ABSTRACT

The auditing are a famous topic in both private and public sectors. However,
in the public sector, the auditing is an up-and-coming issue that has received
little concentration by researchers. To date, only a limited number of studies
on the challenges of audit in the public sector are available, either in the
context of a financial audit or a performance auditThe auditing are a famous
topic in both private and public sectors. However, in the public sector, the
auditing is an up-and-coming issue that has received little concentration by
researchers. To date, only a limited number of studies on the challenges of
audit in the public sector are available, either in the context of a financial
audit or a performance audit. This study focused on the auditing practices in
Bangladesh . The importance of the performance audit function in
Bangladeshi public sector, combined with recent developments related to
this type of audit in the country (such as increasing expectations among the
users andassociated problems in practice) were the reasons for conducting
the study in this area. . Thus, the study aims to identify the existence of the
challenges of performance audit in the public sector of Bangladesh. In
achieving this objective, it explores the perceptions of auditors and auditees.

What is Auditing ?
Auditing involves the testing and evaluation against agreed norms. Auditors
will obtain supporting documentation to assess if the stated is in agreement
with the norms. Therefore it is hard to audit something if there are no agreed
norms. There are many forms of auditing. The most common form is a
financial audit. A financial audit will be performed starting from the use of
auditing assertions. Other forms are an operational audit or an IT audit

What is Auditor ?
An auditor is a professional that accumulates and evaluates evidence to
report on the degree a company's assertions comply with an established set
of procedures or standards (criteria). Use of the title certified public
accountant (CPA) is regulated by state law and individuals using this
designation must be licensed in the state they practice auditing. Each state
has their own regulations for becoming a CPA.
There are four primary types of auditors: certified public accounting firms,

government accountability office auditors (GAO), internal auditors, and

internal revenue agents.

Practices of Auditing in Bangladesh

Auditing a systematic process of objectively, obtaining and evaluating
evidence, regarding assertions about economic actions and events to
ascertain the degree of correspondence between these assertions and
established criteria. It is an independent examination of financial
statements or related financial information of an entity. The results of the
examination are finally expressed in the form of a specific opinion
communicated to the relevant parties. Auditing of financial statements of
companies registered under the companys act 1994 is compulsory in
Bangladesh. According to Sec 213(3), the auditor is to make a report to be
presented in the annual general meeting of the company on accounts
examined by him.
Before acceptance of the International Standards of Auditing (ISA) by the
Institute of Chartered Accountants of Bangladesh (ICAB), detection of errors
and frauds, and prevention of errors and frauds were the two important
objectives of auditing in Bangladesh. At present, Bangladesh
follows ISA guidelines in auditing. Auditing practices are regulated by the
Companies Act 1994, the Banking Companies Act 1991, the Insurance Act
1938, the Securities and Exchange Commission Act 1993, the Securities and
Exchange Rules 1987, the Foreign Donations Regulation Rules 1978,and the
Co-operative Societies Ordinance 1984. According to the Companies Act
1994, accounts of companies registered under this act must be audited by
chartered accountants within the regulations of the Bangladesh Chartered
Accountants Order 1973. Similarly, all books of accounts maintained by a
NON-GOVERNMENT ORGANIZATION
receiving foreign donations shall be audited by a chartered accountant as
defined in the same Order. The accounts of every co-operative society are to
be audited at least once in every co-operative year. The audit is to be
conducted by the Registrar, or by an audit officer authorized by him, and by
such date as may be prescribed. Accounts of enterprises under sector
corporations are audited at three levels - corporations' internal audit
departments, independent professional audit firms, and the Comptroller and
Auditor General (C&AG) of Bangladesh. Internal audit, sometimes similar to
an investigation, and often termed as management audit, is conducted by
the employees of a corporation on special issues. The
purpose of this audit is to check whether the corporation's rules and
regulations are being properly followed at the time of execution of any policy.
Independent professional audit is conducted by chartered accountants to
pass opinion about the financial statements annually. The C&AG has the
obligation to conduct a government commercial audit where there is any

government interest in the form of ownership, or investments, or where the

government provides help in the form of subsidies.

Commercial Audit Directorate :

The Commercial Audit Directorate was set-up in 1956 by the government of
Pakistan to undertake audit in state-owned commercial organizations.
Following the independence of Bangladesh, the role of the department of
commercial audit expanded because of the nationalization of industries,
banks etc. At present, all autonomous and semi-autonomous public
enterprises, government-owned commercial bodies, including nationalized
banks and public enterprises, having minimum 50% government share are
audited by the directorate.

Local and Revenue Audit Directorate:

The Director General, Local and Revenue Audit (DG, L&RA), conducts audit in
two important fields covering about 12,000 government units/individual
offices in a wide range of areas. These are the government offices (other
than Post, T&T, Works, Roads & Highways, Railways, Public Health
Engineering and Defense directorates; hospitals; educational institutions;
sports and cultural bodies) and autonomous and local bodies (city
corporations, municipalities, universities, port authorities and other
autonomous bodies).

Directorate of Works Audit:

The present office of the Directorate of Works Audit was established with
effect from 18 May 1964 under the name Director of Audit and Accounts
Works and WAPDA, East Pakistan, Dacca. After liberation, it was renamed as
Accountant General Works & WAPDA, Bangladesh, DHAKA and entrusted with
the accounting and auditing function of the works expenditure and auditing
the accounts of Bangladesh WAPDA. Following departmentalization of
government accounts, the present office of the Directorate of Works was
established in 1985.

Foreign Aided Projects Audit Directorate:

Different foreign countries and donor agencies provide grants and loans for
different development projects in the form of investment or technical
assistance. The Director General, Foreign Aided Projects Audit, is responsible
for auditing all projects implemented with funding by foreign aid. The main
responsibilities of this Audit Directorate are to carry out audits in

all donor funded development projects to prevent error and fraud, to ensure
accuracy and completeness of accounting records and examine the
adequacy of rules and regulation; to prepare the annual audit report and
submit the same to C&AG for placement before the parliament; to conduct
audits of all Accounts and Financial Statements of donor fund in
accordance with the agreement between the government and donors; to
express an opinion as to whether the financial statements of the donor
funded projects presented are consistent with international standards on
auditing, whether the accounts prepared are in accordance with accepted
principles and whether they present fairly the results of the operation of the
project. In terms of IDA and ADB loans, a separate opinion needs to be
furnished for the statement of expenditure.

Civil Audit:
Following the departmentalization of government accounts, the Civil Audit
Directorate was established in 1985 to strengthen the capability of the C&AG
in discharging his duties. This directorate carries out audits in the following
accounts offices: office of the Controller General of Accounts, Chief Accounts
offices, Regional Accounts offices, District Accounts offices
and Upazila Accounts offices.

Railway Audit Directorate:

The present office of the DG Railway Audit, headed by a Chief Auditor, and
located at the Central Railway Building (CRB) CHITTAGONG, was established in
1950. This office was entrusted with the audit responsibility of the Eastern
Bengal Railway and Pakistan Eastern Railway from 1950 to 1961 and from
1961 to 1971 respectively. Following the liberation of Bangladesh in 1971,
all audit functions of Bangladesh Railway were conducted by this office which
was renamed as the office of the DG Railway Audit in 1995. The office has
208 personnel including one director, two deputy directors, and 14 audit and
accounts officers working in the regional and divisional
offices throughout Bangladesh.

Auditing types, systems and procedures

Three main types of audit are the regularity or compliance audit, financial
statements audit and performance audit (value for money audit). The
regulatory audit is very traditional and it examines receipts and expenditures
and the financial systems and transactions of the audited
organization to see whether it has complied with relevant rules, regulations,
laws, procedures, orders etc. A financial statement audit is the examination
of the financial statements of an audited body to express an opinion on
whether they truly present the expenditures and receipts in the case of the

accounts prepared. It includes the audit of the appropriation and finance

accounts of the government and of the government owned commercial
enterprises. The performance audits examine an organizations programs,
activities, functions or management systems and procedures to assess
whether the organization has achieved economy, efficiency, and
effectiveness in the utilization of its resources. Bangladesh recently adopted
programs to conduct performance audits on different issues in some
organizations.
The auditing system adopted in all audit directorates is very similar. There
are, of course, slight variations depending on the nature and scope of the
audited organization. Each audit directorate prepares a year-wise audit plan
at the beginning of the financial year and on the basis of the budget and risk
involved with the organizations under audit. Some organizations
are audited every year; some once in every two years and some are once in
every three years or more. The director general is entrusted with audit
planning and a director and deputy directors help him in the planning
exercise. Each audit team has, in general, two/three members assigned with
fixed man-days based on risk and volume of work of the concerned
organization. The DG Audit instructs the audit team as to what percentage of
transactions will be subject to audit. The general points taken into
consideration in audit planning are volume of transactions of the auditable
unit, number of vouchers, and nature of expenditure. Prior to the start of an
audit in any organization, the audit team needs to be familiar with the
nature, activities and objectives of the organization as well as with the
annual report and past audit report including the budget book prepared on
the organization.
The audit team gives notice to the audited body well in advance letting them
know the exact date of commencing audit and the records required to be
examined. Procedures followed in carrying out an audit of any office include
initial discussion with the head of the audited body, collection of all the
records and information needed for auditing, examination of the records,
checking the facts, collection of sufficient evidence in support of his
statement, discussions with relevant people, coming to a conclusion and
preparation of the report.

CONCLUSION
In todays world; auditing has become an incorporated segment of the
association. All association wants auditing not only for avoidance and
recognition of fake but in addition for organizational effectiveness. Auditing
plays an essential part to appropriately finish the accounting records and
timely preparation of the consistent financial information.
Internal audit moreover helps organization to defend the property and
maintaining the arranged and effectively accomplish of the business
including adherences to the management policies. The manner of auditing is

becoming easier day by day because of using computer aided audit. The
computer aided audit tools and technique software is simplifying and
automating the audit process. The auditor is now able to find any kind of
fraud or material misstatement through the use of CAATTs software.
Government audit also helps the government to find whether the resources
are use effectively and efficiently. They evaluate the data and directly report
to the Comptroller and Audit general of Bangladesh. Also to guard the
shareholder, creditor and supplier from any kind of fraud, every corporation
must verify their financial report by an external auditor. The external auditor
must be an independent man also has to be a member of the ICAB in
Bangladesh.