SAMPLE OF AUDIT PROCEDURE ON PROCUREMENT Agency Internal Audit Group Audit of Procurement and Management of Supplies, Property and Equipment General Objective: Objective :
To evaluate economy and efficiency in the procurement and management of supplies, property and equipment
Specific Objectives: 1. To ensure compliance with prescribed policies and procedures on procurement and management of supplies, property and equipment; 2. To ascertain adequacy of internal control; and 3. To determine the extent to which the desired results are being achieved. Scope: 2006 Transactions Operations Audit Department Audit Program 1. Check compliance to policies / prescribed procedures and evaluate adequacy of internal control
Audit Procedures 1.
Purpose
Responsible Person
Timetable
Review the pertinent policies, systems and prescribed procedures
To enable the auditors to familiarize with and internalize the policies, systems and procedures in preparation preparation for audit work
1 day, to be undertaken before the field work
2. Obtain dat abase of supplies, property and equipment
To serve as reference in selecting samples for audit thereby ensuring their probative value.
2 day (depending on response by auditee), to be undertaken prior to the conduct of field work
Operations Audit Department Audit Program
Audit Procedures
Purpose
3. From the unit under audit, obtain the following:
To serve as easy reference in identifying responsible personnel, authorized signatories and in conducting the walk-through.
a. Organizational structure b. Manpower complement c. Employees’ individual duties and responsibilities d. Special Orders (SO) for OICs e. List of signing authorities / composition of BAC
4. Conduct walk through on flow of To validate actual process transactions flow with the prescribed procedure a. Observe actual process To identify risk areas in the b. Take a look at records, process flow documents, reports and other output/result of the process To assess efficiency of operations c. Interview the employees handling the tasks To check that distribution of manpower corresponds to d. Compare actual task with list the volume of transactions of individual duties and being handled by the responsibilities auditee. e. Take note of lapses, deviations, inconsistencies and violation of policies. Note
Responsible Person
Timetable 1 hour (depending on the response of auditee) to be gathered on site after the entrance audit conference List of requirements to be faxed prior to field work
Operations Audit Department Audit Program
Audit Procedures
Purpose
down observations and recommendations including actions taken by auditee. 5. Under the supervision of the team To check for any leader, take sample transactions irregularities (violation of from disbursement voucher policies) in the transactions register To determine completeness a. Ob tain disbursement voucher and propriety of documents. from concerned unit (COA To check propriety of and/or Cash Division) signatories on disbursement b. Check contents, accuracy and vouchers and supporting propriety of entries on the documents. documents To check that purchases of c. Match signatures in the goods are based on valid, various documents to ensure approved request and their consistency and properly executed as to authenticity price, quantity, quality and supplier. d. Accomplish the working paper according to mode of To validate the accuracy and acquisition using the attached timeliness of the procured format: goods.
Public Bidding – Procurement WP 1
Procurement Service Office – Procurement WP 2
Direct Contracting – Procurement WP 3
Responsible Person
Timetable
Operations Audit Department Audit Program
Audit Procedures
Emergency Purchase – Procurement WP 4
Negotiated Purchase – Procurement WP 5
Repeat Order Procurement – WP 6
Purpose
–
e. Compare quantity of supplies purchased with APP
f.
To check if purchases made Check APP’s data such as were within the approved item description, quantity, plan. estimated cost, etc.
Take note of lapses, deviations, inconsistencies and violation of policies. Note down observations and recommendations including actions taken by the auditee.
6. Check entries in the s tock To check accuracy and card/equipment ledger card timeliness of entries in the stock card/equipment ledger a. Check if issued RIR were card recorded in the stock card/equipment ledger card To check the accuracy of the inventory records. b. Check if withdrawal of supplies were posted in the stock card To check inventory of and supported by proper unused supplies are within documents. the reasonable limits. c. Compare stock card against
Responsible Person
Timetable
Operations Audit Department Audit Program
Audit Procedures
Purpose
APP and physical inventory. d. Scrutinize the stock card for unusual entries e. Take note of balances of individual items and check cases of slow moving supplies and/or excessive stocks. f.
7.
Take note of lapses, deviations, inconsistencies and violation of policies. Note down observations and recommendations including actions taken by the auditee.
Conduct facility
inspection
of
storage
a. Look for the person responsible in handling the key to store room. b. Check arrangement of supplies (i.e. usage of storage rack/shelves, supplies are secured from falling or sliding and if properly labeled). c. Check if the a isles and passageways are clear for safe and efficient handling of storage materials/supplies. d. Check
if
storage
(roof
&
To ascertain that effective security controls are in place, thus offer adequate protection against loss and deterioration. To check process of safekeeping that will ensure easy handling of supplies and materials.
Responsible Person
Timetable
Operations Audit Department Audit Program
Audit Procedures
Responsible Person
Purpose
ceiling) are free from leaks. e. Check if there’s proper control for materials that are fire or pest control hazards (i.e. availability of fire extinguisher). f.
Check security control as to unauthorized entry.
g. Note down observations and recommendations including actions taken by the auditee. 8. Conduct random physical count/inventory of supplies, property and equipment.
To validate existence property and equipment.
of
To check balances stock a. Check the stock cards against cards are reconciled with the supplies supplies on hand. b. Check existence of property on inventory list c. Note down observations and recommendations including actions taken by the auditee.
2. Follow through of previous audit observations
Follow-up actions taken/and or compliance with previous audit recommendations.
To check whether the previous audit recommendations were put into action / unacceptable practices had been stopped or the previous observations still exist.
Timetable
Operations Audit Department Audit Program
Audit Procedures
3. Organize observations and prepare draft report
Prepare draft report by each member of the audit team with supporting schedules / annexes
4. Discuss concerned personnel
To document the details of audit observation in each area which the branch/unit shows strength and Indicate effect to the Agency weaknesses. operations and risks that may be encountered
List down auditor’s recommended courses of action, persons/units responsible in implementing the recommendations
Indicate auditor’s name after each audit observation.
findings with Discuss the findings with concerned auditee / auditee and/or supervisor of the unit audited.
5. Exit conference
Purpose
For validation / confirmation
Note down auditee / unit head’s comments (items concurred / disagreed) and / or commitments
To validate / confirm the audit observations to the concerned personnel / unit.
1. Discuss result of audit with the manager/OIC.
To clarify some issues that may not be fully understood.
2. Provide auditee in hard and soft copy of the report with covering transmittal memo indicating due date for response.
To ensure that the observations and recommendations are acceptable to auditee to
Responsible Person
Timetable
Operations Audit Department Audit Program
Audit Procedures
Responsible Person
Purpose assure recommendations will be acted upon. To close engagement.
6. Consolidate report
and
7. Submit report Management
finalize
to
the
audit
Consolidate and finalize report
Top
Submit hard copy of report to Top Management (CEO, DCEO, SVPTechnical and SVP Operations).
To inform management on the status of audited area, thus formulate strategies, decision making and take remedial actions.
8. Monitor auditees’ commitment and actions taken on audit recommendations.
1. Monitor response and audit rating.
To determine / assess whether the completed audit engagement assist the branch/unit in improving the weak areas and attain objectives.
2. Monitor action taken and implementation of recommended actions on just concluded audit.
Timetable
