In the public sector, audit mandates or expectations may expand circumstances relevant for reporting by public sector auditors in an Emphasis of Matter paragraph. When considering reporting in an Emphasis of Matter paragraph, the examples provided below must be considered:
• Legislative actions on programs or the budget;
• Contradictive laws, regulations or directives with a significant effect on the entity;
• Fraud, abuse or losses;
• Significant transactions;
• Significant internal control deficiencies;
• Questionable business practices;
• Transactions entered into without due regard for the economy;
• Prior period restatements;
• Environmental issues;
• Corporate social responsibility issues;
• Ethical issues (proper behaviour by public officials); or
• Ineffective and uneconomical use of public assets.
(Any 1 point @ 1 mark each = 10 marks)

Economy; minimising the cost of resources used for an activity, having regard to appropriate quality. It is concerned with the availability of resources 1. In due time 2. Inappropriate quantity and quality 3. At the best price.

Efficiency; Getting the most from the available resources, resources have been put to optimal use or whether similar results could be achieved with fewer resources. It is concerned with 1. relationship between resource employed, 2. condition given and results achieved, quality and quality 3. and timing of outputs and outcomes.

Effectiveness; Effectiveness is concerned with, 1. Meeting the objective set and achieving the intended results 2. It is a goal attainment concept 3. Also involved with ascertaining whether the impacts observed are the result of policy or other circumstance.                         (3 principles @ 2 marks=6 marks)

Information to be documented in Performance Audit for enhancement of audit work may include;
• Background knowledge and information of the entity; name address, what it does, organisation structure, senior management personnel and their qualification, history, objectives, strategies etc. This will help the auditor to understand the nature of the work and facilitate his work.
• Audit objectives and sub-audit objectives. What the auditor wants to achieve and the level of achievements
• Audit scope, the area of the audit and the likely time of coverage
• Audit criteria; what the audit should be
• Audit methodology; the approach to be used for the audit.
• Activity plan covering staff requirement expertise, external expertise needed.
• The estimated cost of the audit
• Key projects timeframe, milestones and control points

The factors to consider whether the financial statements have been prepared in accordance with compliance framework include:

• The accounting policies used by the entity. Ensuring that management selects and uses accounting policies which are acceptable, reasonable, correctly applied and adequately disclosed.
• Compliance with International Public Sector Accounting Standards (IPSAS).
• Ensuring that the financial statements should comply fully with laws and regulations.

Under fair presentation framework the financial statements must give a true and fair view in accordance with the relevant financial reporting standards. This may involve compliance with International Public Sector Accounting Standards (IPSAS) or local accounting standards.
Under compliance framework the main requirement is that the financial statements should comply with relevant laws and regulations. The application of the laws and regulations may not necessarily result in fair view being given. Once the laws and regulations have been complied with, the financial statements become acceptable.

Performance audit involves systematic review of part or all of an organization’s activities in relation to the efficient and effective use of resources. The purpose of performance audit is to assess performance, identify areas for improvement, and develop recommendations.

In this respect the three factors that the Auditor General will be concerned with in carrying out performance audit on the construction of the regional hospital will be:

1) Economy: The audit will be designed to check whether the resources used in the construction were obtained at the least cost for best quality or the quantity of items used was least expected under the circumstances.
2) Efficiency: The measure of the relationship between input and output. Where output is greater than the value of the input efficiency is achieved. However defining output for social and other services is a very difficult task.
3) Effectiveness: This deals with the ability to achieve the set targets. In the case of the Regional hospital measuring effectiveness will involve whether the intended capacity and facilities have been attained as well as the completion and commissioning of the hospital for public use within the set time frame.
4) Check whether the contract for the construction was awarded in line with the Public Procurement Act.
(4 points well explained @ 2 marks each= 8 marks)

Government entities are subject to a variety of laws and regulations not generally applicable to private sector, profit making entities. For example local laws may restrict the authority of Metropolitan, Municipal and District Assemblies to issue debt, and they may be required to pay the proceeds from internally generated funds into special funds etc, other laws may restrict the disbursement of social service payments to eligible applicants.
Violations of any of these, among other laws and regulations could have a direct and material effect on the operations of those entities and their financial statements.
The Auditor General is required to bring to light the infractions of laws and regulations in the annual report.
The compliance audit determines the extent to which, rules, policies, laws, covenants or government regulations are followed by the entity being audited.

• The laws and regulations under which the entity being audited operates and of which it is required to comply. This will ascertain those laws and regulations to determine whether the auditee is fully aware of them and the consequences of any breach thereof.
• Internal rules, procedures and directives. These involve ascertaining the entities procedures designed to ensure that the operations and activities are designed to be in compliance with the laws and regulations.
•  Compliance with the laws and regulations: The audit is conducted to ascertain the extent of compliance or non-compliance with the laws and regulation and the determination of whether non-compliance is deliberate or due to ignorance.
• Consequence of non-compliance: The audit will determine the possible sanctions or punishment that would arise as a result of the non-compliance.

• The laws and regulations governing the entity that ought to be complied with. This may be termed as the criteria against which the entity’s compliance is measured.
• The entities awareness of the laws and regulations and the conduct of operations in line with the laws and regulation. The conditions noted.
• The effect of non-compliance. The consequences of the non-compliance will be clearly spelt out in the report.
• Recommendations. These are intended to enable the auditee to rectify and/or prevent future reoccurrence of the non- compliance.

According to the constitution of Ghana (1992) the Auditor General shall have access to all books, records, returns, and other documents relating or relevant to those accounts.
The Audit Service Act (2000) requires the Auditor General to express his opinion on whether the accounts presented by statutory corporation are fairly presented in line with;
*Applicable statutory provisions
*Stated accounting policies of the Government
*Generally accepted accounting standards

The Auditor General Reports on the following:
The profitability, liquidity, stability and solvency of the corporation and also the performance of the shares of the corporation on the capital markets, where relevant:
*Whether there was any delay in payment of government portion of any declared dividend, if any, into the Consolidated Fund
*Any significant cases of fraud or losses and the underlying causes
*Any internal control weakness noted
*The general corporate performance indicating
– Achievement against set targets and objectives
– Whether the finances of the body have been conducted with due regard to economy, efficiency and effectiveness
having regard to the resources utilised.

In this case, the Managing Director is wrong since the constitution provides that the Auditor general shall have access to all books, records, returns, and other documents relating or relevant to those accounts.
Secondly, by demanding the performance agreement, the Auditors wants to fulfil their role to ensure that general corporate performance are in agreement with set target and objectives.

• Failure on the part of the Auditor General itself: The constitution gives the Auditor General power of disallowance and surcharges. So far it appears the auditor General has not exercise this power effectively and therefore people found to have misappropriated funds have not been made to refund such monies. The Auditor General must therefore start exercising the powers entrusted to him to ensure recoveries of the amount misappropriated in the public sector.
• Ineffectiveness of the work of Public Accounts Committee: The Public Account Committee is required to ensure implementation of the recommendations in the Auditor General’s report but after its public hearing on the audit report, it appears no concrete action is taken to get offenders to make restitution to the State in respect of amounts misused. This situation does not help to strengthen the Auditor General’s functions of accountability to ensure proper use of public funds
• Ineffectiveness of the Audit Report Implementation Committee (ARIC): Audit Report Implementation Committee are mandated under the audit service Act 2000 to ensure that implementation of all audit report recommendations from both the Auditor General and Internal auditor from this respective organisations. But the committee as presently constituted by the act are dominated by internal members whose actions are reported on in the reports. This internal members are reluctant to enforce the recommendations which affect them and the external members have no means of forcing them to do so. The composition of ARIC membership should be changed to bringing in more independent external members who can enforce the implementation of the audit report recommendations.
• Lack of linkage between the Auditor General’s office and the law enforcement agencies: Currently there is no requirement for the Auditor General’s report to be referred to the law enforcement agencies such as the police, EOCO for investigation to be carried out and report made to the Attorney General’s office for prosecution of offenders after the Public Accounts Committee has deliberated onthe report. There is the need to amend the Act to provide the needed linkage between the auditor General and the law enforcement agencies to prosecute persons known to have miss used state funds.

• An officer or employee of Government has wilfully or negligently omitted to collect or receive any public money due to the Government;
• Any public money was not duly accounted for and paid into the consolidated Fund or other designated public account;
• An appropriation was exceeded or was applied for a purpose or in a manner not authorised by law;
• An expenditure was not authorised or properly vouched for or certified;
• There has been a deficiency through fraud, default or mistake of any person;
• Applicable internal controls are inefficient or ineffective;
• Resources have not been used with due regard to economy, efficiency and effectiveness in relation to the results attained.
• In the public interest, the matter should be brought to the notice of Parliament.