Local Audit Manual - English

LOCAL AUDIT
MANUAL
LOCAL AND REVENUE

AUDIT DIRECTORATE
Issued by authority of the Comptroller

and Auditor-General of Bangladesh
25/5/00
Local Audit Manual
Preface
This audit manual has been prepared for use by the Local and Revenue Audit Directorate.
It replaces the guidance given in the following documents:
i) The Local Audit Manual (East Pakistan) Volume I - 1957

ii) Manual of the outside Audit Department (East Pakistan) - 1963
Volumes I and II
iii) Manual of the outside Audit Department (East Pakistan) - 1967
Volume III
iv) The Local Audit Manual (East Pakistan) - 1971
v) Audit Manual, Bangladesh - 1981
This manual is based on the latest audit scope, standards and practices contained in the
Government Auditing Standards and Audit Code. The Government Auditing Standards
and Audit Code prescribe the main principles and practices to be followed by all auditors.
This manual builds on those principles and sets out the detailed techniques and
procedures to be followed. Guidance is given on both regularity and performance/VFM
audits.
The contents of this manual cover part of the audit responsibilities of the Local and
Revenue Audit Directorate, namely those in respect of the audit of local bodies and a
wide range of Government Offices. The audit of Revenue is covered in a separate
manual.
The manual is divided into 12 Chapters:
Chapter 1 sets out the organisation and responsibilities of the Local and Revenue Audit
Directorate and how it relates to others including other Audit Directorates and internal
control/audit units.
Chapter 2 gives details and examples of audit methods and techniques that can be
applied to improve the efficiency and effectiveness of the audit.
Chapter 3 deals with procedures necessary to plan audits in accordance with the best
standards and practices.
Chapter 4 sets out a broad range of procedures, guidelines and programmes on the audit
of expenditure, receipts, assets and liabilities. The procedures are comprehensive,
covering all routine aspects of audit including accounts, probity, propriety, rules and
legality. The responsibility for carrying out these tests is shared with other Audit
Directorates.
Chapter 5 deals with audit procedures for the various Government Offices. This chapter
focuses on the audit tests needed to examine control over expenditure and activities at
offices whose main functions are to formulate or administer Government policy.
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Local Audit Manual
Chapter 6 sets out procedures for auditing Government Service Units whose main task
is to deliver services for the Government in accordance with policy in a cost effective
manner and towards this end the manual contains tests which are specific to those units.
Chapter 7 deals with procedures and guidelines for the audit of Autonomous and Local
Bodies. The procedures are a mix of guidelines for routine audit along with tests to
evaluate management capability and performance of the bodies towards securing their
objectives.
Chapter 8 provides guidance to auditors who undertake non-routine or special audits.

The section on performance/VFM audit gives some guidelines on possible areas for
review of performance during routine audits. It does not go into the overall procedures
for carrying out VFM studies as this is the subject of a separate manual.
Chapter 9 deals with the supervision and review of audit. The various procedures are
designed to ensure that audit is performed to good standards in accordance with the
Government Auditing Standards, the Audit Code and this Manual.
Chapter 10 sets out procedures for audit recording and evidence i.e., the working
papers and other evidence needed by auditors.
Chapter 11 deals with reporting and follow up. It sets out the procedures for reporting
the results of audit and subsequent reviews of what has been done by audited bodies in
pursuance of the report. It should reflect the output and quality of the audit work
undertaken.
Chapter 12 summarises the audit forms and checklists covered in the manual. It
includes the standard forms which, for consistency, should be followed by all auditors.
The completion of these checklists is an important part of the audit evidence.
The application of some audit techniques and tests in this manual will require judgement
by an authorised audit officer. The DG, Local and Revenue Audit Directorate will make
arrangements to ensure that such judgements are applied properly and consistently.
The manual will be updated periodically and any suggestion for improvement is
welcome. The DG, Local and Revenue Audit Directorate is responsible for updating the
manual and is authorised to make changes which do not involve changes of principles
(e.g. programmes) and to notify all relevant authorities. Basic changes will be authorised
by the Comptroller and Auditor-General of Bangladesh.
This manual derives its authority from articles 128 and 132 of the Constitution of the
People’s Republic of Bangladesh and the Comptroller and Auditor-General (Additional
Functions) Act, 1974 and subsequent amendments thereof.
Dhaka Syed Yusuf Hossain

25 May 2000 Comptroller and Auditor-General
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Contents
Pages
Preface ............................................................................................................... i-ii

Glossary ........................................................................................................ vi-viii
List of Abbreviations ........................................................................................... ix
1 Local and Revenue Audit Directorate ............................................................. 1.0
Introduction ......................................................................................................... 1.1

Scope and Objectives of the Directorate ..................................................... 1.1-1.2
Organisation......................................................................................................... 1.3
Responsibilities and Duties ................................................................................. 1.4
Relationship with others ............................................................................... 1.5-1.6
Outputs from the Audit................................................................................. 1.6-1.7
2 General Audit Methods .................................................................................... 2.0
Introduction ......................................................................................................... 2.1

Systems-Based Audit (SBA) Approach ....................................................... 2.2-2.4
Substantive Approach .................................................................................. 2.4-2.6
Sampling and Testing Levels .............................................................................. 2.6
Computer Audit and the use of Computers for Audit ......................................... 2.7
Appendix 1 – Key Internal Controls ................................................................... 2.8
Appendix 2 - Preliminary Consideration of Internal Audit ................................ 2.9
Appendix 3 – Audit of Input/Output controls .......................................... 2.10-2.11
3 Audit Planning ................................................................................................... 3.0
Introduction ......................................................................................................... 3.1

Key Stages in Planning................................................................................. 3.2-3.3
Strategic Plan....................................................................................................... 3.3
Tactical Plan ........................................................................................................ 3.4
Operational Plan .................................................................................................. 3.4
Roles and Responsibilities in Planning Process .................................................. 3.5
Appendix 1 - Understanding the Audit Unit ................................................ 3.6-3.7
Appendix 2 - Assessing Materiality and Risk ............................................. 3.8-3.9
Appendix 3/1 - Annual Assessment of Audit Resources Available .................. 3.10
Appendix 3/2 – Annual (Tactical) Plan ............................................................. 3.11
Appendix 3/3 – Annual (Tactical) Plan ............................................................. 3.12
Appendix 3/4 - Audit Work Plan.............................................................. 3.13-3.14
Appendix 3/5 - Time Budget ............................................................................. 3.15
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Pages
4 General Audit Procedures ............................................................................... 4.0
Introduction ......................................................................................................... 4.1

Expenditure Audit - General Procedure ....................................................... 4.1-4.2
Payroll........................................................................................................... 4.3-4.6
Travel Allowance ......................................................................................... 4.7-4.9
Works Expenditure ................................................................................... 4.10-4.13
Purchases/Procurement of Stores ............................................................ 4.14-4.18
Grants-in-Aid............................................................................................ 4.19-4.23
Receipts .................................................................................................... 4.24-4.27
Bank Account Management ..................................................................... 4.28-4.31
Assets/Stores.............................................................................................. 4.32-4.37
Loans and Advances................................................................................. 4.38-4.41
Liabilities: General Procedure ............................................................................4.42
Provident Fund .......................................................................................... 4.43-4.46
5 Audit of Government Offices............................................................................ 5.0
Introduction ......................................................................................................... 5.1

Ministries/Divisions ..................................................................................... 5.2-5.6
Directorates................................................................................................. 5.7-5.13
National Parliament .................................................................................. 5.14-5.17
Deputy Commissioner/TNO Offices ........................................................ 5.18-5.22
Forest Offices ........................................................................................... 5.23-5.30
Civil Surgeon's Offices............................................................................. 5.31-5.34
Bangladesh Betar & Bangladesh Television ............................................ 5.35-5.38
6 Audit of Government Service Units ................................................................. 6.0
Introduction ......................................................................................................... 6.1

Hospitals ...................................................................................................... 6.2-6.7
District and Thana Family Welfare Offices .............................................. 6.8-8.12
Educational Institutions ........................................................................... 6.13-6.17
Jails ........................................................................................................... 6.18-6.22
Fire Service and Civil Defence ................................................................ 6.23-6.26
7 Audit of Autonomous & Local Bodies ............................................................. 7.0
Introduction ......................................................................................................... 7.1

City Corporations/Municipalities ................................................................. 7.2-7.9
Zila Parishads ........................................................................................... 7.10-7.16
National Curriculum and Text Book Board ............................................. 7.17-7.24
Universities............................................................................................... 7.25-7.32
University Grants Commission ................................................................ 7.33-7.37
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Pages
Port Authorities......................................................................................... 7.38-7.48

BIWT Authority ....................................................................................... 7.49-7.57
Agricultural Research Institutes ............................................................... 7.58-7.62
Sports and Cultural Bodies ....................................................................... 7.63-7.68
8 Procedures on Special Situation Audits .......................................................... 8.0
Introduction ......................................................................................................... 8.1

Suspected Irregularity, Fraud or Corruption........................................................ 8.2
Guidelines from the Audit Code................................................................... 8.2-8.3
Potential Fraud and Irregularities ................................................................. 8.3-8.4
Conduct of Special Audit ............................................................................. 8.4-8.6
Audit of Performance or Value for Money .................................................. 8.7-8.8
Appendix 1 - Possible Areas of Improving Performance............................ 8.9-8.11
Appendix 2 - Examples of Performance Measures ........................................... 8.12
9 Supervision and Review ................................................................................... 9.0
Introduction ......................................................................................................... 9.1

Supervision in preparing for an audit .................................................................. 9.1
Supervision and review during the audit ............................................................. 9.1
Supervision and post audit review....................................................................... 9.2
Inspection and quality control arrangements................................................ 9.2-9.3
10 Audit Recording and Evidence ...................................................................... 10.0
Introduction ....................................................................................................... 10.1

Qualities of evidence ......................................................................................... 10.1
Obtaining evidence ............................................................................................ 10.2
Documentation................................................................................................... 10.2
Queries....................................................................................................... 10.2-10.4
Permanent Files ................................................................................................. 10.5
Audit Completion Programme........................................................................... 10.6
11 Reporting and Follow Up................................................................................ 11.0
Introduction ....................................................................................................... 11.1

Management Letters ................................................................................ 11.2-11.3
Follow up........................................................................................................... 11.3
Appendix - Audit Reporting Pro-formas ................................................ 11.4-11.11
Standard list of irregularity.............................................................................. 11.12
List of Rules, Orders, Ordinances and Acts .................................................... 11.13
12 Index and copy of all Forms and Programmes............................................. 12.0
Introduction ....................................................................................................... 12.1

Index and Forms ................................................................................... 12.2-12.145
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Local Audit Manual
Chapter 1 - Local and Revenue Audit Directorate

Index
Topics Pages
Introduction 1.1
Scope and Objectives of the Directorate 1.1 - 1.2
Organisation 1.3
Responsibilities and Duties 1.4
Relationship with Others 1.5 - 1.6
Outputs from the Audit 1.6 - 1.7
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Local Audit Manual
Chapter 1 - Local and Revenue Audit Directorate
Introduction
1. The Directorate as a whole carries out the audit of three main areas of Government:
(a) the audit of a wide range of Government Offices such as ministries,

directorates, hospitals, educational institutions and autonomous and local
bodies. (The audit of government offices such as Post, T&T, Works, Roads
and Highways, Railways, Public Health Engineering and Defence are covered
by other Audit Directorates);
(b) Local bodies; and
(c) Government revenue particularly taxes such as income tax, customs duties
and VAT.
2. This manual applies to the first two areas only and is referred to throughout as
“Local Audit”. The procedures in the manual provide a wide range of general
guidance to and need to be selected for the needs of each audit. This will be
determined at the planning stage by the appropriate authority, in consultation with
the concerned Deputy Director.
Scope and Objectives of Local Audit
3. There is a wide range of local audits which has been categorised into 3 main
groups, based on the different duties, powers and audit needs of each group. These
are:
(a) Government Offices - these include ministries, directorates and other offices
whose prime functions are to help formulate or administer/implement
government policy and decisions;
(b) Government Service Units – these include hospitals, schools, colleges, sport
and cultural bodies whose main function is to provide a service based on
government policy; and
(c) Autonomous & Local Bodies - these include city corporations,

municipalities, universities and other authorities. This group provides a
mixture of administrative functions and service provision. They have
autonomous powers which need to be taken into account at audit.

Local Audit Manual
4. Overall there are approximately 12,000 individual offices or units which,

potentially, come under the scope of local audit. Local audit must ensure sufficient
audit coverage of the above 3 categories of audit over time, based on risk,
materiality and audit knowledge, rather than attempt to visit all units. This is
covered in more detail in Chapter 3 on audit planning. The development of internal
control/audit units will affect the scope and approach of local audit in future.
5. The broad aim of Local Audit is to safeguard the interest of the State and to
promote transparency and accountability along with sound financial management
practices through an independent audit of Government Offices, Government
Service Units and Autonomous and Local Bodies, as detailed in paragraph 3 above.
6. To fulfil this broad aim, local audit will include a wide range of regularity and value
for money (performance audit) work. The audit work at all categories of local audit
will include but not be limited to:
(a) an examination of the arrangements for securing economy, efficiency and

effectiveness for money in the use of its resources;
(b) the adequacy of financial management systems;
(c) the adequacy of the arrangements for preventing and detecting fraud and
corruption, and the internal control framework generally;
(d) examining the custody and use of assets including equipment, stocks and
stores;
(e) ensuring that appropriate action has been taken on irregularities, improprieties
and wastage in the use of public resources;
(f) the adequacy of arrangements for ensuring the legality of transactions having
financial consequence; and
(g) ascertaining whether there have been deviations from established rules and
regulations.
7. It is not the function of Local Audit to give an opinion on the accounts of the
audited outside Government Offices. Nonetheless auditors should ensure that
significant internal control weaknesses, errors or omissions which may affect the
Government accounts should be notified to the Directorate of Civil Audit.

Local Audit Manual
Organisation of the Directorate

8. Local and Revenue audit is headed by a Director General who is responsible for
policy, planning and overall operations and management of the office. He is
assisted by a Director, and five Deputy Directors. The Directorate is mostly manned
by non-professional staff with some in-house training in auditing. The overall
structure and staffing of local and revenue audit is shown below:
ORGANIZATION OF LOCAL & REVENUE AUDIT DIRECTORATE
DIRECTOR Internal
GENERAL Check
DIRECTOR Administration
Dy Director Dy Director Dy Director Dy Director Dy Director

LAS Sector LAG Sector Revenue Sector OAD Sector Report Sector
FIELD AUDIT SETUP Horizontal HEAD QUARTER SETUP

Movement *
Audit Parties Functional Sections
Concurrent Audit Parties
Audit & Account Officer Audit & Account Officer
Superintendent Superintendent
Auditor Auditor
Jr. Auditor
* Personnel positions change for administrative reasons

Local Audit Manual
Key Responsibilities and Duties of Audit Staff

9. The main responsibilities and duties of staff are shown in the following table:
Director General Director Deputy Audit &

Directors Accounts officers
• Planning, Direction, • Assist the • Prepare audit • As head of a
Coordination, Director general Programmes and functional section
Supervision, and in all matters as ensure their he takes full
delegation of the principal staff execution in responsibility for
functions with the officer. accordance with the accomplishment
intent of fulfilling Specific duties approved plan. of tasks of the
his auditorial include. • Control and section effectively.
responsibilities • Planning of supervision of • As Team Leader of
effectively and audits. the field audit. an audit team he
efficiently. • Supervision of • Supervision and directs and
important audits. review of the supervises the work
• Assisting the work of the of individual
Director General functional member.
in finalising sections. • Distributes work
important audit • Follow up audit among the
reports, reports work. members and
of serious reviews their work.
financial • Evaluates the
irregularity for observations made
C&AG's audit during the audit and
report and reports issues them under
and returns for his authority.
the C&AG. • Conduct the audit
according to plan.
• Finalise the draft
audit report after
discussion with the
Head of the office
audited.
• Submits the Draft
Report to
Headquarters on
time and issue a
copy to the office
audited.
• Ensures that audit
files are complete
with all documents
and evidence
collected.

Local Audit Manual
Relationship with Others

Relationship with C&AG
10. Like other Directorates, Local Audit Directorate comes under the administrative
and financial control of the C&AG. The Directorate derives its authority and power
as delegated by the C&AG from time to time.
11. The Comptroller and Auditor General makes rules and give directions in respect of
all matters pertaining to audit of any office the Directorate is required to audit. He
may give direction to dispense with, when circumstances so warrant, any part of a
detailed audit of a class of transactions and to apply such limited checks in relation
to such account as he may determine.
12. If the DG, Local and Revenue Audit is requested by Government or any other
authority to undertake work which does not fall under his responsibilities, he may
do so with prior approval of the C&AG.
13. The DG, Local and Revenue Audit is required to report to the Comptroller &
Auditor General periodically on various matters including audit plans, progress and
major issues arising.
Relationships with other audit directorates
14. In undertaking audit, it is imperative that Local & Revenue Audit Directorate
should liaise closely with the other audit Directorates responsible for the audit of
similar areas, both to avoid gaps or duplication. It is also necessary for Local Audit
to report any matters arising which may have a bearing on the work of other
Directorates e.g. significant problems affecting accounting transactions.
15. The arrangements for ensuring that there are no gaps or duplication in the audit are
as follows:
(i) adequate strategic planning by the C&AG and DG, Local and Revenue Audit;
(ii) detailed planning of the annual audit including a clear allocation of
responsibilities;
(iii) liaison with other auditors at the audit planning stage setting out the
Directorate’s requirements as principal auditor;
(iv) coordination of the results of audit evidence on the accounts; and
(v) coordinated reporting arrangements.

Local Audit Manual
16. Other audit Directorates should report significant findings directly to the DG, Local
& Revenue Audit which may affect his audit functions e.g. by making available to
him any reports or management letters they have issued. The DG, Local and
Revenue Audit will then consider the nature and significance of such findings in the
context of his area of responsibility.
17. This arrangement is particularly important in respect of government funds provided

to non government entities, local bodies etc. in the form of grants, contributions or
subsidies. These together constitute a growing and material component of the
consolidated account. It is of the utmost importance for DG, Local and Revenue
Audit to assess that the overall evidence is sufficient, relevant and reliable.
Relationships with internal audit
18. The general procedures for placing reliance on any internal audit work are set out in
Chapter 2. DG, Local & Revenue Audit will need to consider any such internal
audit work at the planning and fieldwork stages. Where possible, the work of
internal audit on systems prevailing in the entities responsible for the operations of
the receipts and expenditures could be considered as a source of assurance, but only
if it is possible to confirm that the work done by them is sufficient, relevant and
reliable.
Relationships with other auditors
19. If the concerned entity is subject to external audit under any statute or arrangement
then DG, Local & Revenue Audit will need to take account of the work and report
of that auditor. Consideration will be given to the extent of reliance on such external
audits at the planning stage including any specific requirements for the
enhancement of reliability. This review could affect the following external audits:
BIWTA: Firm of Chartered Accountants.

Private Educational Institutions: Directorate of Inspection & Audit (Under
Ministry of Education) and a Firm of Chartered Accountants.
Outputs from the Audit

20. The audit report is the only visible product of the audit work. The Directorate's
audit output will include a range of reports as needed e.g. to:
• Head of audited Entity (e.g. on weaknesses in control, poor value for money,
impropriety, irregularity etc.) at the conclusion of each audit.
• Head of Department as Controlling Officer, if necessary or Ministries/Divisions
at the conclusion of a special audit including value for money or cases of
significant irregularity including annual summary of audit coverage and key
results.

Local Audit Manual
• The Comptroller and Auditor-General, key results and significant irregularity

and observation for inclusion in the Audit Report to be submitted to the
President, for causing it to be laid before the Parliament.
21. These reports should be discussed and agreed with the audited body, and the
response of the audited body noted therein.
22. Detailed guidance on compiling these reports is contained in Chapter 11 of this

Manual, along with formats designed to focus on significant audit observations and
improve the quality and uniformity of reports.

Local Audit Manual
Chapter 2 – General Audit Methods

Index
Topics Pages
Introduction 2.1
Systems-Based Audit (SBA) Approach 2.2-2.4
Substantive Approach 2.4-2.6
Sampling and Testing Levels 2.6
Computer Audit and Use of Computers for Audit 2.7
Appendix 1 Key Internal Controls 2.8
Appendix 2 Preliminary Consideration of Internal Audit 2.9
Appendix 3 Audit of Input/ Output Controls 2.10-2.11
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Local Audit Manual
Chapter 2 – General Audit Methods
Introduction
1. This chapter provides brief guidance to auditors in the Local & Revenue Audit
Directorate on a range of techniques that will assist them to carry out audit in
accordance with modern methods and standards. These methods and techniques can
only be a general guide and their application will depend on the circumstances at
each audit.
2. The Audit Code sets out the general principles of the audit approach to be followed
by auditors. The actual approach taken will depend on the type of audit being
carried out e.g. opinion, regularity, probity, performance etc. Wherever possible an
integrated approach will be adopted e.g. in testing transactions, say, purchase of
stores, auditors should consider the following aspects in one sample test:
(i) Is there a procurement plan and adequate purchasing procedures?

(ii) Have tender procedures been followed where needed?
(iii) Has the purchase been sanctioned and authorised?
(iv) Is there evidence of receipt of stores ordered – quality & quantity?
(v) Has the invoice been checked comprehensively?
(vi) Is it classified correctly and duly recorded in accounting records?
(vii) Are there any indications of irregularities or improprieties?
(viii) Are there any indications of poor value for money or excessive cost etc?
(ix) Has the audited body followed all due guidelines?
3. The actual approach taken at each audit will be determined by the

AAO/Superintendent in charge of the audit party, in consultation with a Deputy
Director where necessary. However, the audit methods needed to carry out most of
audit will be a mixture of:
(i) a review of systems, procedures and controls (systems-based approach); and

(ii) detailed testing (substantive approach).
4. Given the current stage of development of internal controls and the lack of internal
audit or control units, the main audit evidence will continue to come from detailed
testing but carried out in a more systematic way. Nonetheless, some work on
internal control should be done at each audit. For Local Audit this will relate mainly
to the systems, procedures and controls followed at each auditable unit.
5. Detailed testing procedures outlined below will be selected to ensure that major
activities and transactions are covered. The focus of testing will be on high risk and
high value activities and transactions.

Local Audit Manual
Systems-Based Audit (SBA) Approach
6. The systems based approach to auditing is regarded as a more efficient and effective
method than relying entirely on detailed or substantive tests. Because it focuses
attention on the reliability of procedures and controls, it enables auditors to identify
any underlying weaknesses and seek remedial action from audited bodies. It follows
the principle that, ‘prevention is better than cure’.
7. The main stages of a comprehensive SBA are to:
(i) Identify the major systems;

(ii) Record the systems;
(iii) Test the systems and controls;
(iv) Evaluate results of audit;
(v) Review the controls and identify weaknesses;
(vi) Seek improvements.
8. The current limited development of internal control including internal audit units
means that it is unlikely that a comprehensive SBA approach can be applied or
would be cost effective. However, it is still necessary to carry out a minimum
amount of SBA work based on the checklists in this manual until such time as a
more comprehensive SBA approach becomes feasible. The main purpose of this
limited SBA will be to identify weak controls or a lack of adherence to guidelines
and seek remedial action. This SBA work is unlikely to reduce the sample sizes
needed for the detailed testing of transactions.
9. The minimum SBA approach will be to:
(i) ensure that major audited bodies and/or accounting systems are identified and
examined (chapters 4, 5,6 &7);
(ii) review and test important controls (based on checklists in chapters 4,5,6 &7);
(iii) evaluate the effects of audit results on audit objectives e.g. regularity,
propriety, performance etc.;
(iv) report findings and seek improvements to controls or procedures (chapter
11).
Identifying systems and controls
10. There are a number of key internal controls, which should be reviewed on every
visit and weaknesses reported to the audited body and other higher authority as
necessary. A checklist for reviewing these controls is given in Appendix 1.
11. Auditors will also need to consider at the planning stage which are the major
accounting systems to be reviewed at each audit visit e.g. this is likely to include

Local Audit Manual
payroll because of the high level of expenditure, bank account, and may also
include works expenditure because of high risk. The systems listed in chapter 4
gives some guidance on a range of systems and controls which could be reviewed.
Review and test important internal controls
12. The checklists in this Chapter and in Chapters 4 to 7 provide auditors with most of
the important questions needed to determine whether controls are in place and
working.
Evaluate effects of weaknesses
13. Auditors will need to consider the nature and seriousness of any weakness noted.
This is a matter of judgement by the auditor. The following examples are a guide to
possible action:
Situation Possible Conclusion /Action
1. Bank reconciliation not up 1. It is a major weakness. Seek action to get up-

to date or not balanced to-date/reconciled by audited body. May need
to extend detailed tests. Report immediately to
Head of audited entity and later to appropriate
higher authority.
2. Inadequate checking/lack 2. These could be serious if the inadequate

of supervision of purchase checking was frequent and widespread. If it is
invoices (pre-audit). an isolated mistake, then extra testing of the
work should be considered. If it is a common
weakness, then consequences could be more
major and need even more testing. Auditors
need to consider whether the errors are
isolated or more widespread. Ensure action to
recover any overpayments. Review training
needs.
3. Lack of physical checking 3. Audit should test check major/valuable items
of equipment, stores etc. to consider the effect of this weakness – e.g.
for missing/damaged items. The audit report
should point out this weakness, seek
explanations/action on any missing items and
seek adequate checks by the audited entity in
future.

Local Audit Manual
14. As a general rule, weaknesses noted in internal controls require additional testing
to:
• evaluate the overall effect of weakness;

• extrapolate common errors resulting to calculate what effect they may have on the
accounts as well as for recovery purposes and
• consider whether any irregularities have taken place.
Report the results
15. The review of key internal controls and other detailed tests of systems should
always form a part of the report to the Head of the audit entity at the conclusion of
each audit. The report should be positive and refer to compliance with controls as
well as any weakness. Major weakness or lack of adherence to key
procedures/controls should result in urgent reports to higher authority.
Internal audit/control units
16. If internal audit/control units are established, it will be necessary for Local Audit
staff to consider whether they can place reliance on their systems and work. It will
then be necessary to review the quality, scope and results of such work before
planning and carrying out their audit. A checklist for reviewing internal
audit/control units is included in Appendix 2.
Substantive Approach
17. The majority of audit evidence will continue to come from substantive testing
procedures. There are 2 main types of substantive tests –analytical review
procedures and detailed tests. Analytical procedures can be very useful to give
auditors an overall view on a group of figures before getting into detailed testing of
individual transactions i.e. do the overall figures make sense?
18. Under an analytical procedure, the auditor can compare one aggregate figure with
related data or evidence to identify possible inconsistencies or ensure there are
none. If inconsistencies are noted, the auditor must then seek satisfactory
explanations. Detailed tests will still be necessary but if the overall figures look
right then the detailed testing could be reduced. See example in illustration 1.

Local Audit Manual
Illustration 1
An audited body has 1,000 employees with a total pay bill of Tk 5 million (before
deductions) per month The auditor can calculate from these figures that the
average monthly pay is Tk 5,000. An examination of pay records shows that most
employees are paid between Tk 3,500 to Tk 5,500 per month.
Suggested analytical procedures and audit action:
1. Is the total of pay bills per month consistent with the number of employees and
range of pay rates (per sanctioned posts)?
2. Answer - No. The average rate of monthly pay appears to be Tk. 4,500 per
month (based on analytical evidence) whereas the average actually paid is Tk
5,000 per month (i.e. TK 5 Million divided by 1,000 employees).
3. Analytical review evidence is negative. Review assumptions and calculations to

ensure that a reasonable average pay has been calculated. If satisfactory, check
the monthly pay bills for earlier months in case the month selected was high for
exceptional reasons. If no satisfactory explanation can be found for the apparent
discrepancy, detailed testing needs to be more extensive.
4. For example, test the gross pay of 40 employees on a range of different pay
scales.
5. If results are satisfactory, conclude audit testing and report accordingly.
6. If results are unsatisfactory, e.g. significant overpayments or errors are

identified, then extend detailed testing to another 20 employees and conclude on
the basis of both the analytical review evidence and detailed tests.
7. The analytical review evidence suggested in the initial example above that the
gross pay bill for the month is excessive by Tk 500,000 i.e.:
Actual pay bill = Tk 5,000,000

Calculated pay bill = Tk 4,500,000
19. Detailed tests are based on an audit of individual transactions to ensure that they are
free from material error, comply with budget and other guidelines, are correctly
classified and recorded in the accounts. The procedures carried out in item 4 to 6 in
the above illustration are examples of detailed audit tests. The checklists in this
manual provide detailed guidance on a wide range of both analytical and detailed
testing procedures.

Local Audit Manual
Sampling and Testing Levels

20. It is not usually possible or desirable for auditors to check 100% of items. Auditors
should carefully select the items and their number for audit. Statistical techniques
can be applied and the procedures are well documented in Audit textbooks. But
there remains a substantial element of judgement in selecting which items to test.
The conditions in Bangladesh are not conducive to a statistical based approach to
sampling because of limited internal control, manual recording of individual
transactions etc.
21. Detailed tests will, therefore, be based on a mixture of risk factors and judgement.
The DG, Local and Revenue Audit Directorate will determine these annually as a
part of the planning process (see Chapter 3). It is important that all such judgements
are based on a sound overall approach. The following table illustrates a possible
approach:
Illustration 2
• Ensure that all major systems are tested on each visit
• Minor systems/controls could be tested periodically e.g. every 3rd visit at
major audit entities.
• Testing should cover a full accounting period where possible e.g. tests on
each month
• Determine the risk of systems/transactions e.g.
High risk = known risk areas e.g. from past experience
Normal risk = all non-high risk areas e.g. normal pay, payments.
• Focus testing on high risk/high value items e.g. large expenditure, high value
store items, capital expenditure:
- test 100% of certain transactions e.g. very high value.
- test a large sample of new items/transactions
- test a large sample of known risk items
• selection of sample to be as representative of the area (population) being
tested as possible
• Initial samples of between 12 – 48 items to be applied to each main system,
depending on assessed risk ( to be determined by officer in charge) e.g.
High risk test 36-48 items e.g. 3 or 4 per month

Normal risk test 12-24 items e.g. 1 or 2 per month
• If a high level of common errors is found (say more than 1 in 10 items have a
common error) test a further batch of 12 items i.e. 1 per month to confirm
whether error rate is similar or whether initial sample was unrepresentative.
• Where possible, try to assess overall error rates e.g. by extrapolation of test
results to the whole population (see illustration 1 above).

Local Audit Manual
Computer Audit and the Use of Computers for Audit

22. The extent of computerisation of the transactions of GoB is still limited but
growing. There are 2 main areas of interest for auditors where
computers/IT(Information Technology) is available:
• what use can be made of IT to undertake audit?

• what effect will computer systems have on the audit?
23. There are a number of administrative areas where IT can help the Audit Directorate:
• Audit planning e.g. record of auditable units, frequency, actual visits.

• Performance e.g. record of actual performance, risk experience.
• Reporting e.g. production of management letters, VFM reports.
24. At present, the transactions of the Government Offices and Local Bodies are made
predominantly on a manual basis. This will severely limit the scope of computer
auditing and IT techniques. However, in view of continuing developments, the DG,
Local Audit needs to carry out an annual review of computerisation of accounts at
the strategic planning stage. The approach to auditing computer systems needs to be
revised as further IT development takes place.
25. At present the main focus of Local Audit is to ensure that there are adequate
controls over the input and output of data in the offices where a computer is in use
and that an adequate audit trail has been maintained. A checklist for reviewing input
and output controls is contained in Appendix 3.

Local Audit Manual
Appendix 1
Key Internal Controls
Result Supporting
Control (Yes/No) remarks/
reference to
W/P
Management Controls:
1. Is there adequate separation of duties, e.g. between
checking invoices, recording payments in financial
records and drawing cheques?
2. Are the guidelines in the Accounts Code and other

accounting instructions being followed?
3. Is there adequate supervision and review of staff,

e.g. to ensure that rules and procedures are
followed?
Financial Controls:
4. Are there system of regular and periodical review

of budget control register to see trend of
expenditure/receipt?
5. Have all appropriate accounting records, e.g. cash-

books, been used to record transactions?
6. Are all such records complete and up to date?
7. Are all reconciliation of records (e.g. bank

reconciliation and any subsidiary records) complete
and up-to-date?
8. Are there adequate checking or verification

procedures on invoices and other payments
including prices and arithmetical accuracy?

Local Audit Manual
Appendix 2
Preliminary Consideration of Internal Audit
Preliminary consideration of internal audit

Result Supporting
(Yes/No) remarks or
reference to
W/P
1. Is there an internal audit function that is independent of
day-to-day operations and line management?
2. Does the internal audit report to senior management
and have the right of direct access to the chief
executive (or equivalent)?
3. Is the internal audit structure of an appropriate size,
status and calibre in the light of the size, complexity
and inherent risk of the audited body?
[Steps 1-3: it may be useful to construct/obtain an
organisation chart of the internal audit function for
reporting responsibilities and personnel (including
grades and qualifications)?
4. Obtain copies of recent internal audit reports. Do these
support the initial assessment of calibre at step 3
above?
5. Is there a detailed plan of internal audit activities for
the year and the following year?
6. Does the plan clearly define outputs and deadlines?
7. Do any of the planned outputs appear to be of potential
use for external audit purposes?
8. Does the internal audit function have any spare
capacity or willingness to provide direct assistance to
us?
9. Is there any potential to use the work of internal audit
or to use internal audit to provide direct assistance?

Local Audit Manual
Appendix 3/1
Audit of Input Controls - Checklist
Introduction
The aim is to ensure that all input transactions data are accurate, complete and
authorised. Common manual controls include physical cancellation of input
documents, checking authorised signatures, input control totals and procedures for
dealing with errors or omissions.
Checklist questions
Question Comments WP ref
1. What procedures are in place to ensure that data input is

authorised and accurate?
2. What measures have been taken to prevent duplicate

input of data?
3. What controls are there to ensure that all input has been
received and processed?
4. What are the procedures for ensuring that all valid

transactions have been included?
5. What are the procedures for dealing with errors or any

rejected items?
Prepared by: ________________________________Date:_____________
Reviewed by: _______________________________Date:_____________

Local Audit Manual
Appendix 3/2
Audit of Output Controls - Checklist
Introduction
The aim is to ensure that all computer output is complete, accurate and correctly
distributed. Computer outputs should be checked and reconciled to prove the
completeness and accuracy of processing. Output reports should be reviewed and
acted upon as and when necessary. Possible risks to output include the loss or error,
exception reports and the unauthorised amendment of financial reports.
Checklist questions
1. What procedures are in place to ensure that data output

agrees with data input?
2. Have reasonableness tests been carried out on the

accuracy and completeness of output?
3. What controls are there over the storage and use of

computer stationery?
Prepared by:________________________________ Date:_____________
Reviewed by:_______________________________ Date:_____________

Local Audit Manual
Chapter 3 – Planning
Index
Topics Pages
Introduction 3.1
Key Stages in Planning 3.2-3.3
Strategic Plan 3.3
Tactical Plan 3.4
Operational Plan 3.4
Roles and Responsibilities in Planning Process 3.5
Appendix 1 Understanding the Audit Unit 3.6-3.7
Appendix 2 Assessing Materiality and Risk 3.8-3.9
Appendix 3/1 Annual Assessment of Audit 3.10
Resources Available
Appendix 3/2 Annual (Tactical) Plan 3.11
Appendix 3/3 Annual (Tactical) Plan 3.12
Appendix 3/4 Audit Work Plan 3.13-3.14
Appendix 3/5 Time Budget 3.15
25/5/00 3.0 Chapter-3 Planning

Local Audit Manual
Chapter 3 – Planning
Introduction
1. This section of the manual covers how the Local and Revenue Audit Directorate’s
duties are translated into plans and programmes of work. It sets out the key issues to
be taken into account for planning audit work, so that audit resources are
appropriately deployed and audit objectives met within available time, prevailing
staff and budget allocations.
2. The main aim of all these audit plans is to ensure that all audit responsibilities are
performed in a cost-effective manner. This includes the following considerations:
(i) ensuring that the provisions of the Government Auditing Standards and Audit
Code on planning are fulfilled;
(ii) providing a framework for audit staff to carry out an efficient, timely and fully
integrated audit;
(iii) the application of a risk-based approach to the allocation of resources across
the Local and Revenue Audit Directorate’s work so that resources are used to
best effect. This will include using cumulative knowledge of audit,
understanding the audited entity, consideration of the control environment,
using the concept of materiality, and appropriate audit techniques;
(iv) ensuring that planned audit coverage for each assignment is comprehensive
and directed in such a way as to identifying any irregularities, material errors
or omissions in the Accounts of the audited bodies or other problem areas;
(v) ensuring consistency and working disciplines through the clear documentation
of plans and work, which will also facilitate quality review processes;
(vi) a mechanism to ensure that the planning process is continuous – it will start
before the year of audit commences and continue until the audit is complete. It
will be updated to take into account unplanned or special audits and any other
changes to the original plan. Reference to previous and future years’ audit
should always be included in current year plans.

Local Audit Manual
Key Stages in Planning
3. The key stages are illustrated below:
To identify the Directorate’s audit

Audit Needs Assessment responsibilities and the frequencies needed.
Understanding the auditable units –e.g.
systems, controls, accounting processes and
any computerisation.
To apply knowledge of audit areas identified,

Audit Materiality & Risk including inherent risks and any untypical
Assessment events to decide the audit priorities. This will
include any request for special audits.
Availability of Audit To identify of the total audit resources, both

Resources staffing and financial budget terms.
To prepare an overall audit plan to take

Allocation of Resources account of resource constraints, priorities and
based on needs and risk required frequency of audit. Prepare
programmes for audit parties, based on the
overall plan.
Communication of the Plans To communicate overall plans to C&AG,

other DG’s, and other relevant stakeholders.
4. The needs assessment for Local & Revenue Audit directorate will relate primarily
to frequency and time needed at the various Government offices, Government
service units and autonomous & local bodies. In addition, the DG, Local and
Revenue Audit needs to provide a contingency to carry out special audits,
performance/VFM studies and administrative functions. When computer facilities
are available the whole planning process should be tailored to facilitate amendment,
updating and to provide information on progress.

Local Audit Manual
5. The DG Local & Revenue Audit will also need to consider and lay down guidance
on materiality and risk (at the planning and later stages) to ensure that all material
areas are considered. Guidance on materiality and risk assessment is given in the
Appendix 2 to this Chapter.
6. The availability of audit resources will basically be an analysis of actual staff

numbers – by grade and whether available for field audit or purely an administrative
function. Deduction needs to be made for all non-audit time including annual leave,
special leave, public holidays, medical leave etc. An allowance for training time
will also be needed.
7. The Audit Code (Chapter 3) sets out the general approach for planning and control
of audit. This manual sets out a practical approach to planning to be applied to the
Local & Revenue Directorate at strategic, tactical and operational audit levels as
follows:
(i) The Strategic Plan will deal with the general approach and audit coverage of
the Directorate as a whole over a 3 to 5 year period;
(ii) The Tactical Plan sets out what the audit coverage for the Directorate will be
over a coming accounting year; and
(iii) The Operational Plan will be applicable at an individual audit.
Strategic Plan
8. This plan will set out in broad terms what Local & Revenue Audit will cover, how
and when. It is a policy statement from which shorter term plans can be prepared. It
should be updated periodically to reflect changing needs and circumstances. The
following details should be included:
(i) A statement of key objectives of Local & Revenue Audit (Chapter 1);
(ii) The time period over which all audit objectives will be covered (3 to 5 years);
(iii) The audit areas or units to be audited (all auditable units);
(iv) Knowledge of the business (Appendix 1);
(v) Audit approach – the extent of systems-based and substantive approach
(Chapter 2);
(vi) Extent of computerisation of accounts;
(vii) Staffing resources available – number, grades and skills and
(viii) Development plans and timing e.g. for training, implementation of
Government Auditing Standards, Audit Code, Local Audit Manual and
sustainability arrangements.
9. A copy of the plan should be communicated to all key stakeholders.

Local Audit Manual
Tactical (Annual) Plan

10. This is an annual audit plan which reflects the priorities of the Directorate based on
risk and activity, balanced against the staffing and budgetary resources available.
An illustration of a tactical plan is shown in Appendix 3. Short-term work
programmes can then be prepared for each audit party, based on the annual plan.
Operational (Work) Plan

11. These are detailed programmes of work for each audit unit and should be prepared
by the AAO/Superintendent prior to the visit. These plans will take into account the
general guidelines given in this Chapter and in the audit checklists included in this
manual. It is stressed that these general guidelines must be adapted to take into
account differences – in risk, transactions and systems – which exist, as well as the
experience of past audits in those offices. Forms for use in compiling such plans are
shown in Appendix 3.
12. At the beginning of an audit, the Team Leader will discuss the Audit Plan with the
officer in charge of the audit entity explaining how the audit will be done, the scope
of the audit and the nature of reports to be generated. This discussion will help
establish good working relations with the auditee and remove possible
misunderstanding about the audit purpose. This is also a way for auditors to
establish their own accountability.

Local Audit Manual
Roles and Responsibilities in Planning Process
13. Effective planning is a comprehensive process which will involve all members of
the audit team at varying levels. The table below sets out the roles and
responsibilities for audit planning within the Local and Revenue Audit Directorate.
Role Responsibility
Director General Local • The DG will be involved at key stages in the development
and Revenue Audit of the audit plan, especially where high level contact with
representatives of the audited body is required.
• The DG will liaise with the C&AG and other DG’s Audit
to ensure audit areas are adequately covered and
duplication is avoided.
Director/Deputy • Ensure all audits and key issues are identified

Directors
• Involve the AAO/Superintendents
• Decide on audit priorities and allocation of resources
• Draft, agree and present the plan to DG for approval
• Communicate strategic audit plan within the Directorate.
Team Leaders • Ensure audits at a local level are operated in line with the
[AAO/Superintendents] DG’s strategic plan requirements.
• Prepare programmes of work for visit to each audit unit.
Other Team Members • Other team members will be involved throughout the
planning process as required.

Local Audit Manual
Appendix 1
Understanding the Audit Unit
Cumulative Knowledge of the Audit

1. Background knowledge of audit exists within the Directorate which is vital in the
planning process. This consists of the knowledge and experience held by staff who
have been involved in previous audit. It also includes the written records kept such
as permanent files, current audit files and reports, and outstanding objections which
are still unresolved.
2. The AAO/Superintendent must take account of this knowledge before preparing a

detailed programme for each visit.
Control Environment
3. The control environment must be assessed as part of the planning process. It is the
overall attitude, awareness and actions of management in respect of internal
controls and their importance in the audited body. It is a vital part of understanding
the audited bodies and is a key determinant of audit work. The audit view of the
control environment should influence the approach to each audit unit.
4. The control environment is assessed by reviewing a number of key areas:
Key area Issues to consider

Management The quality of the management of the Accounts
Office.
Control framework The effectiveness of any internal audit. The use of the
various accounting rules, regulations and instructions.
Whether accounting records are up to date.
Staffing The general competence of accounting staff.
Monitoring controls The effectiveness of budgetary control.
IT environment/ Whether the systems are computerised and data are

Systems adequately controlled.

Local Audit Manual
5. Previous audit work, existing sources of intelligence and other aspects of the
planning process will mostly inform the assessment of the control environment.
6. Given the current limited stage of development of computerisation, internal audit

and approach to internal control, it is likely that audit will mostly be carried out
mainly on a substantive basis but every effort should be made to consider and
review the above areas. Where areas of the control environment are identified as
being in need of improvement, these should be included in reports.

Local Audit Manual
Appendix 2
Assessing Materiality and Risk
Materiality
1. Materiality must be fully assessed as part of the planning process. Materiality
should be based on the previous year’s financial statements or on the audited body’s
budget. The bases for materiality will normally be gross expenditure and gross
income (for cash accounting). Information may also be needed to the value of assets
and liabilities.
2. The percentages to be applied to these bases are determined by DG Local and

Revenue Audit and noted in the Annual Audit Plan.
Risk
3. For each Audit objective, the associated risks should be assessed. The main areas of
concern for Local Audit are that:
• poor performance/VFM remains undetected or not reported,

• something major goes wrong e.g. major fraud, impropriety, which should have
been detected by following proper audit standards and guidelines and
• previous audit procedures have not identified and corrected weaknesses in
controls that could have prevented this from happening.
4. The degree of risk is a matter of judgement. For the purpose of Local Audit, risk
should be considered at three levels – high risk, medium and normal risk.
5. In practice, the risk assessment could be made on different attributes e.g.
Audit units e.g. each type of auditable unit or on individual units e.g. a large
hospital, large budget with known difficulties could be high risk, a small hospital
with fewer past problems could be medium risk. The majority of schools could be
low risk, but with higher risks for selected schools only.
Transactions e.g. expenditure on works and Grants-in-Aid could be high risk

because of the system, amount of expenditure and inherent risks involved).
Activities e.g. large auditable units or those which are key to administration of
policy or sensitive areas.

Local Audit Manual
6. The application of a risk assessment is in the end a matter of judgment but it should
be based on past and current knowledge of the audited units and a knowledge of
known risk areas. For example high risk areas for audit purposes could include:
• Transactions governed by complex regulation. The more complex the

regulations, the greater the risk of error;
• Payments and receipts made on the basis of claims or declarations rather than in
exchange for goods and services. Verification of the receipt of goods and
services is generally easier than verification that a claimant meets the criteria
specified for receipt of grant;
• Transactions not on regular or recurring basis and not in the normal course of
business. Such transactions are by definition generally few in number but may
be relatively large in value and, therefore, have a material effect;
• Period end adjustments. These generally are estimates and/or transactions not in
the normal course of business;
• Transactions with non-government bodies/persons.

Local Audit Manual
Appendix 3/1
Annual Assessment of Audit Resources Available

Audit year_____________
1. Number of Auditors available for field audit
AAOs
Superintendents
Auditors
Total
Average days per
Auditor per year
2. Workdays available per auditor

(after allowing for leave, training etc.)
3. less Average time needed on HQ work ( )
4. less Allowance for special studies ( )
5. less Contingency ( )
---------------
6. Net days available per auditor for

field audit ---------------
7. Total days available for field audit

(Column 1 x Column 6) ----------------
Prepared by: ___________________________

Date: _________________________________

Local Audit Manual
Appendix 3/2
Proforma of Annual (Tactical) Plan of Audit Needs (Top level)
Auditable Units Number Total % of total Audit Days

(main categories) of units Expenditure Expenditure allocated
(gross per
annum)
Government
Offices:
Ministries
Directorates
Parliament
Deputy Comm’s
Etc.
Government
Service Units:
Hospitals
Family Welfare
Schools
Jails
Sports
Fire
Etc.
Autonomous/Local
bodies:
City Corporations
Universities
Etc.
Notes:
1. This exercise illustrates how net audit days available (from item 7 in appendix 1)
could be allocated to key categories of audit for the routine programme of field
audits.
2. A weighting could be applied at this stage, based on risk, to increase or decrease the
total days to any category e.g. more to hospitals if considered a higher risk than say
sports or jails.
3. A similar proforma should then be done for each of the main categories (see
appendix 3/3 below.

Local Audit Manual
Appendix 3/3
Proforma of Annual (Tactical) Plan of Audit Needs (Lower level)
Auditable Total % of total Risk Overall Actual

Units Expenditure Expenditure Factor Weighted Audit
(gross per for hospitals High/med. % of total Days
annum) /normal time Allocated
allocated
Government
Service
Units:
Hospitals
1
2
3
4
5
6
7
8
9
10
etc.
Notes:
1. This exercise will be repeated for each category of auditable unit (per Appendix
3/2).
2. If the number of auditable units in any group exceeds 30 (e.g. schools), the exercise
would be too unwieldy to do manually and may not justify the cost involved even if
computerised.. Also the Government Auditing Standards and this manual make it
clear that audit planning should be based on risk and materiality. There is no
requirement to visit all auditable units over time. The selection of which schools to
audit should, therefore, be based on a broader assessment e.g. covering a few of
each type in each region, including some very large schools each year, including
known problem schools regularly.

Local Audit Manual
Appendix 3/4
Audit Work Plan
Fiscal Year ___________________

Audited Unit______________
The plan for this audit has been designed to allow the Local and Revenue Audit
Directorate to gather evidence to serve as a basis for the audit objectives set for this
audit unit e.g. regularity and performance aspects.
Audit Starts on _________________
Audit ends on __________________
Date on which the audit report shall be sent to Headquarters __________________
Date on which any other report (if required) shall be sent to other appropriate
authorities___________________________
The Audit Party moves to (Next Destination) __________________ on _________
The audit party consists of:
Audit and Accounts officer : ________________

Team Leader
Superintendent : ______________________
Auditor : ______________________
Auditor : ______________________
Auditor : ______________________

Local Audit Manual
Required Output of the Audit : .................................................................................
Scope of this Audit : .................................................................................
..................................................................................
Objective of this Audit : .................................................................................
.................................................................................
Important Information necessary for the audit party (summarize all the pertinent
information that will be required by the Audit Party to perform the audit in the most
efficient manner).
Special instruction by the Deputy Director if any.
Prepared by: _______________________________________ Date: ________________
Deputy Director: ___________________________________ Date: _________________
The Audit Work Plan has been discussed with the Audit Team on __________________

Local Audit Manual
Appendix 3/5
Time Budget (Unit Level) -Proforma
Dates of visit ____________________________________________
Name of Audit Unit_______________________________________
Total % of total Risk Overall Actual

Audit Scope/activity Expenditure Expenditure for Factor Weighted Audit
(gross per hospitals High/med. % of total Days
annum)
/normal time Allocated
allocated
Audit
Planning - - - -
General Review of internal
control
- - - -
General Review of - - - -
performance issues
Other specific areas

selected (based on chapter 4
guides)
Expenditure
Receipts
Payroll
Travel
Works
Purchases
Grants-in-aid
Bank Accounts
Assets/Stores
Loans/Advances
Liabilities
Provident Fund
Other___________
________________
________________
Special Tasks (if any) set by

Deputy Director
Reporting Time
Totals
Notes:
1. The time needed for planning, review of internal control, review of performance issues, special task
and reporting should be decided first, based on any guidance given, e.g. by Deputy Director.
2. The specific tasks using the programmes given in chapter 4 should be based on risk (e.g. expenditure
and a risk factor using the judgment of the auditor in charge. The total time available for these tasks
will be the total days given to the audit party less those needed in note 1 above i.e. for planning etc.

Local Audit Manual
Chapter 4 – General Audit Procedures

Index
Topics Pages
Introduction 4.1
Expenditure Audit - General Procedures 4.1 - 4.2
Payroll 4.3 - 4.6
Travel Allowance 4.7 - 4.9
Works Expenditure 4.10 - 4.13
Purchases/Procurement of Stores 4.14 - 4.18
Grants-in-Aid 4.19 - 4.23
Receipts 4.24 - 4.27
Bank Account Management 4.28 - 4.31
Assets/Stores 4.32 - 4.37
Loans and Advances 4.38 - 4.41
Liabilities: General Procedure 4.42
Provident Fund 4.43 - 4.46
25/5/00 4.0 Chapter-4 General Audit Procedures

Local Audit Manual
Chapter 4 – General Audit Procedures
Introduction
1. The purpose of this Chapter is to provide auditors with a range of general audit
checklists which can be used at most local audits. Their inclusion in this Chapter
avoids duplication in later Chapters.
2. The procedures are primarily intended for use on routine audits but they could be
adapted for use on a special audit e.g. a special review of payroll.
3. The following general audit procedures and checklists are included in this Chapter:
Expenditure - General Procedures

- Payroll
- Travel
- Works Expenditure
- Purchases
- Grants-in-Aid
Receipts - General Programme
Assets/Stores - General Programme

- Bank Accounts
- Loans and Advances
Liabilities - General Programme

Provident Fund
Expenditure Audit - General Procedures

4. Government spends money from public funds for the purpose of fulfilling its
executive responsibility. In most cases the money is spent by different government,
autonomous or local bodies. Government expenditure can take many forms
depending on the purpose, but the main categories are remuneration of employees,
procurement of goods and services, financial support to programmes and financial
support to individuals or body of persons deserving such assistance.

Local Audit Manual
5. When auditing expenditure at any local audit, auditors should consider the
following key risks:
• expenditure incurred without any sanction of lawful authority;

• expenditure beyond budget allocations; and
• inadequate control over expenditure leading to waste, poor value for money,
error, impropriety or irregularity.
6. The main objectives of the audit of expenditure are to:
• examine whether expenditure incurred has been sanctioned and paid in

accordance with the terms of the sanction,
• review budgetary control arrangements,
• review other controls over expenditure and
• consider whether value for money has been obtained from that expenditure.
7. These audit objectives will be achieved by review of internal controls at local audits
and substantive testing of a sample of transactions. In the course of audit, the
auditor may, with prior permission, visit the relevant Accounts Office for cross
verification of evidence, if it is felt absolutely necessary to arrive at a clear decision.
The checklists in this chapter provide detailed guidance in these areas.

Local Audit Manual
Payroll
Introduction
8. Payroll is one of the most important systems since it represents the single biggest
item of government revenue expenditure. It is, therefore, important that the auditors
give this item due consideration in audit plans.
Key risks
9. The main risks are:
• payment is made to people who have not been appointed in accordance with
Government rules or do not exist,
• pay and allowances or deductions are incorrectly calculated,
• pay and allowances or deductions are not accounted for accurately,
• inadmissible allowances are allowed along with pay or separately,
• even after superannuation/closure of development project pay and allowances
are continued and
• government servants borne on revenue budget are promoted to hold higher posts
of development projects with enhanced pay.
Key audit objectives
10. The main objectives are to examine whether:
• a payroll system is paying the right amount to the right people at the right time,
• pay is properly classified and accounted for,
• pay represents expenditure to employees for work done and
• employees are employed lawfully and according to sanctioned strength.
Documents to be obtained
11. The following records should be requested for audit review:

• Audit register.
• List of the permanent and temporary posts.
• Retention order of temporary posts (where applicable).
• Scale of sanctioned post.
• Order to fill up leave vacancy (where applicable).
• Schedule of deduction of various advances.
• Leave accounts register.
• Advance sanction order index.

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• Fixation statements of pay.

• Sanctioned strength of the respective establishment.
• Absentee statement.
• Fly-leaf register.
• Duplicate copy of the LPC.
• Personal files of Gazetted Officers.
Audit programme
12. The attached programme should be followed.

Local Audit Manual
Audit Programme
Payroll
Name of office ________________________________ Financial year ___________
Audit Steps Checked W/P

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Sanctioned posts and new appointment
• Examine the list of sanctioned posts and personnel actually
working in the office to see that pay bills were drawn
accordingly.
• Verify the papers/documents relating to new appointments
to see that all necessary conditions were fulfilled before pay
bills were drawn for them.
Allowances deductions and classification
• Check whether all the mandatory deductions e.g. house rent,
GP Fund etc., have been effected in the pay bills according
to approved rates.
• In the case of an allowance which is related to fulfillment of
certain conditions, check the system through which this is
ensured for inclusion in the pay bill.
• Generally check if the pay bills have been drawn showing
proper classification and mentioning correct GPF account
numbers of the employees.
Pay fixation and disbursement
• Check whether pay fixed and recorded in the Service Book
was the same as in the pay bill.
• Check whether fixation of pay of the employees made by
the Drawing and Disbursing Officer (DDO) and verified by
the Accounts Office have been done according to the rules,
regulations and instructions.
• Examine in detail all cases of pay fixation after a new scale
of pay has been introduced by the Government.
• In respect of sanction of pension, check whether this has
been done strictly on the basis of proper fixation of pay and
that all liabilities of the employee have been taken care of.
• In the case of increments of pay relating to crossing of
efficiency Bar (EB), check whether these have been
properly authorised by the competent person.

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• Examine as to how the Drawing and Disbursing Officer
(DDO) satisfies himself regarding the various certificates
recorded on the body of the pay bills.
• Verify the disbursement roll to see that the pay actually paid
to an employee was the same as that of the pay bill.
• Generally check whether necessary revenue stamps have
been affixed and defaced in the disbursement roll as
required under the rules.
GP Fund and other Deduction
• In the event an employee has taken advance/loan from
Provident Fund or motor cycle, house building advance etc.,
see that deductions at stipulated rates are being made
regularly from the pay bill of the borrower.
Conclusion
In my opinion, subject to the audit observations in the Working Papers ________,

the expenditure on account of pay and allowances has been properly calculated and
paid in accordance with the rules.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Travel
Introduction
13. Travel allowance bills warrant careful audit scrutiny, as this is an area of potential
abuse. Travel claims, therefore, should be subject to a reasonableness assessment by
management, before any claims are passed for payment. Management should also
check that the claim has been made in accordance with the rules operating at the
time. Audit’s main task is to see that management has exercised these
responsibilities with due care.
Audit objectives
14. The main objectives are to examine whether:
• travel conforms with authority governing them,
• adequate rules are available for the control of travel expenses especially foreign
travel and the rules are complied with,
• controlling Officers have carried out their checking responsibilities correctly,
• claims for allowances have been based on the applicable rules,
• no excess has been claimed above what the official is entitled to and
• foreign travels serve visible national interest and purpose of travels are clearly
documented.

• Travelling allowance bills.
• Basic Pay.
• Travelling order/ Tour order.
• Travelling Schedule/ Tour Schedule.
• Budget Provision.
• Approved road mileage chart.
• Approved tour diary.
• Evidence giving justification of foreign travel.
16. In the case of transfer:
• Entitlement of dependants as per family definition.
• Existing relevant rules in regard to transportation of goods.
• Order of the competent authority.

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Audit Programme
Travel

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General
• See that the claims were submitted in the appropriate form.
• Also ensure that the drawing officer has certified the claims
appropriately.
• Ensure that there is evidence that the authorising office has
checked that the claims are in conformity with the existing
applicable rules i.e. correct rates have been claimed.
• See that no claims have been paid which do not bear the
signature of the controlling officer.
• See that all tours have been undertaken by the shortest and
cheapest route. In case of deviation, obtain explanation from
the authorising officer.
For foreign travel
• Confirm that copies of Government Order (GO) authorising
each foreign travel, are available in the personal file of the
concerned officer.
• Confirm that daily allowances are paid for the number of
days indicated in the GO.
• Confirm that the air ticket had been purchased from
authorised agency of government and travel was undertaken
by the shortest route and at the cheapest price.
• For a sample of claims, confirm that there is evidence that
the rate of DA paid to the touring officer is as per rate fixed
by the competent authority.
[Note: Since rates of DA vary from country to country,
auditors must have clear knowledge of DA rates applicable
for each country].
• In the event an officer was sanctioned both DA and the cost
of hotel accommodation, ensure through checking of the
hotel bill that the amount drawn had actually been spent by
the officer concerned.

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[Note: For example, if a touring officer has drawn at the rate of
US$ 100 per day for 7 days, check the hotel bill to ensure
that the officer actually stayed in the hotel for 7 days & paid
US$ 100 per day. Hotel rent paid in excess is not admissible,
but if the hotel rent is less than US$ 100 per day, the balance
amount need to be refunded in foreign exchange immediately
after return. Also ensure through checking of the hotel bill
that the charges do not include cost of food, telephone,
laundry and other types of inadmissible expenditure.
• Also confirm that no second advance has been made to an
officer against whom one advance is lying outstanding for
adjustment.
• Confirm that in the final bill, a certificate has been furnished
to the effect that the officer did not stay as a guest of the host
country or of some organisation.
[Note: In that event, a portion of DA requires to be refunded
as required under the rules.]
Conclusion
In my opinion, subject to the observations in the Working Paper ________, the

expenditures on account of Travel have been properly calculated and paid in
accordance with rules.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Works Expenditure
Introduction
17. Different local bodies like City Corporations, Municipalities, District Councils
undertake various types of construction work like buildings, shopping complex,
bridges culverts, roads etc. funded either through government grants or from their
own resources.
18. Since these civil works, in most cases, are carried out through private contractors
careful supervision, monitoring and control in every phase of construction is
essential. Although the primary responsibility of overseeing such activities, rests
with the executing agency, it is incumbent on the auditors, auditing the concerned
entity, to examine each operation thoroughly and meticulously to give reasonable
assurances that all such undertakings have been implemented, economically and
efficiently, within the budget amount, stipulated time-frame and handed over in
defect-free condition.
Key risks
• Awarding contract to parties incapable of performing the job,

• Lack of proper supervision and monitoring,
• Stoppage of work due to budget overrun,
• Use of substandard materials and equipment,
• Poor work quality from non-compliance with specification,
• Non-competitive rates,
• Non-completion of work according to design,
• Payment for work not done,
• Payment made for unauthorised work,
• Changing scope of work during execution,
• Financial support to contractors not covered by rules or through manipulation,
• Loss from defective agreement or non-implementation of agreement,
• Inadequate documentation and absence of good accounting practice and
• Non-tender item/additional work involving substantial amount.

Local Audit Manual
20. The following documents should be obtained for audit review:
• Budget provision.
• Administrative sanction.
• Technical sanction.
• Tender document.
• Design & Drawings of the works.
• Copy of the advertisement.
• Comparative statement.
• Decision of Tender Committee.
• Work order.
• Time schedule.
• Contract agreements.
• Security deposits register.
• Schedule of rates.
• Measurement book.
• Expenditure sanction.
• Contractors’ ledger.
• Stock issue register.
• Equipment issue register.
• VAT and IT register.
• Suspense register.
• Work progress register.
• Work completion report.
• Sale proceeds of tender forms.
Audit programme

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Audit Programme
Works Expenditure

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• See that an estimate has been prepared and sanctioned for
every work.
• See that estimates are not prepared piecemeal.
• See that estimates are approved by the competent authority.
• See that the amount of sanctioned estimate is expressed in
words as well as in figures and is signed & dated by the
officer sanctioning the estimate.
• Take up a few estimates and test the rates by comparison with
the schedule of rates.
• See that tenders have been duly called for.
• See the number of tender documents sold and tenders
received. In case of big variation examine reasons.
• See that specific rates have been quoted in the tender for all
items of work and that they are not in excess of those
provided in the sanctioned estimate. Grounds for accepting
higher rates should be scrutinized.
• See that all tenderers have furnished earnest money along
with their offer; and security deposits by the parties in whose
favour contracts have been awarded.
• See whether there is any non-tendered items in the bills and it
was duly approved.
• Confirm that the contractor is penalised for unwarranted delay
in completion of the work within the stipulated time.
• For a sample of work, confirm that there is audit trail i.e.
follow the work beginning from the issue of notice to final
payment.
• If feasible, observe physical existence of the structure or
obtain assurance from alternative sources that the work in
question has been executed according to plan.
• Confirm that materials issued have been valued as per rules
and recovered.

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• Examine all works that have exceeded original estimates in
respect of regularity and propriety.
• In cases where the lowest tender has not been accepted see
that the reasons have been recorded. Examine each case of
non-acceptance and obtain sufficient and adequate
explanation for such action.
• See that a certificate of satisfactory completion of work is
furnished by the competent authority and there is no unusual
delay in obtaining such a certificate.
• Verify that VAT and IT have been recovered, recorded and
accounted for.
• Confirm that all key decisions are adequately documented and
reasons for a decision are given.
• Examine justification for changes in design, scope and
specification during execution stage. Are financial
consequences commensurate with economic benefits and do
they support project objectives?
Conclusion
In my opinion, subject to the observations in the Working Paper ______, the

transactions with regard to works expenditure are presented fairly in the accounts,
various control system all are place and overall management of the office is
satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Purchases/Procurement of Stores
Introduction
22. The term stores applies generally to all articles and materials purchased/ procured
for the use of Government departments. They include not only expendable and
issuable items, but also items like plant, machinery, instruments, furniture,
equipment, fixtures etc.
23. The Government spends a huge amount of money on purchases each year. Audit of
purchases is, therefore, critical in terms of providing assurance about the proper use
of Government funds. Auditors must be alert to this, and plan their work
accordingly.
24. There are various Government rules regarding proper practices for certain parts of
the purchasing process. The most up-to-date Rules are set out in General Financial
Rules (148 to 155) and Part 11, Chapter IV, Section VII of the Treasury Rules and
Subsidiary Rules. The whole process needs to be considered under the general
purview of Article 38, 39 of the Audit Code. For Autonomous & Local bodies
relevant rules apply.
Key risks
• purchase of stores paid out of Government funds are not used in the
Government work,
• stores either ordered or delivered, are of inappropriate quality, leading to waste
of Government funds,
• the price paid for stores is not the best that could be obtained,
• costs of stores are classified incorrectly leading to misstatements in the
Government account and
• VAT and Income Tax are not recovered from supplier.
26. The main audit objectives are to verify whether:
• stores were required when purchased,

• stores were purchased through an approved procedure,
• stores purchased are of appropriate quality,
• stores acquired at an appropriate price and

Local Audit Manual
• stores purchased were actually received, brought to account and expenditure

classified correctly.
• Budget allocation.
• Sanction letter.
• Tender notice, comparative statement, agreement, work order, certificate of
receipt of store.
• Bill entry register.
• Relevant bill register.
• Vouchers.
• Other relevant documents.
• Inspection report.
Audit programme
28. The attached programme provides guidelines for the audit of purchases/
procurement and should be followed.

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Audit Programme
Purchases/ Procurement

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Audit of pre-order procedures. For a sample of orders
• Verify whether there is a procurement plan and a
procurement/purchase guideline in the office.
• Verify if assessment of need was done properly before
deciding and ordering purchase of stores.
• Check that the authorising office ensured that funds were
available for the purchase.
• In the case of delayed payments for procurement of stores
made during the previous fiscal year, check why payments
were delayed and whether the delay was deliberate to avoid
shortage of funds allotment during that year.
Audit of tender process. For a sample of cases where tenders
were appropriate
• Confirm that the purchase was made on the basis of
competitive price.
• Compare the prices obtained with other recent similar tenders
to see if they are similar. Where there is a significant
difference, identify causes and comment.
• Assess whether publicity for the tender was such as to attract
maximum participation of potential bidders.
• Check the number of tender documents sold, tenders received
and assess whether the tender process was truly competitive.
• Check whether the lowest rate was accepted. Where it was
not, confirm that sufficient justification exists and is recorded.
(Examine comparative statement and bid analysis).
• Check whether any bid was rejected for being non-responsive.
If so, examine its validity.
• Confirm that the required earnest money/ security deposit was
received as per condition of tender.

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Audit of ordering procedures:
• Confirm that the item was required and requisitioned by a
responsible officer.
• Confirm that the expenditure has been approved by the
competent authority before initiation of purchase procedure.
• Confirm that the re-ordering stock level has been maintained.
Audit of receipt of goods. For a sample of invoices paid
• Confirm that there was evidence that the stores were
physically delivered during the period under review and that it
was not mere paper transaction.
• Check that the goods are being used/utilised for the intended
purpose and do not end in unserviceable waste. Give details of
evidence in the W/P.
Audit of payment procedures. For a sample of invoices paid
• Confirm that the payment was sanctioned by a competent
authority.
• Check that the voucher/ invoice is complete in all respect.
• Check that the disbursing office has observed the payment
rules.
• Confirm that the claim is in accordance with rules and in
proper form.
• Confirm that the payment has been made to the proper person
and has been so acknowledged. Consider direct confirmation
with suppliers if necessary.
• Check that the rates are in accordance with agreement/
contract. Check for arithmetical accuracy.
• Confirm that there is a certificate of quality and quantity
signed by the passing and receiving officer, and the
specification agrees with the ordered articles.
• Check that the deductions on account of Income Tax/ VAT
have been recovered at the correct rates.
• Confirm that the rates conform to standard scales. Examine
schedule of rates, if any.

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• Check that the voucher is arithmetically correct and agrees
with the paid cheque, and entry in the cash book.
Audit of management controls:
• Check that the voucher is correctly recorded in the
accounting records and the expenditure properly classified.
• Confirm that the store acquired is ordinarily required for the
normal requirement of the buying agency.
• Check whether there are many purchases of same articles
over the year, as a possible indication that management is
splitting purchases to avoid the need for sanction of higher
authority.
Conclusion
In my opinion, subject to the observations in the Working Paper _____________.
All purchases are for official purpose and are actually being utilized for the normal
business of the government. The expenditure is also in order and properly
classified.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Grants-in-Aid
Introduction
29. Grants-in-Aid are made by Government to assist the funding of a body, concern or
fund which normally is financially independent of the Government. A wide range of
bodies like municipalities, educational institutions, local government institutions,
research and professional bodies, service organisations etc., receive such grants.
30. Grants can be conditional or unconditional. Where no conditions are attached to a

grant, audit will examine whether general principles of grants expenditure have
been observed. For a conditional grant, audit is required to ensure that the grant
money has been spent for the specific condition with which it is granted.
31. In the case of sanction of lump grants-in-aid, the relevant sanction order and the
resultant expenditure will be audited on the principles laid down by the Comptroller
and Auditor General. At the same time the implications of this method of financing
and controlling expenditure on the public service should be examined carefully and,
if necessary, brought prominently to notice. Physical verification may also be
considered, if necessary, to secure audit objectives.
Key risks
32. Grants-in-aid expenditures are not subject to the same direct influence/control of the
officials like any other expenditure of the government. Therefore, in order to
safeguard public funds, auditors need to be careful in examining the existing
financial control within the grant receiving body.
The main risks are:
• the money has not been spent for the purpose it was granted,
• the conditions of grants-in-aid are not clear, leading to ineffective use and waste
of the grant money,
• the sanctioning of the grants-in-aid is based on inaccurate information
frustrating the very purpose of the grant and
• poor internal control within the grant receiving body leads to impropriety or
misappropriation of grant money.
• the conditions of grant have been fulfilled,

• expenditure is guided by the standards/canons of financial propriety,

Local Audit Manual
• the grant money has been completely and correctly presented in the accounts
and
• reliable controls are in place both at sanctioning and spending levels and the
controls are functioning.
• Budget.
• Rules and regulations regulating the grant.
• Sanction orders.
• Programmes of the organisation.
• Reports sent to the grantor by the grantee.
• Books of accounts.
• Vouchers (payment/receipt documents).
Audit programme
35. The attached programme covers the main audit tests required.

Local Audit Manual
Audit Programme
Grants-in-Aid

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Preconditions
• Obtain rules of grants-in-aid and see that the grantee is
qualified/entitled to receive the grant and that the grant was
justified.
• In the case of a grant sanctioned on the request of a grantee,
check the purpose mentioned in the request letter/report and
relate those with the conditions laid down in the sanction
order.
• Assess the reliability of the report/evidence which was sent to
grantor before the grant was given.
• Where receipt of the accounts/audited accounts of the grantee
is a precondition for providing the grant, verify if it was
actually available.
• In the case of grants to make good a financial deficit or
revenue loss, check the accuracy of the evidence/accounts
provided by the grantee.
Sanction
• Verify whether the sanction order contains clearly the
conditions to be fulfilled for utilising the grant money.
• Check if the sanction order includes the manner in which the
report/accounts in respect of the grant money is to be sent to
the grantor.
• Check if the sanction order has been issued within delegated
financial powers of the grantor and issued under the signature
of the authorised person.
Fulfillment of Conditions
• Identify the conditions of the grant and verify that these have
been fulfilled.
• When the condition relates performance, check that there is
clear evidence to the effect that the desired level has actually
been achieved.

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• In the case of recurring grant, confirm that the grantee
continues with the grant related function.
• Examine generally that the grant amount is being spent for
such work which is not at variance with the declared policy of
the state.
Budget control and Accounts
• Check the adequacy of budget control system adopted by the
grantee.
• Also check the adequacy of the system of payment of grant
money to the ultimate beneficiary and how assurance to that
effect is obtained.
[* Particularly important for Education Department.]
• In the case of time bound grant, check whether unspent grant
after the expiry of time limit has been surrendered.
• Also check that portion of the amount which is not ultimately
required for grant objective has been surrendered.
• Where no unspent balance was returned, assess the grantees
procedures for establishing that no surrender was needed.
• Check if so much of the grant has been paid during a financial
year as is likely to be expended during that year.
• Verify whether money has not been drawn in advance of
requirement.
• Check if there has been any occasion for a rush of payment of
the grant at the end of financial year.
• Ensure that individual grant conforms to the principles of
financial propriety.
• Verify if the grant money has been properly accounted for and
Payment for Works/Services
• In the case of grants for specific works or services, examine if
the grantor could use its discretion in authorising payments
according to the needs of the works or services.

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Reporting
• Check whether the activities/expenditures are properly and
timely reported including accounts/audited accounts as is
required under the grant condition.
• Also check the adequacy of the reporting system and confirm
that reports are accurate and free from error.
Conclusion
In my opinion, subject to the observations in the Working Paper _________, there

is satisfactory assurance that the grants-in-aid amount has been spent in accordance
with the rules governing them and for the purpose it was granted, presented
correctly in the accounts and overall management was satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Receipts
Introduction
36. Receipts of Government are of many types. They provide the Government with
finance necessary to run the business of the state. Some are central receipts and
credited to the Consolidated Fund and some are raised locally to be spent by the
entity and/or adjusted against budget allocations. Depending on the source, legal
basis, purpose and consideration, receipts may be classified into definite account
groups such as revenue, fees, levy, sale proceeds, profit on investment, capital
disinvestment, fines, penalty, occasional petty receipts etc.
37. Audit procedures for major revenue receipts are dealt with in the Revenue Audit
Manual. This section covers miscellaneous receipts to be examined during local
audits.
Key risks
• potential receipts have not been recognised and collected,

• receipts have not been assessed according to law,
• receipts have not been identified making room for evasion,
• receipts collected but have not been deposited in government accounts,
• receipts collected but have not been timely deposited in government accounts
• receipts have not been correctly accounted for leading to distortion of estimate
of receipts and
• receipts have been misappropriated.
39. The main audit objectives are to examine whether:
• receipts are assessed in compliance with statutes,

• all amounts due are collected and brought to account,
• the accuracy of the calculation of a receipt due and
• effective control exists for the management of receipts assessment, collection
and accounting.

Local Audit Manual
• Budget estimate of receipts and actual receipts.

• Laws relating to legal basis of receipts.
• Instructions relating to the rates and collection procedure.
• Cash book
• Bank deposit papers.
• Bank reconciliation Statements.
Audit programme
41. The attached audit programme sets out procedures for auditing receipts during local
audit.

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Audit Programme
Receipts

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• Verify the rules and regulations under which receipts are
collected and see that they have been applied properly.
• Verify whether adequate and appropriate
information/statistics are available to make reasonable
assessment of receipt estimate.
• Compare the estimated receipt amount with that of actuals of
the year. In case of wide variation, examine reason.
• Check whether amounts assessed for collection have been
done properly as per instructions.
• Check a sample of calculations to verify its authenticity.
Examine whether collected amount has been entered in the
relevant register and the cash book.
• Verify whether collected amount has been promptly
deposited to proper bank account.
• In case of cash receipt, check the receipt book and verify
amounts in the register/cash book.
• In case of direct deposit into bank, check a sample of
chalans, bank statement etc.
• Verify if bank reconciliation is carried out regularly.
• Check if adequate control system is in place to ensure probity
in the whole operation.
For officials working in certain entities, (like Atomic Energy
Commission, BCSIR, BUET etc.) and receiving
fees/remunerations for services rendered to some outside
agencies.
• See the terms and conditions of appointments.
• Verify whether the conditions attached to such appointments
are adhered to.
• Verify that a percentage of such fees (as decided by the
competent authority) is being deposited into the relevant
government account.

Local Audit Manual
Conclusion
In my opinion, subject to the observations in the Working Paper _______, the

operation relating to assessment and collection of receipts and maintenance of
accounts have been properly controlled.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Bank Account Management

Introduction
42. Government offices draw money for their normal expenditures through different
Accounts Offices (CGA, CAO, DAO, TAO). But for making special nature of
payment, sometimes offices are authorised to draw in advance of requirement the
entire amount sanctioned for a specific purpose and maintain a bank account with a
schedule bank. Besides, bank accounts, not authorised by the competent authority,
are also maintained sometimes by some government offices.
43. In such bank accounts considerable amount of balance remain unutilised and idle
for a long time. These amounts are also not included in the government account
affecting the cash balance/ways and means position of the Government. Besides, in
the absence of timely and properly reporting to the appropriate authority, these
funds are not available for re-appropriation and affect the budget control process.
44. It is, therefore, imperative for the auditor to look into these issues intently during
local audit and inspection of Government Offices.
Key risks
• considerable amount of fund beyond requirement may remain outside the

purview of budgetary control for a long time,
• the amounts may be held in unauthorised bank account which is against the
principles of financial discipline and
• there may not be probity in transactions from such bank accounts.
46. The main audit objectives are to:
• verify whether there has been regularity and financial discipline in conducting
financial transactions of an office and
• check whether there has not been unlawful expenditure of public fund through
an unauthorised bank account.

Local Audit Manual
Document to be obtained
• Authority under which bank account has been opened.

• Orders regarding authorised signatories.
• Cheque books.
• Bank Statements.
• Bank reconciliation statements.
Audit programme

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Audit Programme
Bank Account

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• Verify the authorisation for opening and operating the bank
account including its purpose and whether the account has
been opened and operated upon as per existing instructions
and condition, if any, laid down in the authorisation letter.
• Identify the source of fund and whether the amount appears to
be far in excess of requirement.
• Check whether funds in the accounts are being utilised
regularly and for the purpose for which the account has been
opened.
• Examine reasons, if funds are lying unutilised for a
considerable period of time.
• Check whether there has been proper reporting to the
sanctioning authority if funds are lying idle beyond the
financial year.
• Verify if there is a bank account from where no operation has
taken place for a long time or the purpose of the account is
over. If so, check whether appropriate action has been taken to
close the account.
• Examine whether bank statements are received regularly and
action taken thereon.
• Also verify whether bank reconciliation is carried out
regularly.
• Examine the accounting system and see whether it conforms
to the laid down instructions.
• In the event of closing of an account, check as to how the
interest, if any, has been treated.
• Check whether the bank account is being operated by the
authorised signatories.
• Examine the system of security and custody of the cheque
books to ensure the adequacy of internal control in this regard.

Local Audit Manual
Conclusion

maintenance and operation of the Bank Account are regular, presented fairly,
various control systems are in place and overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Assets/Stores
Introduction
49. Assets are the properties or economic resources owned by an entity. Assets may be
in the form of (a) Cash, (b) Equity, (c) Land, (d) Buildings, (e) Equipment, Plant &
Machinery, (f) Stocks & Stores and (g) Loans and Advances to individuals or
bodies.
50. Assets can be current or fixed. Current assets are also known as Liquid Asset and a
classical example of it is cash. Ownership of asset denotes having the benefits,
responsibility and risks associated with ownership. Current assets should be
considered carefully as their ready convertibility often leads to higher than normal
risk. Cash is a special case and should be given specific attention.
51. Capital assets can be tangible and movable, tangible and immovable or intangible.
Tangible and movable capital assets are, for example, plant, machinery, equipment,
vehicles, stocks and stores, fixture, fittings and office items.
Tangible and immovable capital assets are land, buildings and fixed plant.
Intangible capital assets are software, patent rights, proprietary knowledge etc.
Assets accounts have one common characteristic that they are real and carried
forward from period to period.
Key risks
• assets may not be brought to account and correctly classified,

• there is inadequate and incorrect recording of physical assets and costs,
• assets are not utilised for the purpose they were acquired,
• investments are not yielding desired benefit,
• assets are acquired at excessive cost,
• losses occurred due to theft, fraud or malicious damage,
• assets are not properly protected, or mislaid or ownership lost,
• there is no authority for acquisition and disposal of assets,
• there is collusive fraud in disposal of valuable items,
• possible breaches of law, rules and regulations and
• unauthorised private use of assets.

Local Audit Manual
• adequate regulations have been made for control and stock taking, such
regulations are duly enforced and any requirements of the financial rules have
been complied with,
• lawful authorisations exist for acquisition and disposal of assets,
• the amount of asset shown in the account statement represent all assets and are
physically available,
• disclosure concerning assets are adequate and in accordance with generally
accepted accounting principles,
• evidence and records of ownership custody and control of assets are available
and properly preserved,
• investments are performing and have achieved their purpose and
• assets are properly managed and adequate measures for security safety and
maintenance are in place.
• Cash book (TR Form-3).

• Authority for bank account.
• Cheque books, Pass books/ Bank statements.
• Register of land.
• Register of building.
• Store Account Register (GFR Form 16).
• Register of Plant & Machinery.
• Register of Vehicle.
• Register of Intangible assets (patent right, software, proprietary knowledge
etc.).
• File of indents/invoices.
• Reports of annual stock taking.
• Files containing papers relating to disposal of asset, sale, survey report,
condemnation, writing off etc.).
Audit programme
55. The following programme is a guide to assist the auditor in identifying and
addressing the above risks.

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Audit Programme
Assets/Stores

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Current Asset - Cash
• Check as to where and for what purpose cash is held.
• Verify whether persons who handle cash is fully independent
of the staff who authorise expenditure and that he has paid
necessary security deposit as required under the rules.
• Check if there is any regular cash verification system and
whether appropriate action taken in case of any discrepancy.
• Verify if cash is deposited to bank promptly to ensure
security.
• Check the adequacy of security of cash. Also check whether
cash book is written, closed and attested regularly.
* (In the case of Bank Account use appropriate Audit
programme for Bank Account Management)
Immovable Tangible Assets - Land/Building
• Examine the reason for having the land and how it came into
possession.
• In the case of acquisition, verify the authority and purpose and
check if the compensation money has been paid.
• Check if appropriate action has been taken to release the land
as per existing instructions if remained unutilised for an undue
long time and no longer required.
• Check whether the land is well demarcated and under the
possession of the office.
• Verify if all particulars of the land recorded in the register of
land are correct and that documents are preserved properly.
• Check whether the ownership of land is recorded with the
local land office and that all taxes in this regard have been
paid regularly.
• In the case of building, verify whether it has been taken over
in good condition and as per specific handing over papers.
• Verify if the building is being utilised for the purpose it has
been handed over/constructed.
• Check if all particulars of the building have been recorded in
the building register.

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• Check if there is proper repair and maintenance of the
building.
• Check whether proper security arrangement is in place to
protect the building against any damage/fire etc.
• In the case of release/return of land/building, check whether
this has been done regularly.
• Check physically significant assets like land and buildings.
Movable Tangible Assets - Plant & Machinery, Vehicle
• Check the process of purchase to see whether they were
procured economically.
• Verify whether the departmental regulations of purchase,
receipt and issue, custody, condemnation, sale and inspection
are well-devised and properly carried out.
• Check whether the ownership papers, inspection report
regarding quality are available and the security system is
adequate.
• Examine the purpose for which the plant and machinery has
been acquired were fixed and whether the purpose is being
served.
• Scrutinise if job/jobs done by the plant and machinery are
economical against getting these done from outside agency.
• Verify whether there is regular system of repair and
maintenance and this is actually done.
• Check whether yearly depreciation of cost is carried out and
recorded in the stock register.
• Verify whether technically qualified personnel are available to
operate the plant & machinery.
• Check if there is adequate security measures against
unauthorised use, theft, damage etc.
• Check whether the inventory of spares is adequate to run the
plant smoothly.
• Verify if all particulars are properly recorded in the register
for plant and machinery.
• For vehicle, obtain documentary proof of ownership,
registration certificate etc.
• Check whether a driver is available to run the vehicle.
• Check the purpose for which the vehicle has been procured
and also if there is any deviation.

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• Verify if the vehicle is properly serviced, repaired and
maintained.
• Verify the vehicle log book to see if it is being run/utilised
economically and for the purpose it was acquired.
• Verify if all particulars relating to the vehicle have been
recorded in the vehicle register and that annual depreciation is
calculated and accounted for as such.
Movable Tangible Assets - Stocks & Stores
• Check if departmental regulations/Government instructions
governing purchase, receipt, issue, custody, survey,
condemnation, sale and stock verification are well devised
and carried out properly and regularly.
• Check whether stores account is being maintained in
prescribed form and that balance is drawn as per previous
account and that there is no tampering of entries.
• Check whether all transactions are attested by a responsible
officer.
• Check if a reserve limit of stock is fixed and also check
whether there is any excess accumulation of store.
• Ensure that issue of store is supported by requisition and
indent approved by proper authority and proper
acknowledgement of recipient is available.
• Verify if a scale is prescribed for reordering stock and
whether this has been followed.
• Verify the shelf life of medicine, other medical supplies food
and chemical items.
• Examine if there is any adequate system, to ensure shelf-life
of an item and this is followed properly.
• Check if adequate arrangement is there for proper storage and
security against damage, loss or theft.
• In the case of items of large value, physically check a few
cases.
Intangible Capital Assets - Patent right, Software etc.
• Check whether the office has adequate system in place to
handle such assets, if there is, any.
• In the event of existence of such assets, verify whether it has
been properly documented.
• Verify whether there is adequate security measures to guard
such assets from unauthorised use or misuse.

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Verification/Stocktaking
• Verify if periodical verification/stocktaking is carried out by a
person other than the store-in-charge and certificate to that
effect is recorded in the store account register.
• Evaluate the action taken on previous year's verification result
to see whether irregularity in the store, if any, has been dealt
with adequately.
• Attend during physical verification of some items of large
value.
Disposal of Assets
• In the case of tangible and immovable asset, check that proper
authority exists and that the asset is no longer required.
• Evaluate the survey report to see why disposal became
necessary.
• Check whether condemnation of unserviceable store has been
done by proper authority.
• Also check whether any unserviceable store is lying without
any action.
• In the case of writing off the value of unserviceable store,
verify whether the authority was satisfied that the amount in
question could not be recovered.
• Examine whether disposal of unserviceable stores has been
done as per existing instructions and that best possible value
has been received.
Conclusion
In my opinion, subject to the observations in the Working Paper _________, the

maintenance and operation of Assets/Stores are presented fairly, various control
systems are in place and overall management is satisfactory.
Prepared by: ______________________________ Date:___________________
Reviewed by: ______________________________ Date:___________________

Local Audit Manual
Loans and Advances

Introduction
56. Loans and advances are given to government servants for different purposes like
building of a house, purchase of conveyance (motor car, motorbike etc.) against
budget provision placed at the disposal of a Ministry/Office.
57. The audit approach set out in this programme for the audit of loans and advances to
Government servants is mainly based on the General Financial Rules 249 to 260
and other Government Orders in force. For employees of autonomous and local
bodies relevant rules apply.
Key risks
• loans are given to persons who are not eligible,

• the loan/advance is not used for the purpose for which sanctioned,
• the unspent balance of the loan/advance is not refunded to the Government and
• recoveries are not made properly.
• verify whether loans have been made only to the eligible persons and were
properly authorised,
• examine whether sanction has been made as per delegation of financial powers,
• check whether the amount sanctioned has not exceeded the budget provision for
the purpose and
• see whether loans/advances and interest thereon have been recovered from the
borrower in accordance with the conditions given in the sanction order.

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• Sanction order.
• Fund availability certificate.
• Advances register.
• Mortgage bond.
• Land tax receipt.
Audit programme

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Audit Programme
Loans and Advances to Government Servants

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Audit of sanction order
• Confirm if the sanction orders are definite, issued by the
competent authority and contain conditions like date, when
to begin recovery, period of recovery, rate of interest etc.
• Check whether sanctioned amounts are within budget
allocations or fund balances.
• Verify if approved amounts are within the delegated financial
powers of the sanctioning authority.
Audit of qualifications for loan
• Check if temporary Government Servants had at least 5 years
Government Service at the date the loan was sanctioned.
• Check if temporary Government servants who received
loan/advance had either provided personal security bond
from two eligible permanent employees or mortgage bond to
the Government.
• For house building loan, check if the Government Orders in
force have been followed.
Audit of limitations on loans
• Check whether in the case of house building loan, the loan
amount was not above the amount determined by the
government or prefixed value of the house or estimated cost
of construction.
• In the case of loans for repair of houses, check if the
conditions mentioned in GFR 257(12) have been met.
• In the case of loan for conveyance, confirm that it was in the
public interest and official-need to have such means of
conveyance.

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Audit of repayment and interest calculation
• Check the calculations of the repayments to see (a) that the
period of repayment does not exceed the maximum time
limit prescribed by rules as well as the date of
superannuation (b) that the approved rate of interest has been
applied (c) that penal rate has been imposed for default.
• Verify the recovery register to see that regular recoveries are
not missed.
Audit of security, guarantee, bond etc.
• Check the security/securities to see that necessary documents
have been properly executed as per conditions of the loan
before the loan was disbursed.
• Confirm that mortgage bonds etc. have been executed in the
case of land and building.
• Check whether any conveyance has been disposed of before
full recovery of the loan. If so, check whether proceeds have
been applied for paying off the outstanding loan.
Special situation
• If there are too many HB Loans in one office in one location
during the year, verify the existence and eligibility of the
beneficiaries. Additional scrutiny should be carried out if
malpractice is suspected.
Conclusion
In my opinion, subject to the observations in the Working Paper _______, loans and
advances to Government servants have been made in accordance with the rules
governing them and necessary recoveries are made properly.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Liabilities: General Procedures

Introduction
62. Liabilities are defined as financial obligations for which government becomes liable
to repay. Liability may be in the form of internal debt, short or long term and long
term loans from external sources. Liability may also be in the form of temporary
‘Deposits’ for which no interest is paid and again liability is raised from the
government employees, for which interest is paid (Provident Fund).
External liability is crucial because debt servicing both for principal and interest is
made in foreign currency having balance of payment implication. It is, therefore,
necessary that government “Liability” is managed with utmost care and efficiency.
Audit of Liability is a high risk area because of size and inadequate control.
Key risks
• debt is applied for unproductive purpose,

• there is no proper debt servicing (principal and interest) arrangement,
• there is inadequate recording,
• borrowed money may not be used for the purpose for which originally raised,
• debt money may not be utilized in accordance with sound principles of public
finance,
• debt records are not reconciled and
• debt servicing is not made according to approved schedule.
• government does not go beyond limits, as may be set by an Act of Parliament,

• debt money has been utilised for the purpose for which it was raised,
• adequate amortisation exists,
• effective control exists for debt management,
• settlement of liability is in accordance with agreement or according to rules,
regulations governing such liability and
• desired benefits have been received.
Audit approach
65. Besides liability in respect of Provident Fund, Local Audit would also examine
records relating to internal borrowing in the Finance Division and external liabilities
in the Economic Relations Divisions.

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Provident Fund
Introduction
66. Provident Fund enables all employees of an entity to save directly from their pay
for the future.
67. There are two types of Provident Fund. They are:
• General Provident Fund meant for government employees only and all
subscribers who are eligible to subscribe to Provident Fund under P.F. Rules are
admitted to this Fund.
• Contributory Provident Fund meant for all employees other than the
Government Servants. The eligibility, rate of subscription, mode of withdrawal
of fund and other relevant rules and regulations are prepared and administered
by the concerned entity.
Key risks
68. The main risks arise from the fact that transaction in the General Provident
Fund/Contributory Provident Fund, are cash-based, and as such it is more
vulnerable to fraud than other forms of transactions. It is, therefore, imperative to
keep funds secure from loss and accounted for correctly.
• the fund is not administered in accordance with the rules, for instance,
unauthorised advances are made from the fund,
• all eligible subscribers are not made members of the fund either deliberately or
through over sight,
• advances are not recorded and debited from the balance,
• the fund accounts and detailed subscribers' accounts do not balance, leading to
uncertainty as to which are the correct figures, and enabling fraud and error to
go undetected,
• advances are made in excess of fund balance,
• fund related transactions are not recorded into broad sheet register and
• reconciliation between Monthly Accounts and Broad-Sheet balances is not
done.

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70. The main audit objectives are to see whether:
• fund transactions are made according to the rules and regulations governing the
administration of the fund,
• fund accounts are correct and fund balances are correctly reflected in the
accounting statements,
• all employees belonging to the class of compulsory subscribers are duly brought
under the purview of the fund,
• withdrawal from fund is done as per existing applicable rules and
• ineligible personnel are not admitted to GPF/CPF.
Documents to be obtained:
• Application and nomination papers file.

• GPF/CPF index register.
• GPF/CPF ledger.
• GPF/CPF balance register.
• GPF/CPF final payment register.
• Sanction of advance/ Final payment intimation letter.
• GPF/CPF vouchers (Pay bill, Schedule and Withdrawal bill).
• Summary interest registers.
Audit programme

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Audit Programme
Provident Fund

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Audit of Provident Fund in government offices/government
service units where pay allowances and other payment are
made through CAO/DAO/TAO
• Check and ensure that all eligible subscribers working in the
entity have been admitted to the fund.
• Ensure that a general index of subscribers is maintained in
alphabetical order in the Accounts Section of the entity.
• Ensure that the Subscribers Ledger and Abstract Ledger of the
entity are maintained properly in the Accounts Section.
• Check at random some of the pay bills and ensure that
subscriptions are at or above the minimum limit laid down by
the competent authority.
• In the case of advance sanctioned to a non-gazetted
employees, verify whether such sanction has been approved
by the appropriate authority.
• Also ensure that the conditions under which the advance can
be granted have been fulfilled.
• Verify whether monthly recoveries against advances are made
regularly at the specified rates and recorded in the relevant
books of accounts.
Audit of Provident Fund/Contributory Provident Fund of
entities having their own full-fledged Accounts outfits (like
Municipalities, Universities etc.)
• Check whether the entity under audit has its own Provident
Fund/Contributory Provident Fund Rules, (encompassing all
aspects like eligibility and rates of subscriptions, investment
programme, rules governing advances and withdrawals from
Funds etc.) duly approved by the competent authority.
• Verify that the subscribers to PF/CPF are all entitled to
subscribe under rules.
• Also verify and confirm that all the eligible subscribers of the
entities have been made members of the fund.

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• Confirm that subscriptions deducted from pay are at or above
the minimum laid down in the provident fund rules of the
entity.
• In the case of advance taken by an employee:
a) check that the conditions under which the advance can be
granted under rules of the fund are fulfilled,
b) confirm that no withdrawals have exceeded the balance,
c) confirm that the recoveries on account of principal and
interest are being made regularly and recorded in the
relevant books of accounts.
• In the case of final withdrawal, verify that such withdrawal has
been duly authorised by the appropriate authority on the basis
of current statement of fund balance.
• Confirm that final payments of the amounts drawn on
retirement or quitting service were made only to the subscriber
or his/her nominee/properly authorised representative.
• Obtain aggregate of fund balances and interest for the previous
year and the year under audit and compare ratio between the
two. If the trend of ratio is not consistent, scrutinise the
reasons.
• In the case of CPF, confirm that there has been proper, safe
and profitable investment of the Fund and realisation of
interest/profit/dividend etc.
Conclusion
In my opinion, subject to the observations in the Working Paper __________,

Provident Fund/ Contributory Provident Fund Account is correct and in accordance
with the rules governing the fund and the fund balances are correctly reflected in
the accounting statement.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Chapter 5 – Audit of Government Offices

Index
Topics Pages
Introduction 5.1
Ministries/Divisions 5.2 - 5.6
Directorates 5.7 - 5.13
National Parliament 5.14 - 5.17
Deputy Commissioner/TNO Offices 5.18 - 5.22
Forest Offices 5.23 - 5.30
Civil Surgeon's Offices 5.31 - 5.34
Bangladesh Betar and Bangladesh Television 5.35 - 5.38
25/5/00 5.0 Chapter-5 Government Offices

Local Audit Manual
Chapter 5 – Audit of Government Offices
Introduction
1. This Chapter covers the audit of Government Offices whose main functions are to
help, formulate or administer Government policy.
2. From an audit perspective this group of audits has two main aspects:
(a) the overall management arrangements, e.g. of Ministries and Divisions, to

administer policy in a cost-effective manner; and
(b) day to day control over its own expenditure and activities.
3. This Chapter provides guidance mainly on the second aspect. Guidance on the first
area is contained in Chapter 8 (procedures on Special Situation Audits) and Chapter
11 (Reporting & follow up).
4. The following Government Offices are covered:
• Ministries/ Divisions
• Directorates
• National Parliament
• Deputy Commissioner/TNO Offices
• Forest Offices
• Civil Surgeon's Offices
• Bangladesh Betar and Bangladesh Television

Local Audit Manual
Ministries/Divisions
Introduction
5. A Ministry/Division is the apex Government Office responsible for policy matters
concerning the Ministry/Division for implementation thereof, including
administering and monitoring of all work/programme undertaken by its attached
departments, subordinate offices and agencies.
6. A Ministry/Division is headed by a Minister who is, in most cases, a member of the

Parliament. Below him is the Secretary, a permanent civil servant, who looks after
the general activities of the Ministry/Division. The Secretary is also the Principal
Accounting Officer of his Ministry/Division, its attached departments, subordinate
offices and ensures that funds controlled by him are spent in accordance with the
rules laid down by the Government or any other law for the time being in force.
Funds for a Ministry/Division are disbursed through its Chief Accounts Offices,
District Accounts Office and Thana Accounts Offices.
Key risks
• ministry/division might operate bank accounts, not authorised by competent

authority and that large amount of fund remain idle which is contrary to
financial discipline,
• the system of internal control of the ministry/division is inadequate and
ineffective resulting in the lack of budgetary control,
• the procedure for management of asset and liability is inadequate,
• there is non-adherence to the prescribed procedure for purchase or acquisition of
goods and services and
• there is inadequate supervision and monitoring of implementation of its policies
by the offices under them.
8. The main audit objectives are to verify that:
• funds controlled by the ministry/division are spent in accordance with the rules
laid down by the Government and free from impropriety,
• there are adequate and effective internal control measures and
• programmes are properly monitored to secure economy, efficiency and
effectiveness in all spheres of activities.

Local Audit Manual
• Papers relating to budget allocation.

• Allocation of fund file/register.
• File of authorities/sanctions issued.
• Grants-in-aid file/register.
• Register for security/stock.
• Papers relating to monitoring of implementation of projects/programmes.
• External debt/secondary loan monitoring file.
• Imprest account register.
• Service books of employees.
• Telephone register.
• Register of vehicles/log books.
• Register for condemnation/writing off.
Audit programme
10. The attached programme is a guide to assist the auditor and should be followed.

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Audit Programme
Ministry of ______________________________________ Financial year __________

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In the case of budget and expenditure:
• Verify total budget allocation with total expenditure.
• If overspent, check whether covered by re-appropriation or
regularised by competent authority.
• If savings, check whether reported to Finance Division in time.
• Examine whether funds for different purposes were allocated
to the offices under the Ministry/Division in time and amount
fixed properly and rationally.
• Obtain clarification if there is undue delay in the process and
amount fixed without any basis.
• Check if sanction letters were issued in a proper manner and by
the authorised person.
• Also check whether expenditures were monitored properly
along with physical achievement.
• Check whether timely arrangement for release of funds for
development project was made so as not to dislocate work.
• Verify if there has been adequate review of development
activity to monitor physical progress with expenditure.
• Verify if facilities for training of personnel have been utilised
as per policy framed by the Government.
In the case of sanction of Grants-in-Aid:
• Check whether amount fixed was on the basis of previous
year's expenditure/performance or any other basis.
• Also check whether there is a system to check that conditions
governing the Grants-in-Aid have been fulfilled.
In the case of stock/security held by the Ministry:
• Find out the basis on which the investment has been made.
(due to denationalization of a public enterprise or otherwise)
• Find out physical existence of the instruments and who is in
custody of these.
• Find out how cases of dividends, bonus share, right share etc.,
(if at all) are treated and accounted for.

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• Verify if there exists adequate monitoring system to see that
arrangement for debt servicing ( mainly secondary loan) has
been made by any Agency under the Ministry/Division who
has received such loan.
• In the case of bank account operated by the Ministry/Division,
check whether this is authorised by the competent authority,
source of fund, utilisation and accounting system along with
security arrangement for cheque books.
• Examine whether the financial powers exercised by the
Ministry/Division are within its delegation of financial powers.
• Check if imprest fund of the Ministry/Division has been fixed
rationally on the basis of monthly expenditure.
• Check whether large amounts of advance are lying unadjusted
for undue long time.
• Verify service books of staff to see the correctness of service,
leave account and pay fixation.
• Check papers/registers to see whether there have been proper
use of officials telephones (foreign call for both office &
residence and number of calls for residence) as per Govt.
instruction and that timely payment of telephone bills has been
made.
• Check log books to see whether there has been proper use of
office vehicles and expenditure controlled as per instructions.
• Verify whether Ministry/Division maintains an inventory
register and that annual stock verification is carried out.
• Check the status of outstanding observations in the previous
audit reports.
• To check purchase or acquisition of service, for big amount use
audit programme in Chapter 4.
• Check whether the Ministry/Division has been making regular
payment of utility service bills (gas, electricity, water) and
ensuring the same in the case of offices under it.
Additional audit programme for Economic Relations Division
• Check whether adequate and effective control exist for debt
management.
• Verify that rules, systems and procedures for loan accounting
and reporting are available.

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• Check whether there has been appropriate documentation
(ledgers, registers, advice etc.) of all transactions of
development partner wise disbursement.
• Check whether total repayment during the year is covered by
appropriate budget provision for the year.
• Check whether repayment of installments are according to
approved schedule and in accordance with the total loan
received and agreement regulating such loan.
• Check advice/confirmation from development partners along
with advice of ERD and payment memorandums of
Bangladesh Bank to ensure correctness of repayment
transaction.
• Verify whether arrangement/ system for reconciliation of
disbursement/ repayment/ balance from different development
partners exist and acted upon.
• Ensure that debt relief benefit allowed by the development
partners has been taken into account to recast the repayment
schedule.
• When a loan account is finally closed after complete debt
servicing, verify that appropriate entries have been recorded in
the relevant books.
• Ensure that there has not been a mix up of grant and loan in the
accounts.
• In case of grants, confirm that the money has been utilised for
the purpose for which it was granted as per agreement/MoU.
• In case of grants, also check that all at source expenditure is
reported and accounted for.
• Verify one or two large loans working through opening
balance.
• Put to test one or two new loan contracted during the year to
ensure its accurate and appropriate recording.
Conclusion
In my opinion, subject to observations in the Working Paper _________, the

financial transactions and records of the Ministry/Division are in order, various
control systems are in place and overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Directorates
Introduction
11. Directorates are attached or subordinate offices of Ministries/Divisions, entrusted
with the responsibilities of implementation of Government policies in their
respective sectors. They supervise the field activities, liaise with and report to the
Ministries/Divisions.
12. A Directorate is headed by a Director or a Director General. It enjoys certain

delegation of financial powers and receives its budget allocations through the
controlling Ministry/Division. Funds for a Directorate are disbursed through the
Chief Accounts Office/District Accounts Offices/Thana Accounts Offices.
Key risks
• inadequate/unsatisfactory internal control,

• absence of proper budgetary control,
• deviation from laid down purchase procedure,
• keeping government fund in commercial banks is not authorised by appropriate
authority,
• interest earned on funds in commercial banks are not deposited into treasury,
• unsatisfactory management of grants-in-aid given to different agencies/NGO's,
• lack of adequate control over use of government vehicles/POL/telephone,
• improper record keeping,
• wasteful or extravagant expenditure,
• inadequacy of control and supervision of offices and institutions subordinate to
the Directorate and
• purchased articles are sub-standard leading to waste of government fund.
• check that adequate & satisfactory control exist within the Directorate to
prevent improper use of government funds,
• verify that all expenditures are authorised and incurred in accordance with
existing rules and
• verify that the subordinate offices under the Directorate work efficiently and
effectively.

Local Audit Manual
• Cash book.
• Bank statement and reconciliation statements.
• Fund allotment register.
• Bill register.
• Appropriation register.
• Stock register.
• List of development programme undertaken.
• Log book.
• Telephone call register.
Audit programme

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Audit Programme
Directorates
Name of office __________________________________ Financial year___________

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Planning
• Prepare, plan and prioritise audit assignments keeping in
view the importance, relevance, amount involved as well as
availability of time for the assignment.
• Develop a clear idea about the audited body and the assigned
task before starting the work.
• Go carefully through the previous audit reports and examine
all defects and omissions which have not been remedied,
drawing special attention to points which were dealt with in
more than one report.
[NB: On the first day of taking up the audit assignment, the
leader of the audit party should meet the head of the entity
under audit drawing his attention to the above issue and
seeking his personal intervention in resolving the out-
standing audit observations. The outcome and end results
should be reflected in the working paper.
Budgetary Control
• Examine the sanctioned budget of the Directorate for the
year and see if there is any excessive provision under any
economic code as compared with the provision in the
previous year and in case of marked difference, investigate
the cause and comment whether adequate justification exists
for such increase.
• See that expenditure under each economic code is strictly in
accordance with budget allocations.
• In case re-appropriation has been effected from one
functional/economic code to another, verify whether
necessary approval from the appropriate authority was
obtained and such re-appropriation has not been made to
withhold payment under one functional/economic code to
divert the amount for some other purpose. Also ascertain that
re-appropriations do not give any indications of inaccurate
budgeting or insufficient control over expenditure.

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• Examine the trend of expenditure under broad economic
category 'Supply and Services', specially at the fag end of the
financial year and determine whether purchases made are
backed by adequate justification or to prevent the lapse of
budgeted fund.
• Verify whether different necessary fees are being collected
properly from the client industries/factories/units as per
existing instructions, accounted for and promptly deposited
into treasury.
Cash Book
• See that the cash book is in proper form, receipts and
payments are properly posted under relevant columns, the
pages are consecutively numbered and properly bound.
• Select at random some items of expenditure and verify
through supporting documents whether payment has been
made to the right person and that it has been so
acknowledged and recorded.
Custody of Cheque Book
• Ensure that the cheque book is kept in a secure place under
the personal custody of the drawing officer.
• Ensure that cheque counterfoils have sufficient details and
cheques are issued in sequential order.
• See that the amount in each cheque written in words as well
as in figure and drawn in favour of ultimate payee.
• Ensure that all blank cheques are pre-stamped ‘A/C payee
only’ as soon as they are received from the bank.
Audit of Payroll (see Chapter 4 for checklists)
Audit of GP Fund (see Chapter 4 for checklists)
Audit of TA Bills (see Chapter 4 for checklists)
Audit of Loan & Advances (see Chapter 4 for checklists)
Operation of Bank Account (see Chapter 4 for checklists)
Audit of Expenditure (see Chapter 4 for checklists)
Audit of Common Services
• Examine the Log book of vehicles and verify:
a) transports are being used for authorised purpose.
[Note: In case of private use of vehicles, ensure that kilometre
charges at prescribed rate are deposited by the user.]

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b) POL is issued as per existing rules and only to those vehicles
which are under operation.
[Note: Sometimes POL is used for vehicles which are not in
operation for a considerable period of time]
• See that the official telephones are used only for authorised
purposes and by officials entitled to it.
• See that the telephone bills are paid regularly to T&T out of
the provision made in the budget.
• In the event the office building is a rented one, verify whether
monthly rent had been paid regularly to the house-owner out
of allocated budget provision.
• See that the utility bills (electricity, water charges etc.) for the
office building are being paid regularly by the entity under
audit out of the allocated budget provision.
• In case of expenditure on "Repair & Maintenance" verify that:
- such work was done through tender,
- proper tender procedure had been followed and lowest
responsive bidder was selected for the job.
- that the work was adequately supervised and the repair
work had been done to the fullest satisfaction of the
audited entity and
- that payment had been made to the right party and strictly
as per terms of the contract.
Review of Development Projects
(Where the entity under audit is the implementing agency)
• Find out the total number of projects.
• Find out the total fund allocated in the budget.
• Find out the total fund released by the appropriate authority
during the period under audit. In case of less release, find out:
- whether this was due to slow physical progress,
- whether release of fund could not be arranged in time due
to slackness in meeting the requisite formalities and
- whether supervision, monitoring and guidance were
unsatisfactory and inadequate.

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• Find out whether separate bank accounts had been opened
for such projects and if so, ascertain the amount lying in the
account. Find out why this fund was not refunded at the close
of the financial years.
Audit of Acquisition of Assets/Purchases
In the event there is allocation on the above in the budget of the
audited entity, verify:
• the purpose for which the fund had been allocated with
detailed terms and condition are available in the office,
• that the amount had been spent specifically for the purpose,
the fund was authorised,
• whether the fund allocated was used in full. In case of
excess, whether sanction from the appropriate authority was
obtained and in case of less utilization, see that the money
has been refunded and deposited in the relevant account and
• the acquisition of stock had been made in the most economic
way. Proper purchase procedures had been adhered to.
Audit of Lump Grant
• Examine the purpose for which grant was made.
• See the terms & conditions of the grant and verify whether
the money had been used specifically for the purpose for
which the grants had been sanctioned.
• Ensure that all supporting documents are available in support
of the expenditure.
• In case expenditure had been incurred in excess of the grant,
verify whether approval of the competent authority was
obtained.
• In case the expenditure had been less than the allocated
amount, ensure that the unutilised amount had been refunded
and deposited in the relevant account.
Additional programme for Directorate of Environment
• Check whether rules, regulations and guidelines under the
Environment Protection Act 1995 are in place and being
implemented effectively.

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• Verify if there is any effective programme to check the
decreasing of biomass in the country.
• Check whether the impact of chemicals and industrial
pollution is examined before granting permission to setup
industries.
• Examine whether the Directorate has effective laws and that
these are being implemented to check ever increasing
pollution of atmosphere. Also check what punitive action is
taken against the offenders.
• Verify as to how the municipality service delivery like waste
disposal is ensured. Comment, if necessary.
• Verify whether there are effective and appropriate checks
regarding sanitation and waste disposal arrangement before
granting permission to construct high rise buildings.
• Check whether there is effective programme to increase
public awareness towards importance and improvement of
environment condition for existence of life.
• Evaluate and comment in general term as to whether the
Directorate has capability in terms of manpower and
resources to address environmental issues of the country.
Conclusion
In my opinion, subject to the observations in the Working Paper __________, the

transaction relating to the activities of the Directorate are satisfactory, various
control systems are in place & overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
National Parliament
Introduction
17. The budget of the National Parliament contains two components. One is the
National Parliament Secretariat (Code 0201) which operates exactly like any other
Directorate of government. Therefore, while auditing the National Parliament
Secretariat, the auditors should apply the checklists applicable for audit of
Directorates.
18. The other unit is the main body i.e. National Parliament itself (Code 0010) which is
headed by the Speaker. The other functionaries are Deputy Speaker, Leader of the
House, Leader of the Opposition, Chief Whip/Whips and the Members of the
Parliament (MP's). They are the elected representatives of the people and hold
office for a specific period of time. Since these representatives holding tenure posts,
draw remuneration, allowances and other emoluments from the govt. exchequer and
the mode of operation, financial transactions and control of this entity are somewhat
different than Ministries/Directorate, a different approach seems necessary for
conducting audit of this supreme institution.
Key risks
• absence of proper budgetary control,

• inadequate/unsatisfactory internal control,
• inadequate control and supervision over remuneration/allowances/other benefits
of Members of the Parliament and other Functionaries,
• discretionary fund placed at the disposal of Speaker/Whips/Members of
Parliament are not properly accounted for,
• unauthorised diversion of fund,
• non-adherence of proper tender procedure in regard to purchase/procurement of
stores and
• non-adherence of existing financial rules and regulations.
20. The main audit objectives are to ensure that:
• remuneration pay, allowances, other benefits paid to Speaker, Members of

Parliament and other Functionaries are as per acts/rules,
• adequate and satisfactory control exists within the National Parliament to
prevent improper/unauthorised use of government fund and

Local Audit Manual
• discretionary and other funds placed at the disposal of the members of the
parliament are appropriately used and correctly accounted for.
• Budget allocation papers.

• Cash book.
• Bank statement and reconciliation statement.
• Relevant Act and Government order pertaining to remuneration, allowances,
and other emoluments of Speaker, Deputy Speakers, Chief Whip, Whips,
Members of the Parliament.
• Relevant Government orders/procedure with regard to disbursement of
discretionary fund to Speaker, Members of Parliaments.
• Copies of tender notice, comparative statement, work order, certificate of
receipt of store.
• Vehicles Log book.
• Record of attendance.
Audit programme

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Audit Programme
National Parliament
Account location ________________________________ Financial year ___________

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• Review the status of previous audit reports and the number of
unresolved observations. Meet the concerned officials and
seek their personal intervention in the matter.
• Prepare, plan and prioritise the audit programme keeping in
view the risk areas, importance and availability of time.
• See the sanctioned budget of the Assembly and confirm that
expenditure on all economic codes have not exceed
sanctioned amount.
• See that the budget allotments have been noted in the
relevant register and there is proper system to monitor and
review the trend of expenditure.
• Obtain the latest laws and orders regarding remuneration,
pay, allowances and other emoluments of
Speaker/Whips/Members of Parliament and other
functionaries.
• Verify that remuneration/pay/allowances/other emoluments
disbursed to above are strictly as per latest government order.
(Note : The primary responsibility of checking these bills rests
with the Chief Account officer, National Parliament. Auditors
should, therefore, check some of these bills at random to ensure
that the Accounts Section of the entity has prepared, processed
and passed the bills strictly in accordance with existing orders
governing remuneration/allowances/emoluments of the elected
representatives.
Audit of Travelling Allowance (Both domestic and foreign
tours)
[ For guidance see checklists contained in Chapter 4, General
Audit Procedure]
Audit of purchase procurement of goods and services
[For guidance see checklists ‘Purchase/Procurement’ contained
in Chapter 4, general audit procedure of this manual]

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[For guidance see relevant checklists of the Directorate
contained in this Chapter].
Audit of discretionary fund
• Examine the G.O (Government Order) issued by the entity

and verify whether the amount of discretionary fund
sanctioned in favour of Speaker, Deputy Speaker, Chief
Whip, Whips, Members of Parliament are as per their
respective entitlements.
[Note: For proper scrutiny, auditors must obtain all relevant
orders, circulars governing the operation of discretionary fund
and respective responsibilities of the entity, CAO/DAO/TAO,
DC/TNO, concerned bank and the grant recipients.]
• Verify from the records of the Accounts Section that Chief
Accounts Officer/DAO,TAO had endorsed the G.O's to all
concerned DC/TNO in time and had been properly
acknowledged.
• Verify whether there is proper system to monitor and record
the utilised amount of discretionary fund (disbursed during
the year under audit) & whether there is proper procedure to
verify whether the unutilised amount had been redeposited in
the relevant account of the government.
Conclusion

transactions with regard to the activities of the National Parliament are presented
fairly, various control systems are in place and overall management system is
satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Audit of Deputy Commissioner/TNO Offices

Introduction
23. As the representative of the Government, Deputy Commissioners play a pivotal role
in the district level administration of the country. They are primarily responsible for
collection of land revenue, maintenance of law and order and dispensation of justice
through magistracy. They are custodians of valuables in the Treasury under them.
24. They arrange all land acquisitions as per instruction of the Government. They are
also responsible for disaster management and relief in their districts. They are also
responsible for overall coordination of all development activities of all sectors in
the districts.
Key risk
• internal control is non-existent and non-functional,

• the entity is not being supervised properly by higher management,
• some of the bank accounts are not authorised and a substantial amount of
government fund is lying unnecessarily,
• some PL Accounts placed at the disposal of Deputy Commissioner are not being
operated properly and funds sent for the purpose remain idle for considerable
period of time and
• receipts reported in the bank statements are not verified against chalan.
• all expenditure are authorised, paid to the right person and correctly accounted
for,
• adequate controls are in place for detection, prevention of defalcation and loss
of public money and
• all revenues and receipts are collected promptly and deposited into the relevant
government account.

Local Audit Manual
Documents to be obtained:
• Cash book.
• Allotment register.
• Bill register.
• Appropriation register.
• Stock register.
• Log book.
• Advance register.
• TA register.
• Stamp register.
• Gun purchase/renewal register.
• Trade license register.
• Discretionary Fund register.
• PL register.
Audit programme

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Audit Programme
Deputy Commissioner/TNO Offices

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• Review the status of outstanding observations in the previous
audit reports and give particulars of all defects and omissions
which have not been remedied, drawing particular attention to
points which have been raised in more than one previous
report.
• See the sanctioned budget of the office under audit and ensure
that allocation under different economic code have been kept
in proper register and proper system is in place to watch the
progress of expenditure and total expenditure during the year
under any one economic code did not exceed allotment.
• See that liabilities incurred in one year have not been met from
the budget allotment of the next year without approval of the
competent authority.
• See the trend of expenditure under contingency (supplies &
services and repairs & maintenance) at the end of the financial
year and establish whether such expenditure was actually
necessary or had been incurred to prevent the lapse of budget
allotment.
• Examine the cash books and ensure that they are in prescribed
form. Select some entries in payment side and verify whether
payment has been made to the right person and that it has been
so acknowledged and recorded.
• See that the cheque books are kept in lock and key in the
personal custody of the drawing officer.
• See that the amount of each cheque written in words as well as
in figure on the counterfoil and that counterfoil is initialed by
the person authorised to sign the cheque.
• Ensure that the cheques are drawn in favour of ultimate payee
and have not been signed unless required for immediate
encashment.
• For every purchase, see that there is proper order from
• Ensure that purchase orders have not been split up so as to
avoid obtaining sanction of the appropriate authority.
• In case of non acceptance of the lowest tender, the reasons for
non acceptance have been recorded in writing.

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• Ensure that VAT/Income Tax at prescribed rates had been
deducted from the bills of Contractor/Supplier.
• See that every article purchased or otherwise obtained is
entered in the store account.
• See that the staff responsible for verification of stores is
independent of the staff entrusted with the custody of stores or
for keeping their accounts.
• See the number of PL Account operated by the entity under
audit and review the status of each PL Account. In case of
non-operational account, verify whether fund for the purpose
had been refunded and deposited into the relevant economic
code of government account.
• Ensure that proper system of check and balance are in place to
ensure proper upkeep of judicial/non-judicial and service
stamps. Examine whether the receipt and issuance of stamps
have been correctly recorded in the relevant register and
effective system of monitoring and supervision exists in this
office under audit.
• Check the gun license/renewal registers and obtain at random
some names of the applicants and verify whether they have
deposited license/renewal fees at the prescribed rate through
treasury chalan.
• Examine the total number of grants (e.g. for meeting a disaster
situation, undertaking relief programme, discretionary fund
for ministers and MP's etc.) placed at the disposal of the entity
under audit. Review the up-to-date utilization position and
check whether the unutilized portion of the grant had been
refunded & deposited in the relevant govt. account at the end
of the financial year.
• See the log book for vehicles and ensure that POL issued is as
per Govt. rules and orders and transport used for authorised
purposes.
purposes and used by officials entitled as per govt. rules.

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• See that the utility bills (electricity, water charger etc.) for the
office building are being paid regularly.
(Note: All DC's & TNO's offices receive separate allocation for
meeting utility charges and as such they should be prompt &
regular in paying such government dues.)
• Examine the guest register maintained in the Circuit House/
Inspection Bungalow and check at random whether all
occupants have paid room charge at the prescribed rates. Also
verify that the amount so received has been deposited
promptly into the relevant govt. account.
Conclusion

transactions carried out in the office is presented fairly in the accounts, various
control systems are in place and overall management of the office is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Forest Division Offices

Introduction
29. Forest Divisions are entrusted with diverse and complex operations like protection
and preservation of land and forest, soil conservation, plantation, conservation of
wildlife and ecological balance and protection of environment. In addition, these
offices are also engaged in non-commercial operations in some form or the other
and earn some non-tax revenue for the Government.
30. Besides, they maintain initial accounts and prepare monthly accounts like PW
Divisions for submission to the Chief Accounts Office. They also have cheque
drawing authority mainly because of their nature of work and possible remoteness
of location.
31. In view of this the Local Audit has manifold responsibility like looking into the
maintenance of accounts, forecasting and control of revenue expenditure and
receipt, collection of revenue along with the task of conservation of forest and
environment and maintenance of ecological balance. The comprehensive audit will,
therefore, cover all aspects of accounts, financial compliance, operational,
programme and management.
32. Audit programme for Directorates at Chapter 5 of the Manual would apply for audit
of Forest Offices other than Divisions.
Key risks
• there may not be proper budgetary control and supervision over income and
expenditure,
• there may be weak internal control leading to mixing of accounts and payments
responsibilities,
• records of forest accounts may not be maintained properly leading to generation
of incorrect accounts and misappropriations,
• there may be inadequate security system of both cash and cheques,
• there may be inadequate collection of revenue and
• there is absence of systematic inspection of these entities by superior
management.

Local Audit Manual
• verify that all transactions are as per rules and reflected correctly in the monthly
accounts,
• check that reliable controls are in place both at sanctioning and spending levels,
• ensure that there is regularity and financial discipline in all financial
transactions and
• verify whether the affairs within the jurisdiction of the office have been
managed appropriately.
• Monthly accounts with supporting statements & vouchers.

• File containing all sanctions received from the Conservator of Forest.
• Cash book and subsidiary registers.
• Budget control register.
• Register of cheque books.
• Cheque book in use and counterfoils of finished ones.
• Cash receipt book.
• Register of lease/auction/tender.
• Register of Stores Depot.
• Plant Journal.
• Register of litigations (civil & criminal).
• Calendar of reports & returns.
Audit programme
All cases of contract, lease and auction relating to forest resources during the year
need to be checked and others on the basis of samples.

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Audit Programme
Name of office __________________________________ Financial year ___________

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Budgetary control
• Examine total budget allocations with total expenditure along
with economic code wise allocation and expenditure.
• If overspent, check whether it was covered by re-
appropriation or regularised by competent authority.
• In case of savings check whether it was reported to the higher
authority in time.
• Check generally, whether the financial sanctions given are
within the delegation of financial powers of the issuing
authority.
• Also check whether the position of revenue collection vis-a-
vis the receipt estimate is reviewed and corrective action
taken to gear up collection, if necessary.
Audit of Accounts
• Verify whether there exists proper distribution of duties
among the staff clearly demarcating accounting from payment
responsibilities.
• Verify whether the instructions for requisition of cheque
books have been followed for obtaining new cheque books.
• Check whether there is adequate security of the cheque books
along with physical counting of cheque leaves and recording
certificate to that effect on the body of the cheque books.
• Verify if cheque counterfoils have sufficient details and
• Check whether the office has been doing reconciliation of
receipts and payments of its accounts with those in the bank
statements and also recorded in the District Accounts Office.
• Also check if lapsed, cancelled or lost cheques have been
properly noted in the Cash Book and reported to the bank.
• Verify if charges have been incurred with reference to
sanctions and allotment of fund and that advances and
recoverable payments are covered by authority.

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• In case of works and conservancy expenditure, when
expenditure on a work is spread over two or more months, the
up-to-date total expenditure should be verified against the
sanction.
• See that the Cash Book is maintained in proper form, items of
receipts and payments are entered in detail, closed regularly
and certificate recorded at the end of every month by the
Drawing and Disbursing Officer.
• Check whether daily totals from subsidiary registers have
been entered in the cash book.
• Check whether the Monthly Accounts of receipts and
payments agree with the cash book figures.
• Check whether the monthly accounts are prepared and sent in
time to CAO office.
• Examine the monthly bank statements of receipt and payment
furnished by the Bangladesh Bank/ Sonali Bank and check
that the transactions have been classified correctly in the
accounts.
• Also check that the amounts shown in the summary sheet of
monthly account agree with the detailed schedules
accompanying the summary.
• Verify whether there has been regular verification of
departmental accounts with those of the Accounts Office.
• In case of inter Divisional transfers when a division is acting
for the purpose of ascertaining financial results, make
appropriate reference to the DG Local and Revenue Audit to
arrange checking of two or more Divisions to ensure that there
has not been duplication of figures in the different monthly
accounts.
• Check items booked under 'Forest Remittance'. Unusual
increase/balance must be investigated for legality, propriety
and authenticity. Audit must satisfy itself that 'Remittance' is
not a deliberate attempt for misrepresentation in accounts.
• Verify whether the cash receipt book leaves are serially
numbered, issued sequentially, details recorded in the
counterfoils and kept under proper security.
• Test check amount for which daily cash receipt was issued
with the amount entered in the cash book and appearing in the
bank statement received from Bangladesh/Sonali Bank.

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Forest Advance
• Examine the appropriateness of advance given to a disburser
who has no cheque drawing authority.
• Examine whether transactions in respect of Forest Advance
have been properly treated in the accounts by appropriate
debit or credit entry as per instructions.
• Check whether any advance is lying outstanding for
adjustment for undue long time and if there is a time limit,
whether beyond that limit.
Audit of Works Expenditure
• Apply audit of works expenditure programme at Chapter 4 of
the Manual.
• Also check the reasonableness of the numbers of temporary
labour and muster roll personnel, that they are not fictitious
and that the expenditure in this regard is classified under
conservancy and works and not under establishment.
Audit of Payroll
• Apply Payroll audit programme at Chapter 4 of the Manual.
Audit of Bank Account
• Apply Bank Account audit programme at Chapter 4 of the
Manual.
Audit of Purchase & Procurement
• Apply appropriate steps of audit programme at Chapter 4 of
the Manual.
Audit of Stocks, Stores and Disposal etc.
• Apply appropriate steps of Audit of Assets programme at
Chapter 4 of the Manual
Audit of Revenue Receipts
• Check whether there is realistic and adequate system of
budgeting, accounting, monitoring and reporting of revenue in
the office.
• Examine the system and the process of tender, auction, lease
etc, under which persons and firms are selected for harnessing
forest resources. Bring out any lacuna in the system or faulty
processing of the work, if there be any.

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• Compare amounts of estimates and total collection of revenue
for the past 3 years with those of the year under audit.
Examine trend of receipt and comment. In case of lower
estimate, examine reason. Also in the case of less collection,
scrutinise and comment. Besides, if there has been more
collection, comment on possible underestimation.
• Review whether all possible avenues of revenue like sale of
timber, fire wood, nursery plant, wood for industrial raw
material (newsprint, pulp, tea-chest, match box etc.), bamboo,
sun-grass, cane, lease for honey collection, boulders and
shingles, harvest of golpata, fishing, rent for rest house etc.
have been identified and covered under the estimate of
receipts.
• Review the position relating to outstanding/arrear, current
demand and total collection of revenue to see whether
adequate effort was made to realise all revenues during the
year.
• Generally review whether the assessment of revenue has been
made according to law
• Verify whether adequate and appropriate information and
statistics are available to make reasonable assessment of
receipt estimate.
• Check a sample of assessment calculations to verify its
accuracy and authenticity. Also verify whether collected
amount has been entered in the relevant register and the cash
book and promptly deposited to bank.
• Verify if the receipts reported in the Bank Statement checked
against chalans and posted in the cash book direct or through
some subsidiary register.
• In case of cash receipt, check the receipt book and in the case
of deposit into bank check chalans, bank statements for
authenticity.
Register of land
• Check whether there exists a register of land in the office. If
so, whether it contains all particulars like total area including
open land mass, forest area, water area etc. and demarcations
under the jurisdiction of the office.
• Verify whether there is adequate arrangement to protect the
area from criminal plundering of forest resources and land.

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• Obtain a certificate to the effect that the recorded/documented
forest area is actually under the jurisdiction and control of the
office.
Extraction of Forest Resources
• Obtain a copy of the policy relating to extraction of forest
resources like timber, industrial material, fire wood, golpata,
honey etc.
• Check if the policy is adequate and comprehensive to take
care of issues like the age of tree for timber, the type of tree
for raw material etc.
• Also examine if the policy for extraction of forest resources is
followed to guard against plundering.
• Examine the tendering/lease/auction procedure to ensure that
financial instructions/disciplines have been adhered to.
• Verify whether Government policy on hunting and reserve
forest has not been breached.
Implementation of forest laws
• Are the forest laws adequate to secure and protect forest land
and resource from falling pray to unscrupulous plundering .
• Check whether security personnel like forest guard, rangers
etc. have specified job responsibilities, their number is
adequate and are deployed properly to protect the forests.
• Examine the steps taken for preservation of wild life,
migratory birds etc. against poaching.
• Also check whether laws have been effectively applied for
preservation of forest land against unscrupulous
encroachment.
• Generally check the file relating to litigations arising out of
implementation of forest laws to see that these are properly
pursued and none fell through by default.
Programme
• Ascertain what GOB financial programme/project is being
implemented and status of the work.
• Check project physical implementation progress vis-à-vis
financial expenditure under the overall time frame.

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• In case of a completed project, ascertain and comment as to
how the project is performing and whether the objectives have
been achieved.
• Find out from Plant Journal whether the plantation
programme is according to the Management Plan drawn by
the Working Plan Division. Also see whether the plantation
programme is adequate to keep pace with the felling of trees.
General
• Check expenditure relating to vehicle/water transport
operation and maintenance and use of telephone to ensure
appropriateness and whether these conform to government
instructions.
• Verify that the office has been making regular payment of
utility service bills (electricity, gas, water etc.) both for the
office and recovered from the officials.
• Generally check the adequacy of the inventory control and
security arrangement of the firearms and ammunitions under
the Division.
• Verify whether all reports and returns are sent regularly and
timely to the Conservators of Forest.
Conclusion
In my opinion, subject to the observations in the Working Paper _________ the

transactions relating to income and expenditure have been made in accordance with
the rules governing them and presented fairly in the accounts, various control
systems are in place and overall management of the affairs of the office is
satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Civil Surgeon's Offices

Introduction
37. A Civil Surgeon is a vital link between the Health Administration and the district
level health service delivery system in the country. He plays a pivotal role in
providing health service administrative support, management and logistic support to
all hospitals and health service units in the district.
38. He collects, collates vital health related information which is the main stay for
efficient and effective implementation of comprehensive health service policy of
the government in the district. Civil Surgeons draw their funds through the District
Accounts Offices.
Key risks
• adequate control on budget is lacking,

• prescribed purchase procedure of medical and surgical requisites has not been
followed,
• adequate system of control is not in place,
• management of store is not appropriate and
• preparation to combat emergency situation is lacking.
• verify that funds controlled by the Civil Surgeon are spent in accordance with
the rules laid down by the government and free from impropriety,
• examine that services are properly monitored to secure efficiency and
effectiveness in all spheres of activities,
• examine that prescribed purchase procedure has been followed for MSR and
other equipment and that proper storage arrangement is available and
• verify that contingency plans are available for meeting any situation of
emergent nature.

Local Audit Manual
• File containing papers relating to budget allocation, provisions for MSR and
repair & maintenance of health complex/hospital.
• Cash book.
• Log book for vehicle.
• Papers relating to purchase of MSR.
• Stock register.
• File containing reports and returns.
Audit programme

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Audit Programme
Name of office _________________________________ Financial year____________

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• Verify total budget allocation with expenditure and in case of
savings, see whether reported in time.
• Check whether any financial liability has been incurred in
advance for next financial year. If so, scrutinise reason.
• Examine whether due procedure was followed for purchase of
MSR.
• Examine whether purchase price of MSR commensurate with
the rate fixed by the Government.
• Verify, if possible, whether purchase price of MSR is similar
with the price prevailing in the open market.
• Check if MSR have been distributed to different health units
proportionately, and according to need and without any undue
delay.
• In case of repair and maintenance of health units, check
whether these have been carried out with due process of
regularity.
• Check generally the system of repair and maintenance of
medical equipment of hospitals and health complexes and see
whether prompt action has been taken in these cases.
• Check if there is appropriate effort to keep the ambulances in
the district in running condition.
• Check log book of vehicle to see that the use, repair and
maintenance has been done in a regular manner.
• Check the expenditure on telephone to verify its regularity.
• Verify whether contingency plans are in place to meet health
problems of emergent nature.
• Also check whether all reports and returns are received from
the units and sent timely and regularly to Health
Administration.
• Verify the stock register and check the adequacy of storage
facility of MSR etc. in the office.

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• Examine the cash book to see if, it is maintained and checked
regularly.
• Verify whether expenditure amounts under different codes of
account are compared regularly with those of accounts office
figures as required under the rule.
• Verify whether all utility bills regarding telephone, gas, water
and electricity are paid regularly.
* For audit of pre audited bills namely, Payroll, GP Fund, TA bill, Purchase of store,
appropriate Audit Programme at Chapter 4 of the manual may be followed.
For audit of store the programme relating to audit of Asset at Chapter 4 of the
Manual may be followed.
Conclusion

transactions relating to the activities of the Civil Surgeon's Office are satisfactory,
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Bangladesh Betar and Bangladesh Television

Introduction
43. Bangladesh Betar and Bangladesh Television are two separate Directorates headed
by one Director-General.
44. The main functions of these two government institutions are:
• To propagate government policies and programme to general public.

• To disseminate news and other information containing topics of national
interest.
• To provide entertainment to and create awareness on health, education, social
welfare etc., among the members of the public.
Although both Betar and TV are operating like any other Government Directorates,
the auditors while conducting audit of these two institutions, should pay special
attention to certain areas of their operation, wherefrom a substantial amount of
revenue is being generated and deposited into consolidated fund of the Government.
45. The main objectives are to verify whether:
• license/renewal fees form Radio/TV/VCR/STVR etc., are collected within the

stipulated time,
• money so collected, are promptly deposited into the relevant account of
government,
• officials responsible for collecting license/renewal fees are performing their
duties effectively and with diligence,
• proper, effective and uniform systems are in place with regard to determination
of rates for advertisement to be received from sponsors and money so
determined are collected promptly and credited to the relevant government
account and
• remuneration/royalty, fees etc., payable to artists/participants have been paid to
the right person at the right time and as per terms of contract.
• Cash book.
• Contingent register.

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• Stock register.
• File relating to budget allocation.
• Log book for vehicle.
• Bank/Post office Statements showing remittances of fund received on account
of license/renewal fees of Radio/TV.
• Bangladesh Bank statement showing total amount received on account of
Radio/TV license and renewal fee for the year under audit.
• Relevant registers showing payment of remuneration & royalty to artists and
other recipients.
Audit tests

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Audit Programme
Account location ________________________________ Financial year __________

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Planning
Budgetary control
Cash book
Custody of cheque books
[See Audit Programme on Directorate]
Audit of Payroll
Audit of GP Fund
Audit of TA Bills
Audit of Loans and Advances
Operation of Bank Account
Audit of Expenditure
[See the relevant checklists contained in Chapter 4 of General
Audit Procedure of this Manual]
[See the Audit Programme of Directorate contained in this
Manual]
Audit of receipts on account of license/renewal of
Radio/TV/VCR/STVR etc.
• Review the annual budget of the entity and examine the
following:
- projected target of receipt as reflected in the budget,
- actual receipts (As per statement received from
Bangladesh Bank) and
- percentage of target achieved.
• Ascertain whether both Radio/TV authorities have proper
record and information about the total number of Radio/TV
sets available in the country and whether such information is
authentic and updated from time to time.

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• Carefully examine the different clauses of agreement between
Radio/TV and concerned banks/post offices, responsible for
receiving deposits on account of license/renewal fees and test
check whether the amount so received are deposited promptly
in the appropriate account of government as per terms of
agreements.
• Review the system existing in both Radio/TV to watch and
monitor the progress of collection of fees and whether the
system is effective and satisfactory. Comment, if necessary.
Audit of revenue collected from different companies on
account of advertisement made through TV/Betar for their
products
• Review the budget of both Radio and TV and examine the
projected estimate of revenue on advertisement as reflected in
the budget.
• See whether the projected target has been achieved.
• In case of shortfall, verify whether this was due to:
- ambitious and impractical estimation and
- laxity on the part of authorities with regard to collection of
advertisement fees from sponsors.
• Verify whether approved rules and guidelines exist, for
determining the rates of advertisement and fees and that these
are being collected as per stipulated rates.
Payment of Royalty
• Test check whether royalty, fees etc. paid to
artists/participants are paid in time and as per terms of
agreement between Radio/TV and the recipients.
Conclusion

transactions with regard to the activities are presented fairly, various control
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Chapter 6 – Audit of Government Service Units

Index
Topics Pages
Introduction 6.1
Hospitals 6.2 - 6.7
District and Thana Family Welfare Offices 6.8 - 6.12
Educational Institutions 6.13 - 6.17
Jails 6.18 - 6.22
Fire Service and Civil Defence 6.23 - 6.26
25/5/00 6.0 Chapter-6 Government Service Units

Local Audit Manual
Chapter 6 – Audit of Government Service Units
Introduction
1. This group of audits contain many thousands of "Service Units" whose main task is
to deliver services for the Government in accordance with policy and in a cost-
effective manner. The Local and Revenue Audit Directorate do not have the
resources to visit all these units in a year or even over several years. Nor is it
necessary for the Audit Directorate to do so, according to the Audit Code
guidelines. The selection of which units to visit each year is decided at the planning
stage (Chapter 3) but should include a selection from each category e.g. hospitals,
schools etc. Some of the largest, most sensitive units may need an annual visit.
2. The main categories within this group are:
• Hospitals.
• Family Welfare Office.
• Educational Institutions.
• Jails.
• Fire Service and Civil Defence.
3. Programmes have been prepared for each of these categories. They contain tests
which are specific to those units. They should be used in conjunction with the
general checklists covered in Chapter 4 e.g. Payroll.

Local Audit Manual
Hospitals
Introduction
4. Overall control and management of government hospitals have been entrusted with
the Ministry of Health and Family Welfare. Director General, Health Services looks
after detailed management and administration of all government run hospitals while
Director-General, Family Welfare looks after hospital and clinics dealing with
family welfare and other related matters.
5. The main types of government hospitals are:
• general hospitals,
• hospitals for cardio-vascular diseases,
• eye hospitals,
• children's hospitals,
• mental hospitals,
• thana health vomplex and
• family planning clinics.
Although the size and nature of services of these hospitals differ, the overall
management system, supply and services, the financial control and budgetary
system are more or less identical. For these reasons, these hospitals have been
lumped into one group for audit purpose.
Key risks
• proper internal control in the hospitals is lacking or inadequate,

• some employees may draw pay and allowances without being physically
available,
• hospitals do not adhere to budgetary discipline and incur expenditure in excess
of budgeted amount,
• hospitals do not deposit promptly the fees received from patients for services
rendered,
• hospital authorities buy medicines & equipment from open market at a very
high price on the plea that i) either the item is not available in govt.
medical/govt. authorised medical stores ii) or they are required to be purchased
urgently to save the lives of patients,

Local Audit Manual
• hospitals buy medicines, linen, blankets, surgical equipment, not required for
immediate use. Since these items are kept in stores for a long period of time,
very often they lose their effectiveness. In most cases this is done either to
favour some suppliers/vested groups or to prevent the lapse of government fund
allotted in the budget and
• hospitals are not covered by systematic and effective inspection by higher
authorities.
7. The main audit objectives are to see whether:
• the hospitals operate efficiently and effectively, thus putting the government
fund to the best possible use,
• financial management and budgetary control are effective and adequate,
• hospital authorities adhere to prescribed purchase procedure,
• there is adequate supervision and monitoring over MSR and other consumable
goods, kept in the hospital stores and
• all receipts collected are promptly deposited into banks and brought into
relevant accounts.
• Cash book.
• Contingency register.
• Cash receipt book.
• Stock register.
• File relating to budget allocation, provision for MSR, Supply and Services.
• Log books for vehicle/ambulance.
• Tender documents for purchase of MSR, comparative statements and minutes of
the Tender Committee.
Audit programme
9. The attached programme is a guide to assist the auditor and should be followed.

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Audit Programme
Hospitals
Name of office ________________________________ Financial year____________

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Planning
• Develop a clear idea about the audited body and prepare plan
and prioritise the audit programme, keeping in view the
importance, relevance and availability of time for the
assignment.
• See the previous audit reports and examine all defects and
omissions which have not been remedied, drawing special
attention to points which were dealt with in more than one
report.
[ NB: The leader of the audit party should personally meet the
head of the audited entity seeking his personal
intervention in resolving the outstanding audit
observations. The outcome should be reflected in the
working paper at the end of the assignment.]
Review of budgetary control
• Check that all expenditures are within the budget allocation.
• See that the expenditure on all economic codes have not
exceeded sanctioned amount.
• Examine the sanctioned budget for the year under audit and
see if there is any excessive provision under any head as
compared with the provision in the previous year and in case
of unusual variation, investigate reasons.
• Verify that the budget allotments have been correctly noted in
the appropriate register and there is proper system to monitor
and review the trend of expenditure.
• In the case of re-appropriation from one code to another,
verify whether savings really accrued after meeting all the
legitimate charges and there was no tendency to withhold
payment under a code with a view to diverting the allotment
to some other purpose.

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[NB: For example, very often, funds allocated for electricity,
water, gas, municipal tax, etc., under 'Supply and Services',
are diverted to some other contingency items, thus depriving
the concerned agencies of the government from revenues
projected in their annual budget.]
Audit of Cash Book
• Check that the cash book is in proper form, receipts and
payments under different heads are properly posted in the
cash book under appropriate columns, that the pages of the
cash book are consecutively numbered and properly bound.
• Verify that the cash book is closed monthly and that a
reconciliation of the closing balance of the Bank Statement
and the cash book is carried out and recorded under the
signature of an authorised officer.
• From the cash book, select at random, some items of
expenditure and verify through supporting vouchers whether
payments have been made to the right people and that they
have been so acknowledged and recorded.
Custody of Cheque Books
• Ensure that the cheque books are properly accounted for and
kept under safe custody of the drawing officer.
• Verify that the cheque counterfoils have sufficient details and
• See that the amount in each cheque is written in words as well
• Confirm that all bank cheques are pre-stamped 'A/C payee
only' as soon as they are received from the bank
Operation of Bank Account*
Audit of Payroll*
Audit of GP Fund*
Audit of TA Bill*
Audit of Loans and Advances*
Audit of Expenditure*
[* For guidance see the detailed checklists contained in Chapter 4,
General Audit Procedure of this Manual.]

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Audit of Purchase of MSR
• Check that MSR items are not purchased other than in
accordance with the rules approved by the competent
authority.
• See that a certificate of receipts of MSR items in full
according to specification and in good condition is recorded in
the invoices or in the bill for the supply made and the same
have been correctly entered into Stock Register.
• In the event MSR items are purchased other than from
govt./govt. authorised sources, it should be seen whether:
a) proper sanction and approval had been obtained from
appropriate authority,
b) the items were purchased through open public tender and the
contract had been awarded to the lowest responsive tenderers,
c) the competent authority had examined and certified that the
items were of appropriate quality and
d) the items purchased were stored in a proper place and
promptly used for the purpose they were bought.
• Examine the log books for vehicles and verify that transports
are being used for authorised purposes and
POL is issued as per existing rules and only to those vehicles
which are in operation.
[Note: 1. In the case of private use of vehicles, confirm that
kilometre charges at the prescribed rates are deposited by
the user.
2. Sometimes POL is issued fictitiously for vehicles
which are not in operation.]
• In the case of hospitals operating ambulances, confirm that
these are only used for transporting patients and for other
authorised purposes. Also confirm that requisite fees at
prescribed rate had been realised and deposited into relevant
accounts.
purposes and used by officials entitled to it.

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• See that the utility bills (electricity, gas, water charges etc.)
for the hospital building are being paid regularly out of the
allocated budget provision.
Audit of Receipts
• Ensure that receipts under all heads are traced in the cash
book and also in the subsidiary register.
• Ensure that receipts on account of admission fee, diet and
other charges paid by the patients are promptly paid into the
relevant accounts of the government and proper receipts,
supporting such deposits, are kept on record.
• Check the monthly totals of the daily issues of diet articles
shown in the diet register for one month in each quarter.
i) Test a few cases of the number of indoor patients entered in
the diet register with the register of indoor patients.
ii) Check the quantities of diet articles purchases with those
entered in the diet register.
Quality of treatment and services
• Verify whether there is any system in existence to ensure
proper treatment of the patients.
• Check as to how the quality of different services are
monitored and ensured.
Conclusion

transaction with regard to the activities of the hospital are satisfactory, various
control system are in place and overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
District and Thana Family Welfare Offices

Introduction
10. Government of Bangladesh is committed to contain population explosion,

considered to be a serious impediment in the development efforts of the country. A
vigorous and effective drive has been launched to curb the ever increasing growth
rate and making people aware of the consequences of such unbridled population
growth. In order to achieve this objective, a net work of Family Welfare centers
have been set up throughout the country. District and Thana Family Welfare Offices
are two such places in the network.
The activities of District and Thana Family Welfare offices include among others:
• To motivate people about the importance and necessity of family welfare.

• To render valuable advice to people on family welfare matters.
• To provide contraceptives to clients who want to adopt temporary family
welfare methods (like condoms, oral pills etc.)
• To make proper arrangements (including arranging surgical operations) for
clients who want to adopt permanent family welfare methods like vasectomy,
ligation, etc.
• To set up satellite clinics in villages and providing advice and services to clients
through Family Welfare visitors and workers.
Key risks
• some of the staff and employees like Family Welfare Assistants and Family
Welfare Visitors working both in the main office or at field level, are drawing
pay and allowances without being physically available,
• sometimes contraceptives and other inputs (like condoms, oral pills, IUD
equipment etc.) are not readily available in the centre for non submission of
indent in time and also because of poor monitoring and supervision,
• sometimes contraceptives, medicines and equipment are misappropriated by
employees due to absence of proper control/accounting and also because of
unsatisfactory storage facilities,
• some unscrupulous employees misappropriate money/clothes earmarked for
clients adopting permanent family welfare methods (like vasectomy, ligation
etc.) by showing fictitious particulars,
• family welfare services at the field level may be unsatisfactory due to lukewarm
attitude of the family welfare workers and arrangements to oversee the activities
of these workers are either lacking or inadequate and

Local Audit Manual
• facilities needed for conducting operations like vasectomy, ligation, IUD

insertions etc. may not be of appropriate standard.
Key audit objective
12. The main objectives are to verify whether:
• the centers have proper and adequate arrangements for securing efficiency and
effectiveness in discharging the responsibilities assigned to them,
• the delivery of services both in the main office and at the field level is
satisfactory and the family planning workers are performing their assigned
duties with sincerity and devotion and successfully bringing more clients under
family welfare programme,
• contraceptives like condoms, oral pills etc. are always readily available in the
center and distributed only among the genuine users,
• surgical facilities available in the center are satisfactory, adequate and up to an
acceptable medical standard,
• financial and other benefits to clients who undergo permanent family welfare
methods are duly paid and
• financial discipline as required is maintained in the operations.
• Cash book.
• Register of stock & stores.
• Category-wise register of clients.
• List of satellite clinics.
• Register containing benefits paid to clients for availing permanent family
planning method.
• Register containing fees paid to doctors/FPA/FWV for services rendered.
• TA and provident fund register.
• Vehicle log book.
Audit programme

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Audit Programme
District and Thana Family Welfare Office

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General instruction to auditors
• Develop a clear idea about the entity, the potential risk
areas and the objectives of the assigned task and on the
basis of assessment of the situation prevalent in the entity,
prepare plan and prioritise the audit programme keeping in
view the importance, relevance and availability of time for
the assignment
[NB: For example while auditing the accounts of a Family
Welfare Office, auditors should devote more time and
attention in assessing the performance record of the entity.
They should examine the total number of clients who
availed family welfare methods both permanent and
temporary, whether the number of users have increased or
decreased compared to the prior years, and if so, the
reasons thereof, whether satisfactory arrangement exists in
the entity to ensure proper distribution of contraceptives
methods, whether the users of family welfare methods are
getting all the incentives pledged by government etc.]
Budgetary control
Cash book
Custody of cheque book
Audit of common services
given in Chapter 5 of this manual of Audit of Government
Offices.]
Audit of Payroll
Audit of GP Fund
Audit of TA Bills
[For guidance see the appropriate checklists contained in
Chapter 4 General Audit Procedure of this manual]

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Review of activities of the entity under audit
• Find out the total number of clients who availed the family
welfare facilities, both permanent and temporary, during the
year under audit.
• Compare this figure with the number of clients during
previous year.
• If there is substantial short fall of clients find out whether
this is due to:
- absence of facilities,
- absence of doctors/FWV etc.,
- absence of effective motivational drive,
- lack of contraceptives and equipment and
- lack of fund.
• Find out whether the entity has sufficient stock of all
contraceptives and these are readily available to clients as
soon as they ask them.
• Verify whether proper mechanism exists for distribution of
condoms, oral pills etc. and verify whether there is adequate
check and balance to ensure that such contraceptives are
being distributed to genuine users.
• Confirm through some test checks, that the names appearing
in the list of clients receiving above are bonafide users and
there is enough documentary evidence to substantiate these
facts.
• Find out whether the entity has adequate and satisfactory
arrangement for rendering different permanent family
welfare services (vasectomy, ligation etc.) and all requisite
medicines, surgical and medical equipment are available.
• Check whether the supplies have been stored properly in
terms of security and quality control.
• Verify whether the office has been rendering activities
reports and returns to the higher authority as per calendar of
returns.
• Also verify whether there has been regular inspection of the
office by the controlling authorities.

Local Audit Manual
Conclusion

activities of the entity are presented fairly, various control system are in place and
overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Educational Institutions
Introduction
15. The educational institutions funded and controlled by Government, comprise of

Colleges, Schools and Madrassahas. Since the activities of the above institutions,
including the composition of teaching staff, general administration, maintenance of
accounts are more or less identical, these entities have been lumped into one group
for audit purpose.
16. The common characteristics of these institutions are:
• Their annual budget is required to be approved by the competent authority.

• These institutions are to operate within the allocated budget.
• Receipts on account of tuition fees, admission fees, other fees are required to be
deposited into the relevant account of government while all expenditures
covering pay & allowances of teachers, cost of management of the institution
are borne out of government fund allocated through budget. Defraying any
expenditure from receipts, is strictly prohibited.
Key risks
• the allocated budget of an institution is not monitored closely and overspending

above the budget allocation occurs,
• the receipts on account of tuition fees/admission fees and other miscellaneous
receipts are not collected promptly, entered into appropriate register and lodged
to the bank in time,
• in the event of purchase/ procurement, laid down procedures are not followed
and
• some institutions are raising private funds without approval from appropriate
authority and spending such funds in unauthorised manner.
18. The main audit objectives are to examine whether:
• the budget allocation is clearly acknowledged and the institutions have

exercised adequate control over such allocated budget,
• all receipts due are collected and promptly deposited into designated banks and
• all private funds operated by an educational institution are authorised and used
for legitimate purposes.

Local Audit Manual
• Cash book.
• Subsidiary ledgers.
• Stock register.
• Admission register.
• Tuition fees register.
• Allotment register.
• Register of furniture and equipment.
• Imprest cash book.
Audit programme

Local Audit Manual
Audit Programme
Name of institutions _____________________________ Financial year____________

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Outstanding audit reports
audit reports and examine the defects and omissions which
have not been remedied so far, drawing particular attention to
issues which have been raised in more than one previous
reports.
Budgetary control
• See the sanctioned budget of the institution under audit.
Confirm that the allocation under different heads have been
recorded in proper register and proper system is in place to
watch the progress of expenditure.
• Determine which account code have overspent when
compared to their budget allocation and which code are
underspent.
• For those account codes over spent, investigate where from
the additional funds over and above the budget allocation
were provided. In case it was through re-appropriation, see
whether sanction from appropriate authority was obtained for
the purpose.
• Review the trend of expenditure under contingency and see
whether there is unusual expenditure in June and verify
whether all such expenditures were actually necessary or had
been incurred to prevent the lapse of budget allotment.
Cash book
• See that the cash book is in proper form, receipts and payment
under different codes of accounts are posted properly in the
cash book.
• Select some items of expenditure and verify through
supporting documents whether payments have been made to
the right person and that it has been so acknowledged and
recorded.
• See that all outstanding cheques are brought forward until
they are cashed. In the case of cheques outstanding for more
than 3 months, ascertain the reason for non-encashment.

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• See that money realised on account of tuition/admission fees
of students are first recorded in the receipt side of the cash
book, promptly deposited into bank and receipts obtained and
kept in the relevant file.
• See that cheque books are kept under lock and key in the
• See that the amount in each cheque written in words as well as
the person authorised to sign the cheques.
encashment.
• Ensure that all bank cheques are pre-stamped ‘A/C payee
Audit of Payroll*
Audit of GP Fund*
Audit of TA Bill*
Audit of Expenditure *
[* For guidance see the appropriate checklists contained in the
Chapter 4 General Audit Procedure of this Manual.]
Audit of receipts
1. For both admission and tuition fees.
a) Obtain details of the total amounts received each month.
b) For each month obtain details of the number of students
registered in the institution.
c) Multiply the figure obtained at (a) by the prescribed rate for
tuition fees.
d) Compare the figure obtained at (c) to that obtained at (a).
Where there is difference, seek an explanation for the
difference.

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• Obtain details of the monthly bank statement and compare
the monthly receipts figures lodged to the bank with those
recorded in the cash book as having been received within the
month. Where there is a difference between the two figures
(bank statement and cash book) verify the reason for such
difference.
Audit of Private Fund Receipts
[Note : Private funds are those amounts collected by educational
institutions from private donations from students or their
guardians. An example would be, where an institution
provides tiffin to students for which no fund is provided
by government]
• Verify whether the institution has obtained prior approval
from competent authority before operating any private fund
and if so, what are the terms & conditions. Examine whether
such terms & condition are complied with.
b) Determine the categories and amounts for each category for
which private funds were collected.
c) Determine the categories and amounts for each category on
which private funds were spent.
d) Compare the categories and amounts obtained at (b) to those
obtained at (a), where there is a difference, verify the reasons
for such difference.
Conclusion
In my opinion subject, to the observations in the Working Paper ________, the

transactions with regard to the activities of the institution are presented fairly,
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Audit of Jails
Introduction
21. Jail is a place with complex facilities to house both under trial and convict prisoner
inmates for different time terms. Jails vary in sizes depending on the housing
capacity of inmates. Jails are mainly located at the district headquarters.
22. The complex operations of the jails are looked after administratively by the office
of the Inspector General of Prisons and are carried out according to the Jail Code.
Funds for jails are disbursed by the concerned CAO, Ministry of Home Affairs,
Dhaka and DAOs in the districts.
Key risks
• the system of control is inadequate frustrating different operations properly and

effecting probity,
• appropriate purchase/procurement procedure is not followed,
• stocks and stores are not properly maintained and
• management of manufacturing process and sale proceeds of items is not handled
properly.
Key audit objective
• examine whether different operations are properly carried out and monitored to
secure the objectives efficiently and effectively,
• check whether there is proper control over expenditure and accounts are
maintained properly,
• verify whether there is regularity in procurement and use of medicine, ration
provisions, raw material for manufacturing unit and other expendable items and
• verify whether there is proper maintenance of stocks and stores.
Document to be obtained
• Cash book.

Local Audit Manual
• Imprest account register.

• Admission register of prisoners.
• Register of ration provisions.
• Register of arms and ammunitions.
• Stock register of raw materials, medicines, equipment and other expendable
items.
• Register of manufactured items and sale proceeds.
• Hospital register.
• Register of vehicle/log book.
• File of reports and returns.
Audit programme
26. The following audit programme should be carried out.

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Audit Programme
Jails
Name of Jail ________________________________ Financial year ______________

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Budget and Accounts
• Verify if the budget allotment was made as per estimate
prepared by the jail authorities.
• Check expenditure amounts vis-à-vis the budget allotment.
a) In case of over spending, obtain clarification.
b) In case of savings, check whether it was reported to the
controlling authorities in time.
• Examine the imprest account to see the appropriateness of the
amount fixed. Also check whether there has been timely
adjustment of advances from the account.
• Check whether appropriate security deposit was taken from the
concerned officials and accounted for as provided under the
Jail Code.
• Verify from the admission register of prisoners if valuables and
cash taken from the prisoners have been accounted for and
kept under proper security. Also check if they have been
handed back in time of their release.
• Check whether the Cash Book contains a clear and detailed
account of all receipts and payments and that daily balance is
struck and certified to that effect.
• In the case of a civil prisoner, verify whether the cost of diet
and other expenses have been realised from the appropriate
authority and accounted for properly.
• Verify if there has been regular and periodical verification of
accounts with those maintained in the Accounts Office.
Supply of rations
• Verify whether the contractor for supply of ration has been
engaged properly as provided under the rules.
• Check the adequacy or otherwise of the system of control for
receiving daily supplies from the contractors.
• Examine the system and the basis on which the indent for daily
supplies is placed.

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• Also check how the issues like hospital diet, diet for Division
prisoners etc. are taken care of while fixing daily scale of diet
and how the quality and quantity is ensured.
Factory Account
• Check whether factory/manufacturing accounts are maintained
properly.
• Verify whether procurement of raw material for the factory has
been done as per approved instruction of the Government.
(* Audit programme for purchase/procurement at Chapter 4
may be applied)
• Examine the inventory register of stock to ensure that materials
are there, in good condition and stored properly.
• Check whether costing of the manufactured products have
been made appropriately keeping in view the price of all
inputs, and market condition.
• Verify whether the sale proceeds are properly accounted for
and deposited to treasury in time.
• Examine the overall factory activities to see whether the total
operation is an economic proposition. If not, obtain
clarification and comment.
Stock and Stores
• Check whether the system of procurement of stores is in order.
• Scrutinise the inventory register to verify receipt, storage,
existence and accounting of stores.
(* Use appropriate audit programme, Audit of Assets at
Chapter 4 of this Manual)
• Verify whether hospital supplies and medicines were procured
as per rules and on the basis of annual indent as provided in the
Jail Code. Also check the inventory register of the Jail hospital.
Establishment
• (* For audit of pay roll use appropriate audit programme at
Chapter 4)
• Check the service books of the Staff to verify fixation of pay,
leave account etc.
• Verify the vehicle log book to ensure proper use, repair and
maintenance, use of POL etc. of the office vehicle.

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• Also check if there has been proper use of official telephones.
• Verify whether there has been regular and timely payments of
bills for telephone, electricity, gas, water and other
conservancies.
• Verify if necessary deduction at source of income tax and VAT
has been effected from the contractor’s/supplier's bills.
• Check if mandatory reports and returns including the monthly
Accounts Statement are sent timely and regularly to the
controlling authority.
• Verify if the Jail authority has any year-end liability in the
from of unpaid bill. If so, obtain clarification and comment.
General
• Verify generally the inspection register to see that the Jail has
been inspected regularly by inspecting the Jail authority, the
magistrate and other authority to ensure quality operations and
also to effect overall improvement of the system.
• Generally make an assessment of the Jail capacity, number of
inmates, conservancy services and supplies to see that the
inmates were provided with the minimum facilities they were
entitled to under the law.
Conclusion

transactions relating to the activities and operation of the Jail are presented fairly,
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Fire Service and Civil Defence

Introduction
27. Department of Fire Service and Civil Defence was created, as its name signify, to
combat incidents of fire, rescue life and property, impart regular training to its
personnel and civilians to aid the civil administration, during belligerency and
natural calamity, like storm, earth quake etc. The responsibilities of the Department
also include creation of awareness among the people about fire hazards and need for
observing safety/precautionary measures, ensuring installation of fire extinguishers,
in different public buildings and installations and implementing fire safety laws.
28. The audit of accounts of the normal financial transactions of the department would
be covered by the audit programme of the Directorate given at Chapter 5 of the
Manual. In order to evaluate the performance and assess the overall capability and
preparedness of the department, the following programme may be applied.
Key risks
• there may be weak internal control towards proper coordination of work,

• there may not be properly defined job descriptions,
• there may be store management lapses leading to problem with repair and
maintenance of equipment,
• there may not be strategic/annual training plans to realise training needs and
• there may be management lapses leading to serious adverse impact like loss of
life and property.
Key audit objective
• verify whether appropriate and reliable controls are in place to coordinate the
activities towards a state of full alertness,
• check whether the department carry on regular survey towards implementation
of fire laws,
• examine whether adequate number of people are trained to cope with such
disaster and
• evaluate management performance in securing efficiency, effectiveness and
economy in managing the affairs of the department.

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• A copy of fire safety and civil defence laws and regulations.

• Organisation Chart of the department.
• Job descriptions of the personnel.
• Budget allocation and expenditure on repair, maintenance and on training.
• List of fire fighting and rescue equipment.
• Certificates relating to maintenance of vehicle/equipment.
• Log books of fire fighting engines and vehicles.
• Details of training programme during the year.
• Activity report of the year.
Audit programme
32. The attached programme should be followed:

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Audit Programme
Name of office _______________________________ Financial year _____________

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• Assess whether adequate controls for preparedness are in place
to trigger coordinated action to deal with emergencies.
• Examine organisation chart and job description in the light of
the above and comment.
• Find out about the number of incidents of fire and natural
calamities during the year along with relevant information to
see as to how appropriately the department/unit has been able
to combat the situation.
• Check whether effective measures are taken regularly to
increase public awareness regarding adopting/observing fire
safety measures.
• Check the inventory of store to assess whether adequate stock
level of spare parts has been maintained to properly carry out
repair and maintenance of fire fighting equipment and vehicle.
• Verify whether regular survey is made to check the efficacy of
different fire fighting equipment installed in various places.
• Verify as to how fire prevention/escape/fighting clearance is
given for a building or installation and how this is monitored
and what action taken for violation of terms of such clearance.
Are the laws adequate to deal with such cases? Analyse and
comment.
• Verify as to whether there is strategic training policy and
annual plan in the department for training of personnel and
how effectively these have been implemented during the year.
Also examine budget allotment and expenditure for training,
number of programmes implemented and persons trained to
see whether desired result has been achieved

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• Assess and comment on the state of alertness and preparedness
of the department to effectively deal with emergent situations.
• Generally review and comment on the overall performance of
the department with relation to its achievement and fulfillment
of assigned responsibilities during the year under audit.
Conclusion

overall performance towards managing the affairs of the department is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Chapter 7 – Audit of Autonomous and Local

Bodies
Index
Topics Pages
Introduction 7.1
City Corporations/Municipalities 7.2 - 7.9
Zila Parishads 7.10 - 7.16
National Curriculum and Text Book Board 7.17 - 7.24
Universities 7.25 - 7.32
University Grants Commission 7.33 - 7.37
Port Authorities 7.38 - 7.48
BIWT Authority 7.49 - 7.57
Agricultural Research Institutes 7.58-7.62
Sports and Cultural Bodies 7.63-7.68
25/5/00 7.0 Chapter-7 Autonomous and Local Bodies

Local Audit Manual
Chapter 7 – Audit of Autonomous and Local Bodies
Introduction
1. This chapters covers the audit of Autonomous and Local Bodies created by legal
instruments and are responsible to deliver services of different kinds in accordance
with the policy and in a cost effective manner. An assorted list of bodies have been
chosen to provide auditors with audit programmes which can be used and adapted
in other similar bodies.
2. The procedures are primarily intended for use on routine audits but with some
adaptations can be applied to assess and evaluate the management capability and
performance of the organisations towards securing their objectives economically,
efficiently and effectively.
3. The following Autonomous and Local Bodies are covered:
• City Corporations/Municipalities
• Zila Parishads
• National Curriculum and Text Book Board
• The University Grants Commission
• Port Authorities
• BIWT Authority
4. Audit Programmes have been prepared for each of the categories and some other
bodies which are specific to those units. The general checklists covered in Chapter
4 of the Manual may also be applied during audits.

Local Audit Manual
City Corporations/Municipalities
Introduction
5. City Corporations/Municipalities are self-governing local bodies under the

administrative control of the Ministry of Local Government. They have been
entrusted with the responsibilities of providing basic civic amenities to the people
living in their respective jurisdiction.
6. The main functions of these local bodies include among other things construction of
markets & buildings, repair & maintenance of roads, public parks, drains, cleaning
of city roads, removal of garbage, maintenance and leasing out of ghats and
markets, imposition of local tax etc.
7. City Corporations are located in Divisions (Dhaka, Chittagong, Khulna etc.) headed
by a Mayor, while Municipalities are located in each district and headed by a
Chairman. Both City Corporations and Municipalities are divided into wards
represented by Commissioners.
8. The Mayor/Chairman/Ward Commissioners are elected representatives of the

people, appointed for a fixed term. The responsibility of running/administering
these two types of local institutions devolves on the Mayor/Chairman/Ward
Commissioners.
9. Since the mode of operation, sphere of activities and system of collection of

revenues are identical in case of both City Corporations and Municipalities, these
two local bodies have been lumped into one group for audit purpose.
Key risks
10. The main audit risks are:
• the annual accounts statements, balance sheets, and other relevant accounts
information are not prepared in time,
• the collection of revenue on account of holding tax, other taxes, fee, rents etc. is
poor due to slackness and inaction of the concerned collection department,
• enforcement of effective punitive & legal steps against habitual defaulters is
nonexistent,
• the annual budget is prepared showing inflated and non-achievable amount of
receipts and as a result, very often overspending above the budget allocation
occurs,
• in the event of purchase/procurement laid down procedures are not being
followed,
• amount collected in respect of Government dues from lease of ferry ghat, bus
terminal etc. are not deposited to treasury promptly.

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• amount collected are not deposited promptly to the Bank account of the entity.
• in awarding contracts for civil works, proper tender procedure is not being
followed and sometimes contracts are awarded to the parties incapable of
performing the job and
• arrangements for providing social care, utility services to tax-payers are
perfunctory and inadequate.
• verify that the entities prepare and submit annual accounts timely incorporating
all relevant information and disclosures,
• check that these accounts are complete, correct and free from misstatement and
omission,
• evaluate that the entities are operating efficiently and effectively and thereby
providing basic civic amenities to the people living within their respective
jurisdiction, in the best possible manner,
• examine that all taxes, fees, rents levied by the entity are assessed strictly in
accordances with existing rules,
• verify that all receipts due are collected and promptly deposited into the relevant
account of the entity and
• check that all expenditures are authorised and incurred in accordance with
existing laid down rules.
• Cashier's cash book.

• Accounts cash book.
• Collection register.
• Remission register.
• Warrant register.
• License register.
• Abstract register.
• Provident fund register.
• Advance register.
• Contingent, supply register.
• Log books.
• Muster roll register.
• Rickshaw license register.

Local Audit Manual
Audit programme
The papers relating to the assessment of holding tax, other taxes, rents, other
receipts and trend of collection of such dues should be examined thoroughly and
others on the basis of sample.

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Audit Programme
Name of office ______________________________ Financial year_____________

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• Examine the previous audit reports and ascertain all defects
and omissions which have not been remedied.
[Note: The auditors should exert their utmost to get all the old
observations settled or to suggest ways and means how to
gear up settlement of audit observations by meeting the head
of the office as frequently as may be necessary, during the
course of audit.]
• Develop a clear idea about the audited entity and prepare,
plan and prioritise the audit programme keeping in view the
assignment.
[Note: For example, if the trend of receipts of the entity under
audit is poor, Auditors should devote more time and attention
in that area making in-depth analysis and pinpointing the
defects in the system of revenue collection and suggesting
ways and means to gear up the collection.]
Review of budgetary Control
carefully examine the receipts, estimated under heads
holding tax, other taxes, fees, rents, and comment whether
the estimates had been based on correct assessment of the
situation and the past trend of collection.
[Note: For example, if the collection on account of holding tax in
the previous year was around 50 lacs, budget estimate of 2
crores for the year under audit would be impractical and
unachievable.]
• See that the budget allotments have been correctly noted in
the relevant register and proper and effective systems are in
place to monitor and review the trend of expenditure. In the
case of re-appropriation from one sub-head to another, verify
whether savings really accrued after meeting all legitimate
charges and there was no tendency to withhold payment
under one head with a view to diverting the allocation to
some other purpose.

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[Note: For example, very often funds earmarked for paying
electricity bills are diverted to meet some other contingency
expenditure of the entity, thus depriving the concerned
agencies of the government from revenue they projected in
their annual budget.]
• Review the status of grant received from government as
development support. Verify whether the amount earmarked
in the ADP had been received fully and spent specifically for
the purpose, the grant had been given.
Maintenance of Accounts
• Verify whether the accounts of the entity are maintained in
the form and manner as approved by the competent authority.
• Also examine whether the disclosures and information in the
accounts statements are adequate and prepared in accordance
with relevant accounting standards and applicable accounts
direction.
Cash Book
• See that the cash book is in prescribed form, receipts and
payments under different heads are properly posted, that the
• See that the cash book is closed monthly and that
reconciliation of the closing balance of the bank statement
with that of the cash book is effected under the signature of
the authorised officer.
• From cash book select at random some items of receipts
(holding tax, professional fees, rents etc.) and verify through
relevant subsidiary registers and bank scroll, that the amount
indicated in the cash book had been recorded correctly.
• Similarly select some items of expenditure and verify
through supporting vouchers whether payments had been
made to the right person and that it had been so
• Ensure that cheque books are properly accounted for and

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Audit of Payroll
Audit of Provident Fund
Audit of TA Bill
[For guidance see the detailed checklists contained in Chapter 4,
General Audit Procedure of this manual].
Audit of Holding Tax
• Verify that the entity had complete and upto date list of all
buildings/properties that should come under the purview of
municipal tax.
• Select at random some cases of assessment made by the
assessor and ensure that the assessment had been made
strictly as per terms of model taxation rules.
• See the demand and collection register and select at random
some buildings/properties for which no holding tax had been
paid by the owners for years together and verify through
available records, that the entity under audit had made
genuine and vigorous efforts to realise the arrear taxes from
the defaulters through issuance of demand notice and warrant
notice
Government Building
• Ensure holding tax on government buildings are realised and
credited in the accounts of the entity within the stipulated
time and proper mechanism exists to supervise and monitor
the collection of such dues.
[Note: In the revenue budget of all government offices, separate
allocations are always made for payment of municipal tax
under head ‘Supply and Services'. These amounts,
sometimes, remain unrealised because of laxity on the part of
the collection department of the entity.
Professional or Callings Fees and Trade Licence
(Realised from people, engaged in different professions like
doctors, lawyers, business entities etc.)
• Verify whether there is complete and upto-date list of all
professionals and business entities who are required to pay
yearly fees at rates, prescribed by the relevant authority.
• Examine from the approved budget of the entity, the amount
of receipts projected under this head and actual realisations.

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• In the event the amount of collection is low compared to the
budget provision, verify whether this is due to slackness on
the part of the collection department in realising these dues
from the defaulters.
Audit of Entertainment Tax
• Review the budget provision and actual receipts.
• If the actual receipts are low compared to budget estimate,
examine whether this is due to:
• In accurate and inflated estimate.
• Absence of serious efforts by the collection department in
realising the amount due.
Audit of leasing out ferry ghats, markets, bus terminals etc.
• Review the budget provision and actual realisation under
above head.
• When realisation position is unsatisfactory, ascertain whether
this is due to:
• Inflated estimate.
• Non-payment of rents/leased amount, by the lessee in time.
• Absence of effective and efficient mechanism pursued by the
collection agency in realising the amount due.
• Ascertain whether there is uniform and equitable policy for
awarding the contract to genuine parties.
• Verify whether government dues like VAT/Income tax are
deducted from the bills of the lessee as per existing rules and
deposited into the treasury promptly.
Audit of receipts on account of licenses for rickshaws and
other non motorised vehicles
• Verify the budget provision and actual receipts on account of
above head. If receipts are low, compared to the budget
forecast, ascertain whether the entity has upto-date list of
such vehicles and effective system is in place to compel the
defaulters to pay the fees by taking recourse to punitive
measures like confiscation of the vehicles/legal action etc.

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Audit of development support grant sanctioned by
government plan(ADP)
• See that the amount allocated had been received in full and a
separate account showing details of all transactions was
being maintained by the entity.
• Examine the conditions attached to such grants and check
whether the conditions had been fulfilled.
• Ensure that the allocated amount had been used solely for the
purpose it was granted.
• Ensure that the unutilised amount had been refunded timely
in the appropriate account of the government.
Audit of works expenditure
Note: All Municipalities and City Corporations are required to
undertake civil works like repair/maintenance of
roads/culverts/drains, construction of markets, buildings etc.
These are being funded either by government grants
allocated through ADP or from their own resources. While
conducting audit of civil works, auditors should use audit
programme, Audit of Works Expenditure, contained in
Chapter 4, general audit procedure of this manual.
[For guidance see the portion ‘Audit of Common Services’, in
the audit programme of Directorate, contained in Chapter 5
of this manual.]
Conclusion
transactions relating to the activities of the City Corporation/Municipality are
satisfactory, various control systems are in place and overall management is
satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Zila Parishads
Introduction
14. Zila Parishads are self governing local bodies set up in each District of Bangladesh
under the administrative control of the Ministry of Local Government. These
Parishads are headed by a Chairman, nominated by government who holds office
for a period of three years. The responsibility of looking after day to day
administration of the Parishad has been entrusted with the Secretary of the Parishad.
15. The activities of Zila Parishad and District Municipality are more or less identical
excepting the following:
• The Chairman of a District Municipality is an elected representative of the

people whereas Chairman of a Zila Parishad is nominated by government at
present.
• Municipalities operate in the urban area whereas Zila Parishads operate in rural
areas.
• The activities of Municipalities are much wider and source of revenue is much
larger than Zila Parishad.
The functions of the Zila Parishad are divided into two categories:
i) Compulsory.
ii) Optional.
16. Some of the functions which fall into compulsory category are:
• To implement all development programmes within their respective jurisdiction

out of grants received from government and from their own resources.
• Construction/maintenance of roads, bridges, culverts etc.
• To maintain and operate ferry ghats.
• To maintain and operate Dak Banglow and other rest houses.
17. The optional activities include among others:
• To establish and maintain schools.

• To promote adult education.
• To arrange teachers training.
• To set up museum and art galleries and public parks.
• To set up mobile dispensary and first aid centres.
• To maintain charitable dispensaries.
• To maintain libraries.

Local Audit Manual
Key risks
• the collection of revenue falls much below the budget provision due to
unsatisfactory collection procedure;
• effective arrangements for gearing up revenue collection are non-existent;
• proper accounting procedure is not being followed including reconciliation of
bank account resulting in misuse and misappropriation of Parishad’s fund;
• civil works undertaken by the Parishad are in many case of very poor quality
because of poor supervision and awarding of contract to incompetent parties;
• poor accountability of wasteful expenditure;
• lack of proper supervision and follow up of the utilization of fund; and
• leasing of land, market, pond etc. by corrupt practices/partisan interest.
Key audit objective
• the Parishad is operating efficiently and effectively and thereby providing basic
amenities to the people including the development of infrastructure in the best
possible manner;
• all taxes, rates, rents are assessed correctly, equitably and realized within the
stipulated time;
• all government grants are used specifically for the purpose the fund had been
granted; and
• all receipts have been promptly deposited into relevant accounts.
• All instructions issued by the Government regarding the operation of Zila

Parishad.
• Cash Book.
• Bank Statements and reconciliation statements.
• Stock register for medicine & equipment.
• Pay roll, grants-in-aid, student fees register.
• Register of works.
• TO&E (Table of Organisation and Equipment).
• Collection register for markets, lands, etc.

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• Lease documents.
• Dak Banglow visitor's book and rent register.
• Collection register for ferry ghat
• Establishment register.
• Provident fund register.
• Log book for vehicles.
Audit programme
The papers and documents relating to assessment of tax, rents and other receipts
and trend of collection of such dues should be examined thoroughly and other on
the basis of sample.

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Audit Programme
Zila Parishads

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• The audit programme given below are for the guidance of
auditors undertaking audit of field level. These instructions
only represent the minimum that is necessary for an effective
audit. Since the auditor has access to the basic facts and to the
persons who deal with them, he is in a far better position to
get at realities.
• Examine the previous audit reports and ascertain all
irregularities, defects and omission and whether these defects
have been remedied. Try to get all the old objections settled,
by meeting the head of the office as frequently as may be
necessary.
• Develop a clear idea about the Parishad to be audited. Prepare,
plan and priotise the audit programme keeping in view the
potential risk areas, relevance and availability of time for the
assignment.
[Note: For example, if the trend of revenue receipt is poor and
the progress of different development works undertaken by
the Parishad is unsatisfactory, then the auditors should devote
more attention in these areas pinpointing defects and lacunae
in the activities of the entity and suggesting ways and means
to improve the situation.
Review of activities of the Zila Parishad
• See whether the Parishad prepared an annual work plan,
approved by the competent authority stipulating the
development works to be under taken.
• Verify through available records whether the Parishad
succeeded in achieving the target set in the annual plan
(percentage of achievements needs to be mentioned).
• In the event the percentage of achievement was not
satisfactory, find out whether this is due to:
• Poor collection of revenues.
• Non availability of govt. grant in time.
• there was delay in the award of contract.

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• the contractors who were assigned the task failed to
complete the work within the stipulated time.
Budgetary control
• Examine the sanctioned budget of the Parishad and see if
there is any excessive provision under any head as compared
with the provision in the previous year and in case of marked
difference, investigate the cause.
• Also see if the budget allotment have been correctly noted in
the register of Receipts and Expenditure. Compare the annual
expenditure figures with the sanctioned allotment under each
head and whether any expenditure was incurred in excess of
the allotment. Marked shortfall in the receipt should also be
noted in the report
• Verify whether the accounts of the Parishad are maintained in
direction.
Audit of grants received from government
• Trace all government grants received during the period
covered by this audit from the cash book and the register of
government grants. Find out from the sanctioning letter on
what condition and for what purposes each grant has been
received.
• Ensure that the conditions of grants have been fulfilled and
that no money has been diverted from any such grant for a
purpose other than that for which it was meant.
• Ensure that no portion of the grant has been lying unspent for
a long time.
• In case of works completed out of government grants, see
whether the unspent balance has been surrendered to
government

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Cash book
• See that the cash book is in the prescribed form, receipts and
payments under different heads are properly posted and the
reconciliation of the closing balance with that of the bank
statement is done and the cash book is verified regularly by
• From cash book select at random some items of receipts and
verify through relevant subsidiary registers and bank scroll
that amount indicated in the cash book had been recorded
correctly.
• Similarly select some items of expenditure and verify through
bank scroll whether the amount mentioned in the cash book &
bank scroll tally.
• Verify that cheque books are properly accounted for and kept
under safe custody of the drawing officer.
• Also verify that all cheques were pre-stamped ‘A/C Payee
Only’ as soon as they are received from Bank.
Audit of Payroll
Audit of TA Bills
Audit of Loans & Advances
General Audit Procedure of this manual.]
Rents of Dak Banglow
• Examine the visitors book and check receipts of rent of
Banglows in accordance with the rules framed by the Board.
Verify that rents received are promptly credited to the Board
Fund. Prepare a list of visitors who have not paid up the rents
due from them under the rules.

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Audit of leasing out ferry ghat, lands, markets belonging to
the Parishad
• See whether there are clearly laid down rules stipulating the
procedure to be adopted with regard to leasing Parishad’s
property like lands, ghats, ponds etc. Comment whether the
relevant rules are complied with in all cases.
• Examine whether instructions issue by the Ministry of Local
Government from time to time encompassing all areas of
activities of the Zila Parishad (for example remuneration's and
other benefits to be paid to Chairman, Secretary, use of
Parishad’s vehicles, procedure to be adopted in leasing out
Parishads property etc.) are readily available in the office and
being adhered to.
[For guidance see the portion Audit of common services, in the
audit programme of Directorate contained in chapter 5 of this
manual]
[Note: All Zila Parishads are required to undertake civil works
like repair/maintenance's of roads, culverts, ferry ghats markets
etc., funded either through government grants or from their own
resources. Auditors should use audit programme, Audit of works
expenditure contained in chapter 4, General Audit Procedure of
this manual]
Conclusion

transactions relating to the activities of the Zila Parishad are satisfactory, various
controls are in place and overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
National Curriculum and Text-Book Board

Introduction
22. In order to provide for a nation wide standard curriculum and writing, printing and
supply of text books accordingly for all the education institution upto secondary
level, the National Curriculum and Text-Book Board was established by an
ordinance in 1983. The board is entrusted with complex operations like review and
updating of curriculum, selecting writers and authors for revising/rewriting text
books, printing and timely supply of the same by the beginning of every academic
year.
23. The importance and nature of operations of the Board, therefore, call for some
comprehensive audit test by the Local Audit to form an opinion and report as to
how the Board has been able to deliver service under the overall framework
provided for in the ordinance. This, however, does not minimise the necessity of
looking into the compliance and regularity of the financial transactions.
Key risks
• there may not be proper budgetary control and supervision over income and
expenditure,
• there may be inappropriate distribution of work among the members of the staff
leading to mixing of accounts and payments functions,
• accounts records may not be maintained properly leading to preparation of
incorrect accounts and misappropriation of fund,
• there may be inadequate security system for cash, cheques and stores,
• there may be serious lapses in selecting writers, authors and press and contract
made with them,
• there may be absence of a system of reviewing, updating, evaluating and
monitoring of national curriculum and quality assurance of books,
• there may be mismanagement in procurement and utilisation of printing paper
and
• there may not be proper system of distribution of books.
• the accounts are maintained in the manner prescribed by the Government,

• all transactions conform to the rules governing them, classified correctly and
reflected in the accounts,

Local Audit Manual
• reliable controls are in place both at sanctioning and spending levels,

• grant/loan money was utilised for the purpose for which those were obtained
and
• the affairs of the Board have been managed efficiently to realise its objectives.
• All sanction letters received from the Government.

• All grants allocation letters.
• Annual budget.
• All annual statements of accounts.
• All papers relating to big purchases during the year.
• All papers relating to award of contract for work/job.
• Internal audit reports.
• Proceedings of the Board meetings.
• Agreements of loans/grants.
• Expenditure control register.
• Bank accounts statements (including fixed deposits) and cheque books.
• Register of building and land.
• Register of assets/stores.
• List of writers, authors and printing press.
• Reports of Evaluation and Monitoring Committee.
• Calendar of reports and returns.
• L/C documents.
• Book distribution procedure.
• Selection procedures of writers, authors etc.
Audit programme
All big cases of work/job contract and big purchase during the year need be
checked and others on the basis of sample sizes to be determined during audit
depending on nature and importance of transactions.

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Audit Programme

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Budget control
• Examine budget allocations and expenditures (total and head
wise). In case of variation, comment, if necessary.
• Check whether the amount overspent, if any, was covered by
necessary approval. In case of savings, see whether this was
reported to the appropriate authority in time.
• Check the position of collection of money in respect of
royalty, if any.
• Verify whether there is periodical review of budget provision
and corrective action if necessary.
• Verify whether adequate provision for debt servicing (both
principal and interest) was made in the budget, if necessary,
and action taken accordingly.
• Check whether the grants/loans obtained have been spent for
the purpose for which those were sanctioned. Also comment
as to how the unspent balance, if any, was disposed of.
Audit of accounts
• Verify whether the accounts of the Board are maintained in
the manner and form as approved by the Government and
financial statements are prepared accordingly.
• Check whether there is proper job descriptions for the
members of the staff and duties have been distributed clearly
demarcating accounting responsibilities from payment
functions.
• Verify whether necessary cash/bond security was obtained
from the staff members handling cash, valuables etc. as
provided under the rules.
• Examine physical security of the bank cheque books. Also see
whether physical counting of cheque leaves has been done
and certificate recorded as such on the body of the cheque
books.
• Verify if cheque counterfoils have sufficient details and that

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• Check if cash book balance agrees with the balance in the
bank statement.
• Verify whether the office has been regularly doing
reconciliation of cheques with the bank account and necessary
steps taken, accordingly.
• Also verify if lapsed, cancelled and lost cheques have been
appropriately noted in the cash book and notified to the bank.
• Check that the cash book is maintained in proper form, items
of receipts and expenditures are recorded in details, closed
regularly and necessary certificate recorded at the end of
every month by the examining official.
• Test check whether daily totals from subsidiary registers have
been correctly entered in the cash book.
• Verify whether the monthly financial statements of receipt
and payment amounts agree with those of the cash book.
• Trace a sample of amounts in the financial statement
downward upto the level of invoice/voucher. Also carryout
the same process upward from voucher to financial statement.
• Check if advances allowed for specific purpose/work have
been adjusted promptly as soon as the work is complete and
do not remain outstanding for undue long time.
• Verify whether details of Loan Agreement information have
been recorded in the register, amount received as per contract
and transactions reflected in the accounts.
• When a loan is finally closed after complete debt servicing,
verify whether entries are made accordingly in the relevant
register and reflected in the accounts.
Audit of job award/contract
• In case of contract for job, check that all the process for award
of contract was duly completed as laid down in the Audit
Programme for purchase/procurement at Chapter 4 of the
Manual.

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• Obtain the names of press enlisted with the Board and
examine the system under which the printing work is
awarded.
• Check that necessary security money has, in all cases, been
realised form the contractors, promptly deposited to the bank,
properly accounted for and not refunded before satisfactory
completion of the work or as per terms of the contract.
• Check contractors final bills to ensure satisfactory fulfilment
of the work and arithmetical accuracy.
• Check whether necessary VAT and/or income tax was
deducted from contractors bills as per rules in force and
deposited to treasury. Verify sample of chalans towards this
end.
Audit of personal claims (Payroll, TA & Loan)
• Apply appropriate check from the audit of payroll programme
at Chapter 4 of the Manual.
• Verify whether service books are available for all the
members of the staff and that all service information is
recorded there.
• Verify whether fixation of pay of the staff and offices have
been verified by the appropriate authority.
• Check whether loans and advances given to the officials are
strictly in accordance with the rules governing such loans.
Also check that recoveries are effected as per conditions of
such loans and accounted for properly.
• Verify a few cases of TA claims for admissibility as per
Board rules and arithmetical accuracy.
Audit of bank account & investment
• Apply audit of bank account programme at Chapter 4 of the
Manual
• Verify the status of the funds, generated out of employees
GP/CP Fund, welfare fund etc. Are these lying idle in the
normal bank account or safely and profitably invested? Is
there a guideline approved by the Board to deal with such
fund? Comment, if necessary.
• Same checks as suggested above may also apply for Boards
surplus funds.
Audit of purchase & procurement
• Apply appropriate steps of audit programme for purchase &
procurement at Chapter 4 of the Manual.

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Audit of stocks, stores, tangible assets
• Select and apply appropriate steps of audit of assets
programme at Chapter 4 of the Manual.
(The Board owns land, godown, office building, residential
buildings, printing press, printing paper and printed books)
• Check whether information in detail is recorded in the register
for fixed assets. Do the concerned officials carry out annual
survey and inspection of these assets? Comment, if necessary.
• Review the position of upkeep, repair and maintenance of the
office building, residential buildings and godown and other
premises. Comment, if not satisfactory.
• Examine the purpose for which the printing press was setup
and whether the purpose is being served.
Audit of revenue receipts
• Check whether adequate system exists for budgeting,
accounting, monitoring and reporting of revenue in the office.
Comment, if necessary.
• Review whether the estimate of revenue income has been
prepared appropriately on the basis of statistical information.
Comment in case of significant variation.
• Review the position regarding arrear, current demand and
total collection of revenue to see whether adequate effort was
made to realise all revenue during the year.
• Check whether collected amount has been entered in the
relevant register and cash book and promptly deposited to
bank.
• In case of cash receipt, check at random receipt book and
bank deposit slip in support of deposit into bank.
• Review the collection position of rent of the Board building
premises let out to others. Is the monthly rent fixed for the
premises appropriate as per market rates? Comment, if
necessary.

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Panel of writers for curriculum and text books
• Find out whether there is an approved policy of selection of a
panel of writers. In case there is one, whether this is
appropriate? If not, how this is done? Comment on this issue.
• Review as to how the quality of the text books are assured.
How the accountability of the persons involved are ensured?
• Is there approved rates of remuneration for the writers and
how this is contracted? Comment and check a few paid bills
for admissibility and arithmetical accuracy.
Litigations and panel of lawyers
• Examine the file/register concerning litigations to see that
these are pursued properly by the Board’s lawyers and that
none fell through for lack of supervision and attention.
• Check whether briefs are evenly given to the lawyers who are
on the panel of the Board. Verify the ratio of amount paid to
different lawyers during the year. Comment, if there is
imbalance.
• Check at random lawyers’ remuneration bills for admissibility
and arithmetical accuracy.
Programme
• Ascertain what GoB financed programme/project is being
implemented and the status of work to see physical
progress/achievement vis-à-vis financial expenditure under
the overall approved time frame. Comment, in case of
significant variation.
• In case of completed project, ascertain and comment as to
how the project is performing and whether the objective for
which the project was conceived and implemented has been
achieved.
• Check the system of reviewing, updating, evaluating and
monitoring of national curriculum. Comment, if things are not
properly done.
• Examine the system of distribution of books and comment as
to why the job cannot be completed in time.

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General
• Examine expenditure relating to transport operation and
maintenance to ensure appropriateness, admissibility and
allotment of fund and also to see whether these conform to
rules and instructions. Also check expenditure on telephone in
the same manner.
utility and service bills like rent, rates, taxes, electricity, gas,
water etc., both for the office and recovered from the officials,
if any.
• Ascertain whether the various transports and office equipment
in the office are within the approved limits of the
Government.
• If there has been substantial payment of money for overtime
work, ascertain and comment with relation to actual
nature/volume/urgency of work beyond office hours along
with admissibility.
• Review the status of previous audit reports and comment in
case of significant outstanding audit paragraphs.
• Verify whether all reports and returns, free of error, are
regularly sent to the appropriate authorities audit paragraph.
• Review the activities of the Board, assess its performance and
comment as to whether the Board has been able to deliver
services properly for which it was established.
Conclusion

accounts of the Board have been maintained as prescribed by the Government, the
financial transactions have been made in accordance with the rules governing them
and presented fairly in the accounts and overall management of the affairs of the
Board is generally satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Universities
Introduction
28. Public Universities are created by statutes providing for the legal framework within
which these institutions conduct their activities. The auditors are required to
undertake audit in accordance with the principles embodied in the legal framework.
Auditors have to satisfy that these Universities have acted in compliance with the
requirement of law and they have proper arrangement for securing economy,
efficiency and effectiveness in their use of resources.
Key risks
• some of the staff are not employed lawfully and as per sanctioned strength,
• financial benefits given to some employees are not covered by existing rules,
• unauthorised absence of teachers gone abroad on study leave and no punitive
action has been taken by authorities against such teachers,
• teachers remain busy in project management/consultancy job and other ex
campus activities which in many cases are not authorised,
• lack of accountability of performance of teachers,
• appointment and promotion of teachers in some cases, do not conform to
university rules,
• absence of effective system to prevent session jam,
• unnecessary delay in conducting examination and publishing of results,
• cases of fraud and defalcation in the issuance of certificates,
• university libraries are not equipped with latest books, magazines and
periodicals,
• management of tools, plants and inventory is unsatisfactory,
• absence of proper evaluation of publications and research work,
• mismanagement in collection of rents from the occupants of university quarters,
• grants received from government are used for unauthorised purpose,
• in the event of purchase/procurement laid down procedures are not being
adhered to,
• in awarding contract for civil works, proper tender procedures are not being
followed and sometimes contracts are awarded to parties incapable of
performing the job and
• poor quality of civil works because of poor supervision and control.

Local Audit Manual
• accounting statements are completed timely and prepared in accordance with

acceptable accounting rules,
• all expenditures are authorised, vouched and properly recorded,
• the grants received are used for the purpose for which the grants have been
sanctioned,
• leave of absence of teachers studying abroad is duly sanctioned by the
competent authority and effective system is in place to prevent unauthorised
absence of teaching staff,
• there is proper mechanism through which the university can evaluate annually
the performance of teachers and moderate their activities where necessary,
• proper mechanism exists to prevent session jam, unnecessary delay in
conducting examination and publishing of results,
• there is proper system to prevent fraud and defalcation with regard to issuance
of certificates,
• proper management and upkeep of university assets including tools, plants and
inventory are in place and
• proper supervision and quality control are in place with regard to various civil
works undertaken by the university.
31. To following records should be requested for audit review:
• Services (Reorganisation & Conditions) Act 1975 and Rules made thereunder.
• University accounts manual.
• University calendar.
• Cash book of general fund.
• Cash book of specific fund.
• Remuneration register of paper setters/examiners.
• Audit register of establishment.
• Scholarship register.
• Provident fund account of university teachers and staff.
• Budget estimates and annual accounts.
• Cheque books and counterfoils.
• Bank statements.
• Counterfoils of mark sheets, duplicate certificates issued by the controller.

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• Register of medals & diplomas.

• Register of registered graduates.
• Register of registered students.
• Verification report of stocks.
• Bill register for books purchased.
• Stock register of stationary purchased.
• Register of rents realised from tenants.
• Log books.
• Measurement books.
• Student fees collection register.
• Seat rent collection register.
Audit programme

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Audit Programme
Universities
Name of university __________________________ Financial year ____________

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Planning
• The audit programme given below are for the guidance of the
Auditors undertaking audit at the field level. It must be clearly
understood that these instructions only represent the minimum
that is necessary for an effective audit. The true value of an
audit will be found over and above this in the personal zeal
and the interest of the auditors in his work and in the
application of his own knowledge and experience to the
constantly changing facts presented before him. It should be
borne in mind that as the Auditor has access to the basic facts
and to the person who deal with them, he is in a far better
position to get at realities.
irregularities, defects and omissions and see the defects have
been remedied. Dispose of as many objections as possible and
include the items still un-rectified, in the Audit Report
drawing particular attention to points raised in more than one
previous report.
[Note: The auditors should try their utmost to get all the old
objections settled by holding meeting with the head of the
office as frequently as may be necessary.]
• Develop a clear idea about the entity to be audited, prepare
assignment.
[NB: For example, the concurrent Audit Teams posted in 4
Universities (Dhaka, Chittagong, Rajshahi and Mymensingh
Agricultural University) pre-audit all bills of these entities
excepting pay and allowances of the Vice-chancellor, teaching
staff and other officials. The post audit team, therefore, should
pay more attention in these areas in order to ensure that
absence of pre-audit does not lead to unlawful drawal of pay
and allowances.]

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• Examine the sanctioned budget of the entity under audit and
of marked difference investigate the cause and make comment
in the report.
• See that all liabilities (current or carried from the previous
years) have been taken into account in preparing the budget
and money indisputably payable is never left unpaid.
• Verify that the budget allotment have been correctly noted in
the Abstract Registers of Receipts and Expenditure and re-
appropriations sanctioned from time to time have been noted
against the head concerned.
• See that the expenditure in each head is strictly in accordance
with budget allocation.
Audit of accounts
Cash Book
• See that the cash book is written daily.
• The entries are classified correctly and the postings, total
balances are arithmetically correct.
• The book is closed monthly or daily and that a reconciliation
of the closing balances of the Bank Statements and the cash
book is effected and recorded under the signature of the
authorised officer.
• See that all outstanding cheques are brought forward month
by month until they are cashed. In case of cheques
outstanding for more than 6 months, ascertain the reason for
non encashment.
• Confirm that the cheque books are kept under lock and key in
• The amount of each cheque is written in words as well as in
figures on the counterfoils and the counterfoils are initialed by
the person or persons authorised to sign the cheque.
• The cheques have not been signed unless required for
immediate encashment or delivery to the person concerned.
• Confirm that all blank cheques were pre-stamped ‘A/C Payee
Only’ as soon as they are received from the bank.

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Audit of government grants
• Trace all government grants received during the period. Find
out from the sanctioning letter on what condition and for what
purposes each grant has been received.
• Confirm that the conditions on which the grants were made
have been duly fulfilled and that no money had been diverted
from any such grant to a purpose other than that for which it
was meant. Ascertain whether a portion of such fund is lying
unspent for a long time.
Audit of receipts
[Note: Receipts of the University consist of the following:
• Govt. grant.
• Private donation.
• Fees and fines from students.
• Sale proceeds of publication, forms etc.]
• Rents from University owned shops etc.
In dealing with receipts, the following points should be seen.
• That credits are traced in the cash book for all amounts
realised and promptly entered into relevant register.
• That the demands are punctually and fully realised.
• That the collections are promptly deposited into Banks in the
appropriate account.
• That the amounts paid are correctly entered in the relevant
register.
Audit of salary bills
The Auditors should see
• That the appointment and scales of pay have been sanctioned
by the competent authority and pay in excess of what is
admissible under ordinary rules is not drawn without the
concurrence of the Ministry of Education and Ministry of
Finance.
• That there is provision in the budget that the bills have been
properly signed, and countersigned, that the amounts of the
bills have been disbursed to the right person.
• That the calculations on account of provident fund, house rent
and other deductions have been correctly arrived at and
deducted from pay.

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• That the increments drawn are due and leave has been
sanctioned by the competent authority, that it is admissible
and has not been exceeded without the sanction of the
• That the bill clearly indicates whether the incumbent of the
post is permanent, temporary or officiating.
Audit of expenditure
In dealing with the payment vouchers the following points should
be observed:
• that the payment is admissible,
• that the payment is covered by requisite sanction,
• that the sanctioning authority possesses necessary powers to
grant sanction,
• that there is provision in the budget to meet the charges and
• that every payment is supported by a voucher in proper form.
Audit of civil works
[For guidance consult checklists of audit of works expenditure
contained in Chapter 4 General Audit Procedure]
Review of activities of the university
• See whether effective mechanism exists within the entity to
control, monitor and prevent unauthorised absence of teachers
gone abroad on study leave. Find out how many teachers are
on such unauthorised leave and what punitive action had been
taken against such teachers.
• Find out whether there is clearly laid down rules regulating
consultancy and other advisory assignments undertaken by the
teaching staff. See how many teachers have been engaged in
such secondary assignment and terms and condition attached
to such assignments. Verify whether these conditions are
being complied with.
• See whether effective mechanism have been developed by the
university in preventing session-jam and unnecessary delay in
conducting and publishing results of various examination. List
some of the measures undertaken by the university in this
regard.

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• See whether effective mechanism exists to evaluate annually
the performance of teaching staff and if so what action the
university undertakes if the performance of an individual
teacher is found to be not up to desired standard.
Conclusion

transactions relating to the activities of the University are satisfactory, various
control are in place and overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
The University Grants Commission

Introduction
33. The University Grants Commission is an autonomous body created in 1973 by the
Government through an Ordinance. The main purposes for which the Commission
has been set up are:
• To assess the needs in the field of University education and formulate plans for
the development of such education.
• To determine the financial needs of the Universities.
• To allocate and disburse grants received from Government to the Universities
for different purposes including development and maintenance.
Key risks
• the grants disbursed by the Commission to different Universities are not used
for the sanctioned purpose,
• a substantial amount of government grant received by the Commission, remain
unutilised and kept in the commercial banks. The principal and interest
generated from such funds are not refunded to government account or adjusted
against allocation of subsequent years,
• the unspent portions of the loan are not refunded by the recipient University and
no mechanism exists within the Commission to monitor and oversee such
irregularities and
• the accounting records of the entity containing disbursement position of fund to
different Universities may be incomplete, unsatisfactory and not standardised.
35. The main audit objectives are to verify:
• that the accounting records of the entity are complete, timely and prepared in
accordance with government approved rules,
• that the fund placed by the Commission to the different Universities are spent
strictly for the purpose for which they were sanctioned,
• that the recipient Universities provide to the Commission detailed account of the
grants utilised and
• that the unspent balance of the fund are refunded by the Universities after the
close of the financial year.

Local Audit Manual
• Ordinance and order dated February 15, 1973 of the University grants
Commission.
• Papers relating to budget allocation in favour of different Universities.
• Papers relating to monitoring of implementation of projects/programmes
undertaken by different Universities.
• Minutes of the meetings of the Board of Directors of UGC.
• Cash book.
• Imprest account registers.
• Log books.
Audit programme
The papers relating to the assessment of needs of individual University and

mechanism for disbursement of fund, follow up and reporting procedure of the
recipient Universities need to be checked carefully.

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Audit Programme

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General instruction to auditors:
• The audit programme given below cover some of the basic
matters which auditors should see while conducting audit of
the Commission.
These instructions represent the minimum that is necessary for
an effective audit. The true value of an audit will be found in
the personal zeal and the interest of the auditor in his work
and in the application of his own knowledge and experience to
the constantly changing facts presented before him. Since the
auditor has access to basic facts and to the person who deal
with them, he is in a better position to get at realities.
• Develop a clear idea about the entity, the possible risk areas
and the objectives of the assigned task, and on the basis of
assessment of the situation, prevalent in the entity, prepare,
assignment.
[NB: For example while auditing the accounts of UGC,
auditors should devote more time and attention in assessing
the performance aspect of the entity. They should examine the
Ordinance and Order of 1973, see the purpose for which it
was set up and evaluate their performances in the light of the
assigned responsibilities:]
• See the sanctioned budget of the entity for the period under
audit and examine that all expenditures had been kept within
the allocated budget.
• In the event, over expenditure had taken place under one head,
investigate where the additional funds over and above the
budget allocation were derived from and in case it was
through re-appropriation, see whether sanction from
appropriate authority was obtained for the purpose.
whether there is unusual expenditure at the fag end of the
financial year and verify whether all such expenditure were
actually necessary or had been incurred to prevent the lapse of
budget allotment

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Cash book
• See that the cash book is written clearly.
• Ensure that cash book is in proper form, entries are classified
correctly and the postings, totals balance are arithmetically
correct.
by month until they are cashed.
supporting vouchers whether payments have been made to the
right person and that it has been so acknowledged and
recorded.
• See that the cheque books are kept under safe custody of the
drawing officer.
• See that the amount of each cheque is written in words as well
as in figures on the counterfoil and that the counterfoil is
initialed by the person authorised to sign the cheque.
• See that the cheques are drawn in favour of ultimate payees
encashment.
• Audit of Payroll.
• Audit of GP Fund.
• Audit of TA Bill.
• Audit of Expenditure.
• Operation of Bank Account
General Audit Procedure of this Manual]
Review of activities of UGC
• See whether the UGC has developed a mechanism through
which the entity could evaluate annually the performance and
assess the financial needs and requirements of each university
funded by the Commission.
• If no such mechanism exists, what is the criterion through
which the Commission could objectively assess the needs of
each University.

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• Verify whether the Commission, while disbursing the grant to
an University, stipulates in clear terms conditions to be
fulfilled for utilising the grant money and the manner of
reports/accounts to be sent to the Commission.
• Verify whether the conditions set forth in the sanction letter
have been fulfilled by the recipient University and if not what
action has been taken against that University.
• Verify whether funds disbursed to an University have been
spent specifically for the purpose it was granted.
• Verify whether the amount of interest earned out of grants
fund kept in commercial banks, had been reported to the
relevant authority and adjusted out of allocation of subsequent
grants.
• Check whether the portion of the fund not ultimately required
for grant objectives, has been surrendered.
• Check whether all expenditures related to the grant is properly
and timely reported to the Commission including
accounts/audited accounts as is required under the normal
grant condition.
• Also check the adequacy of the reporting system and verify
Conclusion

transactions with regard to the activities of the University Grants Commission are
satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Port Authorities
Introduction
38. Port Authorities have been created to regulate the affairs of the sea ports concerned
with such activities, namely, conservancy and pilotage, landing and shipping of
cargo, management of the jetty berths, mooring, lighterage points, warehousing,
handling of goods for railborne traffic etc. It is also responsible for managing,
maintaining, improving and developing the ports, providing and maintaining
adequate and efficient port services and facilities in the port and the approaches to
the port and regulating movement of vessels and navigation within the port. The
impressive array of complex activities, the Authorities are entrusted with, calls for
the highest standard of sustained efficiency on their part to be able to live up to the
international standard.
39. Chittagong Port was transformed from a Trust to an Authority by an Ordinance in

1976. Chalna Anchorage created in 1950 was established as Mongla Port Authority
through an Ordinance, in 1976.
40. All the services rendered by the Authorities are fully paid services and therefore,
their revenue earning is large. The accounts are kept on a commercial system from a
Revenue Account and a Balance Sheet.
41. The Local Audit is, therefore, required to attain sufficient proficiency and
appropriate skill to cope with the audit of transactions arising out of such complex
operations. The Local Audit is also called upon to evaluate and comment on the
overall performance towards securing efficiency, effectiveness and economy in
managing the affairs and resources of the Authorities.
42. Presently, concurrent audit parties are permanently based in the Authority offices to
look into all of their financial transactions throughout the year. In the event, the
present system is discontinued and usual audit parties are engaged for a limited
period of time, the volume, quantum and areas of audit checks have to be regulated
and decided upon accordingly.
Key risks
• no proper budgetary control over income and expenditure both at estimating and
spending levels,
• weak internal control resulting in miscalculations and evasion of port charges
and duties,

Local Audit Manual
• inappropriate distribution of work of levy of charges, accounts and payment

functions,
• records, registers and accounts may not be maintained properly leading to
incorrect accounts and misappropriation of funds,
• lack of attention towards realisation of revenues,
• inadequate store management resulting in loss to the Authority,
• inadequate security system for cash, cheques, stores and other properties.
• authority’s funds may not be profitably invested,
• inappropriate dredging programme and arrangement to maintain adequate draft
along side berth and the main shipping channel,
• shipping laws may not be applied properly to realise port revenues and
• management lapses leading to serious adverse impact on the country's
international trade and economy.
Key audit objective
• verify that all financial transactions conform to rules and regulations, correctly
classified and reflected in the accounts,
• examine that appropriate and reliable controls are in place at operational,
sanctioning, spending and management of receipts, assessment, collection and
accounting,
• check that fees, charges and duties are assessed correctly as per rules and
amount due are collected in time and deposited to Bank,
• verify that all amounts due are collected and brought to account,
• check that grant/loan money was utilised for the purpose for which those were
obtained and
• verify that management performance in securing efficiency, effectiveness and
economy is evaluated properly by the controlling authorities.

• All grants sanction letters received from the Government.
• Annual budget.
• All annual/periodical statements of accounts.
• All papers relating to big purchases during the year.
• All papers relating to award of contract for works/job.

Local Audit Manual
• Contractor’s personal account register.

• All final bills for purchase/works/jobs.
• Proceedings of the Authority’s meetings.
• Cash book.
• Papers and registers of investment of fund.
• List of Bank accounts and cheque books.
• Agreements of loans and grants and registers of accounts.
• Ship manifest and related registers.
• Port disbursement register.
• Register of assets and stores.
• Register of lease/auction of land and ferry ghats.
• Register of motor/tug boats & water transports.
• Log book of vehicles.
• Register of fuel consumption.
• Approved rates for different services.
• Register of buildings & sheds.
• File/register of litigations.
• Register of wages of casual/muster roll workers.
• Register of demand for fees & charges.
• Workshop accounts.
• Dredging register.
Audit programme
All big cases of purchase, work/job contract, lease/auction during the year need to
be checked and others on the basis of sample sizes to be determined depending on
risk area, nature and importance of transaction and audit resources available.
(The above may be followed in case of normal audit carried out by audit
party/parties for limited period of time)
47. All important cases need to be scrutinised in case audit parties are permanently
posted to the Authorities for carrying out concurrent audit. Manifests of import and
export should be examined for a limited number of vessels. At least 1 for each way
every month.

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Audit Programme
Port Authorities

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Budget control
• Examine budget allocations and expenditures along with head
wise allocations and expenditures and comment, in the case of
wide variation.
• In the case of wide variation in budget allocation and actual,
examine whether the estimate was prepared taking into
account all necessary information.
• In case of overspending check whether it was covered by re-
appropriation and regularised by the competent authority.
• In case of savings in the budget allocation, check whether it
was reported to the proper authority in time for re-
appropriation etc., if necessary.
• Check the position of collection vis-à-vis revenue estimate. In
the case of wide variation, scrutinise reason and comment.
• Also check if there is a system of regular periodical review of
collection of revenues and corrective actions in the case of big
shortfall.
and acted upon accordingly.
• Check that the grants/loans obtained have been spent for the
purpose for which those were sanctioned. Also comment as to
how the unspent balance, if any, was disposed of.
Audit of accounts
• Verify whether there is proper distribution of duties among
the staff members clearly demarcating accounting
responsibilities from payment functions.
• Verify whether appropriate cash/bond security was obtained
from the staff members handling cash etc., as stipulated under
the rules.
• Verify whether the accounts of the Authority are maintained
in the manner and form as laid down and approved by the
appropriate authority.

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of receipts and payments are entered in details, closed
regularly and certificate recorded in the body of the book by
the examining officer at the end of every month.
• Check whether the monthly accounts statements of receipt and
payments agree with those of the cash book.
• Check if cash book balances agree with those in the bank
statement.
• Verify if the office has been doing reconciliation of the
cheque account with the bank account and necessary steps
taken accordingly.
• Verify whether loan/aid information are there in the
appropriate ledger and transactions have properly been
accounted for.
• Check the Balance Sheet and see whether it gives a true
picture of the financial position of the Authority. Every item
in the balance sheet needs to be checked fully to ascertain that
each balance item is correct and has proper authority.
Comment on the financial standing of the Authority on the
basis of assessment of the Balance Sheet.
• Check the profit and loss account and see that the items of
income and expenditure have been recorded correctly and
comment on the profitability or otherwise of the Authority.
• Verify that depreciation for Authority's huge fixtures,
machineries and equipment have correctly been calculated as
per the approved principle of the Authority, shown in the
profit and loss account and necessary provision made in the
appropriate fund and recorded in the relevant stock register.
• For audit certificate in ‘Port and Pilotage Fund’ examine the
accounts and the Balance Sheet along with deeds, vouchers
and other documents related with it. Similarly examine the
cash in hand and the cheques in course of collection, the
suspense account balance and respective subsidiary accounts,
bank balances and the outstanding bills at hand.
• The Securities representing the investment with the Banker's
safe custody receipts and certificates should also be checked.

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• Examine the accounts of the CP Fund of the Authority and
verify collection of subscribers contributions, balance,
transactions etc. to ensure their correctness.
• Check demands payable and bill recoverable accounts to
ensure that the balances are correct.
• Examine that advances have been properly sanctioned, the
outstanding at the end of the year analysed and that
adjustment/ recovery has in no case been unnecessarily
delayed.
servicing, verify that necessary entries are made in the
book/register and reflected in the accounts.
Audit of expenditure (General)
• Verify whether expenditures have been incurred with
reference to sanctions from competent authority as per
delegation of financial powers and allotment of fund.
• Check whether debt servicing instalments (both interest and
capital) are according to approved schedule and conditions
regulating such loan.
Audit of job award and works expenditure
the Manual.
• In the case of lease/auction, check whether all the process for
award of contract was duly observed.
• Check that security money has in all cases been realised from
the contractors, deposited to bank, properly accounted for and
not refunded before satisfactory completion of the work as per
terms of agreement.
• Check contractors final bills to confirm admissibility,
calculation and arithmetical accuracy.
• Verify whether necessary VAT and income tax has been
deducted from contractor’s bills as per rules in force and
deposited to treasury. Check samples of chalans in support of
the deposit under proper head of account.
Audit of payroll and TA
• Apply appropriate checks from the audit of payroll and audit
of TA at Chapter 4 of the Manual
• Verify whether service books are available for all members of
the staff and that all service particulars are recorded there.
Also see that the particulars have been verified by the

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Audit of loans and advances
• Apply audit of loans and advances programme at Chapter 4 of
the Manual for loans and advances taken by the employees
from all sources including provident fund.
Audit of hospital & education institution
• Test check the allocations and expenditure to be satisfied that
the accounts are in order and expenditures incurred conform to
rules governing them.
Audit of bank account
Manual. Also verify that Authority's funds have been kept in
the nationalised and private banks as per percentage fixed by
the Government.
Audit of purchase and procurement
• Apply appropriate checks of audit programme at Chapter 4 of
the Manual.
Audit of stocks, stores and other assets
• Apply appropriate steps of audit of assets programme at
Chapter 4 of the Manual.
Audit of workshop accounts
• Check the manufacturing accounts with reference to estimate
of cost sanctioned by the appropriate authority.
• Check the work order book to see brief accounts of all jobs,
that all jobs have been properly entered and the dates of
completion and total cost of completed jobs are noted.
• Check job cards at random to see that for every job there is a
sanction for all charges. Also see that demands have been
raised against the ordering unit for final book adjustment in the
Accounts Department.
• Verify whether costing of jobs have been properly done. Check
a few cases to ensure this.
• Verify and comment if the management cost exceeded the
annual production in the workshop.
• Stock account of raw materials held by the workshop should be
scrutinised and balances examined.
• Check whether results of the manufacturing account has been
properly reflected in the profit and loss account.
budgeting, accounting, monitoring and reporting of receipts in
the Authority. Comment, in case this is not in order.

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• Verify whether adequate and appropriate information is
available to make reasonable assessment of receipt estimate.
• Review whether the estimates have been made on the basis of
available information and keeping in view all items for and
through which receipts are generated.
• Examine the position relating to outstanding/arrears, current
adequate efforts have been made to realise all revenues during
the year.
• Generally review whether different items have been assessed
according to law and check a sample of assessment
calculations to verify its authenticity and arithmetical
accuracy.
appropriate register and cash book, properly accounted and
promptly deposited to bank.
• In the case of cash receipts, check receipt books to see that the
leaves are serially numbered, issued sequentially, details
noted in the counterfoils and kept under proper security.
Audit of receipt for rent/service
• Check whether lease-money/rent of port land, rent of
buildings let out to others has been realised, accounted for and
deposited into bank promptly.
• Verify whether rent of godowns, port premises, wharf charges
etc., have been realised properly.
• Also check whether water charges, electricity charges and
other dues have been realised from the users of port houses
and other facilities.
Audit of ships manifests
Import
• Manifests of import vessels should be checked by selecting at
least 12 ships (1 for each month) during the year. The berthing
register, bills of lading in the jetty Superintendent's office
need to be checked.
• Entries in a number of manifests should be test audited for
few details like chalans, delivery order, cart ticket, gate passes
and rent bills.

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• Check whether port disbursement/port dues have been
properly assessed and realised.
• A complete check of chalans, both cash and deposit of all fees
and other charges relating to the vessels selected for audit
should be exercised.
Export
• Manifests of export vessels may be examined in the same
manner as in the case of import vessels. The agent’s manifests
should also be checked with the dock manifests.
Payment and receipt to and from railway
• Check payment and receipt statement of accounts and test
check items for authenticity and arithmetical accuracy.
Audit of investment
• Check whether different funds under the Authority have been
properly and profitably invested.
• Verify relevant document in support of the investment. Also
check Banker's safe custody receipt in support of holding of
the securities.
Port authority laws
• Are the laws adequate to secure the interest of the Authority?
proper control of the port and against the delinquent ships.
• Verify the register of litigations to see that these are
effectively pursued and none fell-through by default.
Programme
• Ascertain the status of GoB financed programme/project to
see physical progress vis-à-vis financial expenditure under the
overall time frame. Comment in case of significant variation.
which the project was implemented has been achieved.
General
• Verify expenditure relating to use of Authority's transport
(both land & water), operation and maintenance cost to ensure
appropriateness and admissibility and fund allotment and also
to see that these conform to financial rules and discipline.
Also check use of telephone in the same manner.

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• Check that the Authority has been making regular payment of
utility service bills (rent, rates, taxes, electricity, gas, water
etc.) both for the office and residence as recovered from the
officials, if any.
• Ascertain whether the various transport and office equipment
in use are within the sanctioned limit of the government.
• If there has been payment of substantial amount of money on
overtime work, ascertain and comment with relation to actual
nature/volume/urgency of work beyond duty hours in terms of
admissibility.
• Review the status of previous audit and comment if there is
significant outstanding.
• Verify whether all reports and returns, free from error, are
regularly sent to appropriate authorities.
Assessment of overall performance
• Assess the status of maintenance and preparedness of port
operation equipment and training of the personnel handling
these equipment. Also find out if adequate number of trained
personnel are available for dealing with emergencies.
Comment, if state of affairs is not upto desired level.
• Generally review and comment about the upkeep, repair,
maintenance and modernisation of facilities of the Authority
to deal with the international maritime transport of the present
time.
• Judging from the magnitude of theft/pilferage of goods and
equipment, review the effectiveness of the security
deployment and arrangement in the port premises.
• Assess the programme of the Authority to maintain
navigability of the port channel and draft along side berth and
see whether adequate work is being carried out regularly
towards this end.
• Find out as to for how many days, port operations remained
closed and for what reason, along with approximate loss
caused to the port. Analyse findings and comment if things
could not be improved and were beyond human control.
• Review and assess the working environment, relationship
between the management and workers from the point of view
of effective human relations on the part of the Authority.
the Authority with relation to its achievement and fulfilment

Local Audit Manual
Conclusion

Authority's accounts have been maintained as per approved system, the financial
transactions have been made in accordance with the rules governing them and
presented fairly in the accounts and overall management of the affairs of the
Authority is satisfactory. I have also examined the accounts and balance sheets of
the Authority and other books of accounts. To the best of my knowledge and
ability, I certify that subject to the comments in the audit report, the accounts are
free of material error and correct.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Bangladesh Inland Water Transport Authority (BIWTA)

Introduction
48. In the context of Bangladesh being a riverine country and that the bulk of goods and
a big portion of passengers being transported throughout the country through the
inland waterways, the Inland Water Transport Authority came into being through an
Ordinance (EPIWTA Ordinance 1958 and amended as BIWTA Ordinance 1977).
The Authority is entrusted with the responsibilities like carrying out river
conservancy and river training with provision for aid to navigation, dissemination
of navigational and meteorological information, maintenance of pilotage service,
dredging of rivers to maintain existing navigable waterways, development and
maintenance of river ports, passenger services, fixation of passenger and goods
carrying rates and controlling mechanised water traffic, coordination of Inland
water Transport with other forms of water transport etc. All these involve diverse
and complex operations mainly like mechanical and civil engineering, hydrology,
dredging, naval engineering and architecture, river morphology etc.
49. Although primarily a service providing organization, the Authority in the process of
its operations also earn some revenue in the form of fees and charges.
50. In view of this, the Local Audit has manifold responsibility of looking into the
financial operations, maintenance of accounts, forecasting and control of revenue
expenditure, receipt, collection of revenue along with implementation of
programmes and overall management of the affairs of the Authority.
Key risks
• no proper budgetary control and supervision exist over income and expenditure,
• weak internal control leading to compromising accounts and payments
functions,
• records, books and accounts not maintained properly leading to generation of
incorrect accounts and misappropriation of funds,
• inadequate security system for cash, cheques and stores,
• inadequate collection of revenue,
• appropriate time schedule and fare rates for passenger traffic not maintained,
• inadequate system to apply traffic rules to ensure safety of the passengers,
• appropriate programme for dredging to maintain navigability of the rivers are
not maintained and
• management lapses leading to serious consequence on the inland water transport
system.

Local Audit Manual
• examine that all transactions are as per rules, correctly classified and reflected in
the accounts,
• check that reliable controls are in place both at sanctioning and spending levels,
• verify that regularity and financial discipline are in place in all the financial
transactions,
• check that grant/loan money was utilised for the purpose for which those were
obtained and,
• evaluate that adequate programme and system is in place to maintain
navigability of the ways and to ensure welfare and safely of the riverine goods
and passengers.
53. The following records should be requested for audit review

• All grants sanction letters received from the Govt.
• Annual budget.
• All annual statements of accounts.
• All papers relating to big purchase during the year.
• All papers relating to award of contract for works/jobs.
• Internal audit reports.
• Cash books.
• Bank accounts statements reconciliation statements and cheque books.
• Agreements of loans and the relevant register.
• Register of assets and stores.
• List of Inland Ports.
• Register of lease/auction of ghats/ferry ghats.
• Register of survey of mechanized water transports (all categories).
• Time table for passenger services.
• Approved rates for different services.
• River chart, hydrography survey, programmes for dredging and dredging
register.
• File/register relating to litigations.
• Proceedings of the Board meetings.
• Minutes of the Advisory Committee meetings.
• TO&E

Local Audit Manual
Audit programme
All big cases of work/job contract, lease/auction during the year need to be checked
and others on the basis of sample sizes to be determined depending on nature and
importance of transactions.

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Budget control
• Examine budget allocations and expenditure along with head
wise allocation and expenditure.
appropriation or regularized by competent authority.
• In case of savings, check whether this was reported to the
higher authority in time.
• Check the position of revenue collection vis-à-vis receipt
estimates. In case of significant variation, comment.
receipt position and corrective action, if necessary.
• Verify whether adequate provision for debt servicing was
made in the budget, if necessary, and acted upon accordingly.
Audit of accounts
in the manner and form as approved by the Government and
• Verify whether appropriate cash/bond securities were
obtained from the staff members handling cash etc. as
stipulated under the rules.
• Examine whether there is adequate security of cheque books
• Check if cash book balance agrees with that of bank balance
as per statement.

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• Verify if the office has been doing reconciliation of cheques
with the bank account and necessary steps taken accordingly.
• Verify if expenditures have been incurred with reference to
sanctions from competent authority as per delegation of
financial powers and allotment of fund.
of receipts and expenditures are entered in details closed
regularly and certificate recorded at the end of every month by
the examining officer.
• Check whether the monthly accounts statement of receipt and
payment agree with those of the cash book.
• Verify if the cash receipt book leaves are serially numbered,
issued sequentially, details recorded in the counterfoils and
kept under proper security.
• Check if advances allowed for specific work have been
adjusted promptly, as soon as the work is over and do not
remain outstanding for undue long time.
• Verify whether details of Loan Agreement informations have
been recorded in the ledger and amount received as per
contract.
• Check at random a few cases of TA bills for admissibility and
arithmetical accuracy.
• Check whether total debt servicing during the year is covered
by appropriate budget provision for the year.
• Check whether debt service installments are according to
approved schedule and conditions regulating such loan.
• Verify whether a loan is finally closed after complete debt
servicing and entries made accordingly in the book/register
where the loan account is maintained.
the Manual.
• In the case of auction, check that all the process for award of
contract was duly observed.

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• Check that security money has in all cases been realised form
not refunded before satisfactory completion of the work or as
per terms of the contract.
• Check contractor's final bills (big ones) to see for correct
• Check whether necessary VAT and income tax was deducted
from contractor's bills as per rules in force and deposited to
treasury. Check sample of chalans in support of the deposit.
Audit of payroll
• Apply appropriate checks from the audit of payroll
• Verify whether Service Books are available for all the
recorded there.
• Check if the loans and advances given to the officials are
strictly in accordance with the rules governing such loans and
advances.
• Also check that recoveries are effected as per conditions of
such loans and advances and accounted for properly.
• Apply audit of Bank Account programme at Chapter 4 of the
the banks as per ratio decided by the Government.
the Manual.
Audit of stocks & stores
• Apply appropriate steps of audit of Assets programme at
• Check the manufacture accounts with reference to estimate of
cost sanctioned by the appropriate authority.
sanction for all charges. Also see whether demands have been
raised against the ordering unit for final book adjustment in
the Accounts Department.
annual production cost in the workshop.

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• Check the profit and loss account and comment thereon, if
necessary.
the office. Comment if necessary.
statistics/information are available to make reasonable
• Review whether the estimate has been made properly with
relation to all the items for and through which income is
generated on the basis of available information (approval of
transport design, lease of port and ghat, terminal charges,
pilotage service fees for coastal vessels, salvage charges,
berthing charges, survey of vessel fees and charges for earth
filling by dredging etc.)
year.
• Generally review whether the different items of revenue have
been assessed according to law and check a sample of
assessment calculations to verify its authenticity and
relevant register and the cash book and promptly deposited to
bank.
• In case of cash receipt, check receipt book and bank deposit
slip in support of deposit into bank.
• Review the appropriateness and position of collection of rent
of the Authority’s buildings/premises. Comment, if necessary.
Implementation of BIWTA laws
• Are the laws adequate to secure the objectives of the
Authority? If not, comment.

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proper control of inland water transport.
• Generally check the file/register relating to litigations arising
out of implementation of BIWTA laws to see that these are
pursued properly and none fell-though by default.
Programme
implemented and status of work to see physical progress vis-
à-vis financial expenditure under the overall time frame. In
case of significant variation, comment.
• Ascertain whether the Authority is applying laws and rules
and carry out adequate supervision to ensure safety of the
passengers.
• Check the programme and arrangement for dredging of the
rivers to maintain navigability of the waterways.
• Review the passenger traffic time table and fare rates and
bring out if there is something significant to mention.
• Check whether the Authority has adequate programme to
develop and maintain river ports for the welfare of the
passengers.
General
• Verify expenditure relating to surface/water transport (for
official use) operation and maintenance to ensure
to see whether these conform to the rules and instructions.
utility service bills (rent, rates, taxes electricity, gas, water
etc.) both for the office and recovered from the officials, if
any.
available are within the list sanctioned by the Government.
• If there is substantial payment of money on overtime work,
ascertain and comment with relation to actual nature
/volume/urgency of work beyond office hours and their
admissibility.

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• Assess the status of maintenance and preparedness of salvage
and other related equipment absolutely necessary for
emergency and to secure the navigability of the waterways.
Also find out if adequate number of trained personnel are
available for the purpose. Comment, if state of affairs is not
upto desired level.
• Review the overall performance of the Authority with relation
to achievement and fulfillment of programme and assigned
responsibilities during the year.
• Review the adequacy or otherwise the position of upkeep,
repair and maintenance of the BIWTA vessels, building and
other premises.
• Review the status of previous audit report and comment in
case of significant outstanding.
• Also find out if the internal audit is rendering useful service in
pointing out important issues for management improvement.
Conclusion

Authority accounts have been maintained as prescribed by the Government, the
and presented fairly in the accounts, and overall management of the affairs of the
Authority is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Agricultural Research Institutes

Introduction
55. In order to achieve self sufficiency in food grain, Government of Bangladesh has
embarked on a massive programme for boosting food production in the country.
56. A number of Research Institutes have been set up under the administrative control
of the Ministry of Agriculture to conduct research in the field of agriculture. The
most important institutes under this category are:
• Bangladesh Agricultural Research Institute.

• Bangladesh Rice Research Institute.
• Bangladesh Jute Research Institute.
• Bangladesh Sugarcane Research Institute.
57. Each of these Institutes is an autonomous body created by an Act/Ordinance. They

receive a substantial sum of fund from Government as development support grant.
58. Since the objectives, activities and mode of operation of these institutes are more or
less identical, these entities have been lumped into one group for audit purpose.
Key risks
• inadequate budgetary control over income and expenditure,

• maintenance of faulty accounts leading to the generation of inaccurate financial
position,
• grants received from government are not used for authorised purpose,
• government funds sanctioned to the entity for payment of compensation money
for acquisition of private land remain unpaid for a considerable period of time,
• funds allocated for carrying out research work are sometimes diverted to some
other purpose without the approval of competent authority,
• there may be too many muster roll employees and financial benefits given to
these employees are not covered by existing govt. rules,
• in the event of purchase/procurement, laid down procedures are not being
adhered to,
• in awarding contract for civil works, proper tender procedure is not being
followed and
• poor quality of civil works due to lack of supervision and control.

Local Audit Manual
Key audit objective
• check whether the entity is performing the assigned task efficiently and
effectively and as per predetermined target,
• verify whether the grants received from government are used strictly for the
purpose for which the grants had been sanctioned,
• examine whether the accounting statements are complete, timely, accurate and
prepared in accordance with acceptable accounting rules and
• confirm whether proper supervision and quality control are in place with regard
to various civil works undertaken by the entity.
• Cash book.
• Bank statement and bank reconciliation statement.
• Copies of Ordinance/Act.
• Minutes of the meeting of Board of Directors/Board of Governors.
• Register of buildings/dormitories within the office premises.
• Annual work plan.
• Revolving fund register.
• Log book.
• TA bills register.
• Establishment register.
• Service books.
• Production register.
• List of distribution centers.
• List of research centers and substations.
• List of significant development/output.
Audit programme

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General Instruction
• Develop a clear idea about the entity and the objectives of the
assigned task and on the basis of assessment of the situation
prevalent in the entity, prepare plan and prioritise the audit
programme keeping in view the importance, relevance and
[NB: For example, while auditing the accounts of Rice
Research Institute, auditors should particularly see the
performance aspect of the entity. In the case of Rice Research
Institute they should, for example, examine the total number
of high yielding variety seeds developed during the year under
audit, compared to the number produced last year. In case of
no achievement, the reasons thereof should be evaluated.
Audit of Government grants
covered by audit. See that no item is left out. Find out from
the sanctioning letter on what condition and for what purpose
each grant has been received.
• In scrutinizing the accounts of government grants for specific
purposes, it should be seen if the conditions on which the
grants were made have been duly fulfilled and that no money
has been diverted from any such grant to a purpose other than
that for which it was meant. See that no grant money is lying
unspent for a long time. In the case of work completed out of
government grants, see whether the unspent balance has been
surrendered to Government.
Budgetary control
Cash book
[For guidance see relevant checklists of the Directorate in Chapter
5, Audit of Government Offices of the Manual.
Audit of Payroll

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Audit of GP Fund
Audit of TA Bills
Audit of Receipts
Audit of Purchase/Procurement
[For guidance see the appropriate checklists contained in Chapter
4 General Audit Procedure of the manual.
Review of activities of the institute under audit
• See the annual report of the entity and also go through the
minutes of the meetings of Board of Directorates held from
time to time during the period of audit. Valuable hints may
sometimes be obtained from them as to points which require
special attention during the audit.
• Scrutinise the financial position of the entity very carefully
and if there is heavy liabilities, give a list of them in the report
commenting on the proposal of the entity if there is any, as to
how liabilities will be cleared.
• See whether funds allocated by government representing
compensation money for acquisition of private land are lying
idle in the commercial banks and if so verify the reasons for
non-payment.
• Verify whether funds allocated by government for
undertaking a particular research works had been used
specifically for that purpose. In case of deviation, ascertain
reasons.
• Find out the total number of distribution centres set up by the
Institute for marketing its products and verify whether:
- pricing of the products has been based on justifiable
grounds,
- pricing has been approved by the component authority,
- all sale proceeds are being realized promptly and deposited
into relevant accounts,
- also examine the estimated receipts as recorded in the
budget of the entity and actual receipts. In case of
substantial shortfall, find out the reasons and comment,

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• Find out the total number of project areas for demonstration of
new varieties of product, developed by the Institute and
arrangement of training of farmer for cultivation of these
varieties. Comment whether the institute is carrying out their
assigned job efficiently and effectively.
• Examine the position of utilisation of farm land. Also check if
land acquired for certain purpose is lying idle for a
considerable period of time. Comment, if necessary.
Conclusion

activities of the entity is presented fairly, various control system are in place and
overall management system is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Sports and Cultural Bodies

Introduction
63. Sports and Cultural Bodies have been established both as Government Offices and
Autonomous Bodies for promoting art, culture, literature, sports and games in the
country. Shilpakala Academy, Bangla Academy, Shishu Academy etc. have been
established as autonomous bodies to promote mainly performing side of art
literature & culture. National Library and Directorate of Archeology are there as
Government offices to enhance learning and to preserve and create awareness of the
national heritage. Similarly the Directorate of Sports as a Government office, the
National Sports Control Board as a national level body and BKSP as a sports
education institution in the autonomous sector exist to support, promote and
improve overall activities related to sports and games in the country.
64. All the above mentioned organisations focus on performance aspect of the sector
they deal with. Besides checking the regulatory and compliance aspect of the
accounts and financial transactions, the main focus of Local Audit would, therefore,
be programme oriented audit to bring out as to how far these organisations have
been able to perform in achieving the responsibilities entrusted to them.
Key risks
• there may be weak internal control towards proper coordination of work,

• there may not be properly defined job descriptions for all personnel,
• there may not be perspective, strategic and annual planning towards realisation
of objectives,
• there may not be proper criteria for allocation of money to various subordinate
bodies,
• funds are not properly utilised and
• there may be management lapses leading to serious impact on the accounts and
realisation of the objectives.
Key audit objective
• examine whether appropriate and reliable controls are in place to coordinate the
activities of the organisation,
• verify whether the organisation carry out regular survey for search of potential
talent and ideas for improvement,
• check whether adequate result oriented output is achieved,

Local Audit Manual
• check whether new ideas and new techniques are introduced for catching with
the modern days and
• verify whether performance in securing efficiency, effectiveness and economy
is assessed adequately in managing the affairs of the organisation towards
achievement of its goal.
• Copies of Ordinance in respect of autonomous bodies and charter of duties of

the Government Office.
• Copies of Board meetings resolutions.
• Organisation chart of the office.
• Job descriptions of the personnel.
• Budget allocation and expenditure showing different units of performance.
• Register of musical instruments/sports goods and all information regarding
books.
• Papers relating to programmes.
• Details of training programmes during the year.
• Activity report of the year.
• Policy criteria for selecting person/persons for representing the country.
• List of archeological sites.
• Accounts and vouchers related to international programmes held in the country.
• All expenditure sanction letters, accounts and vouchers relating to national
teams/delegations' visit abroad.
Audit programme
Papers relating to coordination and monitoring of activity and training need be

checked. Programme implementation papers/reports should also be checked. Papers
relating to selection of person/persons for representing the country and his/their
performance need be evaluated carefully and objectively. All accounts of national
teams visit abroad and international programme organised in the country need also
be checked carefully.

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Audit Programme
Name of office ________________________________ Financial year ____________

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Audit programme in respect of budgetary control, accounts,
expenditure and common service/general, relating to Directorate at
Chapter 5 of the Manual may be followed:
the manual.
• Apply appropriate checks, suitable for the organisation, from
the audit of payroll and TA at Chapter 4 of the manual.
the manual for loans and advances taken by the employees
from all sources of the organisation including provident fund.
manual.
the manual.
Audit of stock, stores & other assets
Chapter 4 of the manual.
Sports control bodies
• Check the criteria/principle followed/approved for distribution
of grant money to different subordinate bodies. Also examine
what check is applied to monitor as to whether the grant money
has been spent for the purpose it is granted.
• Check whether the grant money received from the Government
has been spent for the purpose the money was given.
• Check what training and competition programmes have been
conducted successfully during the year.

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• Verify the selection process of persons to be included in the
national side.
• Verify whether overall performance of a national side is
evaluated and what action taken for every shortcoming
including in-discipline.
• Examine in details the expenditure involved for a national
sides' trip abroad with relation to the rules of the organisation,
conditions set forth in the letter of sanction for expenditure and
canons of financial propriety.
• Verify whether the receipts (gate money, rent of
shops/premises etc.) are properly accounted and promptly
deposited to bank. Also check the money receipt books in this
regard.
• Generally review the programme for development/upkeep of
the playing fields and how this is implemented.
• Examine expenditure incurred for organising international
meet for regularity and propriety.
• Verify the award/contract for electronic media coverage for
international meet (if there is any). Examine in details the
receipts on this account.
• Evaluate the overall performance of the organisation in terms
of achievement during the year and whether the total
expenditure on it has been somewhat fruitful.
National Library
• Check the allocation of fund for purchase of new books and
how the books are selected for procurement. Comment/advise
on the issue, if there is any.
• Check the inventory of books along with the system of
cataloging. If it is electronic/microfiche, check printouts. In
case of manual catalog, check cards at random with requisition
of books. Try to trace out a few cases at random.
• Check security or other system to guard against pilferage, theft,
cutting of pages etc.
• Check as to what action has been taken to retrieve long over
due books loaned to subscribers. Is the system appropriate?
• Check the criteria for renting out premises/auditorium. Are the
criteria followed? Also check the receipt for routine scrutiny.
• Verify the programme of acquisition of new books. Ascertain
its appropriateness or otherwise.

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• Verify also the system of binding/upkeep of old books. Is the
system of preservation effective? Comment, if necessary.
• Check at random the management of the reference books.
• Also check the system of display and preservation of
manuscripts.
Department of Archeology
• Study the organisation chart and check the job description of
the personnel to see whether personnel with appropriate
qualifications are around to take care of our past archeological
heritage.
• Check the register of archeological sites and monuments and
ascertain that the land/site/monument is actually under the
occupation/control of the department and that there is no
encroachment on them.
• Check the programme of excavation/reclamation to verify the
timeliness and expenditure of the work.
• Verify at random whether the upkeep, repair and maintenance
of monuments have been carried out according to provisions of
the Archeological Act and that the pattern of the same has not
been changed.
• Generally review the adequacy or otherwise of the security
arrangement of the sites.
• Also check the inventory, security and receipts of the local
museums. Comment in case of glaring lapses.
National Museum
• Check the organisation chart and job descriptions of the
personnel to see that qualified people are there to take care of
the national treasure of the country.
• Verify whether the money received from the Government has
been spent for the purpose it was granted.
• Check the inventory of the exhibits and see that the most
precious ones are classified properly for security purposes.
• Also check for items missing or broken and action taken.
• Verify whether the auditoriums were let out for appropriate
purposes.
• Check that the gate money, rent of the auditoriums/premises
are properly accounted for and promptly deposited to bank.
Also check the money receipt books and chalans.

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• Assess the adequacy or otherwise of the security
system/arrangement in the museum.
Bangladesh Shilpakala Academy
has been spent for the purpose for which the grant was given.
• Verify the organisation chart, job description and the list of
personnel to see that right persons with appropriate skill, are
managing the departments of fine arts, performing arts etc.
• Check the programme to see as to what sorts of round the year
activities have been carried out to project the cultural heritage
of the country at home and abroad.
• Verify the selection process of personnel for inclusion in the
national delegation to project the country abroad. Is the system
transparent? Comment, if necessary.
• Verify whether overall performance of a national delegation
visiting abroad is evaluated and report of the team manager
considered for remedial measure, if any.
• Examine in details the expenditure incurred for a delegations
trip abroad with in relation to the rules of the Academy,
conditions given in the sanction letter and canons of financial
propriety.
• Examine the system or basis under which the allocation of
grant to different district level branches is made and what
reports and returns are received and how the expenditure and
results are monitored. Comment, if things are not found in
order.
• Examine expenditure incurred for organizing international
shows/exhibitions for regularity and propriety.
Conclusion

accounts have been maintained properly, the financial transactions have been made
in accordance with the rules governing them and overall performance is
satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Chapter 8 –Procedures on Special Situation Audits

Index
Topics Pages
Introduction 8.1
Suspected Irregularity, Fraud or Corruption 8.2
Guidelines from the Audit Code 8.2 - 8.3
Potential Fraud and Irregularities 8.3 - 8.4
Conduct of Special Audit 8.4 - 8.6
Audit of Performance or Value for Money 8.7 – 8.8
Appendix 1 - Possible Areas of Improving Performance 8.9-8.11
Appendix 2 - Examples of Performance Measures 8.12
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Local Audit Manual
Chapter 8 – Procedures on Special Situation Audit
Introduction
1. This Chapter provides guidance on non-routine or "Special" audits. They differ
from the audits in Chapter 5 to 7 in a number of ways:
• the in-depth audit is likely to be a new or one-off review, e.g. possible serious
irregularity;
• the length of time needed is likely to be longer than for a routine audit;
• there may not be previous audit knowledge or experience to draw upon;
• the report is likely to be more elaborate and a major one, in terms of importance.
2. Guidance is given on the following areas:
• suspected irregularity, fraud, corruption.

• audit of Value For Money.

Local Audit Manual
Suspected Irregularity, Fraud or Corruption

3. From time to time, the Auditors will be assigned with “Special Audit” programme.
The Programme includes among others:
• Suspected irregularity;
• Suspected fraud;
• Suspected corruption;
• Investigation of general nature.
4. These audits require a different audit approach from the normal audit programme.
The main differences are:
• The audit is not of a routine nature;

• Allegations made may not necessarily be correct;
• The audit needs more careful handling by auditors;
• Ultimately audit findings could lead to action by higher authorities.
5. The following sections outline a general audit approach in such a situation. The
application of this approach on any particular situation will depend on specific
circumstances and what is reasonable and appropriate on those circumstances.
Guidelines from the Audit Code

6. The audit responsibilities in relation to suspected fraud and irregularity as detailed
in paragraph 26-28 of the Audit Code, can be summarised as follows:
i. The audit should be planned so that there is a reasonable expectation of detecting

material misrepresentation in the Statement of accounts including those that might
result from fraud and irregularities Auditors should identify and pay special
attention to those activities of the audited body exposed to the risk and
irregularities.
ii. In the review of Internal Control, auditors should be alert to the possibility of fraud
and irregularities. The attention of the audited body should be drawn to weaknesses
in internal control identified during audit which facilitate fraud and irregularities.
iii. Indications of fraud and irregularities should be followed up promptly. Auditors

responsibility will be discharged by informing the audited body and recommending
suitable necessary action.
iv. Relevant information circulated by the Comptroller and Auditor General should be
considered.

Local Audit Manual
v. Auditor should pay special attention to the arrangement of the audited body to limit
the possibility of fraud corrupt practices specially in the field or tendering of award,
settlement of claims, canvassing for appointments, disposal of assets etc.
Auditors should see whether audited bodies have taken reasonable steps in order to
limit the possibility of fraud and corrupt practices. It must be ensured that the
audited body:
• adopts & keeps under review standing rules & regulations particularly those
relating to contract for works and supply of goods and services.
• keeps under review and if appropriate, investigates any circumstances in which
particular contractors seem to be preferred or where it is not possible to have
competitive tendering.
• issues appropriate instructions to regulate the handling of contracts.
• issues appropriate standing orders financial regulation or codes of conduct.
• has proper arrangement for receiving and investigating complaints of
corruption.
• ensures that any internal control and internal audit units test compliance with
and effectiveness of, the procedure laid down by management of the audited
body.
Auditors should take note of evidence which may indicate the possibility of corrupt
practice. Where necessary any such evidence should be referred by auditors for
further investigation by the appropriate body.
Potential Fraud and Irregularities

7. Basic frauds, theft, irregularities arise because of a breakdown in systems and
inadequate internal control. Typical basic frauds and irregularities are listed below:
Income
The retention or the misappropriation of cash is the most usual type of fraud.
Examples include the misappropriation of collections, rents and fees, unauthorised
diversion of fund, unauthorised use of collected fees, retention of fund for unusually
long time.

Local Audit Manual
Expenditure
This involves fictitious payments, purchases, and petty cash payments. Frauds and
irregularities occurring in this area arise because of weakness in internal control.
Examples of such frauds and irregularities include, the falsification of vouchers,
fictitious vouchers for the payment of expenses, submission of false invoices,
payment to parties without the approval of the competent authority and payment for
services not actually rendered.
False Wages/Salary Claims
These are a common occurrence in many audited bodies. Examples include over
claimed salary, allowances, travelling bills, overtime bills, payment of pay and
allowances to employees not physically available and payment of claims of
fictitious nature.
Theft of equipment and stores
This involves stealing by employees of office equipment, machineries and spare

parts, surgical equipment and medicines, building materials like cement, steel bars,
petrols, lubricants and other goods.
Conduct of Special audit

8. To fulfil the guidelines in the audit code, the following audit approach should be
carried out:
Before the visit
• The Auditor should prepare, plan the special audit assignments keeping in view
the objectives of the assigned task. It must be ensured that the auditors receive
appropriate direction, guidance so that the task can be properly performed.
Auditors should clearly understand their assigned task before starting the work.
The auditors should obtain all relevant information of the organisation required
to be audited.
• Give notice to the audited body well in advance about the exact date of
commencing audit, the records required to be examined, people need to be
interviewed and other relevant matters.
The audit visit
The Auditors while conducting special audit, on the spot should:
• Conduct initial discussion with the Heads of the audited body;

Local Audit Manual
• Collect all the records needed;

• Review the records;
• Check the facts;
• Collect sufficient evidence to prove the offence;
• Interview relevant people;
• Come to a conclusion;
• Prepare the report.
After the visit
The auditors after completion of the special audit should:
• Report back to the concerned Deputy Director; Director & Director General.
• Deputy Director will then review the special audit report and decide the course
of action to be taken with the approval of the DG.

Local Audit Manual
Local Audit Directorate

General Procedure – Special Investigation
Location _______________________________________ Date __________________
Before the visit Done by Working

paper
1. Draft assignment plan issued.
2. Audit team briefed.
3. Background research obtained and reviewed.
4. Any available data, files, records available centrally,
obtained & reviewed.
5. Final plan issued.
6. The date and location visits to concerned Department/
Organisation notified.
At the Audit Done by Working

paper
1. Meeting with the Head of the office.
2. The purpose of the special audit, documents & papers to
be required intimated.
3. Distribution of work among the audit staff arranged.
4. Supervision and review procedure determined.
5. Audit techniques for the collection of evidence worked
out.
6. Type of working papers and their contents determined.
7. Interviewing relevant people carried out.
8. Audit findings summarised.
9. Final report prepared.
After the visit Done by Working

paper
The Auditor after completion of the special audit
should:
1. Report back to the concerned Deputy Director.

2. Deputy Director to review the special audit report to
determine.
• The quality of the report.
• Whether the objective of the task been fulfilled.
3. Deputy Director to decide next course of action needs to be
taken.

Local Audit Manual
Audit of Performance or Value for Money
Introduction
9. The role of Local Audit in carrying out performance or value for money audits is
substantial. This follows its responsibilities for auditing major areas of Government
expenditure and activity including education and health services. The main
principles for carrying out such audits are contained in the Government Auditing
Standards and the Audit Code.
10. A separate audit manual is being prepared on performance audit. This will give
detailed guidance on how to perform such audits from the initial planning stage
through to reporting. Auditors should therefore refer to that manual for guidance on
those matters. The details in this manual are therefore limited to some specific
guidance to enable auditors in Local Audit to consider performance or VFM issues
routinely at the services audited by them.
11. There are a number of ways that VFM audits could be undertaken:
(i) Major studies – usually carried out by a special team of auditors who may
also be supplemented with specialists from the service or function under
review. Such studies can take at least one year from conception of the study
area through to reporting to Parliament. They will invariably require
considerable discussion with the Public Accounts Committee and audited
bodies e.g. on the final topic selection and scope. These audits will usually
examine the performance of a service or function across a number of entities
or services.
(ii) Special audits – these are more limited in scope and can be undertaken by
audit teams alone, although guidance from specialists can be sought. These
audits take less time to plan, undertake and report. The approach will be to
identify performance and VFM opportunities at individual service units e.g. a
school or a hospital. The results could well be applied more widely if the
findings are significant. Such audits are requested from time to time as a result
of specific concerns raised in Parliament, in the media or by the public.
(iii) Consideration of performance at routine audits – all audit teams should

consider performance issues at all audits and include sufficient time at the
planning stage.
12. For the purposes of this manual, performance audit guidance is limited to special
audits and consideration of performance at routine audits.

Local Audit Manual
13. Improving performance or value for money is deemed to relate to any activity of
Government which could be carried out more efficiently, economically and
effectively. These terms are clearly defined in the Government Auditing Standards
and the Audit Code.
14. The Audit Code stresses that auditors should adopt an integrated approach to their
work. This means that in carrying out their audit fieldwork at local audit auditors
should also consider performance and value for money issues. The checklists
throughout this manual will help to identify potential VFM areas but to a large
extent it also needs the right approach and attitude of the auditor.
15. For special or routine audits, auditors could consider performance/VFM in the
following major areas. Further details of each of these areas is given in Appendix 1.
• procurement
• asset management
• project management
• human resources
• capacity management
• support services
• effectiveness
• quality of service
• performance measures
16. The last item – performance measures – is particularly important to managers and
auditors in the public sector. Auditors should always enquire what measures are
used to monitor performance by the audited body and higher authority and review
them in the way described in Appendix 1. A wide range of such measures has been
developed internationally and some are already in use in Bangladesh. These
measures need to be developed and added to in the coming years. Examples of
some measures for economy, efficiency and effectiveness are given in Appendix 2.
Consideration of performance at routine audits
17. The performance of each auditable unit should be considered on each visit. This can
be done by utilising the guidance contained in the detailed checklists in chapters 4
to 7 as well the additional guidelines in this Chapter. The audit reports should
contain some aspects on performance at all visits. If additional time is needed to
develop a VFM area or a major problem is identified, auditors should report to the
Deputy Director concerned for a decision on how to proceed. It may well be the
case that a special audit needs to be planned and undertaken separately or a major
study considered.

Local Audit Manual
Appendix 1
Possible Areas for Improving Performance

1. Procurement
Improvements could arise through:
• greater competition.
• procuring off-the-shelf rather than specially designed products.
• bulk buying.
• better purchasing and tendering arrangements.
2. Asset management
Assets include land, buildings, equipment, vehicles, stores. VFM could be

considered in the following areas:
• whether the asset is needed.

• what scope exists to rationalise assets and dispose of any surplus to
requirements.
• whether assets disposed of realise the best proceeds obtainable.
• how well assets are utilised.
• whether enough is done to protect assets from theft, damage, waste, fire, misuse.
• whether maintenance of assets is satisfactory.
3. Project management
Managing projects is undertaken across Government and includes major items e.g.
on construction, maintenance of roads and buildings. This is a major risk area in
terms of amounts spent and inherent risks involved. VFM considerations could
include:
• the adequacy of project management arrangements generally, including

monitoring, controlling and recording.
• risk management.
• appropriate contract arrangements.
• managing time, cost, quality and consultants.
• review of project output e.g. time, cost, specification, quality.

Local Audit Manual
4. Human resources
Expenditure on staff is the largest single item of Government expenditure. The

performance of most services and functions depends on how well human resources
are used:
• how well audited bodies are organised to promote efficient human resource
management;
• how efficiently staff are deployed – work loading, shift patterns, measuring
productivity and management of sickness and absenteeism;
• how the need for staff is determined and reviewed and
• adequacy of training arrangements.
5. Capacity management
This is concerned with the extent to which resources are used cost effectively e.g.
• whether there is adequate information and indicators to monitor and assess

usage e.g. of buildings.
• whether there is scope for more efficient use of accommodation and equipment.
6. Support services
These include energy, telephones, postal services. Improvements could come from:
• cheaper procurement.
• improving the usage.
• eliminating waste or inappropriate usage.
• better monitoring and control.
7. Effectiveness
Audit will be concerned with whether Government policy and programmes have
been implemented. Issues could include:
• how the level and type of resources allocated to programmes are determined.
• how resources are used to achieve the objectives of the programme.
• what information or performance measures are used to monitor achievement of
objectives and resources used.
• whether there is evidence to indicate that the programme is achieving objectives
set.
• what the views are of those affected by the programme e.g. hospital patients.

Local Audit Manual
8. Quality of service
In the public sector, quality is often difficult to measure or assess objectively given
the lack of clear performance indicators or measures. Issues of quality could be
considered as follows:
• whether any procedures exist to ensure that quality standards are met.
• how well quality of service is defined.
• whether a service is readily available to all those eligible.
• whether the recipients of a service are satisfied with the quality they have
received.
9. Performance measures
This is a vital aspect for those responsible for services and activities, particularly in
the public sector. There are numerous ways to measure efficiency and economy but
the effectiveness of public services is much more difficult to measure. Sections 7
and 8 above provide some guidelines on effectiveness and some examples are given
in Appendix 2. The role of audit on performance measures could include:
• review of any system for collecting and publishing performance measures.

• review of the reliability and comprehensiveness of performance measures.
• comparison of performance measures over time or with comparable audited
units.
• using performance measures to identify poor performance and recommend
improvements.
• considering what action has been taken to improve performance.

Local Audit Manual
Appendix 2
Examples of Performance Measures

1 Education Service - Schools
Economy & Efficiency Effectiveness
1 Costs per pupil 1 Examination results: e.g.

% pass rates in the
2 Budget cost v. actual secondary and higher secondary examinations.
3 Pupil / teacher ratio 2 Results of inspection of schools: e.g.

quality assessment on teaching standards,
4 Actual Pupil numbers methods and coverage of the national
compared with capacity of curriculum
school
3 Parent/student views e.g. quality assessment
4 Pupil attendance e.g.

% of possible boys attending.
% of possible girls attending.
attendance rates of those registered.
2 Health service - Hospitals
1 Cost per patient day – in 1 Medical Outcomes e.g.

total and by specialism on each major area of treatment
2 Budget v actual cost 2 Waiting Times e.g.

to get hospital admission or
3 Staff/Patient ratios e.g. whilst waiting for treatment
consultants per patient 3 Patient Views e.g.

nurses per patient on medical care, waiting times etc.
4 Actual patient numbers 4 Inspection Results e.g.

compared with capacity of
hospital on the performance of the hospital.
medical audit indicators.
5 Usage rates of key medical
equipment or downtime of
major medical equipment

Local Audit Manual
Chapter 9 – Supervision and Review

Index
Topics Pages
Introduction 9.1
Supervision in preparing for an audit 9.1
Supervision and review during the audit 9.1
Supervision and post audit review 9.2
Inspection and quality control arrangements 9.2 - 9.3
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Local Audit Manual
Chapter 9 – Supervision and Review
Introduction
1. Supervision during the preparation, conduct and closure of an audit is fundamental
to effective audit practice.
2. Supervision should ensure the observance of audit standards and guidelines and the
use of appropriate audit techniques. The abilities and needs of auditors will
necessarily influence the degree of supervision. The Government Auditing
Standards, the Audit Code and this manual provide valuable guidance on
supervision.
Supervision in preparing for an audit

3. The appropriate supervising auditor should ensure that individual auditors:
• know the objectives of the work undertaken;

• have a clear understanding of the scope and depth of the work they are carrying
out;
• understand the methods to be used before carrying out the work; and
• know the extent to which planned work may be varied.
4. This will be achieved largely by following the guidance on audit planning detailed
in Chapter 3 and by ensuring that all audit party members are aware of what is
required of them.
Supervision and review during the audit

5. Supervision during the audit involves regular monitoring of progress to ensure that:
• the audit is proceeding within the budgeted time and programme areas;
• the required standards in the Government Auditing Standards, the Audit Code
and in this manual are followed;
• working papers adequately document the work performed;
• any significant variations considered necessary by the auditor are agreed in
advance.
6. The AAO or Superintendent in charge is responsible for this aspect of supervision

at the audit. Evidence of this supervision will be recorded on working papers e.g. by
initialing checklists and making other notes where more work is requested.
Revisions to the original plan – with reasons – will also evidence the supervision.

Local Audit Manual
Supervision and post audit review
7. After completion of the audit, the supervisor (AAO/Superintendent) should:
• assess whether the objectives of the audit have been achieved;

• satisfy himself that the audit is documented by working papers that support the
findings and conclusions and provide necessary data to prepare a satisfactory
report.
• ensure that a report is prepared on the completion of the audit (see reporting
guidance in Chapter 11 of this Manual).
8. The Deputy Director responsible for the audit party should subsequently review the
working papers and report to ensure that:
• the audit has been conducted in accordance with Government Auditing

Standards, the Audit Code and this manual;
• working papers contain sufficient evidence to support conclusions drawn;
• the audit report contains all significant matters from the audit e.g. on major
accounting errors/omissions, systems weaknesses, improprieties etc.;
• any further audit testing deemed necessary is carried out;
• any further reports needed are prepared and submitted promptly.
9. The extent of this review will be a matter of judgement by the Deputy Director. The
review should be evidenced by initialing the file/report for the audit and by signing
the audit completion checklist (see chapter 10).
Inspection and quality control arrangements
10. The Comptroller and Auditor General has overall responsibility for ensuring that
audit work is carried out in a timely manner and in accordance with accepted audit
standards and practice. The DG Local and Revenue Audit Directorate is also
responsible for ensuring quality control. Guidelines on such standards are contained
in Government Auditing Standards, the Audit Code and in this manual. An annual
programme of quality control inspections should be agreed between the C&AG and
DG Local and Revenue Audit Directorate to ensure that there is no unnecessary
duplication.
11. Quality is the essence of any activity including audit and it is important that all
auditors, the DG, Director, DD, Officers and Staff- contribute to the process. The
following list includes features which should lead to, but does not guarantee, an
effective audit:

Local Audit Manual
(i) Sound planning procedures – to identify priorities and risks and allocate
audit staff accordingly. High risk audit are to be decided by the DG and then
DD would carry out detailed planning.
(ii) Effective controlling and recording - to ensure that staff are well briefed
and carry out the audit in accordance with work plans, including adequate
working papers to support conclusions.
(iii) Carrying out audits in a professional manner – by adhering to audit
standards and practice.
(iv) Displaying a constructive attitude – to assist audited bodies wherever
possible without compromising independence.
(iv) Reporting effectively and promptly - to ensure that the results of the audit
are communicated to the audited body and acted upon.
12. An annual programme of quality control inspections should be agreed between the
C&AG and DG Local and Revenue Audit Directorate to ensure that there is no
unnecessary duplication.

Local Audit Manual
Chapter 10 – Audit Recording and Evidence

Index
Topics Pages
Introduction 10.1
Qualities of evidence 10.1
Obtaining evidence 10.2
Documentation 10.2
Queries 10.2 - 10.4
Permanent Files 10.5
Audit Completion Programme 10.6
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Local Audit Manual
Chapter 10 - Audit Recording and Evidence
Introduction
1. It is crucial that auditors obtain sufficient and appropriate evidence to be able to
draw reasonable conclusions for the objectives of the audit. For example the
evidence to support the audit opinion work will be a mixture of systems/control and
substantive procedures outlined in Chapter 2. It is important therefore that the
evidence has 3 qualities, i.e. it is
• Sufficient,
• Relevant and
• Reliable.
Qualities of evidence
2. Sufficiency is a measure of the quantity of evidence obtained. What will constitute

sufficiency will be assessed at the planning stage of the audit but it will need to be
reviewed in the light of subsequent audit fieldwork. It is pointed out in Chapter 2
that it is not usually necessary, desirable or feasible to check 100% of transactions.
The audit will therefore be based on a test of key controls and transactions. If the
initial sample reveals an unacceptable degree of error or omission, then additional
or alternative testing must be done to substantiate, or otherwise, what was observed
during the test of initial sample.
3. Evidence will be relevant if it relates to the audit objectives and period of audit
under review. For example, testing the payroll system in Audit Year 1 will not
usually be relevant in Year 2 unless further evidence is obtained.
4. The reliability of evidence depends on the nature and source of that evidence.
External evidence is likely to be more reliable than that obtained from the audited
body. Also documentary evidence is preferable to oral evidence. In practice
evidence will come from different sources and weak or non existent documents may
need to be verified in other ways.
5. If auditors are unable to obtain sufficient, relevant and reliable evidence on an audit
objective then this must be made clear in conclusions and reported accordingly. An
extreme example could be where all audit records have been destroyed in a fire and
other satisfactory evidence cannot be obtained.

Local Audit Manual
Obtaining evidence
6. Evidence can come from a number of sources:
• Inspection - e.g. of records, documents or physical assets;

• Observation – e.g. watching the paying out of pensions or pay;
• Enquiry – e.g. interviews asking questions to obtain corroboration of data in
records;
• Computation – e.g. checking calculations of pay; and
• Analytical – e.g. analysing the relationship between two sets of data/statistics.
Documentation of audit evidence

7. All documentary evidence obtained during the course of an audit should be indexed
for easy reference and retained as part of the working papers. These will also
include audit programmes, questionnaires, query sheets and other working notes.
Signed and dated working papers prepared and reviewed at various stages of an
audit constitute the link between fieldwork and report. They are the justification for
reviewing findings by the higher authorities briefing, providing support for
discussions in the PAC meetings and also planning future audits.
8. Working papers are to be regarded as an integral part of audit documentation. They

connect the field work to the audit report and should be retained in the office. They
should both be concise and comprehensive. Wherever possible they should be kept
in the following manner:
• Standard stationery should be used.

• The date and name of the audit must be shown.
• Each sheet should be numbered sequentially, fastened and filed together.
• When working papers are being used in conjunction with an audit programme
or checklist, appropriate cross referring should appear in the notes.
• Working papers should be completed in a tidy fashion and in pen and signed by
the auditors involved.
• The detail to be shown should include all relevant findings of an audit, notes on
questions put to staff and their answers and notes on matters requiring further
consideration or subsequent action.
Queries
9. In the course of any audit work queries will arise. These must be noted and the
appropriate officer asked for an explanation in writing for consideration. Auditors
would then record his/her comment. For uniformity and clarity a standard query
sheet should be used as follows:

Local Audit Manual
Sample Audit Query Sheet

Name of Audit: ______________________________________________
Subject: ____________________________________________________
Date issued: _______________________ Date reviewed: _____________
Working
Paper Point of query Answer Cleared by
Index No.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

Local Audit Manual
Sample Working Paper
Name of audit: _______________________________ Date: _________________
Checklist _________________________________________
Details:
Signature of Auditor: _________________
Date: ______________________________

Local Audit Manual
Permanent Files
10. There should be a permanent file for each main group of auditable units (see
chapter 4 for definitions), which will contain documents to be referred to from year
to year and consequently provides some continuity in the planning and carrying out
of the audit. The Director-General, the Director, the Deputy Director and the Team
Leader should make use of the information in the file for planning.
11. All documents and information relevant to a particular type of auditable unit should
be gathered in the Permanent File and be updated every year. The Monitoring
Section is the custodian of the Permanent File and is responsible for its update. The
minimum information which must be gathered is listed below in the Permanent File
Check List. This Check List must be completed by 31 May every year so that the
information can be used for Current Audit Planning.
Permanent File Programme
Type of Audit Unit____________________________ Audit Year _____________
Description of Records Yes No
• Background information on type of audit unit e.g. ministries

• Relevant Act, Ordinance, laws, rules, orders etc.
• Previous Audit Reports for category and unit;
• Previous Audit Work Plans for unit (if any);
• Budgeted expenditure under Major Heads during the Fiscal
under audit review e.g. pay, allowances, supplies/services etc.
• Any Management Letters;
• Any Special Audit Reports;
• Special Requirements e.g. of C&AG or DG;
• Communication between audit offices relating to audit;
• Other standing information
Prepared by:______________________________________ Date:_______________
Reviewed by: _____________________________________ Date: ______________

Local Audit Manual
Audit Completion Programme
12. The conclusion of each audit should be documented using the following proforma:
Audit Unit______________________________ Audit Year ____________
This section is to be completed by the Team Leader prior to review by the Deputy
Director
Yes No
1. Are all the audit programmes used during the audit completely signed
off by the auditor who did the work?
2. Has the auditor signed and dated his conclusion at the end of each audit
programme?
3. Do the working papers contain enough detail to substantiate the
conclusions reached by the auditor?
4. Have all questions with a NO answer resulted in a working paper to
explain the problem?
5. Have all NO answers which are not satisfactorily explained been
carried forward to an Audit Observation Sheet?
6. Are all audit observation supported by evidence sufficient to allow a
reviewer to form an opinion on the adequacy of audit observation once
the Audit Party has left the premises of the auditee?
7. Have all audit observations been carried forward to the Audit
Observations Summary?
8. Is the audit file properly indexed and the pages secured to ensure that
no documents are lost or misplaced?
9. Are the working papers contain a sample and has cross reference to the
documents?
10. Is all the information required to prepare the management letter
available in the audit file?
Conclusion
I have supervised the work of the Audit Party during this audit in the period from __________to _______
I have reviewed the working papers prepared during the course of the audit. All questions raised by me
during my review have been satisfactorily answered by the auditors in question and there are no open
matters remaining.
The work carried out for each segment of the audit is sufficient to support the audit conclusions expressed
for each segment.
The auditor’s report is fully supported by the audit work carried out.
Signed: Team Leader: _________________________________ Date: ________________
Reviewed by: Deputy Director: __________________________Date: ________________

Local Audit Manual
Chapter 11 –Reporting and Follow up

Index
Topics Pages
Introduction 11.1
Management Letters 11.2 - 11.3
Follow up 11.3
Appendix – Audit Reporting Pro-formas 11.4 - 11.11
Standard list of irregularity 11.12
List of Rules, Orders, Ordinances and Acts 11.13
25/5/00 11.0 Chapter-11 Audit Reporting

Local Audit Manual
Chapter 11 –Reporting and Follow up

Introduction
1. The main purpose of audit reporting is to draw the attention of the audited body and
other stakeholders to the key findings of the audit which need action and response.
The auditor’s function is not complete until the client has been told in clear and
understandable manner about his findings and corrective action has been taken.
2. Local Audit should follow four levels of reporting for their regular statutory audit.
These are (1) First level report to the head of the audited entity (2) Second level to
the Head of Department as Controlling Officer, if necessary (3) Third level to the
Principal Accounting Officer of the Ministry/Division responsible for allocation (4)
Final audit report to President who will cause it to be laid before the Parliament.
The reporting system has been designed to meet the needs of stakeholders with
different intervention capabilities. The guiding principle is that information should
be given to those who have the need for this information and also the authority to
intervene for resolution of the problems.
Audit Reporting Matrix
Report Addressee Timing Contents Form Signature

Level
First Head of the Immediately on 1. Unresolved matters. Detail Team
Level audited entity. completion of 2. Unresolved matter from Leader
(1) audit. previous audits.
Second Head of the Fifteen days after 1. Major Accounts Lapses. M/L Director
Level Department audit completion 2. Internal control failures /DG
as Controlling date or as per 3. All account related matters.
Officer, if existing 4. Failure of pre-audit.
necessary. instructions. 5. Poor VFM
Third Secretary & Twenty days after 1. All matters of rules and M/L DG
Level Principal audit completion regulation
Accounting date or as per 2. Fraud, Waste
Officer existing 3. Financial mismanagement,
Concerned instructions. control weakness
Ministry/ 4. Non compliance in
Division. expenditure and Revenue
(2) collection.
Final President for Maximum 6 Matters of Policy and Principle. Audit Report Comptroller
Level laying before months after State of economy, financial (Highly and Auditor
the completion of control, inefficiency and selective) General
Parliament. audit or as per ineffectiveness. Waste &
existing Extravagance, Major Non
instructions. compliance, scope limitation.
3. The first level report given to the audited entity is necessarily in more detail than
others. It contains all issues and points which have not been satisfactorily resolved
locally but are not material enough to be brought to the notice of the higher
management. It is quite possible that many of the points can be and will be settled
in the course of time at the local level. Those matters which are left out for the
higher level reporting should contain only significant information relating to

Local Audit Manual
principles, policies, serious lapses of controls and also specific cases of material
nature concerning inefficiency, waste, improper expenditure and non-compliance
with rules and regulations.
4. During the course of audit, observations are issued for management response and
the matters which are not resolved are taken to an Observation Summary Sheet.
This is a management tool for presentation of audit results in a condensed and
classified form. They will also include those matters which have been resolved but
considered material enough to be brought to the notice of higher management
including Parliament. Observation Summary Sheet will single out such matters for
inclusion in Management Letter.
5. On conclusion of each audit the Team Leader will discuss the audit report (First
Level) with head of the audited entity and obtain his acknowledgement. Audit file
complete with Report, working papers. Observation Summary Sheet and Audit
Completion Report will be forwarded to the Deputy Director for review and
evaluation. DD will complete the Review Checklist and submit the Audit file to
DD/DG.
6. Examples of different reports and associated papers are shown in the Appendix
below.
Management Letters
7. A Management Letter is the auditor’s tool for reporting on items of importance
found during the audit. It will contain all those situations which resulted in an audit
observation which has an impact on the operation of the department.
8. The Management Letter should mention all those audit observations that are still
open at the date of the auditor’s report and give sufficient information for the
person receiving it to understand the problem. In those cases where the audit
observation has been explained by the officials, if the problem is such that the
concerned department should be made aware of it, then the problem should be
mentioned in the Management Letter.
9. The impact of the problem identified should be stated. This implies the monetary
impact as well as any negative results on the actual operations of the department.
10. Topics which could be discussed in a Management Letter would include any items
set in the list of standard irregularities and considered material either for their
monetary value or for policy and legal implications.

Local Audit Manual
11. A Management Letter should briefly identify the problem, its effect on the financial
discipline and recommendations for the resolution of the problem. The Management
Letter should be addressed to the concerned Principal Accounting Officer.
12. This Management Letter is in addition to the first level report prepared and issued
by the Team Leader immediately on conclusion of audit. Management Letter is
based on those findings considered material enough to be taken up at a higher level.
Observations taken up in the M/L may ultimately form elements for the C&AG’s
Report to Parliament if not resolved within reasonable period of time.
Follow up
13. Follow up work aims at assessing the impact of management action and to establish
its effectiveness. DG will ensure that arrangements are made to monitor the
progress on implementation of recommendations. Follow up work should be
programmed to review management action. The timing of such follow up work will
depend on the importance and nature of the audit findings and will frequently need
to be adjusted within the current year audit plan.
14. DG Local and Revenue Audit Directorate will also follow up recommendation of
the PAC on the audit reports alongside the C&AG’s staff assigned to assist the
PAC. He will bring to the notice of PAC through the C&AG any inaction/delay on
the part of the management in this regard.

Local Audit Manual
Appendix 1
Audit Reporting Pro-formas

Local Audit Manual
Audit Observations Summary

Fiscal Year: ___________________
Account Location:____________________
Audit Report W/P Liabilities Assets Expenditure Receipts Man Let Ministry Management response
Ref.
Total
Amount
Management Response
Team Leader:_________________________________________ Date:_____________________ 1. Agree with audit
2. Don't agree with audit
Deputy-Director:______________________________________ Date:_____________________ 3. Agree with reservation
4. Will take action and report
5. Others (explain)

Local Audit Manual
1. Introduction
2. Scope of audit
3. Review of previous audit
4. Observations & Recommendations
AUDIT REPORT
5. Conclusion Audit File
No.__________
Date:_____________
To
_____________________________
_____________________________
_____________________________
Name of Office & Location _______________________________ Fiscal ____________

Date of last report _____________________ Date of this report ____________________
1. Introduction
An audit team comprising Mrss. (a) ______________________________________________

(b)___________________________________ (c) _________________________________
conducted Statutory audit of the accounts of the office locally during the period
from ______________________ to _________________ in order to ensure
regularity, compliance with rules, regulations and instructions and its reliability and
correctness. During the period under audit Mr./Ms. _________________________
Designation __________________________ held charge of the office.
The audit was planned and conducted in accordance with the Comptroller &
Auditor-General's auditing standards.
2. Scope and technique of audit

[Tick (√) as appropriate]
• Analytical review of accounting & financial system.
• Analytical review of adequacy of the system of internal control and monitoring.
• Review of internal audit findings.
• Review of budgetary control.
• Analytical review of orders and instructions.
• Analytical review of statements of accounts on selective basis.
• Examination of books of accounts and relevant registers.
• Review of procurement practices.
• Review of documents like contract, agreement etc.
• Review of personal files/history of service books.
• Scrutiny of vouchers selected through statistical sampling.
• Issuance of written query sheets and discussion with relevant officials.
• Discussion with the head of office on the audit findings and views taken into
consideration.

Local Audit Manual
Page No. ___________
Year No. of para Settled Outstanding Present Status
4. Findings/observations and recommendations
Observations Result Recommendations

(Loss, over payment,
fraud, misstatement of
a) Major Issues accounts, violation of rules
etc.)

Local Audit Manual
Page No. ______
AUDIT REPORT – CONTINUATION SHEET
b) Issues of lesser importance

Local Audit Manual
Page No. ______

Local Audit Manual
Page No. ______
5. Conclusion
Necessary and appropriate action need to be taken to settle the issues brought out in
the report within a reasonable time and not later than ______________. Early action
is also requested to settle the outstanding observations in the audit report of earlier
years.
I take the opportunity to express my thanks and appreciation for the cooperation and
assistance extended to the audit team by all concerned in the office during audit.
Signature ___________________
Designation __________________
Date ________________________

Local Audit Manual
Audit Review Checklist

Audit Work Plan No. _______________
Account Location ________________________________ Financial year___________
Team Leader ____________________________________
Yes No
• Is the audit file complete in all respect?
• Are all the W/P indexed?
• Are the observations adequately substantiated by appropriate
evidence?
• Have all the intended checklists been applied?
• Was the audit completed according to Work Plan?
• Was there deviation from time budget? Time over run?
• Was excess time (if any) explained and authorised?
• Supervision and review of audit work satisfactory?
• Is the report well written and according to required standard?
• Was the report discussed with head of the office audited and his
opinion obtained?
• Did the Team Leader take personal initiative in the matter of
resolution of prior year audit observations?
• Has the Team Leader personally investigated the reasons for slow
progress of settlement of audit observations?
• If the progress is not at desired level, should it be reported to higher
authority?
• Based on the result of current audit, do you suggest any change in
the focus, manner, timing and extent of audit for the future work
plan for this entity?
Conclusion
This Audit was undertaken and completed according to given work plan and the
Team Leader has exercised due care in the discharge of his supervision and review
functions. I have initiated full range administrative and clerical actions relating this
report.
Signed
DD____________________
Date:__________________
DD/DG _________________
Date: ____________________

Local Audit Manual
Standard list of irregularity

(This list is indicative and not exhaustive. The decision to report will be a matter of
auditor's judgement.
Category of irregularity
1. Expenditure not for the purpose of the Republic.

2. Irregularity in procurement.
3. Expenditure in excess of budget or allocation.
4. Theft, Fraud.
5. Goods paid for but not received.
6. VAT and IT irregularities.
7. Revenue not deposited to the Government Account.
8. Wasteful expenditure.
9. Internal control weakness.
10. Accounting not according to standard.
11. Unauthorised diversion of fund.
12. Expenditure without sanction or contrary to restrictions imposed by
Parliament.
13. Any large claim outstanding for an unduly long time.
14. Remissions of revenue, and waiver of claims to revenue
15. Heavy Loss of public property by accident or for any reason.
16. Omission, misrepresentation or non disclosure of material information in the
accounting statement.
17. Non-issue of necessary accounting or financial rules, causing loss of
efficiency and delay or total non-implementation of the budgeted
programmes.
18. Any extraordinary or apparently unnecessary expenditure.
19. Money withdrawn in advance of requirement to avoid lapse of allocation.
20. Any irregularity connected with grant-in-aid.
21. Cases of writes-off.
22. Investments which are unauthorised, irregular or unsound and non-
performing.
23. Proceeds of loans, borrowings not spent for the purpose they were raised.
24. Payments for services not rendered.
25. Others (Refer to articles 64 of Audit Code).

Local Audit Manual
List of Rules, Orders, Ordinances and Acts
Subject/Organisation Reference
1. Payroll a) Treasury Rules and Subsidiary Rules: SR 111 to 158.
b) Fundamental Rules: Rules 19 to 40.
c) Bangladesh Service Rules: Rules 39 to 50.
d) Orders on National Scale of Pay and Grades 1973 and
Services (Pay and Allowances) Order 1977, 1985, 1991 & 1997.
2. Travel Allowance a) Treasury Rules and Subsidiary Rules: SR 142 to 145
and SR 159 to 160.
b) Compilation of the Fundamental Rules and Supplementary Rules
Vol. 1. SR 17 to 205.
c) BSR part II.
d) Rules and Orders on TA/DA abroad issued by Ministry of
Finance (External Finance Wing)
3. Works Expenditure General Financial Rules: Rules 177 to 200 and Appendix 8.
4. Purchases/Assets/Stores a) General Financial Rules: Rules 148 to 176 and Appendix 9.
b) Treasury Rules and Subsidiary Rules: SR 233 to 234.
5. Grants-in-Aid General Financial Rules: Rules 206-211.
6. Receipts a) General Financial Rules: Rules 28-32.
b) Treasury Rules and Subsidiary Rules: TR 7-10.
7. Loans and Advances General Financial Rules: Rules 249 to 265 and Appendix 9.
8. Provident Fund a) Treasury Rules and Subsidiary Rules: SR 320 to SR 326.
b) GPF Rules 1979/CPF Rules 1979.
9. Municipality Municipality Act of 1977.
10. City Corporation Municipal Corporation Ordinance of 1983
11. Zila Parisad Sthaniya Sarkar (Zila Parisad) Act 1988.
12. University a) Services (Reorganisation & Conditions) Act of 1975.
b) Orders on National Scale of Pay and Grades 1973 and
Services (Pay and Allowances) order 1977, 1985, 1991 & 1997.
c) University Calendar, Ordinance and Regulations 1986.
d) Relevant Act/Ordinance/Rules/Orders of the University.
13. University Grants The University Grants Commission of Bangladesh, Order 1973.
Commission
14. National Curriculum & National Curriculum and Text Book Board Ordinance, 1983.
Text Book Board
15. Port Authority Chittagong Port Authority Ordinance 1976.
Mongla Port Authority Ordinance 1976.
16. BIWTA Bangladesh Inland Water Transport Authority Ordinance 1977.
17. Sports and Cultural Bodies The National Sports Council Act of 1976.
18. Shilpakala Academy Bangladesh Shilpakala Academy Act of 1976.
19. Bangladesh Agricultural Bangladesh Agricultural Research Institute Act of 1976
Research Institute
20. Bangladesh Rice Research Bangladesh Rice Research Institute Act of 1973.
Institute
21. Bangladesh Jute Research Bangladesh Jute Research Institute Act of 1974
Institute
22. Bangladesh Sugarcane Bangladesh Sugarcane Research Institute Act of 1996
Research Institute

Local Audit Manual

Local Audit Manual
Chapter 12 – Index and copy of all Forms and

Programmes
Index
Topics Pages
Introduction 12.1
Index of Forms 12.2 - 12.7
Copy of Forms 12.8 - 12.145
25/5/00 12.0 Chapter-12 Local Audit Forms

Local Audit Manual
Chapter 12 – Index and copy of all Forms and Programmes
Introduction
1. This Chapter provides an overall index for the various forms contained in each of
the individual chapters within this manual. This index should be used as a reference
tool for quick identification and location of the various audit forms and programmes
and provides a master copy for photocopying.

Local Audit Manual
Index of Forms
Form Number Topic Page
Chapter 2 : Audit Methods Ref.
LAF 1 Key Internal Controls 2.8

LAF 2 Consideration of Internal Audit 2.9
LAF 3 Audit of Input/Output Controls 2.10-2.11
LAF 4
LAF 5
LAF 6
LAF 7
LAF 8
LAF 9
Chapter 3 : Planning
LAF 10 Understanding the Audit Unit 3.6 - 3.7

LAF 11 Assessing Materiality and Risk 3.8-3.9
LAF 12 Annual Assessment of Audit Resources Available 3.10
LAF 13 Annual (Tactical) Plan 3.11
LAF 14 Annual (Tactical) Plan 3.12
LAF 15 Audit Work Plan 3.13-3.14
LAF 16 Time Budget 3.15
LAF 17
LAF 18
LAF 19

Local Audit Manual
Index of Forms
Form Number Chapter 4 : General Audit Procedures Page

Audit Programmes Ref.
LAF 20 Payroll 4.5 - 4.6
LAF 21 Travel 4.8 - 4.9
LAF 22 Works Expenditure 4.12 - 4.13
LAF 23 Purchase/Procurement 4.16 - 4.18
LAF 24 Grants-in-Aid 4.21 - 4.23
LAF 25 Receipts 4.26-4.27
LAF 26 Bank Account 4.30 - 4.31
LAF 27 Assets 4.34 - 4.37
LAF 28 Loans and Advances 4.40 - 4.41
LAF 29 Provident Fund 4.45 - 4.46
LAF 30
LAF 31
LAF 32
LAF 33
LAF 34

Local Audit Manual
Index of Forms
Topic
Form Number Page
Chapter 5 : Audit of Government Offices Ref.
Audit Programmes
LAF 35 Ministries 5.4 - 5.6
LAF 36 Directorates 5.9 - 5.13
LAF 37 National Parliament 5.16 - 5.17
LAF 38 Deputy Commissioner/TNO's Office 5.20 - 5.22
LAF 39 Forest Offices 5.25 - 5.30
LAF 40 Civil Surgeon's Office 5.33 - 5.34
LAF 41 Bangladesh Betar and Bangladesh Television 5.37 - 5.38
LAF 42
LAF 43
LAF 44
LAF 45
LAF 46
LAF 47

Local Audit Manual
Index of Forms
Form Number Chapter 6 : Audit of Government Service Units Page

LAF 48 Hospitals 6.4 - 6.7
LAF 49 District and Thana Family Welfare Office 6.10 - 6.12
LAF 50 Educational Institutions 6.15 - 6.17
LAF 51 Jails 6.20 - 6.22
LAF 52 Fire Service and Civil Defence 6.25 - 6.26
LAF 53
LAF 54
LAF 56
LAF 57
LAF 58
LAF 59

Local Audit Manual
Index of Forms
Chapter 7 : Audit of Autonomous and Local
Form Number Page
Bodies Ref.
Audit Programmes
LAF 60 City Corporation/Municipality 7.5 - 7.9
LAF 61 District Council 7.13 - 7.16
LAF 62 National Curriculum and Text-Book Board 7.19 - 7.24
LAF 63 Universities 7.28 - 7.32
LAF 64 University Grants Commission 7.35 - 7.37
LAF 65 Port Authorities 7.41 - 7.48
LAF 66 BIWT Authority 7.52 - 7.57
LAF 67 Agricultural Research Institutes 7.60 - 7.62
LAF 68 Sports and Cultural Bodies 7.65 - 7.68
LAF 69
LAF 70
Chapter 8 : Procedures on Special Situation

Form Number Page
Audits Ref.
Audit Programme
LAF 71 General Procedures - Special Investigations 8.6
LAF 72 Possible Areas for Improving Performance 8.9-8.11
LAF 73 Examples of Performance Measures 8.12
LAF 74
LAF 75
LAF 76

Local Audit Manual
Form Number Chapter 10 : Recording and Audit Evidence Page

LAF 77 Sample Audit Query Sheet 10.3
LAF 78 Sample Working Paper 10.4
LAF 79 Permanent File Programme 10.5
LAF 80 Audit Completion Programme 10.6
LAF 81
LAF 82
Form Number Chapter 11 : Audit Reporting and Follow up Page

Ref.
LAF 83 Audit Reporting Pro-formas 11.5 - 11.11
LAF 84 Standard list of irregularity 11.12
LAF 85 List of Rules, Orders, Ordinances and Acts 11.13
LAF 86
LAF 87
LAF 88

LAF 1
Local Audit Manual
Key Internal Controls
Result Supporting
Control (Yes/No) remarks/
reference to
W/P
Management Controls:
1. Is there adequate separation of duties, e.g. between
checking invoices, recording payments in financial
records and drawing cheques?
2. Are the guidelines in the Accounts Code and other

accounting instructions being followed?
3. Is there adequate supervision and review of staff,

e.g. to ensure that rules and procedures are
followed?
Financial Controls:
4. Are there system of regular and periodical review

of budget control register to see trend of
expenditure/receipt?
5. Have all appropriate accounting records, e.g. cash-

books, been used to record transactions?
6. Are all such records complete and up to date?
7. Are all reconciliation of records (e.g. bank

reconciliation and any subsidiary records) complete
and up-to-date?
8. Are there adequate checking or verification

procedures on invoices and other payments
including prices and arithmetical accuracy?

LAF 2
Local Audit Manual
Preliminary Consideration of Internal Audit
Preliminary consideration of internal audit

Result Supporting
(Yes/No) remarks or
reference to
W/P
1. Is there an internal audit function that is independent of
day-to-day operations and line management?
2. Does the internal audit report to senior management
and have the right of direct access to the chief
executive (or equivalent)?
3. Is the internal audit structure of an appropriate size,
status and calibre in the light of the size, complexity
and inherent risk of the audited body?
[Steps 1-3: it may be useful to construct/obtain an
organisation chart of the internal audit function for
reporting responsibilities and personnel (including
grades and qualifications)?
4. Obtain copies of recent internal audit reports. Do these
support the initial assessment of calibre at step 3
above?
5. Is there a detailed plan of internal audit activities for
the year and the following year?
6. Does the plan clearly define outputs and deadlines?
7. Do any of the planned outputs appear to be of potential
use for external audit purposes?
8. Does the internal audit function have any spare
capacity or willingness to provide direct assistance to
us?
9. Is there any potential to use the work of internal audit
or to use internal audit to provide direct assistance?

LAF 3/1
Local Audit Manual
Audit of Input Controls - Checklist
Introduction
The aim is to ensure that all input transactions data are accurate, complete and
authorised. Common manual controls include physical cancellation of input
documents, checking authorised signatures, input control totals and procedures for
dealing with errors or omissions.
Checklist questions
1. What procedures are in place to ensure that data input is

authorised and accurate?
2. What measures have been taken to prevent duplicate

input of data?
3. What controls are there to ensure that all input has been
received and processed?
4. What are the procedures for ensuring that all valid

transactions have been included?
5. What are the procedures for dealing with errors or any

rejected items?
Prepared by: ________________________________Date:_____________
Reviewed by: _______________________________Date:_____________

LAF 3/2
Local Audit Manual
Audit of Output Controls - Checklist
Introduction
The aim is to ensure that all computer output is complete, accurate and correctly
distributed. Computer outputs should be checked and reconciled to prove the
completeness and accuracy of processing. Output reports should be reviewed and
acted upon as and when necessary. Possible risks to output include the loss or error,
exception reports and the unauthorised amendment of financial reports.
Checklist questions
1. What procedures are in place to ensure that data output

agrees with data input?
2. Have reasonableness tests been carried out on the

accuracy and completeness of output?
3. What controls are there over the storage and use of

computer stationery?
Prepared by:________________________________ Date:_____________
Reviewed by:_______________________________ Date:_____________

LAF 10/1
Local Audit Manual
Understanding the Audit Unit
Cumulative Knowledge of the Audit

1. Background knowledge of audit exists within the Directorate which is vital in the
planning process. This consists of the knowledge and experience held by staff who
have been involved in previous audit. It also includes the written records kept such
as permanent files, current audit files and reports, and outstanding objections which
are still unresolved.
2. The AAO/Superintendent must take account of this knowledge before preparing a

detailed programme for each visit.
Control Environment
3. The control environment must be assessed as part of the planning process. It is the
overall attitude, awareness and actions of management in respect of internal
controls and their importance in the audited body. It is a vital part of understanding
the audited bodies and is a key determinant of audit work. The audit view of the
control environment should influence the approach to each audit unit.
4. The control environment is assessed by reviewing a number of key areas:
Key area Issues to consider

Management The quality of the management of the Accounts
Office.
Control framework The effectiveness of any internal audit. The use of the
various accounting rules, regulations and instructions.
Whether accounting records are up to date.
Staffing The general competence of accounting staff.
Monitoring controls The effectiveness of budgetary control.
IT environment/ Whether the systems are computerised and data are

Systems adequately controlled.

LAF 10/2
Local Audit Manual
5. Previous audit work, existing sources of intelligence and other aspects of the
planning process will mostly inform the assessment of the control environment.
6. Given the current limited stage of development of computerisation, internal audit

and approach to internal control, it is likely that audit will mostly be carried out
mainly on a substantive basis but every effort should be made to consider and
review the above areas. Where areas of the control environment are identified as
being in need of improvement, these should be included in reports.

LAF 11/1
Local Audit Manual
Assessing Materiality and Risk
Materiality
1. Materiality must be fully assessed as part of the planning process. Materiality
should be based on the previous year’s financial statements or on the audited body’s
budget. The bases for materiality will normally be gross expenditure and gross
income (for cash accounting). Information may also be needed to the value of assets
and liabilities.
2. The percentages to be applied to these bases are determined by DG Local and

Revenue Audit and noted in the Annual Audit Plan.
Risk
3. For each Audit objective, the associated risks should be assessed. The main areas of
concern for Local Audit are that:
• poor performance/VFM remains undetected or not reported,

• something major goes wrong e.g. major fraud, impropriety, which should have
been detected by following proper audit standards and guidelines and
• previous audit procedures have not identified and corrected weaknesses in
controls that could have prevented this from happening.
4. The degree of risk is a matter of judgement. For the purpose of Local Audit, risk
should be considered at three levels – high risk, medium and normal risk.
5. In practice, the risk assessment could be made on different attributes e.g.
Audit units e.g. each type of auditable unit or on individual units e.g. a large
hospital, large budget with known difficulties could be high risk, a small hospital
with fewer past problems could be medium risk. The majority of schools could be
low risk, but with higher risks for selected schools only.
Transactions e.g. expenditure on works and Grants-in-Aid could be high risk

because of the system, amount of expenditure and inherent risks involved).
Activities e.g. large auditable units or those which are key to administration of
policy or sensitive areas.

LAF 11/2
Local Audit Manual
6. The application of a risk assessment is in the end a matter of judgment but it should
be based on past and current knowledge of the audited units and a knowledge of
known risk areas. For example high risk areas for audit purposes could include:
• Transactions governed by complex regulation. The more complex the

regulations, the greater the risk of error;
• Payments and receipts made on the basis of claims or declarations rather than in
exchange for goods and services. Verification of the receipt of goods and
services is generally easier than verification that a claimant meets the criteria
specified for receipt of grant;
• Transactions not on regular or recurring basis and not in the normal course of
business. Such transactions are by definition generally few in number but may
be relatively large in value and, therefore, have a material effect;
• Period end adjustments. These generally are estimates and/or transactions not in
the normal course of business;
• Transactions with non-government bodies/persons.

LAF 12
Local Audit Manual
Annual Assessment of Audit Resources Available

Audit year_____________
1. Number of Auditors available for field audit
AAOs
Superintendents
Auditors
Total
Average days per
Auditor per year
2. Workdays available per auditor

(after allowing for leave, training etc.)
3. less Average time needed on HQ work ( )
4. less Allowance for special studies ( )
5. less Contingency ( )
---------------
6. Net days available per auditor for

field audit ---------------
7. Total days available for field audit

(Column 1 x Column 6) ----------------
Prepared by: ___________________________

Date: _________________________________

LAF 13
Local Audit Manual
Proforma of Annual (Tactical) Plan of Audit Needs (Top level)
Auditable Units Number Total % of total Audit Days

(main categories) of units Expenditure Expenditure allocated
(gross per
annum)
Government
Offices:
Ministries
Directorates
Parliament
Deputy Comm’s
Etc.
Government
Service Units:
Hospitals
Family Welfare
Schools
Jails
Sports
Fire
Etc.
Autonomous/Local
bodies:
City Corporations
Universities
Etc.
Notes:
1. This exercise illustrates how net audit days available (from item 7 in appendix 1)
could be allocated to key categories of audit for the routine programme of field
audits.
2. A weighting could be applied at this stage, based on risk, to increase or decrease the
total days to any category e.g. more to hospitals if considered a higher risk than say
sports or jails.
3. A similar proforma should then be done for each of the main categories (see
appendix 3/3 below.

LAF 14
Local Audit Manual
Proforma of Annual (Tactical) Plan of Audit Needs (Lower level)
Auditable Total % of total Risk Overall Actual

Units Expenditure Expenditure Factor Weighted Audit
(gross per for hospitals High/med. % of total Days
annum) /normal time Allocated
allocated
Government
Service
Units:
Hospitals
1
2
3
4
5
6
7
8
9
10
etc.
Notes:
1. This exercise will be repeated for each category of auditable unit (per Appendix
3/2).
2. If the number of auditable units in any group exceeds 30 (e.g. schools), the exercise
would be too unwieldy to do manually and may not justify the cost involved even if
computerised.. Also the Government Auditing Standards and this manual make it
clear that audit planning should be based on risk and materiality. There is no
requirement to visit all auditable units over time. The selection of which schools to
audit should, therefore, be based on a broader assessment e.g. covering a few of
each type in each region, including some very large schools each year, including
known problem schools regularly.

LAF 15/1
Local Audit Manual
Audit Work Plan
Fiscal Year ___________________

Audited Unit______________
The plan for this audit has been designed to allow the Local and Revenue Audit
Directorate to gather evidence to serve as a basis for the audit objectives set for this
audit unit e.g. regularity and performance aspects.
Audit Starts on _________________
Audit ends on __________________
Date on which the audit report shall be sent to Headquarters __________________
Date on which any other report (if required) shall be sent to other appropriate
authorities___________________________
The Audit Party moves to (Next Destination) __________________ on _________
The audit party consists of:
Audit and Accounts officer : ________________

Team Leader
Superintendent : ______________________
Auditor : ______________________
Auditor : ______________________
Auditor : ______________________

LAF 15/2
Local Audit Manual
Required Output of the Audit : .................................................................................
Scope of this Audit : .................................................................................
..................................................................................
Objective of this Audit : .................................................................................
.................................................................................
Important Information necessary for the audit party (summarize all the pertinent
information that will be required by the Audit Party to perform the audit in the most
efficient manner).
Special instruction by the Deputy Director if any.
Prepared by: _______________________________________ Date: ________________
Deputy Director: ___________________________________ Date: _________________
The Audit Work Plan has been discussed with the Audit Team on __________________

LAF 16
Local Audit Manual
Time Budget (Unit Level) -Proforma

Dates of visit ____________________________________________
Name of Audit Unit_______________________________________
Total % of total Risk Overall Actual

Audit Scope/activity Expenditure Expenditure for Factor Weighted Audit
(gross per hospitals High/med. % of total Days
annum)
/normal time Allocated
allocated
Audit
Planning - - - -
General Review of internal
control
- - - -
General Review of - - - -
performance issues
Other specific areas

selected (based on chapter 4
guides)
Expenditure
Receipts
Payroll
Travel
Works
Purchases
Grants-in-aid
Bank Accounts
Assets/Stores
Loans/Advances
Liabilities
Provident Fund
Other___________
________________
________________
Special Tasks (if any) set by

Deputy Director
Reporting Time
Totals
Notes:
1. The time needed for planning, review of internal control, review of performance issues, special task
and reporting should be decided first, based on any guidance given, e.g. by Deputy Director.
2. The specific tasks using the programmes given in chapter 4 should be based on risk (e.g. expenditure
and a risk factor using the judgment of the auditor in charge. The total time available for these tasks
will be the total days given to the audit party less those needed in note 1 above i.e. for planning etc.

LAF 20/1
Local Audit Manual
Audit Programme
Payroll

by
Sanctioned posts and new appointment
• Examine the list of sanctioned posts and personnel actually
working in the office to see that pay bills were drawn
accordingly.
• Verify the papers/documents relating to new appointments
to see that all necessary conditions were fulfilled before pay
bills were drawn for them.
Allowances deductions and classification
• Check whether all the mandatory deductions e.g. house rent,
GP Fund etc., have been effected in the pay bills according
to approved rates.
• In the case of an allowance which is related to fulfillment of
certain conditions, check the system through which this is
ensured for inclusion in the pay bill.
• Generally check if the pay bills have been drawn showing
proper classification and mentioning correct GPF account
numbers of the employees.
Pay fixation and disbursement
• Check whether pay fixed and recorded in the Service Book
was the same as in the pay bill.
• Check whether fixation of pay of the employees made by
the Drawing and Disbursing Officer (DDO) and verified by
the Accounts Office have been done according to the rules,
regulations and instructions.
• Examine in detail all cases of pay fixation after a new scale
of pay has been introduced by the Government.
• In respect of sanction of pension, check whether this has
been done strictly on the basis of proper fixation of pay and
that all liabilities of the employee have been taken care of.
• In the case of increments of pay relating to crossing of
efficiency Bar (EB), check whether these have been
properly authorised by the competent person.

LAF 20/2
Local Audit Manual

by
• Examine as to how the Drawing and Disbursing Officer
(DDO) satisfies himself regarding the various certificates
recorded on the body of the pay bills.
• Verify the disbursement roll to see that the pay actually paid
to an employee was the same as that of the pay bill.
• Generally check whether necessary revenue stamps have
been affixed and defaced in the disbursement roll as
required under the rules.
GP Fund and other Deduction
• In the event an employee has taken advance/loan from
Provident Fund or motor cycle, house building advance etc.,
see that deductions at stipulated rates are being made
regularly from the pay bill of the borrower.
Conclusion
In my opinion, subject to the audit observations in the Working Papers ________,

the expenditure on account of pay and allowances has been properly calculated and
paid in accordance with the rules.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

LAF 21/1
Local Audit Manual
Audit Programme
Travel

by
General
• See that the claims were submitted in the appropriate form.
• Also ensure that the drawing officer has certified the claims
appropriately.
• Ensure that there is evidence that the authorising office has
checked that the claims are in conformity with the existing
applicable rules i.e. correct rates have been claimed.
• See that no claims have been paid which do not bear the
signature of the controlling officer.
• See that all tours have been undertaken by the shortest and
cheapest route. In case of deviation, obtain explanation from
the authorising officer.
For foreign travel
• Confirm that copies of Government Order (GO) authorising
each foreign travel, are available in the personal file of the
concerned officer.
• Confirm that daily allowances are paid for the number of
days indicated in the GO.
• Confirm that the air ticket had been purchased from
authorised agency of government and travel was undertaken
by the shortest route and at the cheapest price.
• For a sample of claims, confirm that there is evidence that
the rate of DA paid to the touring officer is as per rate fixed
by the competent authority.
[Note: Since rates of DA vary from country to country,
auditors must have clear knowledge of DA rates applicable
for each country].
• In the event an officer was sanctioned both DA and the cost
of hotel accommodation, ensure through checking of the
hotel bill that the amount drawn had actually been spent by
the officer concerned.

LAF 21/2
Local Audit Manual

by
[Note: For example, if a touring officer has drawn at the rate of
US$ 100 per day for 7 days, check the hotel bill to ensure
that the officer actually stayed in the hotel for 7 days & paid
US$ 100 per day. Hotel rent paid in excess is not admissible,
but if the hotel rent is less than US$ 100 per day, the balance
amount need to be refunded in foreign exchange immediately
after return. Also ensure through checking of the hotel bill
that the charges do not include cost of food, telephone,
laundry and other types of inadmissible expenditure.
• Also confirm that no second advance has been made to an
officer against whom one advance is lying outstanding for
adjustment.
• Confirm that in the final bill, a certificate has been furnished
to the effect that the officer did not stay as a guest of the host
country or of some organisation.
[Note: In that event, a portion of DA requires to be refunded
as required under the rules.]
Conclusion

expenditures on account of Travel have been properly calculated and paid in
accordance with rules.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

LAF 22/1
Local Audit Manual
Audit Programme
Works Expenditure

by
• See that an estimate has been prepared and sanctioned for
every work.
• See that estimates are not prepared piecemeal.
• See that estimates are approved by the competent authority.
• See that the amount of sanctioned estimate is expressed in
words as well as in figures and is signed & dated by the
officer sanctioning the estimate.
• Take up a few estimates and test the rates by comparison with
the schedule of rates.
• See that tenders have been duly called for.
• See the number of tender documents sold and tenders
received. In case of big variation examine reasons.
• See that specific rates have been quoted in the tender for all
items of work and that they are not in excess of those
provided in the sanctioned estimate. Grounds for accepting
higher rates should be scrutinized.
• See that all tenderers have furnished earnest money along
with their offer; and security deposits by the parties in whose
favour contracts have been awarded.
• See whether there is any non-tendered items in the bills and it
was duly approved.
• Confirm that the contractor is penalised for unwarranted delay
in completion of the work within the stipulated time.
• For a sample of work, confirm that there is audit trail i.e.
follow the work beginning from the issue of notice to final
payment.
• If feasible, observe physical existence of the structure or
obtain assurance from alternative sources that the work in
question has been executed according to plan.
• Confirm that materials issued have been valued as per rules
and recovered.

LAF 22/2
Local Audit Manual

by
• Examine all works that have exceeded original estimates in
respect of regularity and propriety.
• In cases where the lowest tender has not been accepted see
that the reasons have been recorded. Examine each case of
non-acceptance and obtain sufficient and adequate
explanation for such action.
• See that a certificate of satisfactory completion of work is
furnished by the competent authority and there is no unusual
delay in obtaining such a certificate.
• Verify that VAT and IT have been recovered, recorded and
accounted for.
• Confirm that all key decisions are adequately documented and
reasons for a decision are given.
• Examine justification for changes in design, scope and
specification during execution stage. Are financial
consequences commensurate with economic benefits and do
they support project objectives?
Conclusion
In my opinion, subject to the observations in the Working Paper ______, the

transactions with regard to works expenditure are presented fairly in the accounts,
various control system all are place and overall management of the office is
satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

LAF 23/1
Local Audit Manual
Audit Programme
Purchases/ Procurement

by
Audit of pre-order procedures. For a sample of orders
• Verify whether there is a procurement plan and a
procurement/purchase guideline in the office.
• Verify if assessment of need was done properly before
deciding and ordering purchase of stores.
• Check that the authorising office ensured that funds were
available for the purchase.
• In the case of delayed payments for procurement of stores
made during the previous fiscal year, check why payments
were delayed and whether the delay was deliberate to avoid
shortage of funds allotment during that year.
Audit of tender process. For a sample of cases where tenders
were appropriate
• Confirm that the purchase was made on the basis of
competitive price.
• Compare the prices obtained with other recent similar tenders
to see if they are similar. Where there is a significant
difference, identify causes and comment.
• Assess whether publicity for the tender was such as to attract
maximum participation of potential bidders.
• Check the number of tender documents sold, tenders received
and assess whether the tender process was truly competitive.
• Check whether the lowest rate was accepted. Where it was
not, confirm that sufficient justification exists and is recorded.
(Examine comparative statement and bid analysis).
• Check whether any bid was rejected for being non-responsive.
If so, examine its validity.
• Confirm that the required earnest money/ security deposit was
received as per condition of tender.

LAF 23/2
Local Audit Manual

by
Audit of ordering procedures:
• Confirm that the item was required and requisitioned by a
responsible officer.
• Confirm that the expenditure has been approved by the
competent authority before initiation of purchase procedure.
• Confirm that the re-ordering stock level has been maintained.
Audit of receipt of goods. For a sample of invoices paid
• Confirm that there was evidence that the stores were
physically delivered during the period under review and that it
was not mere paper transaction.
• Check that the goods are being used/utilised for the intended
purpose and do not end in unserviceable waste. Give details of
evidence in the W/P.
Audit of payment procedures. For a sample of invoices paid
• Confirm that the payment was sanctioned by a competent
authority.
• Check that the voucher/ invoice is complete in all respect.
• Check that the disbursing office has observed the payment
rules.
• Confirm that the claim is in accordance with rules and in
proper form.
• Confirm that the payment has been made to the proper person
and has been so acknowledged. Consider direct confirmation
with suppliers if necessary.
• Check that the rates are in accordance with agreement/
contract. Check for arithmetical accuracy.
• Confirm that there is a certificate of quality and quantity
signed by the passing and receiving officer, and the
specification agrees with the ordered articles.
• Check that the deductions on account of Income Tax/ VAT
have been recovered at the correct rates.
• Confirm that the rates conform to standard scales. Examine
schedule of rates, if any.

LAF 23/3
Local Audit Manual

by
• Check that the voucher is arithmetically correct and agrees
with the paid cheque, and entry in the cash book.
Audit of management controls:
• Check that the voucher is correctly recorded in the
accounting records and the expenditure properly classified.
• Confirm that the store acquired is ordinarily required for the
normal requirement of the buying agency.
• Check whether there are many purchases of same articles
over the year, as a possible indication that management is
splitting purchases to avoid the need for sanction of higher
authority.
Conclusion
In my opinion, subject to the observations in the Working Paper _____________.
All purchases are for official purpose and are actually being utilized for the normal
business of the government. The expenditure is also in order and properly
classified.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

LAF 24/1
Local Audit Manual
Audit Programme
Grants-in-Aid

by
Preconditions
• Obtain rules of grants-in-aid and see that the grantee is
qualified/entitled to receive the grant and that the grant was
justified.
• In the case of a grant sanctioned on the request of a grantee,
check the purpose mentioned in the request letter/report and
relate those with the conditions laid down in the sanction
order.
• Assess the reliability of the report/evidence which was sent to
grantor before the grant was given.
• Where receipt of the accounts/audited accounts of the grantee
is a precondition for providing the grant, verify if it was
actually available.
• In the case of grants to make good a financial deficit or
revenue loss, check the accuracy of the evidence/accounts
provided by the grantee.
Sanction
• Verify whether the sanction order contains clearly the
conditions to be fulfilled for utilising the grant money.
• Check if the sanction order includes the manner in which the
report/accounts in respect of the grant money is to be sent to
the grantor.
• Check if the sanction order has been issued within delegated
financial powers of the grantor and issued under the signature
of the authorised person.
Fulfillment of Conditions
• Identify the conditions of the grant and verify that these have
been fulfilled.
• When the condition relates performance, check that there is
clear evidence to the effect that the desired level has actually
been achieved.

LAF 24/2
Local Audit Manual

by
• In the case of recurring grant, confirm that the grantee
continues with the grant related function.
• Examine generally that the grant amount is being spent for
such work which is not at variance with the declared policy of
the state.
Budget control and Accounts
• Check the adequacy of budget control system adopted by the
grantee.
• Also check the adequacy of the system of payment of grant
money to the ultimate beneficiary and how assurance to that
effect is obtained.
[* Particularly important for Education Department.]
• In the case of time bound grant, check whether unspent grant
after the expiry of time limit has been surrendered.
• Also check that portion of the amount which is not ultimately
required for grant objective has been surrendered.
• Where no unspent balance was returned, assess the grantees
procedures for establishing that no surrender was needed.
• Check if so much of the grant has been paid during a financial
year as is likely to be expended during that year.
• Verify whether money has not been drawn in advance of
requirement.
• Ensure that individual grant conforms to the principles of
financial propriety.
• Verify if the grant money has been properly accounted for and
Payment for Works/Services
• In the case of grants for specific works or services, examine if
the grantor could use its discretion in authorising payments
according to the needs of the works or services.

LAF 24/3
Local Audit Manual

by
Reporting
• Check whether the activities/expenditures are properly and
timely reported including accounts/audited accounts as is
required under the grant condition.
• Also check the adequacy of the reporting system and confirm
Conclusion
In my opinion, subject to the observations in the Working Paper _________, there

is satisfactory assurance that the grants-in-aid amount has been spent in accordance
with the rules governing them and for the purpose it was granted, presented
correctly in the accounts and overall management was satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

LAF 25/1
Local Audit Manual
Audit Programme
Receipts

by
• Verify the rules and regulations under which receipts are
collected and see that they have been applied properly.
information/statistics are available to make reasonable
• Compare the estimated receipt amount with that of actuals of
the year. In case of wide variation, examine reason.
• Check whether amounts assessed for collection have been
done properly as per instructions.
• Check a sample of calculations to verify its authenticity.
Examine whether collected amount has been entered in the
relevant register and the cash book.
• Verify whether collected amount has been promptly
deposited to proper bank account.
• In case of cash receipt, check the receipt book and verify
amounts in the register/cash book.
• In case of direct deposit into bank, check a sample of
chalans, bank statement etc.
• Verify if bank reconciliation is carried out regularly.
• Check if adequate control system is in place to ensure probity
in the whole operation.
For officials working in certain entities, (like Atomic Energy
Commission, BCSIR, BUET etc.) and receiving
fees/remunerations for services rendered to some outside
agencies.
• See the terms and conditions of appointments.
• Verify whether the conditions attached to such appointments
are adhered to.
• Verify that a percentage of such fees (as decided by the
competent authority) is being deposited into the relevant
government account.

LAF 25/2
Local Audit Manual
Conclusion

operation relating to assessment and collection of receipts and maintenance of
accounts have been properly controlled.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

LAF 26/1
Local Audit Manual
Audit Programme
Bank Account

by
• Verify the authorisation for opening and operating the bank
account including its purpose and whether the account has
been opened and operated upon as per existing instructions
and condition, if any, laid down in the authorisation letter.
• Identify the source of fund and whether the amount appears to
be far in excess of requirement.
• Check whether funds in the accounts are being utilised
regularly and for the purpose for which the account has been
opened.
• Examine reasons, if funds are lying unutilised for a
considerable period of time.
• Check whether there has been proper reporting to the
sanctioning authority if funds are lying idle beyond the
financial year.
• Verify if there is a bank account from where no operation has
taken place for a long time or the purpose of the account is
over. If so, check whether appropriate action has been taken to
close the account.
• Examine whether bank statements are received regularly and
action taken thereon.
• Also verify whether bank reconciliation is carried out
regularly.
• Examine the accounting system and see whether it conforms
to the laid down instructions.
• In the event of closing of an account, check as to how the
interest, if any, has been treated.
• Check whether the bank account is being operated by the
authorised signatories.
• Examine the system of security and custody of the cheque
books to ensure the adequacy of internal control in this regard.

LAF 26/2
Local Audit Manual
Conclusion

maintenance and operation of the Bank Account are regular, presented fairly,
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

LAF 27/1
Local Audit Manual
Audit Programme
Assets/Stores

by
Current Asset - Cash
• Check as to where and for what purpose cash is held.
• Verify whether persons who handle cash is fully independent
of the staff who authorise expenditure and that he has paid
necessary security deposit as required under the rules.
• Check if there is any regular cash verification system and
whether appropriate action taken in case of any discrepancy.
• Verify if cash is deposited to bank promptly to ensure
security.
• Check the adequacy of security of cash. Also check whether
cash book is written, closed and attested regularly.
* (In the case of Bank Account use appropriate Audit
programme for Bank Account Management)
Immovable Tangible Assets - Land/Building
• Examine the reason for having the land and how it came into
possession.
• In the case of acquisition, verify the authority and purpose and
check if the compensation money has been paid.
• Check if appropriate action has been taken to release the land
as per existing instructions if remained unutilised for an undue
long time and no longer required.
• Check whether the land is well demarcated and under the
possession of the office.
• Verify if all particulars of the land recorded in the register of
land are correct and that documents are preserved properly.
• Check whether the ownership of land is recorded with the
local land office and that all taxes in this regard have been
paid regularly.
• In the case of building, verify whether it has been taken over
in good condition and as per specific handing over papers.
• Verify if the building is being utilised for the purpose it has
been handed over/constructed.

LAF 27/2
Local Audit Manual

by
• Check if all particulars of the building have been recorded in
the building register.
• Check if there is proper repair and maintenance of the
building.
• Check whether proper security arrangement is in place to
protect the building against any damage/fire etc.
• In the case of release/return of land/building, check whether
this has been done regularly.
• Check physically significant assets like land and buildings.
Movable Tangible Assets - Plant & Machinery, Vehicle
• Check the process of purchase to see whether they were
procured economically.
• Verify whether the departmental regulations of purchase,
receipt and issue, custody, condemnation, sale and inspection
are well-devised and properly carried out.
• Check whether the ownership papers, inspection report
regarding quality are available and the security system is
adequate.
• Examine the purpose for which the plant and machinery has
been acquired were fixed and whether the purpose is being
served.
• Scrutinise if job/jobs done by the plant and machinery are
economical against getting these done from outside agency.
• Verify whether there is regular system of repair and
maintenance and this is actually done.
• Check whether yearly depreciation of cost is carried out and
recorded in the stock register.
• Verify whether technically qualified personnel are available to
operate the plant & machinery.
• Check if there is adequate security measures against
unauthorised use, theft, damage etc.
• Check whether the inventory of spares is adequate to run the
plant smoothly.
• Verify if all particulars are properly recorded in the register
for plant and machinery.
• For vehicle, obtain documentary proof of ownership,
registration certificate etc.

LAF 27/3
Local Audit Manual

by
• Check whether a driver is available to run the vehicle.
• Check the purpose for which the vehicle has been procured
and also if there is any deviation.
• Verify if the vehicle is properly serviced, repaired and
maintained.
• Verify the vehicle log book to see if it is being run/utilised
economically and for the purpose it was acquired.
• Verify if all particulars relating to the vehicle have been
recorded in the vehicle register and that annual depreciation is
calculated and accounted for as such.
Movable Tangible Assets - Stocks & Stores
• Check if departmental regulations/Government instructions
governing purchase, receipt, issue, custody, survey,
condemnation, sale and stock verification are well devised
and carried out properly and regularly.
• Check whether stores account is being maintained in
prescribed form and that balance is drawn as per previous
account and that there is no tampering of entries.
• Check whether all transactions are attested by a responsible
officer.
• Check if a reserve limit of stock is fixed and also check
whether there is any excess accumulation of store.
• Ensure that issue of store is supported by requisition and
indent approved by proper authority and proper
acknowledgement of recipient is available.
• Verify if a scale is prescribed for reordering stock and
whether this has been followed.
• Verify the shelf life of medicine, other medical supplies food
and chemical items.
• Examine if there is any adequate system, to ensure shelf-life
of an item and this is followed properly.
• Check if adequate arrangement is there for proper storage and
security against damage, loss or theft.
• In the case of items of large value, physically check a few
cases.

LAF 27/4
Local Audit Manual

by
Intangible Capital Assets - Patent right, Software etc.
• Check whether the office has adequate system in place to
handle such assets, if there is, any.
• In the event of existence of such assets, verify whether it has
been properly documented.
• Verify whether there is adequate security measures to guard
such assets from unauthorised use or misuse.
Verification/Stocktaking
• Verify if periodical verification/stocktaking is carried out by a
person other than the store-in-charge and certificate to that
effect is recorded in the store account register.
• Evaluate the action taken on previous year's verification result
to see whether irregularity in the store, if any, has been dealt
with adequately.
• Attend during physical verification of some items of large
value.
Disposal of Assets
• In the case of tangible and immovable asset, check that proper
authority exists and that the asset is no longer required.
• Evaluate the survey report to see why disposal became
necessary.
• Check whether condemnation of unserviceable store has been
done by proper authority.
• Also check whether any unserviceable store is lying without
any action.
• In the case of writing off the value of unserviceable store,
verify whether the authority was satisfied that the amount in
question could not be recovered.
• Examine whether disposal of unserviceable stores has been
done as per existing instructions and that best possible value
has been received.
Conclusion

maintenance and operation of Assets/Stores are presented fairly, various control
Prepared by: ______________________________ Date:___________________
Reviewed by: ______________________________ Date:___________________

LAF 28/1
Local Audit Manual
Audit Programme
Loans and Advances

by
Audit of sanction order
• Confirm if the sanction orders are definite, issued by the
competent authority and contain conditions like date, when
to begin recovery, period of recovery, rate of interest etc.
• Check whether sanctioned amounts are within budget
allocations or fund balances.
• Verify if approved amounts are within the delegated financial
powers of the sanctioning authority.
Audit of qualifications for loan
• Check if temporary Government Servants had at least 5 years
Government Service at the date the loan was sanctioned.
• Check if temporary Government servants who received
loan/advance had either provided personal security bond
from two eligible permanent employees or mortgage bond to
the Government.
• For house building loan, check if the Government Orders in
force have been followed.
Audit of limitations on loans
• Check whether in the case of house building loan, the loan
amount was not above the amount determined by the
government or prefixed value of the house or estimated cost
of construction.
• In the case of loans for repair of houses, check if the
conditions mentioned in GFR 257(12) have been met.
• In the case of loan for conveyance, confirm that it was in the
public interest and official-need to have such means of
conveyance.

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Audit of repayment and interest calculation
• Check the calculations of the repayments to see (a) that the
period of repayment does not exceed the maximum time
limit prescribed by rules as well as the date of
superannuation (b) that the approved rate of interest has been
applied (c) that penal rate has been imposed for default.
• Verify the recovery register to see that regular recoveries are
not missed.
Audit of security, guarantee, bond etc.
• Check the security/securities to see that necessary documents
have been properly executed as per conditions of the loan
before the loan was disbursed.
• Confirm that mortgage bonds etc. have been executed in the
case of land and building.
• Check whether any conveyance has been disposed of before
full recovery of the loan. If so, check whether proceeds have
been applied for paying off the outstanding loan.
Special situation
• If there are too many HB Loans in one office in one location
during the year, verify the existence and eligibility of the
beneficiaries. Additional scrutiny should be carried out if
malpractice is suspected.
Conclusion
In my opinion, subject to the observations in the Working Paper _______, loans and
advances to Government servants have been made in accordance with the rules
governing them and necessary recoveries are made properly.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit of Provident Fund in government offices/government
service units where pay allowances and other payment are
made through CAO/DAO/TAO
• Check and ensure that all eligible subscribers working in the
entity have been admitted to the fund.
• Ensure that a general index of subscribers is maintained in
alphabetical order in the Accounts Section of the entity.
• Ensure that the Subscribers Ledger and Abstract Ledger of the
entity are maintained properly in the Accounts Section.
• Check at random some of the pay bills and ensure that
subscriptions are at or above the minimum limit laid down by
the competent authority.
• In the case of advance sanctioned to a non-gazetted
employees, verify whether such sanction has been approved
by the appropriate authority.
• Also ensure that the conditions under which the advance can
be granted have been fulfilled.
• Verify whether monthly recoveries against advances are made
regularly at the specified rates and recorded in the relevant
books of accounts.
Audit of Provident Fund/Contributory Provident Fund of
entities having their own full-fledged Accounts outfits (like
Municipalities, Universities etc.)
• Check whether the entity under audit has its own Provident
Fund/Contributory Provident Fund Rules, (encompassing all
aspects like eligibility and rates of subscriptions, investment
programme, rules governing advances and withdrawals from
Funds etc.) duly approved by the competent authority.
• Verify that the subscribers to PF/CPF are all entitled to
subscribe under rules.
• Also verify and confirm that all the eligible subscribers of the
entities have been made members of the fund.

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• Confirm that subscriptions deducted from pay are at or above
the minimum laid down in the provident fund rules of the
entity.
• In the case of advance taken by an employee:
a) check that the conditions under which the advance can be
granted under rules of the fund are fulfilled,
b) confirm that no withdrawals have exceeded the balance,
c) confirm that the recoveries on account of principal and
interest are being made regularly and recorded in the
relevant books of accounts.
• In the case of final withdrawal, verify that such withdrawal has
been duly authorised by the appropriate authority on the basis
of current statement of fund balance.
• Confirm that final payments of the amounts drawn on
retirement or quitting service were made only to the subscriber
or his/her nominee/properly authorised representative.
• Obtain aggregate of fund balances and interest for the previous
year and the year under audit and compare ratio between the
two. If the trend of ratio is not consistent, scrutinise the
reasons.
• In the case of CPF, confirm that there has been proper, safe
and profitable investment of the Fund and realisation of
interest/profit/dividend etc.
Conclusion
In my opinion, subject to the observations in the Working Paper __________,

Provident Fund/ Contributory Provident Fund Account is correct and in accordance
with the rules governing the fund and the fund balances are correctly reflected in
the accounting statement.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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In the case of budget and expenditure:
• Verify total budget allocation with total expenditure.
• If overspent, check whether covered by re-appropriation or
regularised by competent authority.
• If savings, check whether reported to Finance Division in time.
• Examine whether funds for different purposes were allocated
to the offices under the Ministry/Division in time and amount
fixed properly and rationally.
• Obtain clarification if there is undue delay in the process and
amount fixed without any basis.
• Check if sanction letters were issued in a proper manner and by
the authorised person.
• Also check whether expenditures were monitored properly
along with physical achievement.
• Check whether timely arrangement for release of funds for
development project was made so as not to dislocate work.
• Verify if there has been adequate review of development
activity to monitor physical progress with expenditure.
• Verify if facilities for training of personnel have been utilised
as per policy framed by the Government.
In the case of sanction of Grants-in-Aid:
• Check whether amount fixed was on the basis of previous
year's expenditure/performance or any other basis.
• Also check whether there is a system to check that conditions
governing the Grants-in-Aid have been fulfilled.
In the case of stock/security held by the Ministry:
• Find out the basis on which the investment has been made.
(due to denationalization of a public enterprise or otherwise)
• Find out physical existence of the instruments and who is in
custody of these.
• Find out how cases of dividends, bonus share, right share etc.,
(if at all) are treated and accounted for.

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• Verify if there exists adequate monitoring system to see that
arrangement for debt servicing ( mainly secondary loan) has
been made by any Agency under the Ministry/Division who
has received such loan.
• In the case of bank account operated by the Ministry/Division,
check whether this is authorised by the competent authority,
source of fund, utilisation and accounting system along with
security arrangement for cheque books.
• Examine whether the financial powers exercised by the
Ministry/Division are within its delegation of financial powers.
• Check if imprest fund of the Ministry/Division has been fixed
rationally on the basis of monthly expenditure.
• Check whether large amounts of advance are lying unadjusted
for undue long time.
• Verify service books of staff to see the correctness of service,
leave account and pay fixation.
• Check papers/registers to see whether there have been proper
use of officials telephones (foreign call for both office &
residence and number of calls for residence) as per Govt.
instruction and that timely payment of telephone bills has been
made.
• Check log books to see whether there has been proper use of
office vehicles and expenditure controlled as per instructions.
• Verify whether Ministry/Division maintains an inventory
register and that annual stock verification is carried out.
• Check the status of outstanding observations in the previous
audit reports.
• To check purchase or acquisition of service, for big amount use
audit programme in Chapter 4.
• Check whether the Ministry/Division has been making regular
payment of utility service bills (gas, electricity, water) and
ensuring the same in the case of offices under it.
Additional audit programme for Economic Relations Division
• Check whether adequate and effective control exist for debt
management.
• Verify that rules, systems and procedures for loan accounting
and reporting are available.

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• Check whether there has been appropriate documentation
(ledgers, registers, advice etc.) of all transactions of
development partner wise disbursement.
• Check whether total repayment during the year is covered by
appropriate budget provision for the year.
• Check whether repayment of installments are according to
approved schedule and in accordance with the total loan
received and agreement regulating such loan.
• Check advice/confirmation from development partners along
with advice of ERD and payment memorandums of
Bangladesh Bank to ensure correctness of repayment
transaction.
• Verify whether arrangement/ system for reconciliation of
disbursement/ repayment/ balance from different development
partners exist and acted upon.
• Ensure that debt relief benefit allowed by the development
partners has been taken into account to recast the repayment
schedule.
servicing, verify that appropriate entries have been recorded in
the relevant books.
• Ensure that there has not been a mix up of grant and loan in the
accounts.
• In case of grants, confirm that the money has been utilised for
the purpose for which it was granted as per agreement/MoU.
• In case of grants, also check that all at source expenditure is
reported and accounted for.
• Verify one or two large loans working through opening
balance.
• Put to test one or two new loan contracted during the year to
ensure its accurate and appropriate recording.
Conclusion
In my opinion, subject to observations in the Working Paper _________, the

financial transactions and records of the Ministry/Division are in order, various
control systems are in place and overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Directorates
Name of office __________________________________ Financial year___________

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Planning
• Prepare, plan and prioritise audit assignments keeping in
view the importance, relevance, amount involved as well as
• Develop a clear idea about the audited body and the assigned
task before starting the work.
• Go carefully through the previous audit reports and examine
all defects and omissions which have not been remedied,
drawing special attention to points which were dealt with in
more than one report.
[NB: On the first day of taking up the audit assignment, the
leader of the audit party should meet the head of the entity
under audit drawing his attention to the above issue and
seeking his personal intervention in resolving the out-
standing audit observations. The outcome and end results
should be reflected in the working paper.
Budgetary Control
• Examine the sanctioned budget of the Directorate for the
year and see if there is any excessive provision under any
economic code as compared with the provision in the
previous year and in case of marked difference, investigate
the cause and comment whether adequate justification exists
for such increase.
• See that expenditure under each economic code is strictly in
accordance with budget allocations.
• In case re-appropriation has been effected from one
functional/economic code to another, verify whether
necessary approval from the appropriate authority was
obtained and such re-appropriation has not been made to
withhold payment under one functional/economic code to
divert the amount for some other purpose. Also ascertain that
re-appropriations do not give any indications of inaccurate
budgeting or insufficient control over expenditure.

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• Examine the trend of expenditure under broad economic
category 'Supply and Services', specially at the fag end of the
financial year and determine whether purchases made are
backed by adequate justification or to prevent the lapse of
budgeted fund.
• Verify whether different necessary fees are being collected
properly from the client industries/factories/units as per
existing instructions, accounted for and promptly deposited
into treasury.
Cash Book
• See that the cash book is in proper form, receipts and
payments are properly posted under relevant columns, the
• Select at random some items of expenditure and verify
through supporting documents whether payment has been
made to the right person and that it has been so
Custody of Cheque Book
• Ensure that the cheque book is kept in a secure place under
• Ensure that cheque counterfoils have sufficient details and
• See that the amount in each cheque written in words as well
• Ensure that all blank cheques are pre-stamped ‘A/C payee
Audit of Payroll (see Chapter 4 for checklists)
Audit of GP Fund (see Chapter 4 for checklists)
Audit of TA Bills (see Chapter 4 for checklists)
Audit of Loan & Advances (see Chapter 4 for checklists)
Operation of Bank Account (see Chapter 4 for checklists)
Audit of Expenditure (see Chapter 4 for checklists)
• Examine the Log book of vehicles and verify:
a) transports are being used for authorised purpose.
[Note: In case of private use of vehicles, ensure that kilometre
charges at prescribed rate are deposited by the user.]

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b) POL is issued as per existing rules and only to those vehicles
which are under operation.
[Note: Sometimes POL is used for vehicles which are not in
operation for a considerable period of time]
purposes and by officials entitled to it.
• In the event the office building is a rented one, verify whether
monthly rent had been paid regularly to the house-owner out
of allocated budget provision.
• See that the utility bills (electricity, water charges etc.) for the
office building are being paid regularly by the entity under
audit out of the allocated budget provision.
• In case of expenditure on "Repair & Maintenance" verify that:
- such work was done through tender,
- proper tender procedure had been followed and lowest
responsive bidder was selected for the job.
- that the work was adequately supervised and the repair
work had been done to the fullest satisfaction of the
audited entity and
- that payment had been made to the right party and strictly
as per terms of the contract.
Review of Development Projects
(Where the entity under audit is the implementing agency)
• Find out the total number of projects.
• Find out the total fund allocated in the budget.
• Find out the total fund released by the appropriate authority
during the period under audit. In case of less release, find out:
- whether this was due to slow physical progress,
- whether release of fund could not be arranged in time due
to slackness in meeting the requisite formalities and
- whether supervision, monitoring and guidance were
unsatisfactory and inadequate.

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• Find out whether separate bank accounts had been opened
for such projects and if so, ascertain the amount lying in the
account. Find out why this fund was not refunded at the close
of the financial years.
Audit of Acquisition of Assets/Purchases
In the event there is allocation on the above in the budget of the
audited entity, verify:
• the purpose for which the fund had been allocated with
detailed terms and condition are available in the office,
• that the amount had been spent specifically for the purpose,
the fund was authorised,
• whether the fund allocated was used in full. In case of
excess, whether sanction from the appropriate authority was
obtained and in case of less utilization, see that the money
has been refunded and deposited in the relevant account and
• the acquisition of stock had been made in the most economic
way. Proper purchase procedures had been adhered to.
Audit of Lump Grant
• Examine the purpose for which grant was made.
• See the terms & conditions of the grant and verify whether
the money had been used specifically for the purpose for
which the grants had been sanctioned.
• Ensure that all supporting documents are available in support
of the expenditure.
• In case expenditure had been incurred in excess of the grant,
verify whether approval of the competent authority was
obtained.
• In case the expenditure had been less than the allocated
amount, ensure that the unutilised amount had been refunded
and deposited in the relevant account.
Additional programme for Directorate of Environment
• Check whether rules, regulations and guidelines under the
Environment Protection Act 1995 are in place and being
implemented effectively.

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• Verify if there is any effective programme to check the
decreasing of biomass in the country.
• Check whether the impact of chemicals and industrial
pollution is examined before granting permission to setup
industries.
• Examine whether the Directorate has effective laws and that
these are being implemented to check ever increasing
pollution of atmosphere. Also check what punitive action is
taken against the offenders.
• Verify as to how the municipality service delivery like waste
disposal is ensured. Comment, if necessary.
• Verify whether there are effective and appropriate checks
regarding sanitation and waste disposal arrangement before
granting permission to construct high rise buildings.
• Check whether there is effective programme to increase
public awareness towards importance and improvement of
environment condition for existence of life.
• Evaluate and comment in general term as to whether the
Directorate has capability in terms of manpower and
resources to address environmental issues of the country.
Conclusion

transaction relating to the activities of the Directorate are satisfactory, various
control systems are in place & overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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• Review the status of previous audit reports and the number of
unresolved observations. Meet the concerned officials and
seek their personal intervention in the matter.
• Prepare, plan and prioritise the audit programme keeping in
view the risk areas, importance and availability of time.
• See the sanctioned budget of the Assembly and confirm that
expenditure on all economic codes have not exceed
sanctioned amount.
• See that the budget allotments have been noted in the
relevant register and there is proper system to monitor and
review the trend of expenditure.
• Obtain the latest laws and orders regarding remuneration,
pay, allowances and other emoluments of
Speaker/Whips/Members of Parliament and other
functionaries.
• Verify that remuneration/pay/allowances/other emoluments
disbursed to above are strictly as per latest government order.
(Note : The primary responsibility of checking these bills rests
with the Chief Account officer, National Parliament. Auditors
should, therefore, check some of these bills at random to ensure
that the Accounts Section of the entity has prepared, processed
and passed the bills strictly in accordance with existing orders
governing remuneration/allowances/emoluments of the elected
representatives.
Audit of Travelling Allowance (Both domestic and foreign
tours)
[ For guidance see checklists contained in Chapter 4, General
Audit Procedure]
Audit of purchase procurement of goods and services
[For guidance see checklists ‘Purchase/Procurement’ contained in Chapter 4, general
audit procedure of this manual]

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contained in this Chapter].
Audit of discretionary fund
• Examine the G.O (Government Order) issued by the entity

and verify whether the amount of discretionary fund
sanctioned in favour of Speaker, Deputy Speaker, Chief
Whip, Whips, Members of Parliament are as per their
respective entitlements.
[Note: For proper scrutiny, auditors must obtain all relevant
orders, circulars governing the operation of discretionary fund
and respective responsibilities of the entity, CAO/DAO/TAO,
DC/TNO, concerned bank and the grant recipients.]
• Verify from the records of the Accounts Section that Chief
Accounts Officer/DAO,TAO had endorsed the G.O's to all
concerned DC/TNO in time and had been properly
acknowledged.
• Verify whether there is proper system to monitor and record
the utilised amount of discretionary fund (disbursed during
the year under audit) & whether there is proper procedure to
verify whether the unutilised amount had been redeposited in
the relevant account of the government.
Conclusion

transactions with regard to the activities of the National Parliament are presented
fairly, various control systems are in place and overall management system is
satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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audit reports and give particulars of all defects and omissions
which have not been remedied, drawing particular attention to
points which have been raised in more than one previous
report.
• See the sanctioned budget of the office under audit and ensure
that allocation under different economic code have been kept
in proper register and proper system is in place to watch the
progress of expenditure and total expenditure during the year
under any one economic code did not exceed allotment.
• See that liabilities incurred in one year have not been met from
the budget allotment of the next year without approval of the
• See the trend of expenditure under contingency (supplies &
services and repairs & maintenance) at the end of the financial
year and establish whether such expenditure was actually
necessary or had been incurred to prevent the lapse of budget
allotment.
• Examine the cash books and ensure that they are in prescribed
form. Select some entries in payment side and verify whether
payment has been made to the right person and that it has been
so acknowledged and recorded.
• See that the cheque books are kept in lock and key in the
• See that the amount of each cheque written in words as well as
the person authorised to sign the cheque.
encashment.
• For every purchase, see that there is proper order from
• Ensure that purchase orders have not been split up so as to
avoid obtaining sanction of the appropriate authority.
• In case of non acceptance of the lowest tender, the reasons for
non acceptance have been recorded in writing.

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• Ensure that VAT/Income Tax at prescribed rates had been
deducted from the bills of Contractor/Supplier.
• See that every article purchased or otherwise obtained is
entered in the store account.
• See that the staff responsible for verification of stores is
independent of the staff entrusted with the custody of stores or
for keeping their accounts.
• See the number of PL Account operated by the entity under
audit and review the status of each PL Account. In case of
non-operational account, verify whether fund for the purpose
had been refunded and deposited into the relevant economic
code of government account.
• Ensure that proper system of check and balance are in place to
ensure proper upkeep of judicial/non-judicial and service
stamps. Examine whether the receipt and issuance of stamps
have been correctly recorded in the relevant register and
effective system of monitoring and supervision exists in this
office under audit.
• Check the gun license/renewal registers and obtain at random
some names of the applicants and verify whether they have
deposited license/renewal fees at the prescribed rate through
treasury chalan.
• Examine the total number of grants (e.g. for meeting a disaster
situation, undertaking relief programme, discretionary fund
for ministers and MP's etc.) placed at the disposal of the entity
under audit. Review the up-to-date utilization position and
check whether the unutilized portion of the grant had been
refunded & deposited in the relevant govt. account at the end
of the financial year.
• See the log book for vehicles and ensure that POL issued is as
per Govt. rules and orders and transport used for authorised
purposes.
purposes and used by officials entitled as per govt. rules.

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• See that the utility bills (electricity, water charger etc.) for the
office building are being paid regularly.
(Note: All DC's & TNO's offices receive separate allocation for
meeting utility charges and as such they should be prompt &
regular in paying such government dues.)
• Examine the guest register maintained in the Circuit House/
Inspection Bungalow and check at random whether all
occupants have paid room charge at the prescribed rates. Also
verify that the amount so received has been deposited
promptly into the relevant govt. account.
Conclusion

transactions carried out in the office is presented fairly in the accounts, various
control systems are in place and overall management of the office is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Budgetary control
• Examine total budget allocations with total expenditure along
with economic code wise allocation and expenditure.
appropriation or regularised by competent authority.
• In case of savings check whether it was reported to the higher
authority in time.
• Check generally, whether the financial sanctions given are
within the delegation of financial powers of the issuing
authority.
• Also check whether the position of revenue collection vis-a-
vis the receipt estimate is reviewed and corrective action
taken to gear up collection, if necessary.
Audit of Accounts
• Verify whether there exists proper distribution of duties
among the staff clearly demarcating accounting from payment
responsibilities.
• Verify whether the instructions for requisition of cheque
books have been followed for obtaining new cheque books.
• Check whether there is adequate security of the cheque books
• Verify if cheque counterfoils have sufficient details and
• Check whether the office has been doing reconciliation of
receipts and payments of its accounts with those in the bank
statements and also recorded in the District Accounts Office.
• Also check if lapsed, cancelled or lost cheques have been
properly noted in the Cash Book and reported to the bank.
• Verify if charges have been incurred with reference to
sanctions and allotment of fund and that advances and
recoverable payments are covered by authority.

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• In case of works and conservancy expenditure, when
expenditure on a work is spread over two or more months, the
up-to-date total expenditure should be verified against the
sanction.
• See that the Cash Book is maintained in proper form, items of
receipts and payments are entered in detail, closed regularly
and certificate recorded at the end of every month by the
Drawing and Disbursing Officer.
• Check whether daily totals from subsidiary registers have
• Check whether the Monthly Accounts of receipts and
payments agree with the cash book figures.
• Check whether the monthly accounts are prepared and sent in
time to CAO office.
• Examine the monthly bank statements of receipt and payment
furnished by the Bangladesh Bank/ Sonali Bank and check
that the transactions have been classified correctly in the
accounts.
• Also check that the amounts shown in the summary sheet of
monthly account agree with the detailed schedules
accompanying the summary.
• Verify whether there has been regular verification of
departmental accounts with those of the Accounts Office.
• In case of inter Divisional transfers when a division is acting
for the purpose of ascertaining financial results, make
appropriate reference to the DG Local and Revenue Audit to
arrange checking of two or more Divisions to ensure that there
has not been duplication of figures in the different monthly
accounts.
• Check items booked under 'Forest Remittance'. Unusual
increase/balance must be investigated for legality, propriety
and authenticity. Audit must satisfy itself that 'Remittance' is
not a deliberate attempt for misrepresentation in accounts.
• Test check amount for which daily cash receipt was issued
with the amount entered in the cash book and appearing in the
bank statement received from Bangladesh/Sonali Bank.

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Forest Advance
• Examine the appropriateness of advance given to a disburser
who has no cheque drawing authority.
• Examine whether transactions in respect of Forest Advance
have been properly treated in the accounts by appropriate
debit or credit entry as per instructions.
• Check whether any advance is lying outstanding for
adjustment for undue long time and if there is a time limit,
whether beyond that limit.
the Manual.
• Also check the reasonableness of the numbers of temporary
labour and muster roll personnel, that they are not fictitious
and that the expenditure in this regard is classified under
conservancy and works and not under establishment.
Audit of Payroll
• Apply Payroll audit programme at Chapter 4 of the Manual.
Audit of Bank Account
• Apply Bank Account audit programme at Chapter 4 of the
Manual.
Audit of Purchase & Procurement
• Apply appropriate steps of audit programme at Chapter 4 of
the Manual.
Audit of Stocks, Stores and Disposal etc.
• Apply appropriate steps of Audit of Assets programme at
Chapter 4 of the Manual
Audit of Revenue Receipts
the office.
• Examine the system and the process of tender, auction, lease
etc, under which persons and firms are selected for harnessing
forest resources. Bring out any lacuna in the system or faulty
processing of the work, if there be any.

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Examine trend of receipt and comment. In case of lower
estimate, examine reason. Also in the case of less collection,
scrutinise and comment. Besides, if there has been more
collection, comment on possible underestimation.
• Review whether all possible avenues of revenue like sale of
timber, fire wood, nursery plant, wood for industrial raw
material (newsprint, pulp, tea-chest, match box etc.), bamboo,
sun-grass, cane, lease for honey collection, boulders and
shingles, harvest of golpata, fishing, rent for rest house etc.
have been identified and covered under the estimate of
receipts.
year.
• Generally review whether the assessment of revenue has been
made according to law
• Verify whether adequate and appropriate information and
statistics are available to make reasonable assessment of
receipt estimate.
• Check a sample of assessment calculations to verify its
accuracy and authenticity. Also verify whether collected
amount has been entered in the relevant register and the cash
book and promptly deposited to bank.
• Verify if the receipts reported in the Bank Statement checked
against chalans and posted in the cash book direct or through
some subsidiary register.
• In case of cash receipt, check the receipt book and in the case
of deposit into bank check chalans, bank statements for
authenticity.
Register of land
• Check whether there exists a register of land in the office. If
so, whether it contains all particulars like total area including
open land mass, forest area, water area etc. and demarcations
under the jurisdiction of the office.
• Verify whether there is adequate arrangement to protect the
area from criminal plundering of forest resources and land.

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• Obtain a certificate to the effect that the recorded/documented
forest area is actually under the jurisdiction and control of the
office.
Extraction of Forest Resources
• Obtain a copy of the policy relating to extraction of forest
resources like timber, industrial material, fire wood, golpata,
honey etc.
• Check if the policy is adequate and comprehensive to take
care of issues like the age of tree for timber, the type of tree
for raw material etc.
• Also examine if the policy for extraction of forest resources is
followed to guard against plundering.
• Examine the tendering/lease/auction procedure to ensure that
financial instructions/disciplines have been adhered to.
• Verify whether Government policy on hunting and reserve
forest has not been breached.
Implementation of forest laws
• Are the forest laws adequate to secure and protect forest land
and resource from falling pray to unscrupulous plundering .
• Check whether security personnel like forest guard, rangers
etc. have specified job responsibilities, their number is
adequate and are deployed properly to protect the forests.
• Examine the steps taken for preservation of wild life,
migratory birds etc. against poaching.
preservation of forest land against unscrupulous
encroachment.
• Generally check the file relating to litigations arising out of
implementation of forest laws to see that these are properly
pursued and none fell through by default.
Programme
• Ascertain what GOB financial programme/project is being
implemented and status of the work.
• Check project physical implementation progress vis-à-vis
financial expenditure under the overall time frame.

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• In case of a completed project, ascertain and comment as to
how the project is performing and whether the objectives have
been achieved.
• Find out from Plant Journal whether the plantation
programme is according to the Management Plan drawn by
the Working Plan Division. Also see whether the plantation
programme is adequate to keep pace with the felling of trees.
General
• Check expenditure relating to vehicle/water transport
operation and maintenance and use of telephone to ensure
appropriateness and whether these conform to government
instructions.
utility service bills (electricity, gas, water etc.) both for the
office and recovered from the officials.
• Generally check the adequacy of the inventory control and
security arrangement of the firearms and ammunitions under
the Division.
• Verify whether all reports and returns are sent regularly and
timely to the Conservators of Forest.
Conclusion
In my opinion, subject to the observations in the Working Paper _________ the

transactions relating to income and expenditure have been made in accordance with
the rules governing them and presented fairly in the accounts, various control
systems are in place and overall management of the affairs of the office is
satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme

by
• Verify total budget allocation with expenditure and in case of
savings, see whether reported in time.
• Check whether any financial liability has been incurred in
advance for next financial year. If so, scrutinise reason.
• Examine whether due procedure was followed for purchase of
MSR.
• Examine whether purchase price of MSR commensurate with
the rate fixed by the Government.
• Verify, if possible, whether purchase price of MSR is similar
with the price prevailing in the open market.
• Check if MSR have been distributed to different health units
proportionately, and according to need and without any undue
delay.
• In case of repair and maintenance of health units, check
whether these have been carried out with due process of
regularity.
• Check generally the system of repair and maintenance of
medical equipment of hospitals and health complexes and see
whether prompt action has been taken in these cases.
• Check if there is appropriate effort to keep the ambulances in
the district in running condition.
• Check log book of vehicle to see that the use, repair and
maintenance has been done in a regular manner.
• Check the expenditure on telephone to verify its regularity.
• Verify whether contingency plans are in place to meet health
problems of emergent nature.
• Also check whether all reports and returns are received from
the units and sent timely and regularly to Health
Administration.
• Verify the stock register and check the adequacy of storage
facility of MSR etc. in the office.

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• Examine the cash book to see if, it is maintained and checked
regularly.
• Verify whether expenditure amounts under different codes of
account are compared regularly with those of accounts office
figures as required under the rule.
• Verify whether all utility bills regarding telephone, gas, water
and electricity are paid regularly.
* For audit of pre audited bills namely, Payroll, GP Fund, TA bill, Purchase of store,
appropriate Audit Programme at Chapter 4 of the manual may be followed.
For audit of store the programme relating to audit of Asset at Chapter 4 of the
Manual may be followed.
Conclusion

transactions relating to the activities of the Civil Surgeon's Office are satisfactory,
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme
Account location ________________________________ Financial year __________

by
Planning
Budgetary control
Cash book
[See Audit Programme on Directorate]
Audit of Payroll
Audit of GP Fund
Audit of TA Bills
[See the relevant checklists contained in Chapter 4 of General
Audit Procedure of this Manual]
[See the Audit Programme of Directorate contained in this
Manual]
Audit of receipts on account of license/renewal of
Radio/TV/VCR/STVR etc.
• Review the annual budget of the entity and examine the
following:
- projected target of receipt as reflected in the budget,
- actual receipts (As per statement received from
Bangladesh Bank) and
- percentage of target achieved.
• Ascertain whether both Radio/TV authorities have proper
record and information about the total number of Radio/TV
sets available in the country and whether such information is
authentic and updated from time to time.

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• Carefully examine the different clauses of agreement between
Radio/TV and concerned banks/post offices, responsible for
receiving deposits on account of license/renewal fees and test
check whether the amount so received are deposited promptly
in the appropriate account of government as per terms of
agreements.
• Review the system existing in both Radio/TV to watch and
monitor the progress of collection of fees and whether the
system is effective and satisfactory. Comment, if necessary.
Audit of revenue collected from different companies on
account of advertisement made through TV/Betar for their
products
• Review the budget of both Radio and TV and examine the
projected estimate of revenue on advertisement as reflected in
the budget.
• See whether the projected target has been achieved.
• In case of shortfall, verify whether this was due to:
- ambitious and impractical estimation and
- laxity on the part of authorities with regard to collection of
advertisement fees from sponsors.
• Verify whether approved rules and guidelines exist, for
determining the rates of advertisement and fees and that these
are being collected as per stipulated rates.
Payment of Royalty
• Test check whether royalty, fees etc. paid to
artists/participants are paid in time and as per terms of
agreement between Radio/TV and the recipients.
Conclusion

transactions with regard to the activities are presented fairly, various control
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme
Hospitals
Name of office ________________________________ Financial year____________

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Planning
• Develop a clear idea about the audited body and prepare plan
and prioritise the audit programme, keeping in view the
assignment.
• See the previous audit reports and examine all defects and
omissions which have not been remedied, drawing special
attention to points which were dealt with in more than one
report.
[ NB: The leader of the audit party should personally meet the
head of the audited entity seeking his personal
intervention in resolving the outstanding audit
observations. The outcome should be reflected in the
working paper at the end of the assignment.]
• Check that all expenditures are within the budget allocation.
• See that the expenditure on all economic codes have not
exceeded sanctioned amount.
of unusual variation, investigate reasons.
• Verify that the budget allotments have been correctly noted in
the appropriate register and there is proper system to monitor
and review the trend of expenditure.
• In the case of re-appropriation from one code to another,
verify whether savings really accrued after meeting all the
legitimate charges and there was no tendency to withhold
payment under a code with a view to diverting the allotment
to some other purpose.

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[NB: For example, very often, funds allocated for electricity,
water, gas, municipal tax, etc., under 'Supply and Services',
are diverted to some other contingency items, thus depriving
the concerned agencies of the government from revenues
projected in their annual budget.]
Audit of Cash Book
• Check that the cash book is in proper form, receipts and
payments under different heads are properly posted in the
cash book under appropriate columns, that the pages of the
cash book are consecutively numbered and properly bound.
• Verify that the cash book is closed monthly and that a
reconciliation of the closing balance of the Bank Statement
and the cash book is carried out and recorded under the
signature of an authorised officer.
• From the cash book, select at random, some items of
expenditure and verify through supporting vouchers whether
payments have been made to the right people and that they
have been so acknowledged and recorded.
• Ensure that the cheque books are properly accounted for and
• See that the amount in each cheque is written in words as well
• Confirm that all bank cheques are pre-stamped 'A/C payee
only' as soon as they are received from the bank
Audit of Payroll*
Audit of GP Fund*
Audit of TA Bill*
Audit of Loans and Advances*
Audit of Expenditure*
[* For guidance see the detailed checklists contained in Chapter 4,
General Audit Procedure of this Manual.]

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Audit of Purchase of MSR
• Check that MSR items are not purchased other than in
accordance with the rules approved by the competent
authority.
• See that a certificate of receipts of MSR items in full
according to specification and in good condition is recorded in
the invoices or in the bill for the supply made and the same
have been correctly entered into Stock Register.
• In the event MSR items are purchased other than from
govt./govt. authorised sources, it should be seen whether:
a) proper sanction and approval had been obtained from
appropriate authority,
b) the items were purchased through open public tender and
the contract had been awarded to the lowest responsive
tenderers,
c) the competent authority had examined and certified that the
items were of appropriate quality and
d) the items purchased were stored in a proper place and
promptly used for the purpose they were bought.
• Examine the log books for vehicles and verify that transports
are being used for authorised purposes and
POL is issued as per existing rules and only to those
vehicles which are in operation.
[Note: 1. In the case of private use of vehicles, confirm that
kilometre charges at the prescribed rates are deposited by
the user.
2. Sometimes POL is issued fictitiously for vehicles
which are not in operation.]
• In the case of hospitals operating ambulances, confirm that
these are only used for transporting patients and for other
authorised purposes. Also confirm that requisite fees at
prescribed rate had been realised and deposited into relevant
accounts.
purposes and used by officials entitled to it.

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• See that the utility bills (electricity, gas, water charges etc.)
for the hospital building are being paid regularly out of the
allocated budget provision.
Audit of Receipts
• Ensure that receipts under all heads are traced in the cash
book and also in the subsidiary register.
• Ensure that receipts on account of admission fee, diet and
other charges paid by the patients are promptly paid into the
relevant accounts of the government and proper receipts,
supporting such deposits, are kept on record.
• Check the monthly totals of the daily issues of diet articles
shown in the diet register for one month in each quarter.
i) Test a few cases of the number of indoor patients entered in
the diet register with the register of indoor patients.
ii) Check the quantities of diet articles purchases with those
entered in the diet register.
Quality of treatment and services
• Verify whether there is any system in existence to ensure
proper treatment of the patients.
• Check as to how the quality of different services are
monitored and ensured.
Conclusion

transaction with regard to the activities of the hospital are satisfactory, various
control system are in place and overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme
District and Thana Family Welfare Office

by
• Develop a clear idea about the entity, the potential risk
areas and the objectives of the assigned task and on the
basis of assessment of the situation prevalent in the entity,
prepare plan and prioritise the audit programme keeping in
view the importance, relevance and availability of time for
the assignment
[NB: For example while auditing the accounts of a Family
Welfare Office, auditors should devote more time and
attention in assessing the performance record of the entity.
They should examine the total number of clients who
availed family welfare methods both permanent and
temporary, whether the number of users have increased or
decreased compared to the prior years, and if so, the
reasons thereof, whether satisfactory arrangement exists in
the entity to ensure proper distribution of contraceptives
methods, whether the users of family welfare methods are
getting all the incentives pledged by government etc.]
Budgetary control
Cash book
given in Chapter 5 of this manual of Audit of Government
Offices.]
Audit of Payroll
Audit of GP Fund
Audit of TA Bills
[For guidance see the appropriate checklists contained in
Chapter 4 General Audit Procedure of this manual]

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Review of activities of the entity under audit
• Find out the total number of clients who availed the family
welfare facilities, both permanent and temporary, during the
year under audit.
• Compare this figure with the number of clients during
previous year.
• If there is substantial short fall of clients find out whether
this is due to:
- absence of facilities,
- absence of doctors/FWV etc.,
- absence of effective motivational drive,
- lack of contraceptives and equipment and
- lack of fund.
• Find out whether the entity has sufficient stock of all
contraceptives and these are readily available to clients as
soon as they ask them.
• Verify whether proper mechanism exists for distribution of
condoms, oral pills etc. and verify whether there is adequate
check and balance to ensure that such contraceptives are
being distributed to genuine users.
• Confirm through some test checks, that the names appearing
in the list of clients receiving above are bonafide users and
there is enough documentary evidence to substantiate these
facts.
• Find out whether the entity has adequate and satisfactory
arrangement for rendering different permanent family
welfare services (vasectomy, ligation etc.) and all requisite
medicines, surgical and medical equipment are available.
• Check whether the supplies have been stored properly in
terms of security and quality control.
• Verify whether the office has been rendering activities
reports and returns to the higher authority as per calendar of
returns.
• Also verify whether there has been regular inspection of the
office by the controlling authorities.

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Conclusion

activities of the entity are presented fairly, various control system are in place and
overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme
Name of institutions _____________________________ Financial year____________

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Outstanding audit reports
audit reports and examine the defects and omissions which
have not been remedied so far, drawing particular attention to
issues which have been raised in more than one previous
reports.
Budgetary control
• See the sanctioned budget of the institution under audit.
Confirm that the allocation under different heads have been
recorded in proper register and proper system is in place to
watch the progress of expenditure.
• Determine which account code have overspent when
compared to their budget allocation and which code are
underspent.
• For those account codes over spent, investigate where from
the additional funds over and above the budget allocation
were provided. In case it was through re-appropriation, see
whether sanction from appropriate authority was obtained for
the purpose.
whether there is unusual expenditure in June and verify
whether all such expenditures were actually necessary or had
been incurred to prevent the lapse of budget allotment.
Cash book
• See that the cash book is in proper form, receipts and payment
under different codes of accounts are posted properly in the
cash book.
supporting documents whether payments have been made to
the right person and that it has been so acknowledged and
recorded.
• See that all outstanding cheques are brought forward until
they are cashed. In the case of cheques outstanding for more
than 3 months, ascertain the reason for non-encashment.

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• See that money realised on account of tuition/admission fees
of students are first recorded in the receipt side of the cash
book, promptly deposited into bank and receipts obtained and
kept in the relevant file.
• See that cheque books are kept under lock and key in the
• See that the amount in each cheque written in words as well as
the person authorised to sign the cheques.
encashment.
• Ensure that all bank cheques are pre-stamped ‘A/C payee
Audit of Payroll*
Audit of GP Fund*
Audit of TA Bill*
Audit of Expenditure *
[* For guidance see the appropriate checklists contained in the
Chapter 4 General Audit Procedure of this Manual.]
Audit of receipts
1. For both admission and tuition fees.
b) For each month obtain details of the number of students
registered in the institution.
c) Multiply the figure obtained at (a) by the prescribed rate for
tuition fees.
d) Compare the figure obtained at (c) to that obtained at (a).
Where there is difference, seek an explanation for the
difference.

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• Obtain details of the monthly bank statement and compare
the monthly receipts figures lodged to the bank with those
recorded in the cash book as having been received within the
month. Where there is a difference between the two figures
(bank statement and cash book) verify the reason for such
difference.
Audit of Private Fund Receipts
[Note : Private funds are those amounts collected by educational
institutions from private donations from students or their
guardians. An example would be, where an institution
provides tiffin to students for which no fund is provided
by government]
• Verify whether the institution has obtained prior approval
from competent authority before operating any private fund
and if so, what are the terms & conditions. Examine whether
such terms & condition are complied with.
b) Determine the categories and amounts for each category for
which private funds were collected.
c) Determine the categories and amounts for each category on
which private funds were spent.
d) Compare the categories and amounts obtained at (b) to those
obtained at (a), where there is a difference, verify the reasons
for such difference.
Conclusion
In my opinion subject, to the observations in the Working Paper ________, the

transactions with regard to the activities of the institution are presented fairly,
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

LAF 51/1
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Audit Programme
Jails
Name of Jail ________________________________ Financial year ______________

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Budget and Accounts
• Verify if the budget allotment was made as per estimate
prepared by the jail authorities.
• Check expenditure amounts vis-à-vis the budget allotment.
a) In case of over spending, obtain clarification.
b) In case of savings, check whether it was reported to the
controlling authorities in time.
• Examine the imprest account to see the appropriateness of the
amount fixed. Also check whether there has been timely
adjustment of advances from the account.
• Check whether appropriate security deposit was taken from the
concerned officials and accounted for as provided under the
Jail Code.
• Verify from the admission register of prisoners if valuables and
cash taken from the prisoners have been accounted for and
kept under proper security. Also check if they have been
handed back in time of their release.
• Check whether the Cash Book contains a clear and detailed
account of all receipts and payments and that daily balance is
struck and certified to that effect.
• In the case of a civil prisoner, verify whether the cost of diet
and other expenses have been realised from the appropriate
authority and accounted for properly.
• Verify if there has been regular and periodical verification of
accounts with those maintained in the Accounts Office.
Supply of rations
• Verify whether the contractor for supply of ration has been
engaged properly as provided under the rules.
• Check the adequacy or otherwise of the system of control for
receiving daily supplies from the contractors.
• Examine the system and the basis on which the indent for daily
supplies is placed.

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• Also check how the issues like hospital diet, diet for Division
prisoners etc. are taken care of while fixing daily scale of diet
and how the quality and quantity is ensured.
Factory Account
• Check whether factory/manufacturing accounts are maintained
properly.
• Verify whether procurement of raw material for the factory has
been done as per approved instruction of the Government.
(* Audit programme for purchase/procurement at Chapter 4
may be applied)
• Examine the inventory register of stock to ensure that materials
are there, in good condition and stored properly.
• Check whether costing of the manufactured products have
been made appropriately keeping in view the price of all
inputs, and market condition.
• Verify whether the sale proceeds are properly accounted for
and deposited to treasury in time.
• Examine the overall factory activities to see whether the total
operation is an economic proposition. If not, obtain
clarification and comment.
Stock and Stores
• Check whether the system of procurement of stores is in order.
• Scrutinise the inventory register to verify receipt, storage,
existence and accounting of stores.
(* Use appropriate audit programme, Audit of Assets at
Chapter 4 of this Manual)
• Verify whether hospital supplies and medicines were procured
as per rules and on the basis of annual indent as provided in the
Jail Code. Also check the inventory register of the Jail hospital.
Establishment
• (* For audit of pay roll use appropriate audit programme at
Chapter 4)
• Check the service books of the Staff to verify fixation of pay,
leave account etc.
• Verify the vehicle log book to ensure proper use, repair and
maintenance, use of POL etc. of the office vehicle.

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• Also check if there has been proper use of official telephones.
• Verify whether there has been regular and timely payments of
bills for telephone, electricity, gas, water and other
conservancies.
• Verify if necessary deduction at source of income tax and VAT
has been effected from the contractor’s/supplier's bills.
• Check if mandatory reports and returns including the monthly
Accounts Statement are sent timely and regularly to the
controlling authority.
• Verify if the Jail authority has any year-end liability in the
from of unpaid bill. If so, obtain clarification and comment.
General
• Verify generally the inspection register to see that the Jail has
been inspected regularly by inspecting the Jail authority, the
magistrate and other authority to ensure quality operations and
also to effect overall improvement of the system.
• Generally make an assessment of the Jail capacity, number of
inmates, conservancy services and supplies to see that the
inmates were provided with the minimum facilities they were
entitled to under the law.
Conclusion

transactions relating to the activities and operation of the Jail are presented fairly,
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme
Name of office _______________________________ Financial year _____________

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• Assess whether adequate controls for preparedness are in place
to trigger coordinated action to deal with emergencies.
• Examine organisation chart and job description in the light of
the above and comment.
• Find out about the number of incidents of fire and natural
calamities during the year along with relevant information to
see as to how appropriately the department/unit has been able
to combat the situation.
• Check whether effective measures are taken regularly to
increase public awareness regarding adopting/observing fire
safety measures.
• Check the inventory of store to assess whether adequate stock
level of spare parts has been maintained to properly carry out
repair and maintenance of fire fighting equipment and vehicle.
• Verify whether regular survey is made to check the efficacy of
different fire fighting equipment installed in various places.
• Verify as to how fire prevention/escape/fighting clearance is
given for a building or installation and how this is monitored
and what action taken for violation of terms of such clearance.
Are the laws adequate to deal with such cases? Analyse and
comment.
• Verify as to whether there is strategic training policy and
annual plan in the department for training of personnel and
how effectively these have been implemented during the year.
Also examine budget allotment and expenditure for training,
number of programmes implemented and persons trained to
see whether desired result has been achieved

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• Assess and comment on the state of alertness and preparedness
of the department to effectively deal with emergent situations.
the department with relation to its achievement and fulfillment
Conclusion

overall performance towards managing the affairs of the department is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme

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• Examine the previous audit reports and ascertain all defects
and omissions which have not been remedied.
[Note: The auditors should exert their utmost to get all the old
observations settled or to suggest ways and means how to
gear up settlement of audit observations by meeting the head
of the office as frequently as may be necessary, during the
course of audit.]
• Develop a clear idea about the audited entity and prepare,
assignment.
[Note: For example, if the trend of receipts of the entity under
audit is poor, Auditors should devote more time and attention
in that area making in-depth analysis and pinpointing the
defects in the system of revenue collection and suggesting
ways and means to gear up the collection.]
Review of budgetary Control
carefully examine the receipts, estimated under heads
holding tax, other taxes, fees, rents, and comment whether
the estimates had been based on correct assessment of the
situation and the past trend of collection.
[Note: For example, if the collection on account of holding tax in
the previous year was around 50 lacs, budget estimate of 2
crores for the year under audit would be impractical and
unachievable.]
• See that the budget allotments have been correctly noted in
the relevant register and proper and effective systems are in
place to monitor and review the trend of expenditure. In the
case of re-appropriation from one sub-head to another, verify
whether savings really accrued after meeting all legitimate
charges and there was no tendency to withhold payment
under one head with a view to diverting the allocation to
some other purpose.

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[Note: For example, very often funds earmarked for paying
electricity bills are diverted to meet some other contingency
expenditure of the entity, thus depriving the concerned
agencies of the government from revenue they projected in
their annual budget.]
• Review the status of grant received from government as
development support. Verify whether the amount earmarked
in the ADP had been received fully and spent specifically for
the purpose, the grant had been given.
• Verify whether the accounts of the entity are maintained in
direction.
Cash Book
• See that the cash book is in prescribed form, receipts and
payments under different heads are properly posted, that the
• See that the cash book is closed monthly and that
reconciliation of the closing balance of the bank statement
with that of the cash book is effected under the signature of
• From cash book select at random some items of receipts
(holding tax, professional fees, rents etc.) and verify through
relevant subsidiary registers and bank scroll, that the amount
indicated in the cash book had been recorded correctly.
• Similarly select some items of expenditure and verify
through supporting vouchers whether payments had been
made to the right person and that it had been so
• Ensure that cheque books are properly accounted for and

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Audit of Payroll
Audit of TA Bill
General Audit Procedure of this manual].
Audit of Holding Tax
• Verify that the entity had complete and up-to-date list of all
buildings/properties that should come under the purview of
municipal tax.
• Select at random some cases of assessment made by the
assessor and ensure that the assessment had been made strictly
as per terms of model taxation rules.
• See the demand and collection register and select at random
some buildings/properties for which no holding tax had been
paid by the owners for years together and verify through
available records, that the entity under audit had made genuine
and vigorous efforts to realise the arrear taxes from the
defaulters through issuance of demand notice and warrant
notice
Government Building
• Ensure holding tax on government buildings are realised and
credited in the accounts of the entity within the stipulated time
and proper mechanism exists to supervise and monitor the
collection of such dues.
[Note: In the revenue budget of all government offices, separate
allocations are always made for payment of municipal tax
under head ‘Supply and Services'. These amounts, sometimes,
remain unrealised because of laxity on the part of the
collection department of the entity.
Professional or Callings Fees and Trade Licence
(Realised from people, engaged in different professions like
doctors, lawyers, business entities etc.)
• Verify whether there is complete and up-to-date list of all
professionals and business entities who are required to pay
yearly fees at rates, prescribed by the relevant authority.
• Examine from the approved budget of the entity, the amount of
receipts projected under this head and actual realisations.

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• In the event the amount of collection is low compared to the
budget provision, verify whether this is due to slackness on
the part of the collection department in realising these dues
from the defaulters.
Audit of Entertainment Tax
• Review the budget provision and actual receipts.
• If the actual receipts are low compared to budget estimate,
examine whether this is due to:
• In accurate and inflated estimate.
• Absence of serious efforts by the collection department in
realising the amount due.
Audit of leasing out ferry ghats, markets, bus terminals etc.
• Review the budget provision and actual realisation under
above head.
• When realisation position is unsatisfactory, ascertain whether
this is due to:
• Inflated estimate.
• Non-payment of rents/leased amount, by the lessee in time.
• Absence of effective and efficient mechanism pursued by the
collection agency in realising the amount due.
• Ascertain whether there is uniform and equitable policy for
awarding the contract to genuine parties.
• Verify whether government dues like VAT/Income tax are
deducted from the bills of the lessee as per existing rules and
deposited into the treasury promptly.
Audit of receipts on account of licenses for rickshaws and
other non motorised vehicles
• Verify the budget provision and actual receipts on account of
above head. If receipts are low, compared to the budget
forecast, ascertain whether the entity has upto-date list of
such vehicles and effective system is in place to compel the
defaulters to pay the fees by taking recourse to punitive
measures like confiscation of the vehicles/legal action etc.

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Audit of development support grant sanctioned by
government plan(ADP)
• See that the amount allocated had been received in full and a
separate account showing details of all transactions was
being maintained by the entity.
• Examine the conditions attached to such grants and check
whether the conditions had been fulfilled.
• Ensure that the allocated amount had been used solely for the
purpose it was granted.
• Ensure that the unutilised amount had been refunded timely
in the appropriate account of the government.
Note: All Municipalities and City Corporations are required to
undertake civil works like repair/maintenance of
roads/culverts/drains, construction of markets, buildings etc.
These are being funded either by government grants
allocated through ADP or from their own resources. While
conducting audit of civil works, auditors should use audit
programme, Audit of Works Expenditure, contained in
Chapter 4, general audit procedure of this manual.
[For guidance see the portion ‘Audit of Common Services’, in
the audit programme of Directorate, contained in Chapter 5
of this manual.]
Conclusion

transactions relating to the activities of the City Corporation/Municipality are
satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme
Zila Parishads

by
• The audit programme given below are for the guidance of
auditors undertaking audit of field level. These instructions
only represent the minimum that is necessary for an effective
audit. Since the auditor has access to the basic facts and to the
persons who deal with them, he is in a far better position to
get at realities.
irregularities, defects and omission and whether these defects
have been remedied. Try to get all the old objections settled,
by meeting the head of the office as frequently as may be
necessary.
• Develop a clear idea about the Parishad to be audited. Prepare,
plan and priotise the audit programme keeping in view the
potential risk areas, relevance and availability of time for the
assignment.
[Note: For example, if the trend of revenue receipt is poor and
the progress of different development works undertaken by
the Parishad is unsatisfactory, then the auditors should devote
more attention in these areas pinpointing defects and lacunae
in the activities of the entity and suggesting ways and means
to improve the situation.
Review of activities of the Zila Parishad
• See whether the Parishad prepared an annual work plan,
approved by the competent authority stipulating the
development works to be under taken.
• Verify through available records whether the Parishad
succeeded in achieving the target set in the annual plan
(percentage of achievements needs to be mentioned).
• In the event the percentage of achievement was not
satisfactory, find out whether this is due to:
• Poor collection of revenues.
• Non availability of govt. grant in time.
• there was delay in the award of contract.

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• the contractors who were assigned the task failed to complete
the work within the stipulated time.
Budgetary control
• Examine the sanctioned budget of the Parishad and see if
there is any excessive provision under any head as compared
with the provision in the previous year and in case of marked
difference, investigate the cause.
• Also see if the budget allotment have been correctly noted in
the register of Receipts and Expenditure. Compare the annual
expenditure figures with the sanctioned allotment under each
head and whether any expenditure was incurred in excess of
the allotment. Marked shortfall in the receipt should also be
noted in the report
• Verify whether the accounts of the Parishad are maintained in
direction.
Audit of grants received from government
covered by this audit from the cash book and the register of
government grants. Find out from the sanctioning letter on
what condition and for what purposes each grant has been
received.
• Ensure that the conditions of grants have been fulfilled and
that no money has been diverted from any such grant for a
purpose other than that for which it was meant.
• Ensure that no portion of the grant has been lying unspent for
a long time.
• In case of works completed out of government grants, see
whether the unspent balance has been surrendered to
government

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Cash book
• See that the cash book is in the prescribed form, receipts and
payments under different heads are properly posted and the
reconciliation of the closing balance with that of the bank
statement is done and the cash book is verified regularly by
• From cash book select at random some items of receipts and
verify through relevant subsidiary registers and bank scroll
that amount indicated in the cash book had been recorded
correctly.
• Similarly select some items of expenditure and verify through
bank scroll whether the amount mentioned in the cash book &
bank scroll tally.
• Verify that cheque books are properly accounted for and kept
under safe custody of the drawing officer.
• Also verify that all cheques were pre-stamped ‘A/C Payee
Only’ as soon as they are received from Bank.
Audit of Payroll
Audit of TA Bills
Audit of Loans & Advances
General Audit Procedure of this manual.]
Rents of Dak Banglow
• Examine the visitors book and check receipts of rent of
Banglows in accordance with the rules framed by the Board.
Verify that rents received are promptly credited to the Board
Fund. Prepare a list of visitors who have not paid up the rents
due from them under the rules.

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Audit of leasing out ferry ghat, lands, markets belonging to
the Parishad
• See whether there are clearly laid down rules stipulating the
procedure to be adopted with regard to leasing Parishad’s
property like lands, ghats, ponds etc. Comment whether the
relevant rules are complied with in all cases.
• Examine whether instructions issue by the Ministry of Local
Government from time to time encompassing all areas of
activities of the Zila Parishad (for example remuneration's and
other benefits to be paid to Chairman, Secretary, use of
Parishad’s vehicles, procedure to be adopted in leasing out
Parishads property etc.) are readily available in the office and
being adhered to.
[For guidance see the portion Audit of common services, in the
audit programme of Directorate contained in chapter 5 of this
manual]
[Note: All Zila Parishads are required to undertake civil works
like repair/maintenance's of roads, culverts, ferry ghats markets
etc., funded either through government grants or from their own
resources. Auditors should use audit programme, Audit of works
expenditure contained in chapter 4, General Audit Procedure of
this manual]
Conclusion

transactions relating to the activities of the Zila Parishad are satisfactory, various
controls are in place and overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Budget control
• Examine budget allocations and expenditures (total and head
wise). In case of variation, comment, if necessary.
• Check whether the amount overspent, if any, was covered by
necessary approval. In case of savings, see whether this was
reported to the appropriate authority in time.
• Check the position of collection of money in respect of
royalty, if any.
• Verify whether there is periodical review of budget provision
and corrective action if necessary.
and action taken accordingly.
• Check whether the grants/loans obtained have been spent for
the purpose for which those were sanctioned. Also comment
as to how the unspent balance, if any, was disposed of.
Audit of accounts
• Verify whether the accounts of the Board are maintained in
the manner and form as approved by the Government and
• Check whether there is proper job descriptions for the
members of the staff and duties have been distributed clearly
demarcating accounting responsibilities from payment
functions.
• Verify whether necessary cash/bond security was obtained
from the staff members handling cash, valuables etc. as
provided under the rules.
• Examine physical security of the bank cheque books. Also see
whether physical counting of cheque leaves has been done
and certificate recorded as such on the body of the cheque
books.

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• Check if cash book balance agrees with the balance in the
bank statement.
• Verify whether the office has been regularly doing
reconciliation of cheques with the bank account and necessary
steps taken, accordingly.
of receipts and expenditures are recorded in details, closed
regularly and necessary certificate recorded at the end of
every month by the examining official.
been correctly entered in the cash book.
• Verify whether the monthly financial statements of receipt
and payment amounts agree with those of the cash book.
• Trace a sample of amounts in the financial statement
downward upto the level of invoice/voucher. Also carryout
the same process upward from voucher to financial statement.
• Check if advances allowed for specific purpose/work have
been adjusted promptly as soon as the work is complete and
do not remain outstanding for undue long time.
• Verify whether details of Loan Agreement information have
been recorded in the register, amount received as per contract
and transactions reflected in the accounts.
• When a loan is finally closed after complete debt servicing,
verify whether entries are made accordingly in the relevant
register and reflected in the accounts.
Audit of job award/contract
• In case of contract for job, check that all the process for award
of contract was duly completed as laid down in the Audit
Programme for purchase/procurement at Chapter 4 of the
Manual.

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• Obtain the names of press enlisted with the Board and
examine the system under which the printing work is
awarded.
• Check that necessary security money has, in all cases, been
realised form the contractors, promptly deposited to the bank,
properly accounted for and not refunded before satisfactory
completion of the work or as per terms of the contract.
• Check contractors final bills to ensure satisfactory fulfilment
of the work and arithmetical accuracy.
• Check whether necessary VAT and/or income tax was
deducted from contractors bills as per rules in force and
deposited to treasury. Verify sample of chalans towards this
end.
Audit of personal claims (Payroll, TA & Loan)
• Apply appropriate check from the audit of payroll programme
at Chapter 4 of the Manual.
• Verify whether service books are available for all the
recorded there.
• Verify whether fixation of pay of the staff and offices have
been verified by the appropriate authority.
• Check whether loans and advances given to the officials are
strictly in accordance with the rules governing such loans.
Also check that recoveries are effected as per conditions of
such loans and accounted for properly.
• Verify a few cases of TA claims for admissibility as per
Board rules and arithmetical accuracy.
Audit of bank account & investment
Manual
• Verify the status of the funds, generated out of employees
GP/CP Fund, welfare fund etc. Are these lying idle in the
normal bank account or safely and profitably invested? Is
there a guideline approved by the Board to deal with such
fund? Comment, if necessary.
• Same checks as suggested above may also apply for Boards
surplus funds.
• Apply appropriate steps of audit programme for purchase &
procurement at Chapter 4 of the Manual.

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Audit of stocks, stores, tangible assets
• Select and apply appropriate steps of audit of assets
(The Board owns land, godown, office building, residential
buildings, printing press, printing paper and printed books)
• Check whether information in detail is recorded in the register
for fixed assets. Do the concerned officials carry out annual
survey and inspection of these assets? Comment, if necessary.
• Review the position of upkeep, repair and maintenance of the
office building, residential buildings and godown and other
premises. Comment, if not satisfactory.
• Examine the purpose for which the printing press was setup
and whether the purpose is being served.
• Check whether adequate system exists for budgeting,
accounting, monitoring and reporting of revenue in the office.
• Review whether the estimate of revenue income has been
prepared appropriately on the basis of statistical information.
• Review the position regarding arrear, current demand and
total collection of revenue to see whether adequate effort was
made to realise all revenue during the year.
relevant register and cash book and promptly deposited to
bank.
• In case of cash receipt, check at random receipt book and
bank deposit slip in support of deposit into bank.
• Review the collection position of rent of the Board building
premises let out to others. Is the monthly rent fixed for the
premises appropriate as per market rates? Comment, if
necessary.

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Panel of writers for curriculum and text books
• Find out whether there is an approved policy of selection of a
panel of writers. In case there is one, whether this is
appropriate? If not, how this is done? Comment on this issue.
• Review as to how the quality of the text books are assured.
How the accountability of the persons involved are ensured?
• Is there approved rates of remuneration for the writers and
how this is contracted? Comment and check a few paid bills
for admissibility and arithmetical accuracy.
Litigations and panel of lawyers
• Examine the file/register concerning litigations to see that
these are pursued properly by the Board’s lawyers and that
none fell through for lack of supervision and attention.
• Check whether briefs are evenly given to the lawyers who are
on the panel of the Board. Verify the ratio of amount paid to
different lawyers during the year. Comment, if there is
imbalance.
• Check at random lawyers’ remuneration bills for admissibility
and arithmetical accuracy.
Programme
implemented and the status of work to see physical
progress/achievement vis-à-vis financial expenditure under
the overall approved time frame. Comment, in case of
significant variation.
which the project was conceived and implemented has been
achieved.
• Check the system of reviewing, updating, evaluating and
monitoring of national curriculum. Comment, if things are not
properly done.
• Examine the system of distribution of books and comment as
to why the job cannot be completed in time.

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General
• Examine expenditure relating to transport operation and
maintenance to ensure appropriateness, admissibility and
allotment of fund and also to see whether these conform to
rules and instructions. Also check expenditure on telephone in
the same manner.
utility and service bills like rent, rates, taxes, electricity, gas,
water etc., both for the office and recovered from the officials,
if any.
in the office are within the approved limits of the
Government.
• If there has been substantial payment of money for overtime
work, ascertain and comment with relation to actual
nature/volume/urgency of work beyond office hours along
with admissibility.
• Review the status of previous audit reports and comment in
case of significant outstanding audit paragraphs.
• Verify whether all reports and returns, free of error, are
regularly sent to the appropriate authorities audit paragraph.
• Review the activities of the Board, assess its performance and
comment as to whether the Board has been able to deliver
services properly for which it was established.
Conclusion

accounts of the Board have been maintained as prescribed by the Government, the
and presented fairly in the accounts and overall management of the affairs of the
Board is generally satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme
Universities
Name of university __________________________ Financial year ____________

by
Planning
• The audit programme given below are for the guidance of the
Auditors undertaking audit at the field level. It must be clearly
understood that these instructions only represent the minimum
that is necessary for an effective audit. The true value of an
audit will be found over and above this in the personal zeal
and the interest of the auditors in his work and in the
application of his own knowledge and experience to the
constantly changing facts presented before him. It should be
borne in mind that as the Auditor has access to the basic facts
and to the person who deal with them, he is in a far better
position to get at realities.
irregularities, defects and omissions and see the defects have
been remedied. Dispose of as many objections as possible and
include the items still un-rectified, in the Audit Report
drawing particular attention to points raised in more than one
previous report.
[Note: The auditors should try their utmost to get all the old
objections settled by holding meeting with the head of the office
as frequently as may be necessary.]
• Develop a clear idea about the entity to be audited, prepare
assignment.
[NB: For example, the concurrent Audit Teams posted in 4
Universities (Dhaka, Chittagong, Rajshahi and Mymensingh
Agricultural University) pre-audit all bills of these entities
excepting pay and allowances of the Vice-chancellor, teaching
staff and other officials. The post audit team, therefore, should
pay more attention in these areas in order to ensure that absence
of pre-audit does not lead to unlawful drawal of pay and
allowances.]

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• Examine the sanctioned budget of the entity under audit and
of marked difference investigate the cause and make comment
in the report.
• See that all liabilities (current or carried from the previous
years) have been taken into account in preparing the budget
and money indisputably payable is never left unpaid.
• Verify that the budget allotment have been correctly noted in
the Abstract Registers of Receipts and Expenditure and re-
appropriations sanctioned from time to time have been noted
against the head concerned.
• See that the expenditure in each head is strictly in accordance
with budget allocation.
Audit of accounts
Cash Book
• See that the cash book is written daily.
• The entries are classified correctly and the postings, total
balances are arithmetically correct.
• The book is closed monthly or daily and that a reconciliation
of the closing balances of the Bank Statements and the cash
book is effected and recorded under the signature of the
authorised officer.
by month until they are cashed. In case of cheques
outstanding for more than 6 months, ascertain the reason for
non encashment.
• Confirm that the cheque books are kept under lock and key in
• The amount of each cheque is written in words as well as in
figures on the counterfoils and the counterfoils are initialed by
the person or persons authorised to sign the cheque.
• The cheques have not been signed unless required for
immediate encashment or delivery to the person concerned.
• Confirm that all blank cheques were pre-stamped ‘A/C Payee
Only’ as soon as they are received from the bank.

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Audit of government grants
• Trace all government grants received during the period. Find
out from the sanctioning letter on what condition and for what
purposes each grant has been received.
• Confirm that the conditions on which the grants were made
have been duly fulfilled and that no money had been diverted
from any such grant to a purpose other than that for which it
was meant. Ascertain whether a portion of such fund is lying
unspent for a long time.
Audit of receipts
[Note: Receipts of the University consist of the following:
• Govt. grant.
• Private donation.
• Fees and fines from students.
• Sale proceeds of publication, forms etc.]
• Rents from University owned shops etc.
In dealing with receipts, the following points should be seen.
• That credits are traced in the cash book for all amounts
realised and promptly entered into relevant register.
• That the demands are punctually and fully realised.
• That the collections are promptly deposited into Banks in
the appropriate account.
• That the amounts paid are correctly entered in the relevant
register.
Audit of salary bills
The Auditors should see
• That the appointment and scales of pay have been sanctioned
by the competent authority and pay in excess of what is
admissible under ordinary rules is not drawn without the
concurrence of the Ministry of Education and Ministry of
Finance.
• That there is provision in the budget that the bills have been
properly signed, and countersigned, that the amounts of the
bills have been disbursed to the right person.
• That the calculations on account of provident fund, house rent
and other deductions have been correctly arrived at and
deducted from pay.

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• That the increments drawn are due and leave has been
sanctioned by the competent authority, that it is admissible
and has not been exceeded without the sanction of the
• That the bill clearly indicates whether the incumbent of the
post is permanent, temporary or officiating.
Audit of expenditure
In dealing with the payment vouchers the following points should
be observed:
• that the payment is admissible,
• that the payment is covered by requisite sanction,
• that the sanctioning authority possesses necessary powers to
grant sanction,
• that there is provision in the budget to meet the charges and
• that every payment is supported by a voucher in proper form.
Audit of civil works
[For guidance consult checklists of audit of works expenditure
contained in Chapter 4 General Audit Procedure]
Review of activities of the university
• See whether effective mechanism exists within the entity to
control, monitor and prevent unauthorised absence of teachers
gone abroad on study leave. Find out how many teachers are
on such unauthorised leave and what punitive action had been
taken against such teachers.
• Find out whether there is clearly laid down rules regulating
consultancy and other advisory assignments undertaken by the
teaching staff. See how many teachers have been engaged in
such secondary assignment and terms and condition attached
to such assignments. Verify whether these conditions are
being complied with.
• See whether effective mechanism have been developed by the
university in preventing session-jam and unnecessary delay in
conducting and publishing results of various examination. List
some of the measures undertaken by the university in this
regard.

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• See whether effective mechanism exists to evaluate annually
the performance of teaching staff and if so what action the
university undertakes if the performance of an individual
teacher is found to be not up to desired standard.
Conclusion

transactions relating to the activities of the University are satisfactory, various
control are in place and overall management is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme

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General instruction to auditors:
• The audit programme given below cover some of the basic
matters which auditors should see while conducting audit of
the Commission.
These instructions represent the minimum that is necessary for
an effective audit. The true value of an audit will be found in
the personal zeal and the interest of the auditor in his work
and in the application of his own knowledge and experience to
the constantly changing facts presented before him. Since the
auditor has access to basic facts and to the person who deal
with them, he is in a better position to get at realities.
• Develop a clear idea about the entity, the possible risk areas
and the objectives of the assigned task, and on the basis of
assessment of the situation, prevalent in the entity, prepare,
assignment.
[NB: For example while auditing the accounts of UGC,
auditors should devote more time and attention in assessing
the performance aspect of the entity. They should examine the
Ordinance and Order of 1973, see the purpose for which it
was set up and evaluate their performances in the light of the
assigned responsibilities:]
• See the sanctioned budget of the entity for the period under
audit and examine that all expenditures had been kept within
the allocated budget.
• In the event, over expenditure had taken place under one head,
investigate where the additional funds over and above the
budget allocation were derived from and in case it was
through re-appropriation, see whether sanction from
appropriate authority was obtained for the purpose.
whether there is unusual expenditure at the fag end of the
financial year and verify whether all such expenditure were
actually necessary or had been incurred to prevent the lapse of
budget allotment

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Cash book
• See that the cash book is written clearly.
• Ensure that cash book is in proper form, entries are classified
correctly and the postings, totals balance are arithmetically
correct.
by month until they are cashed.
supporting vouchers whether payments have been made to the
right person and that it has been so acknowledged and
recorded.
• See that the cheque books are kept under safe custody of the
drawing officer.
• See that the amount of each cheque is written in words as well
as in figures on the counterfoil and that the counterfoil is
initialed by the person authorised to sign the cheque.
• See that the cheques are drawn in favour of ultimate payees
encashment.
• Audit of Payroll.
• Audit of GP Fund.
• Audit of TA Bill.
• Audit of Expenditure.
• Operation of Bank Account
General Audit Procedure of this Manual]
Review of activities of UGC
• See whether the UGC has developed a mechanism through
which the entity could evaluate annually the performance and
assess the financial needs and requirements of each university
funded by the Commission.
• If no such mechanism exists, what is the criterion through
which the Commission could objectively assess the needs of
each University.

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• Verify whether the Commission, while disbursing the grant to
an University, stipulates in clear terms conditions to be
fulfilled for utilising the grant money and the manner of
reports/accounts to be sent to the Commission.
• Verify whether the conditions set forth in the sanction letter
have been fulfilled by the recipient University and if not what
action has been taken against that University.
• Verify whether funds disbursed to an University have been
spent specifically for the purpose it was granted.
• Verify whether the amount of interest earned out of grants
fund kept in commercial banks, had been reported to the
relevant authority and adjusted out of allocation of subsequent
grants.
• Check whether the portion of the fund not ultimately required
for grant objectives, has been surrendered.
• Check whether all expenditures related to the grant is properly
and timely reported to the Commission including
accounts/audited accounts as is required under the normal
grant condition.
• Also check the adequacy of the reporting system and verify
Conclusion

transactions with regard to the activities of the University Grants Commission are
satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme
Port Authorities

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Budget control
• Examine budget allocations and expenditures along with head
wise allocations and expenditures and comment, in the case of
wide variation.
• In the case of wide variation in budget allocation and actual,
examine whether the estimate was prepared taking into account
all necessary information.
• In case of overspending check whether it was covered by re-
appropriation and regularised by the competent authority.
• In case of savings in the budget allocation, check whether it
was reported to the proper authority in time for re-
appropriation etc., if necessary.
• Check the position of collection vis-à-vis revenue estimate. In
the case of wide variation, scrutinise reason and comment.
collection of revenues and corrective actions in the case of big
shortfall.
and acted upon accordingly.
Audit of accounts
• Verify whether there is proper distribution of duties among the
staff members clearly demarcating accounting responsibilities
from payment functions.
• Verify whether appropriate cash/bond security was obtained
from the staff members handling cash etc., as stipulated under
the rules.
• Verify whether the accounts of the Authority are maintained in
the manner and form as laid down and approved by the
appropriate authority.

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of receipts and payments are entered in details, closed
regularly and certificate recorded in the body of the book by
the examining officer at the end of every month.
• Check whether the monthly accounts statements of receipt and
payments agree with those of the cash book.
• Check if cash book balances agree with those in the bank
statement.
• Verify if the office has been doing reconciliation of the cheque
account with the bank account and necessary steps taken
accordingly.
• Verify whether loan/aid information are there in the
appropriate ledger and transactions have properly been
accounted for.
• Check the Balance Sheet and see whether it gives a true picture
of the financial position of the Authority. Every item in the
balance sheet needs to be checked fully to ascertain that each
balance item is correct and has proper authority. Comment on
the financial standing of the Authority on the basis of
assessment of the Balance Sheet.
• Check the profit and loss account and see that the items of
income and expenditure have been recorded correctly and
comment on the profitability or otherwise of the Authority.
• Verify that depreciation for Authority's huge fixtures,
machineries and equipment have correctly been calculated as
per the approved principle of the Authority, shown in the profit
and loss account and necessary provision made in the
appropriate fund and recorded in the relevant stock register.
• For audit certificate in ‘Port and Pilotage Fund’ examine the
accounts and the Balance Sheet along with deeds, vouchers
and other documents related with it. Similarly examine the
cash in hand and the cheques in course of collection, the
suspense account balance and respective subsidiary accounts,
bank balances and the outstanding bills at hand.
• The Securities representing the investment with the Banker's
safe custody receipts and certificates should also be checked.

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• Examine the accounts of the CP Fund of the Authority and
verify collection of subscribers contributions, balance,
transactions etc. to ensure their correctness.
• Check demands payable and bill recoverable accounts to
ensure that the balances are correct.
• Examine that advances have been properly sanctioned, the
outstanding at the end of the year analysed and that
adjustment/ recovery has in no case been unnecessarily
delayed.
servicing, verify that necessary entries are made in the
book/register and reflected in the accounts.
Audit of expenditure (General)
• Verify whether expenditures have been incurred with
reference to sanctions from competent authority as per
delegation of financial powers and allotment of fund.
• Check whether debt servicing instalments (both interest and
capital) are according to approved schedule and conditions
regulating such loan.
the Manual.
• In the case of lease/auction, check whether all the process for
award of contract was duly observed.
• Check that security money has in all cases been realised from
not refunded before satisfactory completion of the work as per
terms of agreement.
• Check contractors final bills to confirm admissibility,
• Verify whether necessary VAT and income tax has been
deducted from contractor’s bills as per rules in force and
deposited to treasury. Check samples of chalans in support of
the deposit under proper head of account.
• Apply appropriate checks from the audit of payroll and audit of
TA at Chapter 4 of the Manual

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• Verify whether service books are available for all members of
the staff and that all service particulars are recorded there. Also
see that the particulars have been verified by the competent
authority.
the Manual for loans and advances taken by the employees
from all sources including provident fund.
Audit of hospital & education institution
• Test check the allocations and expenditure to be satisfied that
the accounts are in order and expenditures incurred conform to
rules governing them.
the nationalised and private banks as per percentage fixed by
the Government.
the Manual.
Audit of stocks, stores and other assets
• Check the manufacturing accounts with reference to estimate
of cost sanctioned by the appropriate authority.
• Check the work order book to see brief accounts of all jobs,
that all jobs have been properly entered and the dates of
completion and total cost of completed jobs are noted.
sanction for all charges. Also see that demands have been
raised against the ordering unit for final book adjustment in the
Accounts Department.
• Verify whether costing of jobs have been properly done. Check
a few cases to ensure this.

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annual production in the workshop.
• Stock account of raw materials held by the workshop should
be scrutinised and balances examined.
• Check whether results of the manufacturing account has been
properly reflected in the profit and loss account.
budgeting, accounting, monitoring and reporting of receipts in
the Authority. Comment, in case this is not in order.
• Verify whether adequate and appropriate information is
available to make reasonable assessment of receipt estimate.
• Review whether the estimates have been made on the basis of
available information and keeping in view all items for and
through which receipts are generated.
• Examine the position relating to outstanding/arrears, current
adequate efforts have been made to realise all revenues during
the year.
• Generally review whether different items have been assessed
according to law and check a sample of assessment
calculations to verify its authenticity and arithmetical
accuracy.
appropriate register and cash book, properly accounted and
promptly deposited to bank.
• In the case of cash receipts, check receipt books to see that the
leaves are serially numbered, issued sequentially, details
noted in the counterfoils and kept under proper security.
Audit of receipt for rent/service
• Check whether lease-money/rent of port land, rent of
buildings let out to others has been realised, accounted for and
deposited into bank promptly.
• Verify whether rent of godowns, port premises, wharf charges
etc., have been realised properly.

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• Also check whether water charges, electricity charges and
other dues have been realised from the users of port houses
and other facilities.
Audit of ships manifests
Import
• Manifests of import vessels should be checked by selecting at
least 12 ships (1 for each month) during the year. The berthing
register, bills of lading in the jetty Superintendent's office
need to be checked.
• Entries in a number of manifests should be test audited for
few details like chalans, delivery order, cart ticket, gate passes
and rent bills.
• Check whether port disbursement/port dues have been
properly assessed and realised.
• A complete check of chalans, both cash and deposit of all fees
and other charges relating to the vessels selected for audit
should be exercised.
Export
• Manifests of export vessels may be examined in the same
manner as in the case of import vessels. The agent’s manifests
should also be checked with the dock manifests.
Payment and receipt to and from railway
• Check payment and receipt statement of accounts and test
check items for authenticity and arithmetical accuracy.
Audit of investment
• Check whether different funds under the Authority have been
properly and profitably invested.
• Verify relevant document in support of the investment. Also
check Banker's safe custody receipt in support of holding of
the securities.
Port authority laws
• Are the laws adequate to secure the interest of the Authority?
proper control of the port and against the delinquent ships.

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• Verify the register of litigations to see that these are
effectively pursued and none fell-through by default.
Programme
• Ascertain the status of GoB financed programme/project to
see physical progress vis-à-vis financial expenditure under the
overall time frame. Comment in case of significant variation.
General
• Verify expenditure relating to use of Authority's transport
(both land & water), operation and maintenance cost to ensure
to see that these conform to financial rules and discipline.
• Check that the Authority has been making regular payment of
utility service bills (rent, rates, taxes, electricity, gas, water
etc.) both for the office and residence as recovered from the
officials, if any.
• Ascertain whether the various transport and office equipment
in use are within the sanctioned limit of the government.
• If there has been payment of substantial amount of money on
overtime work, ascertain and comment with relation to actual
nature/volume/urgency of work beyond duty hours in terms of
admissibility.
• Review the status of previous audit and comment if there is
significant outstanding.
Assessment of overall performance
• Assess the status of maintenance and preparedness of port
operation equipment and training of the personnel handling
these equipment. Also find out if adequate number of trained
personnel are available for dealing with emergencies.
Comment, if state of affairs is not upto desired level.

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• Generally review and comment about the upkeep, repair,
maintenance and modernisation of facilities of the Authority
to deal with the international maritime transport of the present
time.
• Judging from the magnitude of theft/pilferage of goods and
equipment, review the effectiveness of the security
deployment and arrangement in the port premises.
• Assess the programme of the Authority to maintain
navigability of the port channel and draft along side berth and
see whether adequate work is being carried out regularly
towards this end.
• Find out as to for how many days, port operations remained
closed and for what reason, along with approximate loss
caused to the port. Analyse findings and comment if things
could not be improved and were beyond human control.
• Review and assess the working environment, relationship
between the management and workers from the point of view
of effective human relations on the part of the Authority.
the Authority with relation to its achievement and fulfilment
Conclusion

Authority's accounts have been maintained as per approved system, the financial
transactions have been made in accordance with the rules governing them and
presented fairly in the accounts and overall management of the affairs of the
Authority is satisfactory. I have also examined the accounts and balance sheets of
the Authority and other books of accounts. To the best of my knowledge and
ability, I certify that subject to the comments in the audit report, the accounts are
free of material error and correct.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme

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Budget control
• Examine budget allocations and expenditure along with head
wise allocation and expenditure.
appropriation or regularized by competent authority.
• In case of savings, check whether this was reported to the
higher authority in time.
• Check the position of revenue collection vis-à-vis receipt
estimates. In case of significant variation, comment.
receipt position and corrective action, if necessary.
• Verify whether adequate provision for debt servicing was
made in the budget, if necessary, and acted upon accordingly.
Audit of accounts
in the manner and form as approved by the Government and
• Verify whether appropriate cash/bond securities were
obtained from the staff members handling cash etc. as
stipulated under the rules.
• Examine whether there is adequate security of cheque books
• Check if cash book balance agrees with that of bank balance
as per statement.

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• Verify if the office has been doing reconciliation of cheques
with the bank account and necessary steps taken accordingly.
• Verify if expenditures have been incurred with reference to
sanctions from competent authority as per delegation of
financial powers and allotment of fund.
of receipts and expenditures are entered in details closed
regularly and certificate recorded at the end of every month by
the examining officer.
• Check whether the monthly accounts statement of receipt and
payment agree with those of the cash book.
• Verify if the cash receipt book leaves are serially numbered,
issued sequentially, details recorded in the counterfoils and
kept under proper security.
• Check if advances allowed for specific work have been
adjusted promptly, as soon as the work is over and do not
remain outstanding for undue long time.
• Verify whether details of Loan Agreement informations have
been recorded in the ledger and amount received as per
contract.
• Check at random a few cases of TA bills for admissibility and
• Check whether total debt servicing during the year is covered
by appropriate budget provision for the year.
• Check whether debt service installments are according to
approved schedule and conditions regulating such loan.
• Verify whether a loan is finally closed after complete debt
servicing and entries made accordingly in the book/register
where the loan account is maintained.
the Manual.
• In the case of auction, check that all the process for award of
contract was duly observed.

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• Check that security money has in all cases been realised form
not refunded before satisfactory completion of the work or as
per terms of the contract.
• Check contractor's final bills (big ones) to see for correct
• Check whether necessary VAT and income tax was deducted
from contractor's bills as per rules in force and deposited to
treasury. Check sample of chalans in support of the deposit.
Audit of payroll
• Apply appropriate checks from the audit of payroll
• Verify whether Service Books are available for all the
recorded there.
• Check if the loans and advances given to the officials are
strictly in accordance with the rules governing such loans and
advances.
• Also check that recoveries are effected as per conditions of
such loans and advances and accounted for properly.
• Apply audit of Bank Account programme at Chapter 4 of the
the banks as per ratio decided by the Government.
the Manual.
Audit of stocks & stores
• Apply appropriate steps of audit of Assets programme at
• Check the manufacture accounts with reference to estimate of
cost sanctioned by the appropriate authority.
sanction for all charges. Also see whether demands have been
raised against the ordering unit for final book adjustment in
the Accounts Department.
annual production cost in the workshop.

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• Check the profit and loss account and comment thereon, if
necessary.
the office. Comment if necessary.
statistics/information are available to make reasonable
• Review whether the estimate has been made properly with
relation to all the items for and through which income is
generated on the basis of available information (approval of
transport design, lease of port and ghat, terminal charges,
pilotage service fees for coastal vessels, salvage charges,
berthing charges, survey of vessel fees and charges for earth
filling by dredging etc.)
year.
• Generally review whether the different items of revenue have
been assessed according to law and check a sample of
assessment calculations to verify its authenticity and
relevant register and the cash book and promptly deposited to
bank.
• In case of cash receipt, check receipt book and bank deposit
slip in support of deposit into bank.
• Review the appropriateness and position of collection of rent
of the Authority’s buildings/premises. Comment, if necessary.
Implementation of BIWTA laws
• Are the laws adequate to secure the objectives of the
Authority? If not, comment.

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proper control of inland water transport.
• Generally check the file/register relating to litigations arising
out of implementation of BIWTA laws to see that these are
pursued properly and none fell-though by default.
Programme
implemented and status of work to see physical progress vis-
à-vis financial expenditure under the overall time frame. In
case of significant variation, comment.
• Ascertain whether the Authority is applying laws and rules
and carry out adequate supervision to ensure safety of the
passengers.
• Check the programme and arrangement for dredging of the
rivers to maintain navigability of the waterways.
• Review the passenger traffic time table and fare rates and
bring out if there is something significant to mention.
• Check whether the Authority has adequate programme to
develop and maintain river ports for the welfare of the
passengers.
General
• Verify expenditure relating to surface/water transport (for
official use) operation and maintenance to ensure
to see whether these conform to the rules and instructions.
utility service bills (rent, rates, taxes electricity, gas, water
etc.) both for the office and recovered from the officials, if
any.
available are within the list sanctioned by the Government.
• If there is substantial payment of money on overtime work,
ascertain and comment with relation to actual nature
/volume/urgency of work beyond office hours and their
admissibility.

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• Assess the status of maintenance and preparedness of salvage
and other related equipment absolutely necessary for
emergency and to secure the navigability of the waterways.
Also find out if adequate number of trained personnel are
available for the purpose. Comment, if state of affairs is not
upto desired level.
• Review the overall performance of the Authority with relation
to achievement and fulfillment of programme and assigned
responsibilities during the year.
• Review the adequacy or otherwise the position of upkeep,
repair and maintenance of the BIWTA vessels, building and
other premises.
• Review the status of previous audit report and comment in
case of significant outstanding.
• Also find out if the internal audit is rendering useful service in
pointing out important issues for management improvement.
Conclusion

Authority accounts have been maintained as prescribed by the Government, the
and presented fairly in the accounts, and overall management of the affairs of the
Authority is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme

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General Instruction
• Develop a clear idea about the entity and the objectives of the
assigned task and on the basis of assessment of the situation
prevalent in the entity, prepare plan and prioritise the audit
programme keeping in view the importance, relevance and
[NB: For example, while auditing the accounts of Rice
Research Institute, auditors should particularly see the
performance aspect of the entity. In the case of Rice Research
Institute they should, for example, examine the total number
of high yielding variety seeds developed during the year under
audit, compared to the number produced last year. In case of
no achievement, the reasons thereof should be evaluated.
Audit of Government grants
covered by audit. See that no item is left out. Find out from
the sanctioning letter on what condition and for what purpose
each grant has been received.
• In scrutinizing the accounts of government grants for specific
purposes, it should be seen if the conditions on which the
grants were made have been duly fulfilled and that no money
has been diverted from any such grant to a purpose other than
that for which it was meant. See that no grant money is lying
unspent for a long time. In the case of work completed out of
government grants, see whether the unspent balance has been
surrendered to Government.
Budgetary control
Cash book
[For guidance see relevant checklists of the Directorate in Chapter
5, Audit of Government Offices of the Manual.
Audit of Payroll

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Audit of GP Fund
Audit of TA Bills
Audit of Receipts
Audit of Purchase/Procurement
[For guidance see the appropriate checklists contained in Chapter
4 General Audit Procedure of the manual.
Review of activities of the institute under audit
• See the annual report of the entity and also go through the
minutes of the meetings of Board of Directorates held from
time to time during the period of audit. Valuable hints may
sometimes be obtained from them as to points which require
special attention during the audit.
• Scrutinise the financial position of the entity very carefully
and if there is heavy liabilities, give a list of them in the report
commenting on the proposal of the entity if there is any, as to
how liabilities will be cleared.
• See whether funds allocated by government representing
compensation money for acquisition of private land are lying
idle in the commercial banks and if so verify the reasons for
non-payment.
• Verify whether funds allocated by government for
undertaking a particular research works had been used
specifically for that purpose. In case of deviation, ascertain
reasons.
• Find out the total number of distribution centres set up by the
Institute for marketing its products and verify whether:
- pricing of the products has been based on justifiable
grounds,
- pricing has been approved by the component authority,
- all sale proceeds are being realized promptly and deposited
into relevant accounts,
- also examine the estimated receipts as recorded in the
budget of the entity and actual receipts. In case of
substantial shortfall, find out the reasons and comment,

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• Find out the total number of project areas for demonstration of
new varieties of product, developed by the Institute and
arrangement of training of farmer for cultivation of these
varieties. Comment whether the institute is carrying out their
assigned job efficiently and effectively.
• Examine the position of utilisation of farm land. Also check if
land acquired for certain purpose is lying idle for a
considerable period of time. Comment, if necessary.
Conclusion

activities of the entity is presented fairly, various control system are in place and
overall management system is satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Audit Programme
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Audit programme in respect of budgetary control, accounts,
expenditure and common service/general, relating to Directorate at
Chapter 5 of the Manual may be followed:
the manual.
• Apply appropriate checks, suitable for the organisation, from
the audit of payroll and TA at Chapter 4 of the manual.
the manual for loans and advances taken by the employees
from all sources of the organisation including provident fund.
manual.
the manual.
Audit of stock, stores & other assets
Chapter 4 of the manual.
Sports control bodies
• Check the criteria/principle followed/approved for distribution
of grant money to different subordinate bodies. Also examine
what check is applied to monitor as to whether the grant money
has been spent for the purpose it is granted.
has been spent for the purpose the money was given.
• Check what training and competition programmes have been
conducted successfully during the year.

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• Verify the selection process of persons to be included in the
national side.
• Verify whether overall performance of a national side is
evaluated and what action taken for every shortcoming
including in-discipline.
• Examine in details the expenditure involved for a national
sides' trip abroad with relation to the rules of the organisation,
conditions set forth in the letter of sanction for expenditure and
canons of financial propriety.
• Verify whether the receipts (gate money, rent of
shops/premises etc.) are properly accounted and promptly
deposited to bank. Also check the money receipt books in this
regard.
• Generally review the programme for development/upkeep of
the playing fields and how this is implemented.
• Examine expenditure incurred for organising international
meet for regularity and propriety.
• Verify the award/contract for electronic media coverage for
international meet (if there is any). Examine in details the
receipts on this account.
• Evaluate the overall performance of the organisation in terms
of achievement during the year and whether the total
expenditure on it has been somewhat fruitful.
National Library
• Check the allocation of fund for purchase of new books and
how the books are selected for procurement. Comment/advise
on the issue, if there is any.
• Check the inventory of books along with the system of
cataloging. If it is electronic/microfiche, check printouts. In
case of manual catalog, check cards at random with requisition
of books. Try to trace out a few cases at random.
• Check security or other system to guard against pilferage, theft,
cutting of pages etc.
• Check as to what action has been taken to retrieve long over
due books loaned to subscribers. Is the system appropriate?
• Check the criteria for renting out premises/auditorium. Are the
criteria followed? Also check the receipt for routine scrutiny.
• Verify the programme of acquisition of new books. Ascertain
its appropriateness or otherwise.

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• Verify also the system of binding/upkeep of old books. Is the
system of preservation effective? Comment, if necessary.
• Check at random the management of the reference books.
• Also check the system of display and preservation of
manuscripts.
Department of Archeology
• Study the organisation chart and check the job description of
the personnel to see whether personnel with appropriate
qualifications are around to take care of our past archeological
heritage.
• Check the register of archeological sites and monuments and
ascertain that the land/site/monument is actually under the
occupation/control of the department and that there is no
encroachment on them.
• Check the programme of excavation/reclamation to verify the
timeliness and expenditure of the work.
• Verify at random whether the upkeep, repair and maintenance
of monuments have been carried out according to provisions of
the Archeological Act and that the pattern of the same has not
been changed.
• Generally review the adequacy or otherwise of the security
arrangement of the sites.
• Also check the inventory, security and receipts of the local
museums. Comment in case of glaring lapses.
National Museum
• Check the organisation chart and job descriptions of the
personnel to see that qualified people are there to take care of
the national treasure of the country.
• Verify whether the money received from the Government has
been spent for the purpose it was granted.
• Check the inventory of the exhibits and see that the most
precious ones are classified properly for security purposes.
• Also check for items missing or broken and action taken.
• Verify whether the auditoriums were let out for appropriate
purposes.
• Check that the gate money, rent of the auditoriums/premises
are properly accounted for and promptly deposited to bank.
Also check the money receipt books and chalans.

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• Assess the adequacy or otherwise of the security
system/arrangement in the museum.
Bangladesh Shilpakala Academy
has been spent for the purpose for which the grant was given.
• Verify the organisation chart, job description and the list of
personnel to see that right persons with appropriate skill, are
managing the departments of fine arts, performing arts etc.
• Check the programme to see as to what sorts of round the year
activities have been carried out to project the cultural heritage
of the country at home and abroad.
• Verify the selection process of personnel for inclusion in the
national delegation to project the country abroad. Is the system
transparent? Comment, if necessary.
• Verify whether overall performance of a national delegation
visiting abroad is evaluated and report of the team manager
considered for remedial measure, if any.
• Examine in details the expenditure incurred for a delegations
trip abroad with in relation to the rules of the Academy,
conditions given in the sanction letter and canons of financial
propriety.
• Examine the system or basis under which the allocation of
grant to different district level branches is made and what
reports and returns are received and how the expenditure and
results are monitored. Comment, if things are not found in
order.
• Examine expenditure incurred for organizing international
shows/exhibitions for regularity and propriety.
Conclusion

accounts have been maintained properly, the financial transactions have been made
in accordance with the rules governing them and overall performance is
satisfactory.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Local Audit Directorate

General Procedure – Special Investigation
Location _______________________________________ Date __________________
Before the visit Done by Working

paper
1. Draft assignment plan issued.
2. Audit team briefed.
3. Background research obtained and reviewed.
4. Any available data, files, records available centrally,
obtained & reviewed.
5. Final plan issued.
6. The date and location visits to concerned Department/
Organisation notified.
At the Audit Done by Working

paper
1. Meeting with the Head of the office.
2. The purpose of the special audit, documents & papers to
be required intimated.
3. Distribution of work among the audit staff arranged.
4. Supervision and review procedure determined.
5. Audit techniques for the collection of evidence worked
out.
6. Type of working papers and their contents determined.
7. Interviewing relevant people carried out.
8. Audit findings summarised.
9. Final report prepared.
After the visit Done by Working

paper
The Auditor after completion of the special audit
should:
1. Report back to the concerned Deputy Director.

2. Deputy Director to review the special audit report to
determine.
• The quality of the report.
• Whether the objective of the task been fulfilled.
3. Deputy Director to decide next course of action needs to be
taken.

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Possible Areas for Improving Performance

1. Procurement
Improvements could arise through:
• greater competition.
• procuring off-the-shelf rather than specially designed products.
• bulk buying.
• better purchasing and tendering arrangements.
2. Asset management
Assets include land, buildings, equipment, vehicles, stores. VFM could be

considered in the following areas:
• whether the asset is needed.

• what scope exists to rationalise assets and dispose of any surplus to requirements.
• whether assets disposed of realise the best proceeds obtainable.
• how well assets are utilised.
• whether enough is done to protect assets from theft, damage, waste, fire, misuse.
• whether maintenance of assets is satisfactory.
3. Project management
Managing projects is undertaken across Government and includes major items e.g.
on construction, maintenance of roads and buildings. This is a major risk area in
terms of amounts spent and inherent risks involved. VFM considerations could
include:
• the adequacy of project management arrangements generally, including

monitoring, controlling and recording.
• risk management.
• appropriate contract arrangements.
• managing time, cost, quality and consultants.
• review of project output e.g. time, cost, specification, quality.

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4. Human resources
Expenditure on staff is the largest single item of Government expenditure. The

performance of most services and functions depends on how well human resources
are used:
• how well audited bodies are organised to promote efficient human resource
management;
• how efficiently staff are deployed – work loading, shift patterns, measuring
productivity and management of sickness and absenteeism;
• how the need for staff is determined and reviewed and
• adequacy of training arrangements.
5. Capacity management
This is concerned with the extent to which resources are used cost effectively e.g.
• whether there is adequate information and indicators to monitor and assess usage
e.g. of buildings.
• whether there is scope for more efficient use of accommodation and equipment.
6. Support services
These include energy, telephones, postal services. Improvements could come from:
• cheaper procurement.
• improving the usage.
• eliminating waste or inappropriate usage.
• better monitoring and control.
7. Effectiveness
Audit will be concerned with whether Government policy and programmes have
been implemented. Issues could include:
• how the level and type of resources allocated to programmes are determined.
• how resources are used to achieve the objectives of the programme.
• what information or performance measures are used to monitor achievement of
objectives and resources used.
• whether there is evidence to indicate that the programme is achieving objectives
set.
• what the views are of those affected by the programme e.g. hospital patients.

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8. Quality of service
In the public sector, quality is often difficult to measure or assess objectively given
the lack of clear performance indicators or measures. Issues of quality could be
considered as follows:
• whether any procedures exist to ensure that quality standards are met.
• how well quality of service is defined.
• whether a service is readily available to all those eligible.
• whether the recipients of a service are satisfied with the quality they have
received.
9. Performance measures
This is a vital aspect for those responsible for services and activities, particularly in
the public sector. There are numerous ways to measure efficiency and economy but
the effectiveness of public services is much more difficult to measure. Sections 7
and 8 above provide some guidelines on effectiveness and some examples are given
in Appendix 2. The role of audit on performance measures could include:
• review of any system for collecting and publishing performance measures.

• review of the reliability and comprehensiveness of performance measures.
• comparison of performance measures over time or with comparable audited units.
• using performance measures to identify poor performance and recommend
improvements.
• considering what action has been taken to improve performance.

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Examples of Performance Measures

1 Education Service - Schools
Economy & Efficiency Effectiveness
1 Costs per pupil 1 Examination results: e.g.

% pass rates in the
2 Budget cost v. actual secondary and higher secondary examinations.
2 Results of inspection of schools: e.g.

3 Pupil / teacher ratio
quality assessment on teaching standards,
methods and coverage of the national
4 Actual Pupil numbers
curriculum
school
3 Parent/student views e.g. quality assessment
4 Pupil attendance e.g.

% of possible boys attending.
% of possible girls attending.
attendance rates of those registered.
2 Health service - Hospitals
1 Cost per patient day – in 1 Medical Outcomes e.g.

total and by specialism on each major area of treatment
2 Budget v actual cost 2 Waiting Times e.g.

to get hospital admission or
3 Staff/Patient ratios e.g. whilst waiting for treatment
consultants per patient 3 Patient Views e.g.

nurses per patient on medical care, waiting times etc.
4 Actual patient numbers 4 Inspection Results e.g.

hospital on the performance of the hospital.
medical audit indicators.
5 Usage rates of key medical
equipment or downtime of
major medical equipment

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Sample Audit Query Sheet

Name of Audit: ______________________________________________
Subject: ____________________________________________________
Date issued: _______________________ Date reviewed: _____________
Working
Paper Point of query Answer Cleared by
Index No.
Prepared by: _________________________________ Date: ________________
Reviewed by: ________________________________ Date: ________________

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Sample Working Paper
Name of audit: _______________________________ Date: _________________
Checklist _________________________________________
Details:
Signature of Auditor: _________________
Date: ______________________________

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Permanent Files
10. There should be a permanent file for each main group of auditable units (see
chapter 4 for definitions), which will contain documents to be referred to from year
to year and consequently provides some continuity in the planning and carrying out
of the audit. The Director-General, the Director, the Deputy Director and the Team
Leader should make use of the information in the file for planning.
11. All documents and information relevant to a particular type of auditable unit should
be gathered in the Permanent File and be updated every year. The Monitoring
Section is the custodian of the Permanent File and is responsible for its update. The
minimum information which must be gathered is listed below in the Permanent File
Check List. This Check List must be completed by 31 May every year so that the
information can be used for Current Audit Planning.
Permanent File Programme

Type of Audit Unit____________________________ Audit Year _____________
Description of Records Yes No
• Background information on type of audit unit e.g. ministries

• Relevant Act, Ordinance, laws, rules, orders etc.
• Previous Audit Reports for category and unit;
• Previous Audit Work Plans for unit (if any);
• Budgeted expenditure under Major Heads during the Fiscal
under audit review e.g. pay, allowances, supplies/services etc.
• Any Management Letters;
• Any Special Audit Reports;
• Special Requirements e.g. of C&AG or DG;
• Communication between audit offices relating to audit;
• Other standing information
Prepared by:______________________________________ Date:_______________
Reviewed by: _____________________________________ Date: ______________

LAF 80
Local Audit Manual
Audit Completion Programme
12. The conclusion of each audit should be documented using the following proforma:
Audit Unit______________________________ Audit Year ____________
This section is to be completed by the Team Leader prior to review by the Deputy
Director
Yes No
1. Are all the audit programmes used during the audit completely signed
off by the auditor who did the work?
2. Has the auditor signed and dated his conclusion at the end of each audit
programme?
3. Do the working papers contain enough detail to substantiate the
conclusions reached by the auditor?
4. Have all questions with a NO answer resulted in a working paper to
explain the problem?
5. Have all NO answers which are not satisfactorily explained been
carried forward to an Audit Observation Sheet?
6. Are all audit observation supported by evidence sufficient to allow a
reviewer to form an opinion on the adequacy of audit observation once
the Audit Party has left the premises of the auditee?
7. Have all audit observations been carried forward to the Audit
Observations Summary?
8. Is the audit file properly indexed and the pages secured to ensure that
no documents are lost or misplaced?
9. Are the working papers contain a sample and has cross reference to the
documents?
10. Is all the information required to prepare the management letter
available in the audit file?
Conclusion
I have supervised the work of the Audit Party during this audit in the period from __________to _______
I have reviewed the working papers prepared during the course of the audit. All questions raised by me
during my review have been satisfactorily answered by the auditors in question and there are no open
matters remaining.
The work carried out for each segment of the audit is sufficient to support the audit conclusions expressed
for each segment.
The auditor’s report is fully supported by the audit work carried out.
Signed: Team Leader: _________________________________ Date: ________________
Reviewed by: Deputy Director: __________________________Date: ________________

LAF 83/1
Local Audit Manual
Audit Observations Summary

Fiscal Year: ___________________
Account Location:____________________
Audit Report W/P Liabilities Assets Expenditure Receipts Man Let Ministry Management response
Ref.
Total
Amount
Management Response
Team Leader:_________________________________________ Date:_____________________ 1. Agree with audit
2. Don't agree with audit
Deputy-Director:______________________________________ Date:_____________________ 3. Agree with reservation
4. Will take action and report
5. Others (explain)

LAF 83/2
Local Audit Manual
1. Introduction
2. Scope of audit
3. Review of previous audit AUDIT REPORT
4. Observations & Recommendations
5. Conclusion Audit File
No.__________
Date:_____________
To
_____________________________
_____________________________
_____________________________
Name of Office & Location _______________________________ Fiscal ____________

Date of last report _____________________ Date of this report ____________________
1. Introduction
An audit team comprising Mrss. (a) _________________________________

(b)___________________________________ (c)
____________________________ conducted Statutory audit of the accounts of
the office locally during the period from ______________________ to
_________________ in order to ensure regularity, compliance with rules,
regulations and instructions and its reliability and correctness. During the period
under audit Mr./Ms. _________________________ Designation
__________________________ held charge of the office.
The audit was planned and conducted in accordance with the Comptroller &
Auditor-General's auditing standards.
2. Scope and technique of audit

[Tick (√) as appropriate]
• Analytical review of accounting & financial system.
• Analytical review of adequacy of the system of internal control and monitoring.
• Review of internal audit findings.
• Review of budgetary control.
• Analytical review of orders and instructions.
• Analytical review of statements of accounts on selective basis.
• Examination of books of accounts and relevant registers.
• Review of procurement practices.
• Review of documents like contract, agreement etc.
• Review of personal files/history of service books.
• Scrutiny of vouchers selected through statistical sampling.
• Issuance of written query sheets and discussion with relevant officials.
• Discussion with the head of office on the audit findings and views taken into
consideration.

LAF 83/3
Local Audit Manual
Page No. ___________
Year No. of para Settled Outstanding Present Status
4. Findings/observations and recommendations
Observations Result Recommendations

(Loss, over payment,
fraud, misstatement of
a) Major Issues accounts, violation of rules
etc.)

LAF 83/4
Local Audit Manual
Page No. ______
b) Issues of lesser importance

LAF 83/5
Local Audit Manual
Page No. ______

LAF 83/6
Local Audit Manual
Page No. ______
5. Conclusion
Necessary and appropriate action need to be taken to settle the issues brought out in
the report within a reasonable time and not later than ______________. Early action
is also requested to settle the outstanding observations in the audit report of earlier
years.
I take the opportunity to express my thanks and appreciation for the cooperation and
assistance extended to the audit team by all concerned in the office during audit.
Signature ___________________
Designation __________________
Date ________________________

LAF 83/7
Local Audit Manual
Audit Review Checklist

Audit Work Plan No. _______________
Account Location ________________________________ Financial year___________
Team Leader ____________________________________
Yes No
• Is the audit file complete in all respect?
• Are all the W/P indexed?
• Are the observations adequately substantiated by appropriate
evidence?
• Have all the intended checklists been applied?
• Was the audit completed according to Work Plan?
• Was there deviation from time budget? Time over run?
• Was excess time (if any) explained and authorised?
• Supervision and review of audit work satisfactory?
• Is the report well written and according to required standard?
• Was the report discussed with head of the office audited and his
opinion obtained?
• Did the Team Leader take personal initiative in the matter of
resolution of prior year audit observations?
• Has the Team Leader personally investigated the reasons for slow
progress of settlement of audit observations?
• If the progress is not at desired level, should it be reported to higher
authority?
• Based on the result of current audit, do you suggest any change in
the focus, manner, timing and extent of audit for the future work
plan for this entity?
Conclusion
This Audit was undertaken and completed according to given work plan and the
Team Leader has exercised due care in the discharge of his supervision and review
functions. I have initiated full range administrative and clerical actions relating this
report.
Signed
DD____________________
Date:__________________
DD/DG _________________
Date: ____________________

LAF 84
Local Audit Manual
Standard list of irregularity

(This list is indicative and not exhaustive. The decision to report will be a matter of
auditor's judgement.
Category of irregularity
1. Expenditure not for the purpose of the Republic.

2. Irregularity in procurement.
3. Expenditure in excess of budget or allocation.
4. Theft, Fraud.
5. Goods paid for but not received.
6. VAT and IT irregularities.
7. Revenue not deposited to the Government Account.
8. Wasteful expenditure.
9. Internal control weakness.
10. Accounting not according to standard.
11. Unauthorised diversion of fund.
12. Expenditure without sanction or contrary to restrictions imposed by
Parliament.
13. Any large claim outstanding for an unduly long time.
14. Remissions of revenue, and waiver of claims to revenue
15. Heavy Loss of public property by accident or for any reason.
16. Omission, misrepresentation or non disclosure of material information in the
accounting statement.
17. Non-issue of necessary accounting or financial rules, causing loss of
efficiency and delay or total non-implementation of the budgeted
programmes.
18. Any extraordinary or apparently unnecessary expenditure.
19. Money withdrawn in advance of requirement to avoid lapse of allocation.
20. Any irregularity connected with grant-in-aid.
21. Cases of writes-off.
22. Investments which are unauthorised, irregular or unsound and non-
performing.
23. Proceeds of loans, borrowings not spent for the purpose they were raised.
24. Payments for services not rendered.
25. Others (Refer to articles 64 of Audit Code).

LAF 85
Local Audit Manual
List of Rules, Orders, Ordinances and Acts
Subject/Organisation Reference
1. Payroll a) Treasury Rules and Subsidiary Rules: SR 111 to 158.
b) Fundamental Rules: Rules 19 to 40.
c) Bangladesh Service Rules: Rules 39 to 50.
d) Orders on National Scale of Pay and Grades 1973 and
Services (Pay and Allowances) Order 1977, 1985, 1991 & 1997.
2. Travel Allowance a) Treasury Rules and Subsidiary Rules: SR 142 to 145
and SR 159 to 160.
b) Compilation of the Fundamental Rules and Supplementary Rules
Vol. 1. SR 17 to 205.
c) BSR part II.
d) Rules and Orders on TA/DA abroad issued by Ministry of
Finance (External Finance Wing)
3. Works Expenditure General Financial Rules: Rules 177 to 200 and Appendix 8.
4. Purchases/Assets/Stores a) General Financial Rules: Rules 148 to 176 and Appendix 9.
b) Treasury Rules and Subsidiary Rules: SR 233 to 234.
5. Grants-in-Aid General Financial Rules: Rules 206-211.
6. Receipts a) General Financial Rules: Rules 28-32.
b) Treasury Rules and Subsidiary Rules: TR 7-10.
7. Loans and Advances General Financial Rules: Rules 249 to 265 and Appendix 9.
8. Provident Fund a) Treasury Rules and Subsidiary Rules: SR 320 to SR 326.
b) GPF Rules 1979/CPF Rules 1979.
9. Municipality Municipality Act of 1977.
10. City Corporation Municipal Corporation Ordinance of 1983
11. Zila Parisad Sthaniya Sarkar (Zila Parisad) Act 1988.
12. University a) Services (Reorganisation & Conditions) Act of 1975.
b) Orders on National Scale of Pay and Grades 1973 and
Services (Pay and Allowances) order 1977, 1985, 1991 & 1997.
c) University Calendar, Ordinance and Regulations 1986.
d) Relevant Act/Ordinance/Rules/Orders of the University.
13. University Grants The University Grants Commission of Bangladesh, Order 1973.
Commission
14. National Curriculum & National Curriculum and Text Book Board Ordinance, 1983.
Text Book Board
15. Port Authority Chittagong Port Authority Ordinance 1976.
Mongla Port Authority Ordinance 1976.
16. BIWTA Bangladesh Inland Water Transport Authority Ordinance 1977.
17. Sports and Cultural Bodies The National Sports Council Act of 1976.
18. Shilpakala Academy Bangladesh Shilpakala Academy Act of 1976.
19. Bangladesh Agricultural Bangladesh Agricultural Research Institute Act of 1976
Research Institute
20. Bangladesh Rice Research Bangladesh Rice Research Institute Act of 1973.
Institute
21. Bangladesh Jute Research Bangladesh Jute Research Institute Act of 1974
Institute
22. Bangladesh Sugarcane Bangladesh Sugarcane Research Institute Act of 1996
Research Institute

Local Audit Manual

Local Audit Manual
List of Abbreviations
AAO Audit & Accounts Officer

ADP Annual Development Programme
BIWTA Bangladesh Inland Water Transport Authority
C&AG Comptroller and Auditor-General
LAF Local Audit Forms
CAO Chief Accounts Office
CPF Contributory Provident Fund
CGA Controller General of Accounts
DA Daily Allowance
DAO District Accounts Office
DD Deputy Director
DDO Drawing and Disbursing Officer
DG Director General
ERD Economic Relations Division
FWV Family Welfare Visitor
GFR General Financial Rules
GoB Government of Bangladesh
GO Government Order
GPF General Provident Fund
IT Information Technology
MoU Memorandum of Understanding
MSR Medical Surgical Requisites
PAC Public Accounts Committee
PL Account Personal Ledger Account
SBA Systems Based Audit
TA Travel Allowance
TAO Thana Accounts Office
TC Treasury Chalan
TR Treasury Rules
TO&E Table of Organisation & Equipment
UGC University Grants Commission
VAT Value Added Tax
VFM Value for Money
W/P Working Paper
25/5/00 ix Abbreviations - Local Audit

Local Audit Manual
Glossary
Act Comptroller and Auditor-General (Additional Functions) Act (No.

XXIV of 1974) as amended upto 1983.
Adverse Opinion An audit opinion that the financial statements do not present a true
and fair view of the financial position of the audited body.
Annual Audit The Plan which allocates resources to carry out audits of systems,
Plan activities and establishments to be audited during a year.
Appropriation Accounts relating to expenditure brought into account during a

Accounts financial year to the several items specified in the Appropriation Act.
Audit Audit is an independent examination of the books of accounts, other

documents, stores, assets etc. relating to the receipts and expenditure
of the Government, statutory public authorities and public
enterprises. The aims of audit are to ensure that rules and orders
framed by the competent authority in regard to financial matters have
been followed; that sums due have been properly assessed, realised
and brought to account; that expenditure has been incurred with due
regularity and propriety; that assets have been properly utilised and
safeguarded, that public resources have been used economically,
efficiently and effectively, and that the accounts truly represent facts.
Audit Evidence The basis for the opinion expressed by the auditor in the audit report.
Auditee or Body or Organisation for which the Comptroller and Auditor-

Audited Body General is responsible for auditing.
Auditors Officials of Bangladesh Audit Department who perform audit work

on behalf of the Comptroller and Auditor-General of Bangladesh.
Audit A list of those audit procedures which should be applied to an audit

Programme activity, designed in order to meet specific audit objectives.
Audit Standards The Government Auditing Standards which are issued by the
Comptroller & Auditor General of Bangladesh and contain basic
standards with which auditors are required to comply.
Certificate The certificate which the Comptroller and Auditor-General may give
under the provision of article 128 of Constitution of the People's
Republic of Bangladesh and paragraph 4 of the Comptroller and
Auditor-General (Additional Functions) Act of 1974.
25/5/00 vi Glossary - Local Audit

Local Audit Manual
Code The Audit Code issued by the Comptroller and Auditor-General

which contains guidance on audit principles and practices to be
followed by auditors.
Compliance Audit work on probing compliance with the financial rules and
Audit regulations.
Comptroller and Comptroller and Auditor-General (C&AG) of Bangladesh.

Auditor- General
Control Risk The risk that the internal controls being operated by management are
unreliable.
Corruption The misuse of public power, office or authority for private benefit
through bribery, extortion, influence, peddling, nepotism, fraud or
embezzlement.
Corrupt Practice Resorting to any activity which constitutes corruption.
Finance A comprehensive accounts of all receipts and expenditure of the

Accounts Government during a financial year.
Financial The view of the audited body's financial affairs as expressed by both
Position its balance sheet and related income and expenditure accounts,
together with other statutory accounts where applicable.
Fraud Intentional distortions of financial statements and accounting

records and /or misappropriation of assets.
Government "Government" means the Government of the People's Republic of

Bangladesh.
Manual Local Audit Manual
Materiality An expression of the relative importance of a particular matter in the

context of the statements of accounts as a whole. A matter is
material if its omission or misstatement would reasonably influence
the decision of an addressee of the audit opinion. Materiality may
also be considered in the context of any individual primary
statement within the statements of accounts or of individual items
included within them. Materiality is not capable of general
mathematical definition as it has both qualitative and quantitative
aspects. A significant matter need not necessarily be material. For
example, an item which is contrary to law can be significant without
being material.
25/5/00 vii Glossary - Local Audit

Local Audit Manual
Opinion The opinion which auditors must give on the statements of accounts
(or other accounts if a statement is not required) of the audited body.
Propriety Audit Audit work to consider matters that appear to involve improper
expenditure.
Public Enterprise A company or firm, whether incorporated, registered or not, in which

the Government has at least fifty percent share or interest.
Risk of Error The risk that the audited body's financial systems are in error or that
the financial statements will not present a true and fair view of the
financial position.
Standards Government Auditing Standards.
Statements of The annual financial statements in the prescribed form or the books
Accounts of account for those audited bodies not required to produce a
statement.
Statutory Public Any authority, corporation or body the activities or the principal
Authority activities of which are authorised by any Act, Ordnance, Order or
instrument having the force of law in Bangladesh.
Stewardship Custodianship, Trusteeship
Studies Investigations undertaken by the C&AG's office with a view to

identifying good practices and opportunities to secure improvements
in value for money.
Value for An objective and systematic review of an Organisation to assess

money/ whether in the pursuit of predetermined goals it has achieved
performance economy, efficiency and effectiveness in the utilisation of its
audit work resources. The term VFM audit also denotes performance audit.
Note: Terms or expressions used in this Manual which appear also in the Act or in any
order or rules issued thereunder shall have the same meanings as have been
assigned to them in the Act, the order or the rules concerned
25/5/00 viii Glossary - Local Audit

Local Audit Manual - English

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Local Audit Manual - English

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LOCAL AUDIT

LOCAL AND REVENUE

Issued by authority of the Comptroller

i) The Local Audit Manual (East Pakistan) Volume I - 1957

The manual is divided into 12 Chapters:

25/5/00 i Preface - Local Audit

Chapter 8 provides guidance to auditors who undertake non-routine or special audits.

Dhaka Syed Yusuf Hossain

25/5/00 ii Preface - Local Audit

Preface ............................................................................................................... i-ii

1 Local and Revenue Audit Directorate ............................................................. 1.0

Introduction ......................................................................................................... 1.1

2 General Audit Methods .................................................................................... 2.0

Introduction ......................................................................................................... 2.1

3 Audit Planning ................................................................................................... 3.0

Introduction ......................................................................................................... 3.1

25/5/00 iii Contents - Local Audit

4 General Audit Procedures ............................................................................... 4.0

Introduction ......................................................................................................... 4.1

5 Audit of Government Offices............................................................................ 5.0

Introduction ......................................................................................................... 5.1

6 Audit of Government Service Units ................................................................. 6.0

Introduction ......................................................................................................... 6.1

7 Audit of Autonomous & Local Bodies ............................................................. 7.0

Introduction ......................................................................................................... 7.1

25/5/00 iv Contents - Local Audit

Port Authorities......................................................................................... 7.38-7.48

8 Procedures on Special Situation Audits .......................................................... 8.0

Introduction ......................................................................................................... 8.1

9 Supervision and Review ................................................................................... 9.0

Introduction ......................................................................................................... 9.1

10 Audit Recording and Evidence ...................................................................... 10.0

Introduction ....................................................................................................... 10.1

11 Reporting and Follow Up................................................................................ 11.0

Introduction ....................................................................................................... 11.1

12 Index and copy of all Forms and Programmes............................................. 12.0

Introduction ....................................................................................................... 12.1

25/5/00 v Contents - Local Audit

Chapter 1 - Local and Revenue Audit Directorate

25/5/00 1.0 Chapter-1 Local and Revenue Audit Directorate

Chapter 1 - Local and Revenue Audit Directorate

(a) the audit of a wide range of Government Offices such as ministries,

Scope and Objectives of Local Audit

(c) Autonomous & Local Bodies - these include city corporations,

25/5/00 1.1 Chapter-1 Local and Revenue Audit Directorate

4. Overall there are approximately 12,000 individual offices or units which,

(a) an examination of the arrangements for securing economy, efficiency and

(b) the adequacy of financial management systems;

25/5/00 1.2 Chapter-1 Local and Revenue Audit Directorate

Organisation of the Directorate

ORGANIZATION OF LOCAL & REVENUE AUDIT DIRECTORATE

Dy Director Dy Director Dy Director Dy Director Dy Director

FIELD AUDIT SETUP Horizontal HEAD QUARTER SETUP

* Personnel positions change for administrative reasons

25/5/00 1.3 Chapter-1 Local and Revenue Audit Directorate

Key Responsibilities and Duties of Audit Staff

Director General Director Deputy Audit &

25/5/00 1.4 Chapter-1 Local and Revenue Audit Directorate

Relationship with Others

Relationships with other audit directorates

25/5/00 1.5 Chapter-1 Local and Revenue Audit Directorate

17. This arrangement is particularly important in respect of government funds provided

Relationships with internal audit

Relationships with other auditors

Prepared by: ____________________Date:_

Reviewed by: ___________________Date:_

Prepared by:____________________ Date:_

Reviewed by:___________________ Date:_