1. What entities can AGO audit?
The Auditor-General is empowered to audit the accounts of the Government and public authorities and bodies administering public funds as prescribed under the law. Where it is not provided for under any written law, the Auditor-General may audit the accounts of the public authority or body with Minister’s consent.
In addition, the Auditor-General may conduct “follow-the-dollar” audits on non-Government entities under the Minister’s direction.
2. What kind of audits does AGO carry out?
AGO carries out financial regularity audits and selective audits as depicted in the Venn diagram below.
A financial regularity audit of an entity involves the following:
a. an examination of accounts for the purpose of rendering an opinion on financial statements [Financial Statements audit];
b. a check for compliance with laws, policies, contracts and agreements, and administrative rules or instructions, involving, or as may affect the revenue, expenditure, assets and liabilities [Compliance audit]; and
c. a check on the adequacy of internal control systems (e.g. IT controls, approving authorities) that Management has put in place to safeguard its resources against waste, loss and misuse [Internal Controls audit].
A selective audit is an examination of selected activities and operations, carried out in relation to the accounts,
a. to check for financial irregularities (apart from rendering an opinion on the financial statements); and
b. to ascertain whether there has been excess, extravagance, or gross inefficiency leading to waste, and whether measures to prevent them are in place.
3. What is a “follow-the-dollar” audit?
The Auditor-General may conduct a “follow-the-dollar audit” if the Minister is satisfied that it is in public interest to do so. Upon the Minister’s direction, the Auditor-General may audit whether non-Government entities have complied with the terms and conditions set for the use of public funds.
For example, if a Voluntary Welfare Organisation (VWO) has been appointed by the Government to disburse public funds to the needy and there are reasons to suspect that the VWO has used the funds for unauthorised purposes, the Minister can direct that a “follow-the-dollar” audit be conducted on the VWO to ascertain whether the public funds given to the VWO have been used according to the terms and conditions set out by the Government.
4. Does AGO audit all statutory boards?
The Public Sector (Governance) Act provides for audits of the financial statements of most statutory boards to be carried out either by the Auditor-General or another auditor appointed by the Minister concerned in consultation with the Auditor-General. In addition, the Minister for Finance has, under section 4(4) of the Audit Act, directed that the Auditor-General may carry out selective audits of statutory boards.
AGO audits the financial statements of three statutory boards annually and conducts selective audits of the other statutory boards in rotation.
5. How does AGO select statutory boards to be audited?
AGO considers factors such as materiality of public funds managed by the statutory boards and the number of years the statutory boards have not been audited by AGO.
6. What is the frequency of audit of statutory boards?
AGO aims to audit the larger statutory boards at least once every five years and other statutory boards at least once every seven years.
7. What is the role of AGO in relation to commercial auditors who are appointed to audit statutory boards?
The law requires the Minister to consult the Auditor-General when he appoints an auditor to conduct the annual audit of the financial statements of a statutory board. The Auditor-General will give his advice on the choice of auditor based on certain qualifying criteria.
8. If a statutory board complies with the Singapore Financial Reporting Standards or any standard that is prescribed by law, does that mean that its financial statements prepared based on those standards will be deemed by AGO to show a true and fair view of its financial position and results?
Compliance with legislated financial reporting standards per se does not necessarily result in financial statements that are true and fair. In forming an audit opinion, AGO will also assess the appropriateness of accounting policies adopted by the statutory board and the adequacy of its disclosures so as to determine whether the financial statements do show a true and fair view of its financial position and results.
For example, if a statutory board chooses not to disclose certain transactions (even if allowed under the financial reporting standards) and AGO assesses that these non-disclosures had materially affected the financial statements, AGO will issue a modified or a qualified audit report depending on the severity of the non-disclosure. This is consistent with the requirements of the Singapore Standards on Auditing.
9. Does AGO audit government-owned companies?
Government-owned companies are governed by the Companies Act and are audited by commercial auditors. AGO may audit a government-owned company if the company requests for it and the Minister for Finance consents to the audit, or if the Minister directs AGO to carry out the audit in the public interest.
10. What are AGO’s responsibilities with respect to the protection of the national reserves?
Under the Constitution of the Republic of Singapore, the Auditor-General has the duty to inform the President of any proposed transaction by the Government which, to his knowledge, is likely to draw on reserves which were not accumulated during its current term of office. In addition, if AGO observes any non-compliance with the laws in relation to protection of reserves in its audit, this will be reported.
11. What auditing standards does AGO use? Are they different from those used by commercial auditors in the audit of statutory boards?
For the audit of financial statements, AGO uses the Singapore Standards on Auditing (SSA) issued by the Institute of Singapore Chartered Accountants which are also applicable to commercial auditors.
12. How does AGO ensure quality in its audits?
AGO has a Quality Assurance Framework (QAF). This AGO QAF comprises systems, structures, policies and procedures that are designed to provide reasonable assurance that the audits done by AGO meet recognised professional standards.
The AGO QAF comprises the following elements:
Leadership which sets out AGO’s vision and mission, enabling legislation, core values, organisation structure and decision-making bodies, and professional standards adopted. It also lays down the AGO Pledge and AGO Code of Conduct and Ethics which AGO auditors must abide by.
Human Capital which sets out the management policies and procedures to attract, retain, motivate and develop a high calibre workforce in order that AGO has staff with the professional qualification, technical competence and capabilities to carry out their work well.
Managing Audits which deals with the application of auditing standards in AGO audits from start to finish, including communicating the results of audit in management letters and reporting summaries of selected audit findings in the annual Report of the Auditor-General to the President and Parliament.
Monitoring and Policy Reviews which are to provide reasonable assurance that AGO is complying with professional standards and its core values. It covers mechanisms such as internal reviews of audits conducted and benchmarking to help ensure quality and continuous improvement throughout the whole organisation.
13. When AGO auditors ask for information for their audit, can auditees choose not to provide the information requested by AGO?
No. Information requested by AGO for audit within its legal mandate must be produced. The law (Audit Act) empowers the Auditor-General to have access to all information he requires for the discharge of his duty.
If information requested for an audit is not released to AGO, the non-disclosure of information may be reported in the Auditor-General’s report to the President and Parliament. The financial statements of the auditee, if affected, may also be qualified.
Where an auditee has concerns on the release of a particular piece of information (e.g. highly classified information), he should explain such concerns in writing to AGO. Where appropriate, arrangements could be made to restrict access to the information to a more senior AGO officer, including the Auditor-General in person if necessary.
The procedure for this is embodied in the “Protocol of AGO’s Audit” issued to all ministries and statutory boards on commencement of an audit.
14. Our organisation has an internal audit unit (IAU) which carries out financial and/or value for money audits. Will AGO not be duplicating its work?
No. There is no duplication of work as the roles of AGO vis-a-vis the IAU are different. IAU is a tool of management and its reports generally stop at management and/or an Audit Committee. The AGO, however, provides an external and independent perspective through its audits and reports to the President and the Parliament.
As part of its audit planning, AGO obtains information on management reviews and internal audits carried out or to be carried out by ministries and statutory boards. This helps AGO to avoid any unnecessary repeat of an audit observation. However, AGO may review specific issues which in its view have not been fully addressed in the internal audit.
15. Why does AGO highlight instances of non-compliance involving relatively small sums of public funds? Should AGO not focus on instances where larger amounts of public funds may be involved?
Non-compliances with procedures are signs of weak internal controls. Reporting of such observations serves to raise awareness of the need for effective internal controls. Small lapses, if regarded as trivial and allowed to perpetuate, would lower the standard of governance in the public sector. They could lead to material errors or be exploited resulting in significant loss of public moneys.
16. Is AGO subject to audit?
Yes, AGO is audited by commercial auditors.
On top of the external audit, AGO is audited by its Internal Audit Unit which reports directly to the Auditor-General.