About the Author
Mr. Muhammad Imran
Assistant Director (Information Systems Audit) O/o Auditor General of Pakistan, Islamabad
Mr. Muhammad Imran’s areas of professional interest include Public Sector Audit Policy Formation, Strengthening of Governance and Accountability Framework, Public Sector Financial Management, Planning and Implementing Information Systems (IS), IS Auditing and Data Analytics.
COVID-19 pandemic is not only an unprecedented health emergency but also associated with momentous economic effects. With its advent, the response of the governments in health emergency has increased in many folds alongwith the role of Audit which is recognized as significant support in government response mechanism by ensuring accountability and transparency to the public financial management. In past, there were some other health emergencies like Ebola, Dengue, etc that have provided some guidance to Supreme Audit Institutions (SAIs) on the response of health emergency but that was of course not at par with the magnitude of Coronavirus. Thus, this write-up will propose some noteworthy roles of Audit in economic recovery after the COVID-19 pandemic.
In the last two years, the foremost agenda of all the governments was to safeguard the livelihood of masses by imposing lockdowns and restriction on gatherings. In this scenario, the access to the information and physical governance of the auditors was also limited which resulted in compromises on the crucial oversight and key controls of the governments’ speedy response to the pandemic. The face-to-face engagement of the auditors was replaced by the home-based approach and there was the limited access to the information and explanation from the auditee alongwith the unavailability of the physical visits and verification activities. Responses to the inquiries during audits have also been delayed and so was the case with execution and issuance of the audit reports.
Since the pandemic has been ameliorated to a certain extent, most of the governments have opened up day-to-day activities, and SAIs are also resuming their regular audit programs with the enclosure of post audits during the period of COVID-19 emergency operations. The condition in Pakistan has also been returning to normalcy and government resources are being provided to assist with recovery. At this juncture, SAI Pakistan has the responsibility to ensure accountability and transparency.
Key role during the post-pandemic phase
It is pertinent for assuring the audited expenditure that it must be started from the government response to the COVID-19 during the emergency phase and gradually continue till the post-emergency phase. During this audit activity, the Audit should consider higher priority programs of the governments in terms of risk and materiality coupled with the availability of the data from the auditee. Audit will certainly face some hindrances such as missing audit trails, issues with the physical verification, and limitations about data access but it should find some alternate procedures to mitigate these hindrances.
Secondly, the role of Audits does not end with the routine audit plans but it should also audit the special funds, donations and relief packages announced by the governments i.e. in the case of the Government of Pakistan, it has announced Rs. 900 billion for its relief package in March 2020. Thus, the audit must provide assurance not only on the regular budget but also special relief packages. Hence, audit will provide oversight to the huge amount provided by the Government and enhance the credibility of the oversight significantly.
Thirdly, the SAI must keep great coordination with the stakeholders such as the Ministry of Health, Disaster Management Agencies (i.e. in case of Pakistan, National Disaster Management Authority and Provincial Disaster Management Authority), Ministry of Finance, and other government entities responsible for funding, managing and reporting during the crises. It is important because the audit has to ensure that all the relevant data would be available. Proactive communication will also be helpful in accomplishing the overall audit objectives. This emerging experience will provide the opportunities for SAIs to review and reinforce contingency plans for business continuity and staff connectivity.
Fourthly, the role of audit should be to minimize the technical aspect of the pandemic response by eying on the appropriateness of the government’s evaluation process based on the government preparedness or recommendation of other communicable disease emergency on the experience of COVID-19. Audit must evaluate whether any Incident Management System (IMS) has been evolved or there is nothing in the preparedness of upcoming communicable diseases.
Fifth, the Audit must play a vital role in using the appropriate audit procedures for a particular set of transactions relating to post-pandemic activities for instance, ISSAI 55201 exhibits around seventeen inherent risk factors linked with disaster-related aid accomplishments. These risk factors contribute to evaluating the amount of risk involved in auditing the provision of aid. A major chunk of them is related to unattended recipients, delays, non-judicious distribution of the resources, fraud, and corruption in using the aid.
The above paragraph leads to another important role of Audit which pertains to alignment of its auditing techniques with the actions taken during the COVID-19 emergency. For example, the expenditure during this period can be categorized into three different categories (i) economic support, (ii) health care support and (iii) social protection and humanitarian aid. As their name implies, each category points towards a different domain of recipients, inherent risks, and objectives. Thus, the Audit must have to look into different audit timing, auditability, and audit questions along with different types of audits.
Another very important role that SAI can play in Economic Recovery-Post Pandemic is to coordinate and assist with the rest of the accountability agencies i.e. procurement authorities and anti-corruption agencies. A broader collaboration of Institutions and Governance will assist in post-pandemic accountability and transparency with a more operational basis for strengthening the system. Moreover, where the audit needs to be conducted by a third party private institution, the SAI may be part of selection of the private institution and can assure its work and report thereafter.
Audit of digital payment is another emerging role of SAIs, giving considerable priority for payments about welfare through remote devices such as mobile phones and other gadgets. Audit has to enhance its readiness to acknowledge and understand the scope and capacity of applicable tools and skills to identify the control risks in such scenarios. In usual settings, these types of transactions are prone to corruption and fraud. Hence, in complex settings, audit has to use Artificial Intelligence (AI) and other disruptive technologies for voluminous contracts and millions of vouchers for checking all digital payments, materiality levels, unbalanced debit and credit data and multiple revisions or queries pertaining to approval.
Last but not the least, timeliness of the report is very crucial. In this regard, the role of Audit is to explore the possibility of producing a brief and quick report having several themes. Moreover, a real-time audit of transactions can also serve the same purpose as the one served by the standalone report.
The COVID-19 pandemic has caused political, economic, and social disruption that already has unveiled the inefficiencies of the current economic fabric of almost all the countries around the world. Amid this concern, the governments are now looking for shaping the recovery and resetting the economies for more inclusive and sustainable growth. Audit can play a very vital role in this scenario by producing assurance to the government expenditure and undertaking different steps promptly.