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Outsourcing of Internal Audit
03-05-2009, 04:47 PM
Post: #1
Outsourcing of Internal Audit
Dear Friends,

Can anybody tell me whether there is any decision by the govt. to outsource the Internal Audit Department.
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03-06-2009, 09:45 PM
Post: #2
Auditor General of Pakistan is an institution which was established under the Constitution of 1973, in the same way the Auditor General of Pakistan appointed in accordance with the constitution of Islamic Republic of Pakistan.
I think government cannot outsource the audit of government organizations.

Thanks and regards.

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03-07-2009, 05:49 PM
Post: #3

If you have asked the question in the backdrop of code of corporate governance or corporate sector, then be informed that a lot of companies have outsourced arrangements for their internal audit.

However, in most of the cases they have their own Head of Internal Audit (not a complete department) to liase with outsourced personnel, manage the reports, responses, conclusions and implementation of recommendations etc. He also is supposed to deal with audit committee although in such audit committee meetings the represnetative of outsourced personnel also participates.

If your question is regarding Government sector organizations, then first of all we have to identify what organization we are discussing. There are lot of different set ups and issues concerning such set ups. Govt owns stakes in corporations, companies etc but such companies could be the corporatized entities under Companies Ordinance 1984. KESC (before privatization), SNGPL, SSGC, State Life, Paksiatn Steel, WAPDA's corporatized entities and so many others are little bit different than normal government sector departments, authorities and institutions. Most of them have statutory requirements of getting their accounts audited by CA firms. They also have their own internal audit departments. Like-wise they can outsource the internbal audit function similar to other corporate sector. There is no harm. However, they will have to follow the approval procedures specified for them to procure such services. One may visit to have some insight about the basics of such procurement rules.

Other Governmental authorities, which don't even have a requirement for statutory reporting or audits may also get their internal audit outsourced following the prescribed procedures. lots of such departments have their own internal audit functions.

The role of Auditor General of Pakistan is not that of Internal Auditors. They work as external auditors for governmental institutions/departments where audit is not required to be conducted by CA firms. Even in some corporatized entities which have their statutory auditors, they visit and conduct their audit although it may not justified or legal and may be an overlapping of the work. However, they have their own agenda and their final reports (audit paras) are even presneted before the National Assembly for discussiona and consideration. The way they carry out their audit is quite different. It is more of an investigation in its nature thereby finding frauds and affixing responsibilities and affecting recoveries.

If you need to discuss it further, let us know.


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