PRE-AUDIT/POST AUDIT PRESENTATION

1. PRE-AUDIT/POST AUDIT PRESENTATION Charles Barugahare Director Internal Audit

2. PRESENTATION OUTLINE • Definitions and back ground of Pre/Post Auditing • Merits and Demerits of pre and post Auditing • Risk assessment in MUK • Pre- Auditing in Makerere University • Post -Auditing in Makerere University • Auditing in the college system • Way forward 1st July 2011 and beyond • Conclusion • Questions/Comments

3. Definition/Back ground to Auditing • Internal auditing (IA) is an independent objective assurance and consulting activity designed to add value and improve organization’s operations (iia definition) • Independence & objectivity aspects are very critical • Consulting refers to furnishing Council, Mgt and staff with analysis, appraisals, recommendations and capacity building aspects • Add value & improving operations covers • recommending use of best practices, • identification of new risks/new required controls • Being able to handle emerging business issues

4. Definition & background of IA Cont’d IA is aimed at evaluating and improving the effectiveness of; Risk management, controls, and governance processes

5. Definitions cont’d Pre -Auditing –refers to an examination of documents supporting a transaction or a series of transactions before they are paid for and recorded. Post- Auditing refers to the review of documents or a series of transactions after the transaction has been recorded or consummated.

6. Rational for pre- Audit • Rising incidents of illegal, irregular, wasteful and anonymous disbursements of public funds • Marked inadequacies in internal controls Case for Selective pre -auditing • Not all transactions are subject to pre-auditing –only transactions or areas considered to have issues above.

7. Rational for post audit • Able to review more areas than under pre- audit • Possible to assess the organisation's resources and ensure that all resources (human,material, and financial) are utilised appropriately so that the best possible results are achieved; • Able to produce meaningful reports for mgt & Council attention • Able to verify the reliability and suitability of the information systems; • Able to ascertain compliance to policies, laws independently • Able to inform the management of any irregularity or anomaly revealed and to recommend appropriate measures for their elimination; • Able to Follow-up on whether the recommendations by the internal auditors/external Auditors have been implemented.

8. Merits/Demerits of Pre/post audit PRE POST Looks at risks, processes, controls Its practical to audit for all activities or risky ones Errors are identified after payment/transaction Wider scope Generally reports produced Auditors independent of operations Recommended best practice • Looks at transactions • Some transactions are impractical to pre-audit • Errors are identified & corrected before transaction • Narrow scope • Generally limited or no reports • Auditors are part of operations • Traditional practice

9. PRE- AUDITING IN MUK • The key areas currently pre-audited are; • Verification of all deliveries • Reviewing all payment vouchers • Verification of all pay change reports • Reviewing all accountabilities • Certifying certain project reports

10. Verification of deliveries • Must audit verify all deliveries or critical deliveries? • If some, who verifies the rest? • How do we select those to be verified by Audit and those by the rest? • How do we monitor that those verified by others are actually verified?

11. Verification Cont’d • The Answer to 1 is NO, only critical deliveries require to be verified • Critical deliveries can be determined by amount or nature of delivery- • Nature – All capital items continue to be verified by Audit • Amount – All transactions above 2million ( micro procurements) • In the Colleges- The transactions below 2M, the person responsible for administration receives the items and be verified by Accountant- Reporting. • For Administration Units ---------------??? • Audit to review on an going basis stores records and reports • Audit to be represented in opening all procurement bids above 30M

12. Other pre-audit aspects in the schedule • See details in the schedule

13. Post auditing in MUK • The audit structure, staffing and positioning were all planned for a post audit set up • Council has pronounced itself post auditing • The risk assessment and the demands from mgt, Audit committee and stakeholders are driving the post audit approach.

14. Current post audit situation • About 70% pre- Audit and 30% post audit. • No comprehensive risk assessment, Audit areas selected judgementally or using rough assessments • Limited skills and knowledge in most staff • Limited computer skills

15. Post Audit cont’d • Limited access to computerized systems • Limited guidelines • Limited exposure by most staff on Audit program set up, identifying and documenting audit evidence, report writing etc.

16. Post audit -Going forward • Staffing with technical/practical skills improved • Strategize to give more attention to post audit • Documentation and marketing post auditing • Refer assessment done by the Committee

17. Auditing in the college System • Auditing will remain a central activity in the university • Post auditing largely influenced this decision. • More in the pre- template

18. End Questions, comments & remarks!!!!!!! Thank you