New regulations for auditors

GOVERNMENT says it is working with the Public Accountants and Auditors Board (PAAB) to develop guidelines for private firms that are contracted to audit State enterprises.
This was revealed by the Comptroller and Auditor General (AG), Mildred Chiri, at a seminar convened by the Institute of Chartered Accountants of Zimbabwe (ICAZ) to discuss effective ways of conducting audits for State enterprises.
The AG’s office, which is mandated by the Constitution of Zimbabwe to audit public sector institutions, is also allowed to contract private firms.
Recent audits that have been conducted by private audit firms on State enterprises include a forensic audit conducted on the National Social Security Authority by Deloitte last year.
“We are working with PAAB to produce guidelines for public sector audits,” Chiri told the seminar.
“The framework, which we expect to be in place before the end of October 2016, will spell out how audit firms conduct audits in the public sector.  These guidelines will be used for the 2016 year-end financial audits,” she said.
Chiri expressed concern that after winning bids to audit, some audit firms keep adjusting their audit fees upwards without the AG’s consent.
She said it was important for private audit firms to discuss audit budgets with her office, instead of dealing directly with State enterprises.
Chiri said there were instances where some audit firms were accepting assignments from parastatals and State enterprises without her approval.
“One of our biggest challenges is that some of the audit firms accept assignments without the AG’s knowledge and simply go to the client and get paid without our concurrence. Ensure that you don’t get paid directly by the client. You should get approval from the AG’s office,” she said.
The AG’s office is also planning to introduce performance bonds.
Under the system, a winning bidder would pay a performance fee equivalent to 10 percent of the audit risk.
This was disclosed by Terence Gomba, deputy director in the AG’s office responsible for local authorities.
“We are working on the modalities to introduce performance bonds,” said Gomba.
“Depending on how hot the assignment is, the winning auditing firm will be required to pay 10 percent of the audit risk. We will hold on to those bonds and will release them at the end of the assignment. This is to protect the AG and the public against failure to perform,” he said.
Most parastatals and State enterprises, Chiri said, were not happy with high audit fees charged by private firms.
Chiri also revealed that government would establish a forensic audit unit in response to high levels of requests for forensic audits by State institutions.
“We want to set up a forensic audit unit because of the increase in the number of requests for forensic audits in parastatals and State enterprises,” the AG told the seminar. – FinGaz
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