2007年-世界发展银行全球_Pakistan___Public_Sector_Accounting_and_Auditing_A_Comparison_to_International_Standards_93页_9mb

Summary of Pakistan's Public Sector Accounting and Auditing Practices Compared to International Standards

Core Content

This document provides an assessment of public sector accounting and auditing practices in Pakistan, comparing them with international standards. It outlines the current status of accounting and auditing frameworks, identifies gaps, and proposes action plans to improve alignment with global norms.

Main Objectives

The report aims to:

• Assist in implementing more effective public financial management (PFM) through improved accounting and audit processes.
• Provide a basis for evaluating the current practices against international standards.
• Chart a path for improving the adherence to international standards.
• Offer a continuing reference for measuring progress in reform efforts.

Key Findings

Public Sector Accounting

1. Adoption of IPSAS: Pakistan partially adopts International Public Sector Accounting Standards (IPSAS). The IPSAS-2 cash flow reporting format is used, but full accrual-based reporting is not yet in place.
2. Education and Training: Training programs partially align with International Education Standards (IES). There is a need to integrate IPSAS into the syllabi of the Audit and Accounts Training Institute (AATI).
3. Code of Ethics: The code of ethics for auditors aligns with the INTOSAI Code of Ethics.
4. Accounting Standards Body: The Auditor General of Pakistan (AGP) has the authority to prescribe accounting standards, but the framework needs strengthening.
5. Financial Statements: Financial statements are not fully in line with IPSAS. Gaps include the absence of accounting policies, lack of third-party transaction inclusion, and failure to consolidate controlled entities.
6. Cash Flow Statements: Current cash flow statements do not conform to IPSAS requirements. They are prepared but in inconsistent formats.
7. Accounting Policies and Notes: These are not provided in the budget or accounts documents, and their inclusion is necessary for transparency.
8. Disclosures: Some disclosures are partially compliant with IPSAS. There is a need to reduce reporting lag, improve reconciliations, and disclose more information.
9. Consolidated Financial Statements: Consolidation of all controlled entities is not yet achieved, though the Cash Basis IPSAS format can be used as a starting point.

Public Sector Auditing

1. Statutory Framework: The statutory framework for auditing is partially aligned with INTOSAI standards. Legislative changes are needed to enhance the powers and independence of the Supreme Audit Institution (SAI).
2. Auditing Standards: The Auditor General has adopted INTOSAI standards but not fully the International Standards on Auditing (ISA). A Public Sector Committee is recommended for the adoption of ISA.
3. Code of Ethics: The code of ethics is in place and matches international standards.
4. Accountability and Independence: The SAI's accountability process is largely in line with INTOSAI standards, but the legal framework requires improvements in transparency and independence.
5. Auditor Training: Training for auditors is partially aligned with international standards. AATI should review its syllabi to meet IFAC educational standards.
6. Audit Methods and Technology: The SAI is equipped with audit methods and technologies, but full implementation is lacking. Technology support for a management information system is needed.
7. Quality Assurance: Quality assurance programs are partially in place. Better working paper guidance, computerization, and independent review processes are required.
8. Audit Planning and Supervision: These processes are partially compliant with international standards. A risk-based approach and improved methodologies are necessary.
9. Internal Control Evaluation: The process is partially compliant. A more risk- and systems-based approach is needed.
10. Compliance with Laws: Audits partially meet international standards. Integration with annual certification audits is recommended.
11. Audit Evidence: The evidence for audit conclusions is partially compliant. More rigorous testing and better organization of evidence are required.
12. Financial Statement Analysis: Limited scope exists for financial analysis. Full implementation of IPSAS would improve this.
13. Audit Opinion: The process for preparing audit opinions is not fully compliant with ISA 700. A reliable program for annual accounts in IPSAS format is needed.
14. Fraud and Error Consideration: The process is partially compliant. Forensic audit training is necessary to distinguish between errors and fraud.
15. Public Availability of Reports: Reports are made public after parliamentary consideration, but formal legislation for public availability is lacking.
16. Audit Recommendations: The process for implementing audit recommendations is partially effective. Reform of administrative and review processes is needed to reduce backlogs.

Key Recommendations

• Adopt IPSAS: The government should adopt IPSAS as the core framework for financial reporting, with the Modified Cash Basis under the New Accounting Model (NAM) as an interim step.
• Implement the Financial Audit Manual: The manual, based on ISA and INTOSAI standards, should be fully implemented with a clear timetable.
• Strengthen the Auditor General's Role: The AGP should have enhanced jurisdiction, mandate, and functions. Legislative reforms are necessary to ensure independence and transparency.
• Establish a Public Sector Committee: A committee should be formed to review and adopt ISA, with the involvement of the Institute of Chartered Accountants of Pakistan (ICAP).
• Improve Training and Capacity Building: AATI should continue to update its syllabi to include international standards. PIFRA supports capacity building and computerization.
• Enhance Reporting and Disclosure Processes: Reports should be made public more promptly. The Public Accounts Committee (DAC) needs to improve its review efficiency.
• Ensure Compliance in State-Owned Enterprises (SOEs): The Commercial Audit Wing of the AGP should be strengthened to ensure compliance with IAS/IFRS for SOEs. External auditors should be selected and report through the AGP.

Conclusion

The report highlights the need for Pakistan to align its public sector accounting and auditing practices with international standards, particularly IPSAS and ISA. This alignment is essential for enhancing transparency, accountability, and the effectiveness of public financial management. The implementation of these standards requires a comprehensive reform program, improved training, and legislative changes to ensure independence and reliability in financial reporting and audit processes.