Journal Of Goverment Audit and Accounts

Featuring an Office - Auditing Guidance Framework in SAI India
By Mr. N. N. Subramanian, Dy. Director, CRA, O/o the Principal Director of Audit, Central, Bengaluru


Auditing is a core constitutional responsibility cast upon the Supreme Audit Institutions across the globe and it is sine qua non of their existence to establish, implement and maintain a framework of audit guidance not only to facilitate governance but also to standardize the practice of auditing across the institution. The International Organization of Supreme Audit Institutions has, over the years, developed an ISSAI framework comprising a bouquet of professional pronouncements ranging from prescribing the fundamental principles of various types of audit to providing subject specific guidance and propagating best practices.

The institution of the Comptroller and Auditor General of India (SAI, India) has been actively involved in development of the guidance framework and has in recent times assumed a leadership role in restructuring the ISSAI framework.The Forum for the INTOSAI Professional Pronouncements chaired by SAI, India is migrating the ISSAI framework into an INTOSAI Framework of Professional Pronouncements by defining theirclassification principles and distinguishing the INTOSAI Principles, Standards and Guidance, which enhances the understanding of their nature, purpose and authority.

Recognising the diverse models of SAIs, varying in their legal form and organization, mandate, maturity and national context, the INTOSAI Framework of Professional Pronouncements envisage that SAIs can either adopt them as authoritative standards or use them as the basis for development of authoritative standards. SAI, India uses the latter and develops standards, guidelines and other forms of guidance that are consistent with the INTOSAI Framework.

Developing Audit Guidance Framework: Role of PPG

The Professional Practices Group (PPG) is the standard and audit guidance setting body within the institution of the Comptroller and Auditor General of India.PPG was carved out of the erstwhile Director General (Audit) and established in the Office of the Comptroller and Auditor General of India in May 2011 with the following roles and responsibilities.

  1. Establishing, enhancing, enforcing desired quality regime
  2. Developing, reviewing and updating auditing standards in conformity with INTOSAI standards
  3. Development, dissemination and implementation of new audit methodologies
  4. Framing regulations and rules relating to audit function including review of the CAGs Regulations on Audit and Accounts, 2007 and modification thereto in the context of the legal mandate of CAG as it evolves
  5. Keeping track of professional developments at national and international levels and interface with all professional bodies
  6. Identify, assess and propagate good practices and new ideas
  7. Bringing out generic Audit guides and manuals
  8. Monitoring preparation of sectoral/field manuals by functional wings at Headquarters and field offices

PPG is also vested with the responsibility of deciding on policy and regulating the conduct of audit of Externally Assisted Projects and Autonomous bodies and bringing out the biannual Journal of Government Audit and Accounts.

Development of guidance and approval process

This critical role of fostering a desired audit quality regime involves identification of areas that require policy intervention in the form of developing and updating various forms of guidance on a regular basis. Inputs from wide ranging sources feed into this process, which comprise the views of the Audit Advisory Board, decisions of the Senior Management, AG’s Conference deliberations, concerns raised by various functional wings in the office of the Comptroller and Auditor General of India and peer review recommendations.

After identification of areas, development and approval of audit guidance are collaborative,iterative and robust processes. To provide a perspective, PPG engages in wide ranging consultations at various levels, constitutes task forces for identified projects and harnesses external expertise for innovative methodologies.Typically, core committees are constituted with multi- dimensional representation from various wings, field offices and domain experts, if necessary to steer the process of developing standards/auditing guidelines with PPG providing the basic drafting and secretarial support. The preliminary or draft versions, in the nature of exposure drafts, are put out for comments and inputs. Based on the feedback, after appropriate revision, the revised draft is brought before the Technical Board for Professional Practices for appraisal.

Based on the recommendations and endorsement by the Technical Board, the audit guidance is brought before the Comptroller and Auditor General of India for approval and implementation within the Department. The approved guidance also becomes the basis for development of Structured Training Modules in RTIs and other capacity building initiatives.

The Technical Board

The Technical Board for Professional Practices was established in April 2014 comprising DAI as the Chairperson and DAI (GA & GASAB), DAI (RC), ADAIs of two States (on rotational basis) as members with ADAI (PPG) as Convenor and DG (PPG) as Secretary of the Technical Board to render technical advice to CAG in areas of audit and accounting policy and their implementation that may be necessitated in view of the changes in the auditing environment, expansion of audit arena, emerging audit methodologies and emphasis on adapting International Standards for Supreme Audit Institutions. The constitution of Technical Board was subsequently amended to include the DAI (Commercial) in the Board. The Board would consider issues relating to:

  • Implementation of audit policy, consultation and advice on accounting policy-pursuance of its underlying objectives
  • Development of audit methodologies and accounting procedures- appropriate and in consonance with such policy objectives
  • Institutional mechanism for identification, assessment and propagation of good practices as well as innovative ideas
  • Establishment, enhancement and enforcement of an audit quality regime

Challenges in developing the framework: SAI, India

The audit mandate emanating from the Constitution of India, CAG’s DPC Act and specific legislations enacted over time by Parliament and State Legislatures has a wide jurisdiction, which includes all three tiers of the government- Union, States and Local bodies, public sector, statutory corporations and extends to autonomous bodies and authorities substantially financed by government. The audit universe, therefore, is geographically dispersed with diverse organizational hierarchies, dissimilar governance and accountability levels.

As a corollary, addressing the following two intrinsic questions while developing an audit guidance is a very complex process and assumes challenging proportions.

  • What to achieve: Typically this involves envisaging the auditing principles that are sought to be achieved and are amenable to objective evaluation across the various auditing sectors.
  • How to achieve: This comprises prescribing the auditing processes and appropriate audit procedures that are amenable to uniform application across the various auditing sectors towards achieving the auditing principles.

Existing guidance framework: SAI, India

The development and updation of audit guidance is an ongoing and an evolving process. Prior to 2011, the fundamental principles of auditing pronounced by INTOSAI were ‘process based’ and it is only in the recent past that the three types of audit-Financial Attest, Performance and Compliance have been intrinsically ingrained in the audit lexicon. The standards have therefore moved away from the ‘process based’ to ‘Type of Audit’ based standards.

Consequently, the Audit guidance in SAI, India, which had only the Accounting Standards (aligned to INTOSAI) and the Manual of Standing Orders in the civil side and domain specific audit manuals in the central side - Commercial, Railways, Posts and Telecommunication and Defence have also been revised and updated. Over the past few years, PPG has steered the development of guidance at all levels - principles, processes and procedures and has synergized them into a composite Audit Guidance Framework that defines their hierarchy.The Audit Guidance Framework developed in SAI, India as it stands today represents the following hierarchical order:

Auditing Standards

Establish auditing principles:These are norms/benchmarks to evaluate quality of audit results.

Auditing Guidelines

Regulate audit process:These are parameters to regulate planning, conducting, reporting and follow up of Performance, Compliance and Financial Audits so as to achieve the norms/benchmarks established in the Auditing Standards.

Manualised Standing Orders / Manuals

Prescribe detailed audit procedures:These are procedural orders/ audit check lists to be followed while planning and conducting audits so as to comply with the prescribed processes envisaged in the Auditing Guidelines.

Domain specific guidance notes and practice guides

Aid specific audit processes:serve as guides.

The overall framework corresponds to the INTOSAI Framework of Professional Pronouncements as shown below:

  • Constitution of India
  • DPC Act, 1971
  • Regulations on Audit and Accounts, 2007
  • Code of Ethics
  • Audit Quality Management Framework

INTOSAI Principles

  • Auditing Standards, 2017 (Third edition)
  • Performance Auditing Guidelines 2014
  • Financial Attest Auditing Guidelines for State Government Accounts, 2015
  • Compliance Auditing Guidelines, 2016

INTOSAI Standards

  • Guidelines for audit of PPP projects (under revision)
  • Manual of Standing Orders (Audit) – under revision
  • Domain specific and Subject specific Audit Manuals
  • Commercial Audit Manual
  • Revenue Audit Manual
  • Railway Audit Manual
  • P&T Audit Manual
  • Internal Control Evaluation Manual
  • Manual of Audit of Autonomous Bodies
  • Manual of instructions for audit of Panhayati Raj institutions
  • Other forms of guidance- Subject Specific Guidance and Practice Notes and Guides
  • Subject Specific Guidance
  • Guidance on Types of Audit
  • Guidance on direct access to private sector record
  • Guidance on Interaction with audited entities
  • Guidance on risk based approach to planning Performance audits
  • Supplementary guidance on evidence gathering, analysis & evaluationtechniques in performance audits
  • Guidance on developing recommendations
  • Guidance on Follow Up audits
  • Guidelines on Audit Materiality
  • Guidance on compliance audit of Regulatory Bodies
  • Guidance on compliance audit of SPVs, Trusts & Societies
  • Guidance on compliance audit of PPP arrangements
  • Style Guide for Audit Reports
  • Guidance on writing Preface to Audit Reports
  • Guidance on writing Executive Summary for standalone performance audits
  • Practice Notes and Guides
  • Practice Guide- Audit on contract management
  • Practice Guide- Audit of poverty alleviation programmes
  • Practice Guide- Audit of procurements
  • Practice Guide- Planning individual performance audits
  • Practitioners’ Guide on Data visualization
  • Practice Note – Financial Attest Audit of Autonomous Bodies

INTOSAI Guidance - Subject Specific

Continue Readingimg

From the Editor's Desk

Standards are guidance statements put in place by an organization to manage risk Standards provide a basis for mutual...


Role of the INTOSAI in Standard Setting for Public Sector Auditing

Supreme Audit Institutions (SAI) are national authorities responsible for auditing government revenues and spending...


Introduction to the INTOSAI Frame Work for Professional Pronouncements-IFPP

In 2015, an important development took place in INTOSAI standards setting. A Common Forum was created by the three...


Standard Setting by Compliance Audit Subcommittee of International Organisation of Supreme Audit Institutions

Compliance Audit Subcommittee (CAS) is one of the subcommittees under the Professional Standards Committee (PSC) of the ...


Financial Audit and Accounting Sub-Committee

Financial Auditing focuses on determining whether financial information is presented in accordance with the applicable financial...


Role of INTOSAI Performance Audit Sub-Committee In developing standards and guidelines

The Performance Audit Subcommittee was created by the Professional Standards Committee of INTOSAI in September...


Standard Setting in INTOSAI WGITA-The Indian Experience

Working Group of Information Technology Audit (WGITA), an INTOSAI working group of SAIs, set up in the XIII INCOSAI...


Preparation of an Accouting Standard - The GASAB Narrative

In a milieu where government accounting systems depicted individual entity’s objectives and peculiarities in measuring...


News From International Desk

The Comptroller and Auditor General (CAG) of India occupies several important positions in INTOSAI and ASOSAI...