmission of the Letter of Notification, but deliver it at the same time as the fieldwork starts.
4.2.6Each auditor participating in the field work gets an Authorization Letter signed by the Auditor General or staff members assigned by him (Art 30 Audit Law of the Royal Government of Cambodia).
4.3Audit Field Work
Process of audit
4.3.1Before the start of the Field Work the leader of the audit team sets up the Audit File, in which the audit team records each phase of the audit. The audit team leader is responsible to keep the Audit File up to date from the start of the Field Work until the closing of the audit. The Audit File is divided into different sections which contain the relevant documents of each phase of the audit.
When the auditors have finished the Draft Audit Report, the documents verifying the audit opinion are transferred from the Working Papers into the Audit File.
4.3.2The field work starts with the Opening Discussion. The head of the audit team (or one of its superiors) and the head of the audited entity (or a member in charge) participate in this meeting. The audit team explains the audit topic, the audit objectives, and the audit procedures including the estimated end of the field work.
4.3.3The auditors commit the field work in an atmosphere of cooperation and mutual respect. They listen to the arguments and explanations of the staff of the audited entity.
4.3.4The senior management of the NAA may take part in the field work any time.
4.3.5In the course of field work, the auditors decide about the details of the audit approach to be adopted and the steps to be taken.
4.3.6The auditors of the NAA take note of any evidence which is relevant for the performance of audit work.
4.3.7After having completed the field work, as a rule, the auditors inform the audited entity in the Closing Discussion orally about the findings, to learn the auditee’s opinion about the findings in an early stage and to explain the further audit procedure. The auditors are not authorized to inform the auditee about the expected audit conclusions. If possible, the Closing Discussion is held by the same persons as the Opening Discussion.
4.3.8The auditors have free and full access to all premises and records of the audited entities. The institutions included in the audit have the duty to provide the NAA with all information and documents needed for the audit, inclusive sensitive information (Art 32 Audit Law of the Royal Government of Cambodia). If an entity refuses to comply with this duty, the auditors without delay inform their superiors.
4.3.9The auditors gather the information in a way that it can be used in the audit report. The relevant content of verbal information may be secured by witnesses present at the meeting or by minutes signed by each participant of the interview.
4.3.10The legal duty of the audited entities to provide the auditors with necessary information includes the duty to draw up the documents and to deliver, if suitable, copies of those documents to the auditors.
4.3.11The auditors make sure that documents no longer needed, will be returned to the auditees without delay.
Compliance with Laws and Regulations
4.3.12In conducting all types of audit the auditors provide reasonable assurance of detecting errors, irregularities and illegal acts that could significantly affect the audit objectives.
4.3.13The auditors are alert to situations or transactions that could be indicative of illegal acts that may have an direct or indirect effect on the audit results.
4.3.14Any indication that an irregularity, illegal act, fraud or error may have occurred, which could have a material effect on the audit, causes the auditors to extend procedures to confirm or dispel such suspicions.
4.3.15The auditors of the NAA carry out the audits until the audit evidence is sufficient, competent, reasonable and relevant to afford a reasonable basis for the findings, judgement and conclusions to be laid down in the Audit Report. For the financial audit, the auditors thoroughly analyze those financial statements.
4.3.16The auditors adequately document the audit evidence in Working Papers, including the process of the audit beginning from the planning, deviations from the plan, special occurrences, decisions taken, and recommendations for the further process of the audit concerned or for future audits.
4.3.17The Working Papers contain information in written or electronic form, in pictures, in copies, or original items.
4.3.18An internal control system is the means of the Royal Government established by the management of the institutions, ministries and public enterprises in order to provide reasonable assurances which regard to effectiveness of operations, reliability of financial reports and compliance with the applicable laws, regulations, policies, procedures and implementation agreements (Art 43 Audit Law of the Royal Government of Cambodia).
The internal audit units in the ministries, institutions, and public enterprises submit their reports and conclusions to the NAA (Art 41 Audit Law of the Royal Government of Cambodia). The auditors of the NAA may include those ministries and institutions in their audit plan if their audit reports are not clear.
4.3.19Depending on the objectives of the audit being conducted the auditors may assess the effectiveness, efficiency and reliability of the internal control.
4.3.20The NAA may also audit the effect of systems of internal control implemented in the audited entities named in Art 2 Audit Law of the Royal Government of Cambodia.
4.3.21Where accounting or other information systems are computerized, the auditors of the NAA may determine whether internal controls are functioning properly to ensure the integrity, reliability and completeness of the data.
Analysis of Financial Statements
4.3.22In financial audits, the NAA analyzes whether the financial statements comply with the accounting standards for financial reporting and disclosure. The analysis obtains a rational basis for the certification of the financial statements.
4.3.23The analysis ascertains whether the financial statements
- are prepared in accordance with the accounting standards
- are presented with due consideration to the circumstances of the audited entity
- present sufficient disclosure about its various elements, and
- evaluate, measure and present its various elements properly.
4.3.24Where the NAA is required to report on the execution of budgetary laws, the audit should include:
- for revenue accounts, ascertaining whether forecasts are those of the initial budget, and whether the audits of taxes, duties, and nontax revenues records, and receipts of revenues and imputed receipts could be carried out by comparison with the previous annual financial statements of the audited entities.
- for expenditure accounts, verifying credits to assist budgets, adjustment laws and, for carryovers, the previous year’s financial statements.
- for accounts receivable and accounts payable, verifying the documentation of debt records.
- for the management of state properties, ascertaining whether the state properties have been properly recorded and administered or not.
- for the practice of accounting principles and the internal management system of the audited entities.
4.4.3After the end of the field work, the auditors work out the Draft Audit Report.
4.4.2The Draft Audit Report consists of
- the audit findings that are relevant for the assessing of the operations and transactions for the auditee, and
- judgement and recommendations of the NAA.
In case of financial audit, the Draft Audit Report contains the supposable opinion of the Auditor General on the audited financial statement.
4.4.3The NAA asks the audited entity to comment the Draft Audit Report within 28 days.
4.4.4The auditors analyze the comments of the audited entity on the Draft Audit Report, and submit the results to their superiors. The NAA is free to adopt the comments of the audited entity into the Audit Report or not. If the NAA considers the comments are not clear for the Audit Report, the NAA may ask the audited entity for further comments or, if suitable, for meetings to discuss the matter to be reported.
4.4.5When in the opinion of the NAA the audit findings and its assessment are clear, the NAA finalizes the Audit Report.