Para 2.1.10 — MSO (Audit)
Original Rule Text
2.1.10 The principal source of evidence for audit conclusions will be the records of the auditee organisation. It is the primary duty of audit to ensure that the audit conclusions drawn about the organisation and various projects and programmes, activities,
transactions, etc. subjected to audit are based on sufficient, competent and relevant evidence. Evidence must be planned, gathered and analysed before any conclusion can be reached. This may be gathered by:
(i) physical observation, including joint inspection by the auditors and the executive, the resultant observations being signed by both as confirmation of performance or achievements;
(ii) review of documents;
(iii) evaluation of the quality of internal control mechanisms; and
(iv) interviews with executives.
In auditing government accounts, evidence may not be obtained by making independent enquiries from private individuals or members of the general public. However, evidence may be gathered by enquiry from third parties through a reputed agency only when Audit is of the view that the evidence gathered directly from the auditee organisation is insufficient to arrive at proper conclusions. Audit should ensure that evidence obtained from deliberations or interviews with executives is documented and signed by both the participating audit personnel and executives.
- Commonly used Audit Procedures
What This Means
Audit conclusions must be based on sufficient, competent, and relevant evidence obtained from the auditee's records. Evidence can be gathered through physical observation (joint inspections signed by both auditors and executives), document review, evaluating internal controls, and interviews with executives. Auditors cannot make independent enquiries from the general public, but may use a reputed third-party agency if direct evidence is insufficient. All interview-based evidence must be documented and signed by both parties.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Evidence must be sufficient, competent, and relevant
- 2Four methods: physical observation, document review, internal control evaluation, and interviews
- 3Joint inspections must be signed by both auditors and executives
- 4No independent enquiries from private individuals or the public
- 5Third-party evidence gathering allowed only when auditee evidence is insufficient
- 6Interview evidence must be documented and signed by both parties
Practical Example
During a performance audit of a rural road scheme, auditors conduct a joint physical inspection of completed roads with the PWD Executive Engineer. Both parties sign the inspection note confirming that 3 out of 10 roads inspected had lower-than-specified pavement thickness. This signed document becomes admissible audit evidence that the department cannot later dispute.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Can auditors ask members of the public for information?▼
Why must interview evidence be signed by both parties?▼
What makes evidence 'competent'?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.