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Are internal auditors sleeping on the job?
Whatever it is, internal auditors in local governments and MDAs have many questions to answer regarding why they are deployed in these roles where they should be first-line gatekeepers against systemic fraud and maladministration, enabling the system to efficiently check itself at all times without the need for radical and ‘external’ measures
Al-Haji Faruk Kirunda. (File)
By: Admin ., Journalist @New Vision
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OPINION
By Al-Haji Faruk Kirunda
In the aftermath of a renewed fight against corruption in local government administrative units and Ministries, Departments and Agencies (MDAs), there is an area that isn’t being given adequate attention yet vital to bringing this fight to a reasonable terminus. That is the role of internal auditors. Every time a corruption scandal is exposed, there is likelihood that some internal auditor somewhere did not do his or her work.
Uganda, like all functional states, has a department of the Auditor General (AG), established under Article 163 of the 1995 Constitution, functioning as the supreme audit authority to oversee public financial management, ensure accountability, and reporting directly to Parliament. Every city, district, municipal council, town council and other administrative units also employ internal auditors to represent the functions of the office in those jurisdictions.
No single unit is without an auditor based in the very jurisdiction. Within the relevant law, the internal audit department in a Local Government unit is an independent and objective assurance and consulting unit, statutorily provided for under Section 90 of the Local Government Act (Cap. 243) and Section 48 of the Public Finance Management Act, 2015. Headed by the district or city Internal Auditor (often a Principal Internal Auditor), this department plays a “crucial oversight role in promoting good governance, accountability and the efficient use of public resources”.
The primary mission of the department is to provide risk-based and objective assurance, advice and insight. It reports functionally to the district council and administratively to the chief administrative officer (CAO). The internal auditors evaluate the soundness, adequacy and effectiveness of the district’s internal control systems across all departments and programmes. This includes financial, operational and compliance controls to safeguard assets, ensure accuracy of financial records and promote operational efficiency. Among other functions, they conduct special audit assignments and investigations as directed by the district council, management or when anomalies are suspected, to uncover fraud, waste or abuse.
In executing their roles, the internal auditors compile reports on their investigations in various departments which are assessed by the council and other organs responsible for accountability, including the Office of the President under the office of the Resident District Commissioners (RDCs). These periodic reports are structured in such a way that they detail the scope of various projects and functions and pinpoint anomalies identified thereof. In short, these field-based auditors have the duty and power to detect and draw attention to queries along the chain of service delivery in government programmes. In my view, the internal auditors are among the first line of defence against misuse and abuse of public resources (with powers to report their findings on as is basis, without administrative, political or other forms of interference that compromise objective reporting) — the same way antibodies act as an early warning “mechanism” that the body is under attack by disease-causing agents.
Therefore, given the provisions that establish and empower the function of audit in the government system, how then is it that corruption, wastage, misappropriation and abuse of public resources persist to an extent that we now need high-powered teams from the centre to go down and catch “small fish” that would otherwise be caught at that level? I will excuse the AG’s office because at the apex of it, the audit role should not be seen to be under any kind of pressure. The AG’s office is also on record for exposing some of the biggest financial and systemic abuses in the country through its reports to Parliament.
The internal auditors are resident in the districts and cities. They are Ugandan, born and likely educated around. When Ugandans despair and lament over corruption, these auditors are here. They are affected by the effects of theft of public funds, lack of drugs in hospitals, shoddy works on roads and other public projects like everyone else. But we rarely hear them raising a voice on these things, while at the same time, for all their training and competence, the vices persist or even get worse. What could be the problem? Are they sleeping on the job or have they been “conquered” by the powerful syndicates that run these administrative units?
The primary mission of the department is to provide risk-based and objective assurance, advice and insight. It reports functionally to the district council and administratively to the chief administrative officer (CAO). The internal auditors evaluate the soundness, adequacy and effectiveness of the district’s internal control systems across all departments and programmes. This includes financial, operational and compliance controls to safeguard assets, ensure accuracy of financial records and promote operational efficiency. Among other functions, they conduct special audit assignments and investigations as directed by the district council, management or when anomalies are suspected, to uncover fraud, waste or abuse.
In executing their roles, the internal auditors compile reports on their investigations in various departments which are assessed by the council and other organs responsible for accountability, including the Office of the President under the office of the Resident District Commissioners (RDCs). These periodic reports are structured in such a way that they detail the scope of various projects and functions and pinpoint anomalies identified thereof. In short, these field-based auditors have the duty and power to detect and draw attention to queries along the chain of service delivery in government programmes. In my view, the internal auditors are among the first line of defence against misuse and abuse of public resources (with powers to report their findings on as is basis, without administrative, political or other forms of interference that compromise objective reporting) — the same way antibodies act as an early warning “mechanism” that the body is under attack by disease-causing agents.
Therefore, given the provisions that establish and empower the function of audit in the government system, how then is it that corruption, wastage, misappropriation and abuse of public resources persist to an extent that we now need high-powered teams from the centre to go down and catch “small fish” that would otherwise be caught at that level? I will excuse the AG’s office because at the apex of it, the audit role should not be seen to be under any kind of pressure. The AG’s office is also on record for exposing some of the biggest financial and systemic abuses in the country through its reports to Parliament.
The internal auditors are resident in the districts and cities. They are Ugandan, born and likely educated around. When Ugandans despair and lament over corruption, these auditors are here. They are affected by the effects of theft of public funds, lack of drugs in hospitals, shoddy works on roads and other public projects like everyone else. But we rarely hear them raising a voice on these things, while at the same time, for all their training and competence, the vices persist or even get worse. What could be the problem? Are they sleeping on the job or have they been “conquered” by the powerful syndicates that run these administrative units?
I don’t know if these auditors know that their “silence” or laxity, or whatever is affecting their performance, is increasingly coming to the attention of the public. It could be passive, but it is there and shouldn’t be taken for granted.
A dissertation submitted by one Judith Kyakuwadde to Kampala international University’s (KIU) College of Economics and Management department of accounting and finance in 2019, in partial fulfillment for the award of a bachelor’s degree in business administration, accounting and finance and titled: Internal auditing and performance of local governments in Uganda ‘a case study of Lyantonde District Local Government, illustrates this. Kyakuwadde’s findings revealed that internal auditing in local governments was performing fairly. “The fair performance (is) being attributed to lack of complete independence of internal auditors, inappropriate internal controls and management’s reluctance to attend to the recommendation,” she reported.
The researcher recommended that there is need for periodic review of the internal control systems of the local governments “so as to deflect deficiencies as they emerge from time to time. And that there is need for the management of LDLG to periodically review the internal audit manuals to meet the ever-changing environments that favour fraud and embezzlement”.
She concluded: “…the roles of the internal audit function in a local government are clear to all employees as per the Local Government Manual and Regulations Act, but the internal auditors do not execute their tasks perfectly because they choose some of the duties and yet a combination of all roles and measures would clearly cub the problem of fraud and embezzlement currently facing LDLG. It is evident that, it is due to negligence of employees to their duties that has led to a problem of fraud in local governments over years”.
This was a university student making this diagnosis, possibly with other researchers and interested parties having made similar discoveries, but what changes have been effected accordingly? Were her research findings taken note of and adopted accordingly? What else hampers the work of these auditors other than noted laxity, collusion and lack of a patriotic spirit? Could it be shortages in staffing, lack of modern audit tools or continuous professional training? Whatever it is, internal auditors in local governments and MDAs have many questions to answer regarding why they are deployed in these roles where they should be first-line gatekeepers against systemic fraud and maladministration, enabling the system to efficiently check itself at all times without the need for radical and “external” measures.
The writer is special presidential assistant, press and mobilisation/deputy press secretary, State House
A dissertation submitted by one Judith Kyakuwadde to Kampala international University’s (KIU) College of Economics and Management department of accounting and finance in 2019, in partial fulfillment for the award of a bachelor’s degree in business administration, accounting and finance and titled: Internal auditing and performance of local governments in Uganda ‘a case study of Lyantonde District Local Government, illustrates this. Kyakuwadde’s findings revealed that internal auditing in local governments was performing fairly. “The fair performance (is) being attributed to lack of complete independence of internal auditors, inappropriate internal controls and management’s reluctance to attend to the recommendation,” she reported.
The researcher recommended that there is need for periodic review of the internal control systems of the local governments “so as to deflect deficiencies as they emerge from time to time. And that there is need for the management of LDLG to periodically review the internal audit manuals to meet the ever-changing environments that favour fraud and embezzlement”.
She concluded: “…the roles of the internal audit function in a local government are clear to all employees as per the Local Government Manual and Regulations Act, but the internal auditors do not execute their tasks perfectly because they choose some of the duties and yet a combination of all roles and measures would clearly cub the problem of fraud and embezzlement currently facing LDLG. It is evident that, it is due to negligence of employees to their duties that has led to a problem of fraud in local governments over years”.
This was a university student making this diagnosis, possibly with other researchers and interested parties having made similar discoveries, but what changes have been effected accordingly? Were her research findings taken note of and adopted accordingly? What else hampers the work of these auditors other than noted laxity, collusion and lack of a patriotic spirit? Could it be shortages in staffing, lack of modern audit tools or continuous professional training? Whatever it is, internal auditors in local governments and MDAs have many questions to answer regarding why they are deployed in these roles where they should be first-line gatekeepers against systemic fraud and maladministration, enabling the system to efficiently check itself at all times without the need for radical and “external” measures.
The writer is special presidential assistant, press and mobilisation/deputy press secretary, State House