ECOSAI - 2019
SAIs act as watchdog over country's
nancial integrity with the mandate to
assess whether public funds are managed in
an eective and ecient manner in
compliance with existing laws.” OECD, 2011
An independent and professional Supreme
Audit Institution (SAI) is one of the most
impo rtan t o rgans of the co un t ry 's
accountability chain. Its core function is to
audit the government's spending and
re v e n u e, gi v i ng an as s u ra n c e tha t
government's reported nancial data is
credible. In most of the countries SAIs do not
work as anti-corruption bodies as they are
not explicitly charged with detecting and
in ve st ig at in g cor ru p t i on . Sep ar at e
investigating agencies are responsible for
detecting corruption in almost all countries.
SAIs can obtain an implicit mandate to fight
corruption from following four important
guidelines given in Lima Declaration on
Auditing Precepts;
a. the proper and effective use of public
b. the development of sound nancial
c. the proper execution of administrative
d. the communication of information to
public authorities and the general public
through the publication of objective
Almost all the SAIs draw their mandate from
the Constitution or some written laws, thus
the institutional framework, authority and
exact nature of audit assignments vary
greatly by country. Nevertheless, according
to INTOSAI (2010 a), SAIs share a common
purpose,to provide audit or assurance
services by comparing economic information
with a framework for financial reporting, and
to produce knowledge derived from the
conduct of audit investigations, which
creates the basis for the implementation of
corrective actions.”
Generally, SAIs have an explicit mandate to
perform three types of audits; financial audit,
compliance audit and performance audit.
However, role of SAIs has been evolving in
recent years, SAIs are also taking up some
special audits; environmental audits, ethics
audits, forensic audits etc. Notwithstanding
the type of audit, ISSAIs necessitates that
“audits should promote transparency and
accountability in the appropriate use of
public funds and assets.” This proves that
SAIs have key role to play in fighting against
corruption and fraud.
There is a general consensus among that,
“corruption has permeated in all forms of
government, which results in waste of
resources, stunts economic growth and the
quality of life, undermines government
credibility and reduces its effectiveness.”
SAIs' Important Role In Fighting Corruption
Sarah Shaikh
Deputy Director
SAI Pakistan
ECOSAI - 2019
Despite the damage corruption has caused
the state audit has failed to play an effective
role in fighting against it except in few
developing countries.
As guardians of public interests audit
institutions enjoy greater level of public trust
and are expected to play a key role in curbing
According to ISSAI 5700, “one of the most
important aspects of SAIs role in combating
c o r r u p t i o n i s t h e w o r k i t d o e s i n
strengthening public institutions, which are
the elements of national integrity system.”
The SAIs during Congress of INTOSAI agreed
that “the main contribution of SAIs in fighting
corruption lies in improving overall
transparency and accountability, supporting
an environment that limits the opportunity
for acts of corruption and creating a climate
of good governance.” SAIs during the same
meeting had an agreement that, “fostering
strong financial management based on
reliable, sucient and timely reporting,
disclosure of deviations and eective
internal control systems represent the basic
elements of SAIs role.”
SAIs can play an eective role in anti-
corruption approaches through two ways:
a. Prevention
b. Detection
It is easier to prevent corruption than to
detect it (Kenneth M. Dye). In 1998, during
INCOSAI, INTOSAI agreed that SAIs “should
endeavor to create an environment that is
unfavourable to corruption.” “SAIs can help
in deterring corruption by promoting sound
public financial management systems based
on reliable reporting and robust internal
control mechanisms, which contribute to
support transparency and accountability in
public sector.” Auditors can deter corruption
by giving a statement about internal controls
in the Audit Report. They should give opinion
on “whether or not the internal controls
present are appropriate and sufficient to
ensure that the systems support the accuracy
and fairness of financial systems and fraud
opportunities are minimized.”
Institutions like police and other anti-
corruption agencies have the prime
responsibility of detecting corruption.
However, public expects the Supreme Audit
Institutions to play a key role in discovering
mal practices as auditors are experts in
detecting fraudulent financial reporting that
conceals the corrupt activities. The auditors
can come across many fraudulent and
corru p t pra ctice s such as, falsi ed
statements and claims, tax and custom
evasion, overpayment and non-delivery of
goods and services etc. All types of audits the
auditors take-up can help in detecting
SAI Pakistan's Role in Fighting Corruption
SAI Pakistan follows Westminster Model, also
k n o w n a s A n g l o - S a x o n M o d e l o r
parliamentary model, which is in use in United
Kin gd om an d m os t C om m on we al th
Countries including sub-Saharan Africa. This
system is linked to the parliamentary system
of the country. The Legislature authorizes
future expenditure through the Ministry of
Finance. All the government departments are
expected to produce annual accounts which
are then audited by Department of the
Auditor General of Pakistan (DAGP). DAGP
produces and submits its audit findings to
Public Accounts Committee (PAC). The PAC in
t u r n , i s s u e s i t s o w n r e p o r t s a n d
recommendations, to which the audited
entities respond.
The disease of corruption has seeped in to the
roots of the country, which is also reflected in
2018 Transparency International Survey's
ranking under which Pakistan ranked at 117
among 180 countries on corruption index.
The country's past rankings on corruption
index also do not display any rosy picture. It
has remained at 139 out of 174 in 2012, 134 out
of 182 in 2011, 143 out of 178 in 2010, and 139
out of 180 in 2009. Former governments have
made some efforts to eradicate this menace.
In their eorts the lead anti-corruption
agencies were National accountability
Bureau (NAB) and Federal Investigation
agency (FIA). NAB is an autonomous and
constitutionally established federal
institution responsible to build efforts against
corruption. Similarly the primary role of FIA
till 2004 was also ghting corruption;
however, after 2004, its functions has
enhanced. The AGP is not constitutionally
accredited to fight and detect corruption.
However, the auditors of DAGP had always
been authorized to put on record, if while
auditing they find any instances of fraud or
corruption. These instances of corruption
and fraud are then reported to the concerned
The Auditor General's organization is the
institution mandated by the Constitution to
support parliamentary oversight over the
raising and utilization of public nancial
resources. In this capacity, the Auditor
General plays a key role in ensuring
accountability and transparency in the
governmental operations. The DAGP is
mandated to perform compliance, financial,
performance audits, special audit and special
study reports. The main purpose of financial
audit is to “ensure that financial statements
are not misleading and reflect organization's
genuine economic transactions. These
inaccurate and incomplete statements can
help in detecting fraud, corruption and
embezzlement. Similarly, compliance audit
reports give an opinion whether the financial
transactions comply with the laws and
regulations. Any deviation from the laws can
reveal the corrupt or fraudulent activities.
Likewise, performance audits are conducted
to assess the economy, effectiveness and
efficiency of the government plans, projects,
and programmes. So when a “project or
programme exceeds its planned costs, takes
longer than expected or failed to achieve the
planned results, this could be a red flag and
merit further investigation to ensure
probity.” The special audits and special study
reports are taken up on the directions of the
Government and the Supreme Court of
The new government in Pakistan took oath in
August, 2018. Pledging “strict accountability”
and a crackdown against “the people who
looted the country,” this new government
has initiated an extensive anti-corruption
It has emphasized the role of the Auditor
General's Department in curbing corruption.
The government has promised to further
strengthen the Auditor General by providing
it more independence and resources.
Recently, the Auditor General has been asked
by both the government and the Supreme
Court to conduct some special audit
assignments to detect the instances of
mismanagement in many government
organizations. The focus of these mis
managements had been to unearth the
instances of corruption and fraud.
The special audit assignment recently taken
up by the DAGP on the directions of Supreme
ECOSAI - 2019
ECOSAI - 2019
Court was Forensic Audit of billion rupees
Thar Coal Project. Forensic Audit is a new
phenomenon in public sector auditing in
Pakistan. Amid challenges DAGP has been
successful in conducting this and other
forensic audit assignments. The forensic
audit report of the Thar Coal Project
underlines facets of corruption and fraud in
varied ways including deliberate non-
adherence of Planning Commission and
Project Management Guidelines. The
inadequate internal controls and non-
transparent processes proportionately
increase red flags and high risks of fraud and
corruption. The audit findings reflect that
there is an element of collusion i n
perpetrating fraud and corruption. Among
other findings, the audit report says that no
feasibility study was conducted, neither were
technical experts hired, nor was there an
International Competitive Bidding. There was
also fraudulent award of various tenders and
non-transparent payments out of DDO Bank
Account. This Audit Report will aid the anti-
corruption agencies investigate the matter in
Other special audits recently directed by the
government and conducted by the AGP
include forensic audit of four projects of
Employees Old-Age Benefit Institution, audit
of billion tree tsunami project, audit of oil
pricing mechanism of the Pakistan State Oil,
audit of e-ticketing of Pakistan Railways,
special audit of the Benazir Income Support
Programme, and performance audit of Haj
The government has given special audit
assignments to the DAGP, which reflect SAI
Pakistan has a broader role to play in its anti-
corruption drive. DAGP has well-trained
forensic auditor, who are helping the anti-
corruption agencies in collecting evidence to
be presented in the court of law as was done
in case of forensic audit of four projects of
EOBI. DAGP can widen its role in detecting
corruption by improving the exchange of
information and experiences with the anti-
corruption agencies. Anti-corruption audit
programmes aimed at uncovering the misuse
of public resources at the local level had been
successful in countries like Brazil. This shows
that state audit can be utilized as an effective
tool to reduce corruption in Pakistan.
DAGP can play a more active, effective and
primary role in fighting against corruption by
following the world's best practices.
According to Evans, SAIs can play an effective
role by 'identifying and monitoring
corruption “hotspots”.'
By focusing on audit areas which are more
susceptible to corruption like public
procurement, DAGP may help other anti-
corruption agencies by providing evidences of
fraud and corruption.
Moreover, DAGP should strive to create an
effective mechanism of coordination with
anti-corruption institutions, law enforcement
agencies and other national institutions. The
nature of this coordination would depend on
certain Terms of References, which would
not hurt the independence of both DAGP and
anti-corruption agencies. Similarly, trainings
and anti-corruption expertise of DAGP
o c i a l s a r e i m p o r t a n t m e a n s o f
strengthening its role to ght against
c o r r u p t i o n . I S S A I 5 7 0 0 p r o v i d e s a
comprehensive guideline for SAIs to ght
against corruption, which DAGP may
incorporate in the trainings.
Corruption; a menace has spread like a
disease in all forms of governments. SAIs
being the watch dogs and guardians of public
interests have a responsibility to play an
active role inghting against corruption.
They can do so by preventing and deterring
corruption. SAI Pakistan is given an active role
and is keen to play its due responsibility in
government's anti-corruption drive. DAGP
has completed all its special assignments
given by Supreme Court and the government,
which had been successful in exposing the
fraudulent practices and instances of
ECOSAI - 2019
1. The role of Supreme Audit Institutions (SAIs) in Combating Corruption
2. Features and Functions of Supreme Audit Institutions
3. Supreme Audit Institutions –Their Roles in Combatting Corruption and Providing Auditing
and Accounting Standards and Guidelines
4. Audit of Orange Line project's civil works complete
5. Dye K.M. 2008. Corruption and Fraud Detection by Supreme Audit Institutions.
6. Evans A. 2008. The Role of Supreme Audit Institutions in Combating Corruption
7. Gherai D.S., Tara I.G., and Matica D.E. 2016. The Supreme Audit Institution Can Control
Corruption or Not.
8. Chene Marie. 2018. The Role of Supreme Audit Institutions in Fighting Corruption. U4
Helpdesk Answer 2018:9
9. Audit report on Underground Coal Gasification Project for the years 2—0-10 to 2017-18