Para 3.2.8 — MSO (Audit)
Original Rule Text
3.2.8 Audit has to provide assurance that claims preferred are in accordance with the entitlements and rules in force. If, during a sample check in audit, the incidence of incorrect application of financial rules and other irregularities is found to be significant, the approach of substantive testing, namely check of all claims, should be adopted so as to be in a position to conclude that the irregularities are wide-spread and not confined only to one or two individual cases. This approach should then be extended to other auditee units of the Department both horizontally and vertically to gain assurance about extent of the irregularities.
- Issues for audit scrutiny
- Audit of Pay Bills
What This Means
When auditing pay claims, the auditor must verify that each claim follows the correct entitlements and financial rules. If a sample check reveals a significant number of irregularities, the auditor should switch from sample testing to checking every single claim. This expanded scrutiny should also be applied across other offices in the same department, both at the same level and up/down the hierarchy, to determine how widespread the problem is.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Audit must confirm that pay claims match entitlements and rules in force
- 2If sample checks reveal significant irregularities, switch to checking all claims (substantive testing)
- 3Extend the deeper audit horizontally (peer offices) and vertically (higher/lower units)
- 4The goal is to determine whether irregularities are isolated or systemic
Practical Example
An auditor checking pay bills at a district office finds that 8 out of 20 sampled claims have incorrectly applied HRA rates. Because this error rate is significant, the auditor now examines all pay claims at that office and also requests similar data from three other district offices to see if the same mistake is happening department-wide.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
When should an auditor switch from sample checking to substantive testing?▼
What does 'horizontally and vertically' mean in this context?▼
Does this rule apply only to pay bills?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.