The objective of procurement audit is to design and perform audit procedures in such a way as to enable the auditor to obtain sufficient and appropriate audit evidence so as to draw reasonable conclusions on which to base the audit opinion. The relevant audit procedures that should be performed to obtain desirable audit evidence include the following:
1. Inspection
Includes physical review of records and documents and the tangible assets of the entity to obtain evidence of valuation, existence, ownership rights and obligations of the assets. Within the context of procurement and disposal audits, physical inspections are more
permanent when auditing construction projects and supplies for confirmation of physical existence of the completed construction work.
2. Observation
This is used to gather evidence of the procuring entity procedures of operations and use or handling of assets procured. This is done by watching a process being performed by the staff and documented or that the laid down procedures are being followed. Within the context of procurement audit, the auditor can observe the process of bid receiving, box sealing and bid opening.
3. Enquiry/Confirmation
Involves seeking relevant information both financial and non-financial from knowledgeable persons inside or outside the public entity either formally or in writing.
4. Reconciliation/Computations
5. Analytical procedures
Consists of the study and analysis of significant ratios and investigating material, fluctuations and variances in order to measure the performance. Auditor should analyse trends and relationships in financial and non-financial data by means of plausible relationships and evaluate the results to determine whether they are consistent with the entities business operations and environment.
6. Compliance procedures
Auditor carries out tests to confirm existence of controls and if proper functional processes are operating effectively and as per the controls in the procurement process of the procuring entity.
7. Use experts to collect audit evidence
The auditor can gather from individuals who also have professional knowledge in specific areas affecting procuring entity operations in contracts of works
8. Vouching of entries/tracing
You examine supporting documentation to see if they are properly recorded, authorized, relate to procuring entities business purpose and respective financial period. Audit evidence is important and should be obtained at all stages of the procurement process. Professional auditing standards require auditors to assess critically including consideration for possible fraud.
Procurement auditors are presumably required to evaluate the quality of evidence obtained and comment as to whether procurement or projects covered by the audit were appropriately executed and in compliance with existing new frameworks and that value for money was obtained.
