Opportunities and issues of Auditing in Government Companies

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Introduction

The current discussion would evolve through identifying opportunities as well as issues of auditing in government companies. The primary inspector for auditing  of an government organisation or some other organisation owned or controlled, straightforwardly or in a roundabout way, by the central government, or by any state government, or legislatures, or mostly by the central government and halfway by at least one state legislatures will be selected by the Controller as well as Auditor General. Therefore, it can be seen that for government companies or organisations the auditing process is different than the private company auditing process as Government Company auditing is conducted and controlled by the government. However, online assignment help Birmingham and despite having strong exposure of government controlled auditing process, the government companies would have certain challenges in the auditing process side by side the opportunities underlying. Thus, the discussion at present would mainly focus on these aspects.

Auditing Process in Government Companies

Planning, carrying out the audit, issuing the audit reports, and following up on them are all parts of the audit process. Because there would not be enough people to audit all of the government offices every year, the offices have been ranked by importance (Manita et al. 2020). In context of the discussion at present, the auditing process in government companies is outlined as follows;

Appointment of First Auditor

The Comptroller and Auditor General (C&AG) must appoint the first auditor of a Government company or any other company either owned  or controlled, directly or indirectly, through the Central Government, any State Government, or Governments, or partly by the Central Government and partially by one or more State Governments, within 30 days of the company’s registration. Furthermore, essay help and  C&AG is unable to appoint auditor in Government Company or any other company either controlled or owned, directly or indirectly by central or state government within the scheduled timeframe (Alabdullah and Ahmed, 2020). Then the Board of the company should be appointing the auditor in a duly convened Board Meeting.

Audit Planning and Notification

Followed to identifying and appointing an auditor, it would be necessary to ensure proper audit planning as well as notify about it. The auditor would be reviewing the previous audit process. And, followed to that certain modifications would be required in audit planning and concerning it auditor would also review the policies as well as statutes and would prepare basic audit programme (Johnsen, 2019). Furthermore, the internal audit service would be notifying appropriate department personnel regarding upcoming audit and its purposes.

Open Meeting

Now, Diploma in Nursing and  audit process, it would be necessary to conduct a open meeting that would further include management as well as any administrative personnel who would be involved within the process of auditing. Here, purpose and objective of the audit would be discussed alongside the audit program.

Report Drafting and Management Response

Followed to the above process, it would now be necessary to report the draft and required management responses (Kimani et al. 2020). The report would include areas such as; objective, scope of the audit, relevant aspects and related findings and recommendations for improvement as well as correction. After that, the report that has been drafted would be submitted to the management and Board in order for further review as well as responses. That should also involve action plan for any further correction.

Opportunities of Auditing in Government Companies

The foundation of effective governance in the public sector is government auditing. By giving fair, objective evaluations of whether public assets are dependably and actually figured out how to achieve planned results, reviewers assist government associations with accomplishing responsibility and integrity, further develop tasks, and impart certainty among stakeholders and partners (Iriyadi, 2019). The oversight as well as insight, and foresight responsibilities of governance are supported by the role of the government auditor. Therefore, in this context, the opportunities of auditing are highly evident. The major opportunity could further be seen through oversight component. Oversight addresses whether government substances are doing what they should addresses whether government elements are doing what they should do and serves to distinguish and hinder public defilement. Insight provides an independent evaluation of government programs, policies, operations, and outcomes to help decision-makers make decisions. Trends and upcoming difficulties are identified through foresight (Liu et al. 2019). Auditors as the evaluators would be using instruments, for example, monetary reviews, execution audits, and examination and warning administrations to satisfy every one of these jobs. Henceforth, the opportunities that would come through auditing in government companies are in context of organisational independence as well as having a formal mandate competent staffs. Moreover, in terms of setting direction, instilling ethics and integrity and accountability reporting would also be some of the major scopes or opportunities emerging through proper auditing process of a government organisation. In this significance, it is further to be noted that advantage of audit to government companies would be that an audit committee could periodically meet with the chief executive of the government along with the financial officers (Vadasi et al. 2020). This is for reviewing, monitoring as well as directing activities and related results in context of government’s internal control maintenance and preparing financial reports.

Issues of Auditing in Government Companies

Followed to the discussion above considering the opportunities, it is further to be said that despite having major opportunities, government companies are further observed to face several major issues in context of auditing process. Fundamentally, it is seen that in their line of work, auditors face a wide range of serious issues, including lower motivation level for staffs, inadequate training and capacity development as well as resistance to change, political interference alongside environmental, communication, and leadership issues (Macve, 2020). Besides that, other major issues that could be seen while conducting auditing process in government companies are as follows;

  • Financial reports submitted would not be consonance with the business transactions that have been executed throughout the government organisation.
  • In addition to this, it is also to be seen that threats as well as intimidation by the officials of the government might not have positive effects on quality of the work of the auditor and in that context significant issue could arise.
  • Moreover, inadequate accounting knowledge for reviewing the accounts and financial processes could also create major issue in this context (Hazaea et al. 2021).
  • On the other hand, it could further be stated that a portion of the problems bound to be experienced when evaluating government establishments are misappropriation of assets by some administration authorities, lack in affirming money due and inability to exercise due proficient consideration. And, in that context issue in auditing process of the government company might emerge.

Recommendations for overcoming the Issues in Auditing of Government Companies

Followed to the discussion above, it can be stated that the identified underlying issues are required to be addressed and necessary recommending approaches are to be developed. Every government would require activities in context of independent audit that would provide certain range of assurance along with related advisory services, including financial attestation, performance, and operational efficiency, to safeguard the public interest (Aguilera et al. 2019). These activities can be carried out using internal or external audit services, or specific combination of the two processes. To be able to respond to the entirety of the government’s activities, the public sector or governmental audit activities should have a broad mandate. Thus, in this context, the audit process throughout the government organisations would require organisational independence as well as sufficient funding scope alongside competent leadership, supporting stakeholders and setting up professional audit standards. Governments should lay out assurances to guarantee that review exercises are engaged to report major underlying issues to fitting oversight specialists. By establishing an independent audit committee, this protection can be achieved (LeBaron, 2021). Henceforth, in this context, the application of the recommending views and approaches would be highly effective and efficient for ensuring stable and proper audit process and system for government companies.

Conclusion

Based on the above discussion and critical evaluation, it can be stated that auditing for government organisations would be performed for ensuring financial statements having been prepared properly. That is also not to misrepresent taxable amount in the company. External auditing of the government’s financial statements is required. The financial statements would gain credibility as the result of this. It opens up opportunities to enhance performance management, timely reporting, and decision-making, establish high service standards, and strengthening financial systems and internal controls. The records of government agencies as well as private businesses and individuals carrying out activities that are subject to regulation of either central or state government or taxation are kept and examined by government auditors. Inspectors utilised through the public authority guarantee incomes are gotten and spent by regulations and guidelines. It would further be attributable in securing accountability of the authorities without being involved in embezzlement and any misconduct and being responsible towards public disclosure. Therefore, audit process in government organisations would also involve proper governance structure and practices.

Reference list

Aguilera, R.V., Marano, V. and Haxhi, I., 2019. International corporate governance: A review and opportunities for future research. Journal of International Business Studies50, pp.457-498.

Alabdullah, T.T.Y. and Ahmed, E.R., 2020. Audit committee impact on corporate profitability in Oman companies: an auditing and management accounting perspective. Riset Akuntansi dan Keuangan Indonesia5(2), pp.121-128.

Hazaea, S.A., Zhu, J., Al-Matari, E.M., Senan, N.A.M., Khatib, S.F. and Ullah, S., 2021. Mapping of internal audit research in China: A systematic literature review and future research agenda. Cogent Business & Management8(1), p.1938351.

Iriyadi, I., 2019. Prevention of Earnings Management through Audit Committee and Audit Quality in the Award-Winning and Non-Winning Companies. Journal of Accounting Research, Organization and Economics2(2), pp.155-169.

Johnsen, Å., 2019. Public sector audit in contemporary society: A short review and introduction. Financial Accountability & Management35(2), pp.121-127.

Kimani, D., Adams, K., Attah-Boakye, R., Ullah, S., Frecknall-Hughes, J. and Kim, J., 2020. Blockchain, business and the fourth industrial revolution: Whence, whither, wherefore and how?. Technological Forecasting and Social Change161, p.120254.

LeBaron, G., 2021. The role of supply chains in the global business of forced labour. Journal of Supply Chain Management, 57(2), pp.29-42.

Liu, M., Wu, K. and Xu, J.J., 2019. How will blockchain technology impact auditing and accounting: Permissionless versus permissioned blockchain. Current Issues in auditing13(2), pp.A19-A29.

Macve, R., 2020. Perspectives from mainland China, Hong Kong and the UK on the development of China’s auditing firms: implications and a research agenda. Accounting and Business Research50(7), pp.641-692.

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