Legal and Professional Framework in Audit Risk Management

procurement Audit and risk management

Provision of Legal and Professional Framework in Audit Management

The procurement auditor should understand the Public procurement and Asset Disposal Act 2015 (PPADA 2015), Public Procurement Disposal Regulations (2006) and the company law in details. It is also recommended that the auditor should also have practised procurement and auditing for at least for two years in a busy environment.

It is a key requirement that the procurement auditor to understand in-depth the procurement process from procurement planning to the disposal of asset or end of service of contract so as to make an audit report and recommendations that are meaningful and practical. It is thus recommended beyond the auditor being an accounting professional he should also be procurement professional by having professional qualifications such as Certified Procurement and Supply Professional of Kenya.

Before an auditor is appointed to an audit, there are numerous processes and procedures that must be completed first. The company needs to consider the qualifications of the auditor amongst other things. The auditor and the client also need to agree on the terms of engagement beforehand and this is done through an engagement letter signed by both the client and the auditor. This is covered by ISA 210 on Terms of Audit Engagements. The auditor is also expected to be aware of his rights and also the professional and ethical requirements that he needs to adhere to before he starts an audit engagement.




Public Procurement and Asset Disposal Act (PPADA 2015)

The Public Procurement and Asset Disposal Act 2015 have not detailed much on issues of procurement audit, however there are a few provisions that mentions issues related to procurement audit that procurement auditor should understand which includes:

  1. Section 25: States that auditing of the Public Procurement Regulatory Authority by the Auditor-General in accordance with Articles 226 (3) and 229 of the constitution and the Public Audit Act, 2003.
  2. Section 43 (1-8): Mandates the Public Procurement Regulatory Authority to conduct inspections, assessments reviews or audits relating to contracts, procurement and asset disposal proceedings. The inspector shall have access to all relevant books, records, returns, reports and other documents of the procuring entity or person who participated in the procurement or disposal proceedings
  3. Section 68: Compels an accounting officer of a procuring entity to keep records for each procurement for at least six years after the contract has been completed or after termination of the procurement
  4. Section 114 (6): Requires a procurement management unit to prepare and submit to the accounting officer and the internal auditor quarterly reports detailing an analysis of items procured through framework agreements and these reports shall include, an analysis of pattern of usage, procurement costs in relation to the prevailing market rates and any recommendations.





The Companies Act, 2015
The Company’s Act, 2015 Part XXVII from section 709-755 provides for the following:

  1. Appointment of an auditor
  2. Qualifications of an auditor
  3. Removal of an auditor from office
  4. Resignation
  5. Rights and duties of an auditor
  6. Procedures before and after accepting appointment
  7. Professional Ethics
  8. International Standards on Auditing





The Public Audit Act, 2015
The act provides for the following;

  1. Establishment of the Office of the Auditor-General
  2. Qualification for appointment as the Auditor-General
  3. Functions and powers of the Auditor-General
  4. Independence of the Auditor-General
  5. Delegation of powers
  6. Power to obtain information from others
  7. Power to examine bank accounts
  8. Outsourcing audit services
  9. Establishment and composition of the Audit Advisory Board
  10. Guiding principles, practices and standards of auditing
  11. Scope of Audit
  12. Periodic Audits
  13. Annual financial audits
  14. Performance Audit
  15. Forensic Audit
  16. Procurement audits
  17. Auditing of national security organs
  18. Reporting by the appointed auditor
  19. Time limit for submission of accounts
  20. Use of media in publicizing of audit reports
  21. Implementation of reports by an accounting officer
  22. Observance of Code of Conduct and Ethics
  23. Offences by officers of the office of the Auditor-General




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