Financial Integrity and Management
(a) Capability required:
Accurately and regularly record transactions and balances in a manner that
adheres to broadly accepted good practices, and are audited periodically by an
independent firm or organization.
- Production of reliable financial statements that are prepared in accordance with
internationally recognized accounting standards.
- Production of annual external audited accounts that are consistent with
recognized international auditing standards.
- Production of detailed departmental accounts.
- Demonstration of use of accounting packages that are recognized and familiar to
accounting procedures in developing countries.
- Demonstrate capability for functionally independent internal auditing in
accordance with internationally recognized standards.
Good example on audited financial statements:
The application contains audited financial statements with an unqualified opinion from KPMG for each of the two years of operation being 2008 and 2009. The financial statements are in accordance with auditing standards issued by the Auditor General of the country. The applicant uses integral Administrative Management software that includes an accounting module marketed by Datalogic which is a local firm aiming to develop the product for the region. The application provided a link to the software company so that the Accreditation Panel could verify the appropriateness of the software.
Marginally acceptable example on audited financial statements:
The applicant is a government ministry and its accounts are audited together with those of the government as a whole by the Auditor General. His latest report on the 2008 financial accounts shows a multitude of examples of improper recording, non compliance with rules and fraud. But only few comments relate to the applicant. A separate letter from the Auditor General for the ministry also has no significant issues outstanding. This would be acceptable for accreditation provided the other parts of the application show strong governance systems and a strong internal audit.
Acceptable example on internal audit:
While there is no internal audit function for this small organization there is, each year, a management review done by the external auditor. The management letter relating to 2009 covered the organizational structure of the applicant and a review of procedures regarding procurement; and accounting / cash. The applicant takes the observations seriously and fixed the weaknesses and provided a status report showing the actions they had taken.
Poor example on internal audit:
The application makes reference to internal audit provisions and these are adequate and contained in Section 36 of the country’s Financial Regulations. The Auditor General in his report for 2008 is critical about the internal audit effectiveness within the country. The organization chart of the applicant has a few auditors but gives no information on the internal audits done, the content of the annual report or audits planned. Nor is it clear whether aspects of the applicant’s projects, contracting and disbursements are audited. With this information the Fiduciary Standards are not met and accreditation would not be recommended by the Accreditation Panel.