The history of Local and Revenue Audit Directo-rate dates back to British period when the Bengal Provincial Government requ-ested Auditor General of All-India to take up audit of local government, autonomous bodies and corporations working under provincial government and at this request, the Auditor General of India set up a new office under Accountant General in the name of Local Audit Department or LAD headed by Examiner of Local Accounts, said Md. Mahtab Uddin, Director General, Local and Revenue Audit Directorate in an exclusive interview with The Guardian.
The Director General, in this context further said that this system continued till 1974 until the Comptroller and Auditor General of Bangladesh created a new office in the name of Local and Revenue Audit Directorate with two explicit wings- one wing which was called LA for auditing local government and autonomous bodies (excluding works and commercial offices) and the other wing which was called OA for auditing government offices, court and revenue offices and thus the LAD was given the name of Local and Revenue Audit Directorate and this is the history of this department.
He then mentioned that Local and Revenue Audit Directorate is the largest audit directorate which has to audit nearly more than nine thousand units of various ministries, local governments and autonomous bodies on the basis of prioritization which means that some auditable units are audited after two years and some after three to five years.
In this context, the Director General mentioned that roughly one hundred audit teams are formed each year and nearly fourteen hundred units are audited generating Audit Inspection Reports (AIR). He added that to complete this uphill task, the directorate has very limited number of resources; so it is very difficult to cover all units with the existing staff and officers as they are considered insufficient compared to volume and nature of work.
He informed that out of 417 persons on roll, the number of class-I officers is 57, class-II officers (super) 116, class-III employees (auditors and junior auditor) 169 who play pioneering role in conducting field audit and there are more than 65 class-IV staffs working in various sections and with audit team.
In this context, he also informed that there are many vacancies in various categories of post amounting to 200 and a great number of working forces will be added to the current fleet very soon as a recruitment process is undergoing in CAG office to fill up these posts.
He mentioned that the number of auditable unit dealt with by this directorate is not only the largest, but also very significant in terms of size and money. He cited that Custom, Tax and Vat which earn or collect country’s nearly 70% revenue are audited by this directorate and the institutions of local government and authorities like City Corporation, Municipalities, public universities, government hospital and clinic, civil surgeon office, police, BGB, district boards, education boards, etc. fall within the purview of this directorate.
Citing another example, he said that the detection of financial loss and irregularities of the government by this directorate is also highly compared to that of other audit directorates and added that because of the action of this directorate; nearly Tk. 224.17 crore was recovered in 2013-14 fiscal year; so this directorate is not only containing financial irregularities and loss, but also earning huge revenue for government.
The Director General further said that in the same fiscal year, this audit directorate produced 4 audit reports to PAC and nearly 10,000 objections were reported to management for action.
Reflecting the main objective of future plan of this directorate, he informed us that the directorate is committed to enhance the efficiency and efficacy of audit. In this context, he said that audit directorates including his are really proud to have better cooperation from the present government which has provided money to undertake SCOPE and SPEM-B project to bring the audit directorate under network.
He informed that under these projects, audit directorates have been internally connected as well as with CAG office and facilities for doing audit by using software, AMMS (Audit Monitoring, Management and Supervision) have been developed and huge number of senior and midlevel officers were trained abroad, particularly in Australia, Canada, Malaysia and Philippines.
He also informed that the most significant contribution of present government is the regular meeting of PAC resulting in recovery of huge amount of money from various organizations because of quick disposal of audit objections.
Stressing on the responsibility of audit directorates, he said that the audit directorates for establishing good governance in the country can never be exaggerated as audit is designed to establish transparency and accountability in public spending of tax payers’ money and have to ensure that the country has got the value from every sum of money it spent.
In an exclusive interview, Md. Mahtab Uddin, a high profile officer of BCS audit cadre who also earned a number of higher training on professional issues, replied to several questions covering the history, activities, problems, potentials, achievements and future plans of Local and Revenue Audit Directorate, including other important issues of challenges and developments in audit affairs. His deliberations are quite interesting, informative and educative as well. The excerpts of his valuable interview are presented here for The Guardian readers at home and abroad:
The Guardian: Please give us a short introduction to the founding history of Local and Revenue Audit Directorate.
Director General: I want to give answer to this question in two ways. First, Local and Revenue Audit Directorate is one of the directorates which work under Comptroller and Auditor General (CAG) of Bangladesh. He has been entrusted by our constitution with the task of auditing entire public sector organizations (Art- 127 to 132). By law he is required to perform by and large two types of job, i.e. certifying accounts of the republic and auditing all kinds of financial statement, document, stamps, bonds etc related to public expenditure and income. He has constitutional mandate to do these jobs independently and impartially and report to the Parliament consisting of members of parliament through Hon’ble President. Among the organizations which work to establish good governance in a democratic country, the office of the Comptroller and Auditor General is one of these by extracting accountability and transparency of public financial managers in incurring public expenditure and earning income. There are as many as ten audit directorates to assist CAG in his works and Directorate of Local and Revenue Audit is one which covers some specific areas assigned to by him.
Secondly, this office has taken its root back to British period when Bengal Provincial Government requested Auditor General of All India to take up audit of local government, autonomous bodies and corporations working under provincial government. At this request, Auditor General of India set up a new office under Accountant General in the name of Local Audit Department or LAD headed by Examiner of Local Accounts. This system continued till 1974 when, after liberation, Comptroller and Auditor General of Bangladesh created a new office namely Local and Revenue Audit Directorate with two explicit wings- one wing which was called LA for auditing Local government and autonomous bodies (excluding Works and Commercial offices); and the other wing which was called OA for auditing government offices, court and revenue offices. Subsequently, because of inclusion of new offices, the volume of works of this directorate increased manifold resulting in the creation of new sector i.e. revenue sector apart from ‘LA’ and ‘OA’ and addition of new 615 posts to existing fleet. Thus Local and Revenue Audit Directorate has been given the current shape.
The Guardian: In this context, would you discuss the powers and functions of this directorate?
Director General: As I said, this directorate works to assist CAG to audit certain areas of public sector like other audit directorates. We should first know two basic characters of audit which act as catalyst in determining the powers and functions of any audit directorate. These are: audit is a quasi judicial function and auditors are friendly critics. So audit always tries to form a judgment on any transaction they examine and recommends for action to the management of the organization which has been audited and the recommendations are always primarily subject to action to be taken by the management. If the actions are not taken or the actions taken are not in compliance with extant rules and regulation then audit directorates follow some steps to bring it to the notice of CAG who reports to the Parliament through the Hon’ble President. The reports are finally tabled to the Public Accounts Committee (PAC) consisting of the members of the Parliament. While discussing the audit report, PAC gives hearing to both the management and the audit before making final recommendation on audit report. The recommendations made by the PAC are obligatory for the management whose actions are followed by the audit directorates. So audit directorates have the responsibilities for reporting back to PAC through CAG about non-compliance of PAC’s recommendation.
So, the Local and Revenue Audit Directorate has to follow the above mentioned procedure in general to perform auditing responsibilities which have been divided in three broad areas. The first area is government offices, which include ministries, directorates and other offices. The second area is government service units like hospitals, schools, colleges, sports and cultural bodies etc. The third sector includes Autonomous and Local Bodies like city corporations, municipalities, universities and other authorities. The fourth sector covers revenue earning departments like Custom Commissionerates, Vat Comissi-onerate and Taxation Commisi-onerates etc. Out of 56 ministries/ divisions of the republic, this directorate encompasses nearly 34 ministries apart from their subordinates. So compared to other audit directorate, this directorate’s coverage is so huge that there is a high demand from inside and outside departments for splitting it up in two to three audit directorates.
Here it would be convenient for non audit people to describe what audit actually means. Audit is an examination of accounts, documents, records which are related to either public expenditure or income though modern audit goes further to the extent of evaluation of performance of public financial managers to see whether value for money has been achieved or not. The performance audit which is the most acceptable form of audit in rich and western countries is also getting momentum in Bangladesh and LAD is moving forward to undertake program for performance audit or programs which are congruent to performance audit, for example, entity wide audit, issue based audit, environment audit etc. This audit directorate takes permission of CAG for conducting this kind of special audit though it is empowered to carry out normal audit in other areas following codes, manuals and other rules-regulations. The power of CAG derived from constitution is virtually exerted by audit directorates, so audit is carried out actually under his umbrella leadership.
Audit has different techniques and tools to accomplish the auditing task, for example- certification audit, compliance audit, regularity audit, propriety audit etc followed according to the needs and purposes of the main stakeholders i.e. the PAC and state regulations. The audit directorate mainly focuses during audit on the following areas.
w The propriety of expenditure which refers to the expenditure properly, economically and efficiently incurred;
w Internal control system of the organization;
w Frauds, forgeries, theft, defalcation and embezzlement of public money;
w Serious irregularities, breach of laws, non compliances with rules and regulations;
w Stock, depots, inventories of material, machineries etc.
w Cashbook, ledger, voucher, receipts, stamps, bonds, securities, agreement, contracts and any other money value books.
w Misuse, abuse or wastage of government land, properties and any other kind of assets;
w Safety and security of public fund, cash, treasuries etc
w Transparency in transactions relating to public expenditure and income.
The Guardian: Would you also discuss the organizational structure of this directorate?
Director General: Though LAD has undergone several changes in recent years, the present structure has been actually decided in early ’80s by Enam Committee. The organizational structure has been shown through diagram below:
The Guardian: And say whether this directorate has any branch and unit across the country?
Director General: From the above diagram, it is seen that this directorate has three regional offices known as Concurrent Revenue Audit Departments which are attached to Custom Office situated at Dhaka airport, Chittagong sea airport and Benapole land port in Jessore. These ports are engaged in fixing and collecting customs and duties from the exporters and C.R.A.D offices are concurrently auditing the bills of lading and other shipping documents supplied by the custom offices immediately after finishing off their tasks on them. Normally a number of audit teams are formed from headquarter by the DG and sent to various offices which are called auditable unit under audit programs. C.R.A.Ds are also like other audit teams, but they don’t need any frequently approved program from DG’ office as they are stationed in one place to audit one office round the year. Off course, sometimes DG utilizes the officer and staff of these offices in other audit parties or vice versa. However, they are fully accountable to headquarter offices for performing their jobs and required to send reports and returns showing various position of their works.
The Guardian: In this context, would you mention the number of officers and staff currently working under this directorate?
Director General: In public sector, LAD is the largest audit directorate which has to audit nearly more than nine thousand units of various ministries, local governments and autonomous bodies on the basis of prioritization which means that some auditable units are audited after two years and some after three to five years. Still it is very difficult to cover all units with the existing staff and officer as they are considered insufficient compared to volume and nature of work. Roughly one hundred audit teams are formed each year and nearly fourteen hundred units are audited generating Audit Inspection Reports (AIR). To complete this uphill task, the directorate has very limited number of resources. Out of 417 persons on roll, the number of class- I officers is 57, class -II officer (super) 116, class III employees (auditors and junior auditor) 169 who play pioneering role in conducting field audit. Apart from these, there are more than 65 class IV staffs working in various sections and with audit team. This is the number of officer and staff which are on roll, but there are many vacancies in various categories of post amounting to 200. Hopefully a great number of working forces will be added to the current fleet very soon as a recruitment process is undergoing in CAG office to fill up these posts.
The Guardian: Would you tell us what modern facilities are available at this directorate for its officers and staffs to perform their duties well?
Director General: Thanks to the present government’s initiative for digitalization of administrative machineries for providing improved and better service to the people, audit department has also acquired some technologies, software, advanced training program and assistances of national and foreign consultants. Now audit teams are working in the field away from head offices with laptop computers which are also connected to head offices through network and, as a result, exchange of ideas, instructions, monitoring and supervision are possible between the auditors in the field and officers at headquarter because of quick responses from both end. Since they have been supplied with the modem they can use internet also to collect necessary data and information from the websites of other organizations including international organizations. The audit team now can send their audit inspection reports (AIR) to headquarter office immediately after completing the task by uploading the document and files. The use of AMMS ( Audit Monitoring and Management System) software is another technological development as audit planning, processing, reporting etc. can be done more efficiently and quickly. This has also reduced the volume of paperwork. The entire office is now under wi fi network connection facilitating all officer and staff to communicate among themselves to get access to departmental network and internet.
The Guardian: Would you reflect the problems and limitations of this directorate?
Director General: There are some traditional problems which this directorate has been carrying for years together like inadequate response from auditee organization, lack of IT skilled manpower, shortage of manpower, non existence of internal control or audit cell in many organizations, huge backlog of files, ambiguous and equivocal rules and procedures, reluctance towards the implementation of PAC’s decision etc. There are also many limitations which hampers the audit to carry out its job properly. Auditors mainly base on the papers produced to them during audit but cannot do physical verification of the work. For example, on the spot verification of construction, repair or maintenance to see whether the works has been accomplished in compliance with rules and procedure or compatible with regularity audit. In the event of frauds, forgeries, defalcations of public money, audit can neither investigate to fix up responsibilities, nor prosecute any accused person nor impose any penalty or fine. Their recommendations, even the decisions of the PAC are also sometimes ignored by the management. Audit is done on sampling basis roughly 10-20% of the population, so in consideration of the limited resources, audit coverage may not be sufficient to quarantine all financial irregularities. In most of the cases audit observations are representative and it is expected that management would take corrective and preventive measures in other cases of similar nature.
The Guardian: And say what steps are being taken to solve those?
Director General: The problems are enormous and very difficult to address as many of these problems are beyond the action of this department, and integrated efforts and cooperation should be in place from audit department and the managements simultaneously. Auditors are sometimes viewed by the management as opponent, which is not true. A kind of mistrust and suspicion prevail in them that creates impediment from the very beginning of audit. They should be convinced that the auditors act as friendly critics to establish transparency and accountability in public sectors. So the first thing necessary is to remove misunderstanding and confusion of and establish rapport with management through awareness building program like seminar, workshop and training. Many training programs are undertaken by Financial Management Academy (FIMA) to train both participants from various ministries, departments as well as audit and accounts department. FIMA, which works under the instructions of CAG, has also made arrangement for professional training like CIPFA through an agreement with British institutions. Though our constitution has provided some fundamental principles outlining the duties and responsibilities, the necessity of enactment of detailed rules still exists there. A draft Audit Act has been submitted to government which, if enacted, will strengthen audit department in terms of mobilization of resources for doing high quality audit. Apart from traditional audit, modern type of audit like performance audit, entity wide audit, issue based audit, risk based audit, forensic audit, environment audit etc are being conducted in current years.
The Guardian: Please inform us about the achievements of this directorate?
Director General: The number of auditable unit dealt with by this directorate is not only the largest, but also very significant in terms of size and money. Custom, Tax and Vat which earn or collect country’s nearly 70% revenue are audited by LAD. Besides, local government and authorities like City Corporation, Municipalities, public universities, government hospital and clinic, civil surgeon office, police, BGB, district boards, education boards etc fall within the purview of this directorate. So the detection of financial loss and irregularities are also high compared to other audit directorates. Because of action of this directorate, nearly Tk. 321.73 crore was recovered in 2013-14 fiscal year. So this directorate is not only containing financial irregularities and loss, but also earning huge revenue for government. In the same fiscal year, this audit directorate produced 4 audit reports to PAC and nearly 10,000 objections were reported to management for action. If they fail to take appropriate action on any case, it will be reported to PAC. In order to enhance the skill and efficiency, 50 audit teams will be provided in current year with laptop computer and modem by which they will be able to send their report within very short time.
The Guardian: Would you disclose the future plans of this directorate?
Director General: The main objective of future plan of this directorate is to enhance the efficiency and efficacy of audit. Audit in Bangladesh is still at traditional level focusing on compliance audit and regularity audit which does not give opinion on the value of government money spent. In international arena value for money audit, risk based audit, environment audit etc get upper hand in drawing attraction of stakeholders. Our PAC also demands more focus no these kinds of audit particularly in the big national projects and spending areas. Moreover, everybody wants to see that audit directorates will come up with quality audit using information technology. With this end in view, this directorate is concentrating on the following activities more and more;
w Comprehensive use of AMMS software to cover all phases of audit right from planning to reporting of audit process.
w More focus on modern type of audit like performance audit, entity wide audit, issue based audit, environment audit etc.
w Enhance the credibility of audit and earn the confidence of the stakeholders trhough strengthening Quality Assurance Team (QAT)
w Follow International Standards of Supreme Audit Institution (ISSAIs) issued for member SAIs.
The Guardian: In this context, would you say what cooperation you are getting from the government, especially from the concerned ministry to implement your future plans?
Director General: Audit department is really proud to have better cooperation from the present government which has provided money to undertake SCOPE and SPEM-B project to bring the audit directorate under network. Under these projects, audit directorates have been internally connected as well as with CAG office. Secondly, facilities for doing audit by using software, AMMS (Audit Monitoring, Management and Supervision) has been developed and a huge number of senior and midlevel officers were trained abroad particularly in Australia, Canada, Malaysia and Philippines. The most significant contribution of present government is the regular meeting of PAC resulting in recovery of huge amount of money from various organizations because of quick disposal of audit objections.
The Guardian: In the end, please give your valuable massage for your later generation officers and also for the people of Bangladesh.
Director General: The importance of audit directorates for establishing good governance in the country can never be exaggerated as audit is designed to establish transparency and accountability in public spending of tax payers’ money. They have to ensure that the tax payers have got the value from the money spent. The second message is that audit has to be technology based. When we talk about modernization of audit we should mean the use of technology that can bring speed, precision and credibility.
Life Sketch of Mahtab Uddin
Md. Mahtab Uddin was was born in 1958 in the village of Bhitor Bhag, under the upazila of Bagatiparain the district of Natore. He obtained MA in Islamic History and Culture from Rajshahi University in 1980 (exam held in 1982) and in Government Financial Management from Ulster University of United Kingdom in 2000. He did certificate courses in Government Financial Management and Business Communication in 1998 and diploma course in 1999 also from Ulster University.
He belonged to 1982 batch of BCS and joined Audit and Accounts cadre in 1983. Since then, he worked in various offices of audit and accounts department in different capacities. He spent maximum time of his service life in Bangladesh Railway where he joined as Asst. Financial Adviser and became Chief Accounts Officer in January, 1986. Then he worked as Dy. FA&CAO at Paksey, as Addl. FA&CAO at Rajshahi and Chittagong. In 2003, he joined as Financial Adviser and Chief Accounts Officer at Chittagong and as Joint Director General, Finance at Rail Bhaban in Dhaka.
Md. Mahtab worked in military accounts and audit side too. He joined as Director General of Civil Audit Directorate in April, 2007, and of Local and Revenue Audit Directorate in August, 2014. He,however, spent nearly 5 years in military accounts as Senior Finance Controller, Army from August, 2008 to August, 2014.
He had extensively toured many countries of Asia, Europe and Africa on different occasions. He audited Bangladesh Mission at Geneva, Brussels, Stockholm, Tokyo, Manila, Bangkok, Brunei Darussalam, Washington, Berlin, Islamabad, Tehran, Amman and Riyadh. He also audited Sonali Bank at Calcutta and Kuwait apart from auditing Bangladesh Biman Airlines offices at Singapore, Karachi and Damam.
For training purpose, he also visited Belfast, Dublin, London, Brussels and Kuala Lumpur. Besides, Mr. Mahtab took part in a couple of international conferences. Among those, he attended INTOSAI Conference at Tunis in 2013 and INTOSAI-ASOSAI Joint Conference in Moscow in September, 2014.