The Audit Office of Guyana – embracing risk and technology

Aug 25, 2010 News

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By Crystal Conway

The Audit Office of Guyana (AOG) has recently acquired two new additions to their arsenal that will allow them to improve the quality and depth of their audit investigations.
The first is the incorporation of the risk-based approach to financial audits.
According to the Auditor General Deodat Sharma, the audits undertaken by his officers are not exhaustive. It would hardly be feasible, he noted, if his staff were to look at every single voucher and transaction for every agency that they audit. Instead, the accepted practice is to take a sample of the entries or vouchers under consideration, examine those and extrapolate the results for the whole.
Sharma went on to point out that there are inherent risks to this approach; to exemplify this, he pointed to the fact that if you take thirty vouchers as a sample to make your analyses you are taking a risk on the accuracy of your reporting, because the thirty-first voucher has some error that would have altered the final report if it had been included.
The risk-based audit approach uses a formal and systematic analysis of the factors that may lead to errors and misstatements in financial reporting. Based on the results of these analyses, the extent and frequency of the audit tests to be conducted on various parts of an account can be determined. Low risk areas will only be subjected to the minimum audit testing as required by the International Audit Standards.
Meanwhile, for higher risk areas, the audit can concentrate sufficient effort based on the risk assessment. Risk-based auditing will allow auditors to utilize their resources more effectively and also obtain more pertinent information from the audit than the current methods.
The introduction of the auditing technique at the AOG is part of an Inter-American Development Bank (IDB)-funded project. One aspect of the project allows for the agency to stage a number of pilots in the current auditing period. Some of these pilot audits will take place at the Ministry of Education, the Ministry of Home Affairs, the Office of the President and a few other Government agencies.
According to Sharma, the benefits derived from the project to introduce risk-based auditing are numerous. These include the ability to undertake a more focused audit by allowing more effective use of audit staff resources. He also said that if the auditors were able to spend more time on the problem areas then the analyses of underlying causes of errors can be more comprehensive, which will result in better audit recommendations.
The Auditor General went on to point out that with this technique, auditors will be able to do more than just highlight irregularities; instead they will be able to make recommendations that will allow the prevention of these errors in the future.

The use of risk-based auditing is systematic and structured, it can be recorded and monitored therefore utilizing it will make it that much easier to demonstrate that the AOG is complying with International Auditing Standards. These standards have for some time required auditors to evaluate risk when planning their audits.
But the approach previously used by the auditors was not underpinned by a structured methodology and tended to create conditions where auditors would end up doing too much work in areas that were not significant to the account. Risk-based auditing however is much more structured and helps auditors to determine beforehand – in the audit planning stages – what level of work is required.
Sharma also pointed out that one of the offshoots of being able to undertake more effective audits would be the possibility of re-deploying staff resources to reduce audit backlogs in other areas.
Under the project, the AOG has retained the services of Mr. Peter Carlill, a consultant and former Audit Manager with the National Audit Office of the United Kingdom. Over the last few weeks Carlill has worked with the staff of the AOG training them in the techniques of risk-based auditing.
But the new technique is not the only tool that the AOG has adopted as of late. Staffers at the AOG have also been undergoing training with an internationally utilised software suite used by auditing offices in over 90 countries. Called CaseWare IDEA and registered to CaseWare International Inc. The software will be used by the AOG to improve each audit conducted by the office.
Sharma noted that the IDEA software enhances fraud detection performance while lowering the cost of analysis and increasing the quality and accuracy of the audit.
He also said of the software, “Instead of auditing around the computer we’ll now be able to audit through it.” He was at the time referring to the fact that with the advent of IFMAS – the Integrated Financial Management and Accounting System – there are many more computerised entries that the auditors are unable to use. Instead they have to revert to the raw data to examine these account entries and vouchers, however the software allows the auditors to simply input the raw data they need analysed or in this case the electronic information that has already been compiled and the software then examines it for the markers that the auditors are searching for.
To ensure that his staff will be able to make the most of the new software, Sharma has contracted Steven Luciani, a CaseWare instructor, to administer two one-week training courses at the AOG. Luciani pointed out that he was impressed by the local auditors’ enthusiasm and grasp of the information. He noted that each course is already fully packed with information, and to have both courses administered consecutively was a real challenge. A number of ‘trainers’ were selected from the staffers based on their performance in the courses. When Luciani leaves, these trainers will take over to ensure that all of the AOG’s audit staff is equipped with the necessary training to utilise the software effectively.So it comes as no surprise that on Friday last, the AOG held a ceremony where several staff members received certificates for training in the two areas. Sharma said that almost 80 or 90 percent of the 120-strong auditing staff have been trained in risk-based auditing, while 24 staff members have been trained in the use of the IDEA software – inclusive of Senior Management.
Sharma noted that with the advent of risk-based auditing, as well as the use of the IDEA software, his office will now be better equipped to deliver quality audits in a timely and cost effective manner. Meanwhile, the public can expect an Audit Report that focuses on the areas of greatest risk and better recommendations for resolving any problems in the public accounts.

Richard Ishmael records 92.69% CSEC pass rate

As schools continue to assess their performances at the recently concluded Caribbean Secondary Education Certificate (CSEC) examinations, Richard Ishmael Secondary School is boasting an overall pass rate of 92.69%.
Among the school’s standouts are Melissa Drakes and Mandy Mangal who both gained 10 subjects, Carl Alleyne 9 subjects, and Obitre Hytmiah and Kevin Dhanram 8 subjects.
This year, the school offered 23 subjects to its students, with 100% passes being obtained in fourteen of these subjects including Agricultural Science, Electricity, Electronic Document Preparation and Management (EDPM), Food & Nutrition, Geography, Home Economics Management, Human and Social Biology, Information Technology, Integrated Science, Principles of Accounts,  Principles of Business, Social Studies, Technical Drawing and Visual Arts.
A whopping pass rate of over 90% was obtained in seven of the other nine subjects, except Mathematics and Spanish with 60% and 50% respectively. Exceptional improvements were noted in English A (95.8%), English B (92.86%) and Geography (100%).
Of the 120 students who wrote the exam, 116 secured passes in 5 to 10 subjects.
The principal, Chandroutie Persaud, congratulated the students and staff for their hard work and urged the Parent Teacher Association (PTA) body to continue supporting the school.

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