PUNJAB LOCAL GOVERNMENT (INTERNAL AUDIT) RULES, 2004.

THE PUNJAB LOCAL GOVERNMENT (INTERNAL AUDIT) RULES, 2004.

[SOR(LG)38-1/2004]

[22nd October, 2004]

THE PUNJAB LOCAL GOVERNMENT (INTERNAL AUDIT) RULES, 2004.

1.Short title, extent and commencement.- (1) These Rules may be called the Punjab Local

Government (Internal Audit) Rules, 2004.

(2)They shall extend to all District Governments and Tehsil/Town Municipal

Administrations of the Province of the Punjab.

(3) They shall come into force with immediate effect.

2. Definitions.- In these Rules, unless there is anything repugnant to the subject or context.

3.Audited Entity.- means an office or organization of a Local Government established,

created or registered under the PLGO, 2001.

4. Control.- means the policies, procedures, practices and organizational structures in place,

designed to provide reasonable assurance that the objectives of a local government are achieved

effectively & efficiently and to avert detect and correct undesirable events well in time.

5. Control Risk.- includes the risk of an error that could be material individually or in

combination with other errors, is not prevented or detected and corrected within the time frame

specified for such correction by internal control system.

6. Control Systems.- include the controls established and maintained by a local government

for an audited entity defined in these rules to collect, record and process data and report the

resulting information.

7. Council.- means a Zila Council and a Tehsil/Town Council.

8. Economy.- means acquiring resources at the competitive lowest cost without

compromising the quality with regards to the objectives of a local government.

9. Effectiveness.- means the relationship of an output to what is / was intended to be

achieved.

10. Efficiency.- means the relationship of inputs to outputs in terms of optimum utilization of

resources.

11. Executive.- includes all officers of a Local Government assigned to discharge the

respective affairs of a Local Government.

12. Governance.- means a leadership process through which the Executives set and oversee

implementation of the policies, designed to achieve better performance of functions and ensure

accountability.

13. Government.- means Government of the Punjab.

14. Government Organizations.- means all administrative departments and subordinate

offices under the direct or indirect control of the Government of the Punjab.

15. Internal Audit.- means an independent and objective assurance, appraisal and consulting

activity designed to add value and to improve the operations of a Local Government to achieve

the agreed objectives of its policy by bringing a systematic, disciplined approach to evaluate and

improve the effectiveness of risk management, control and governance processes.

16. Nazim.- means a Zila Nazim and a Tehsil/Town Nazim.

17. Ordinance.- means the Punjab Local Government Ordinance, 2001 (as amended).

18. Principal Accounting Officer.- includes District Coordination Officer of a District or City

Government and Tehsil/Town Municipal Officer in case of a Tehsil/Town Municipal Administration,

and any other officer who is exercising the assigned authority as such.

19. Quality Services and Standards Office.- means the Office working under the control of

internal auditor and responsible for conducting internal .audit and other ancillary functions as

specified in these rules,

20. Internal Auditor.- means head of Quality Services and Standards Office appointed or

designated by the Local Government concerned to conduct internal audit of an audited entity

under these Rules.

21. Regulation.- means regulations made under these Rules.

22. Risk.- means the degree to which operations of a Local Government are exposed to

breaches in ethics, financial indiscipline or loss, inappropriate disclosure of data or ineffective use

of resources and includes an act or event occurring that would have an adverse effect on Local

Government office and its systems.

23. Risk Management.- means systematic approach to setting the best course of action under

uncertainty by identifying, assessing, understanding, acting on and communicating risk issues.

Risk management involves designing and implementing strategic plans and processes to manage

risk issues at a level acceptable to the management of a Local Government.

24. Appointment, Qualification, Terms and Conditions of Service of the

Internal Auditor.- (1) The Nazim of each District or City District Government and Tonsil/Town

Administration, as the case may be, may appoint/designate an Internal Auditor.

(2) The qualifications, pay and allowances, tenure in office and other terms and

conditions, of service of the Internal Auditor shall be prescribed by the government

on the recommendation of the Council.

(3) The Internal Auditor and his staff shall be the employees of the Local Government

concerned.

(4)  The Internal Auditor shall not hold another office in a local government, which

creates or may create a conflict of interest with his position as such.

(5) The Internal Auditor shall not hold another position in a local government in which

he serves as head of the Quality Services and Standards Office, except where the

holding of said additional office would not compromise the discharge his functions

as an Internal Auditor.

(6) The employees of the Quality Services and Standards Office shall receive

instructions from Internal Auditor only, who shall report to the Principal Accounting

Officer, Nazim and the Council.

(7)  Save as otherwise provided in the law or rules, the Internal Auditor may not be

removed or suspended before the end of the term for which he has been appointed,

except with the approval of the Council.

25. Professional Independence and Objectivity.- (1) The Internal Auditor shall serve as the

Principal Support Officer to the Nazim concerned and shall provide information and make

recommendations to the Principal Accounting Officer, Nazim, members of the councils and heads

of the audited entities.

(2) He shall have direct access to the Nazim and the Principal Accounting Officer of a

Local Government in the discharge of his assigned functions.

(3) The scope of work of the internal auditor shall include a broad range of advisory

services, gathering information on all functions of the Local Government, including

evaluation of design and systems, and formulation of advice with the objective to

build quality and ensure timely delivery of services.

(4) The opinions, views, assessment, valuation and recommendations of the internal

auditor shall be an advisory and consulting activity, designed to add value and to

improve the Local Government operations, and shall be given due consideration and

weight by the Local Government while taking corrective measures/actions.

(5) The internal auditor shall discharge all functions, and act in accordance with the

provisions of the Ordinance and these Rules without any outside influence. The

independence and professional work of the internal auditor and his staff shall not be

subject to interference, obstruction and scrutiny by any executive authority of the

Local Government;

(6) The professional work of the internal auditor shall be based on objective criteria and

he shall perform his professional work impartially and fairly.

(7) The internal auditor and his office shall not interfere in the functioning of the local

government and any office or body created under a statute or any other law in force.

26. Guidelines.- (1) The internal auditor shall help the Local Government to accomplish all its

major policy objectives by bringing a systematic and disciplined approach to the process of

evaluation to improve the effectiveness of risk management, control systems and governance

processes. The internal auditor may issue appropriate guidelines, strictly consistent with the

provisions of the laws and rules in force and such guidelines may include advice on modifications

of existing systems and procedures, introduction of new systems, procedures, forms, etc., for

carrying out the purpose of these rules.

(2) The Nazim may, with the approval of the Council, enlarge or restrict the scope of

the objectives, or change, amend, alter, vary or modify the systematic and

disciplined approach for the required evaluation and improvement of the

effectiveness of risk management, control and governance processes.

27. Obligation to conduct Internal Audit.- (1) Internal Audit shall be a continuous

management function of a Local Government.

(2) The internal auditor shall have access at all reasonable lines to relevant documents,

minutes, files, books, papers, accounts and vouchers of the Local Government

Offices, and shall be entitled to enquire from the executives, such information and

explanations which are necessary for the performance of his functions.

(3) In case of any classified/secret information, restrictions imposed by law regarding

the eligibility to have access to information shall also apply to the internal auditor.

(4) The officer of Quality Services and Standards Office concerned, so long as the

records remain in his custody, shall be responsible for its safely ensuring that such

record is not destroyed, mutilated, damaged or tampered within any manner,

whatsoever.

28. Functions, Duties and Responsibilities of the Internal Auditor.- (1) The Internal Auditor

shall examine, inter alia, whether the audited entity has in place:

(i) Mechanisms to ensure compliance with the policies, laws, rules and

regulations and effective systems of internal control to achieve its objectives;

(ii) Strategies to manage risks and measures to manage resources

economically, efficiently and effectively;

(iii) Procedures to safeguard the assets of the Local Government concerned;

(iv) Reliable information systems including that of accounting information and

financial management;

(v) Mechanisms to prevent and detect fraud, abuse and waste of public

resources;

(vi) Effective procedures for the rectification of deficiencies in the operations and

systems of the Local Government identified by Internal Auditor;

(vii) Mechanisms for citizens participation in performance evaluation of Local

Government offices; and

(viii) Mechanisms for redressal of grievance of citizens in accordance with

Section 188 of PLGO, 2001;

(2) Without prejudice to the generality of the above, the functions of Internal Auditor

include:

(i) Evaluation of adherence to laws, regulations and approved policies and

procedures.

(ii) Evaluation of the institutional processes, including human resource,

management, information flows, office accountability mechanisms of a local

government to safeguard resources against fraud, waste abuse and mis-

management.

(iii) Reviewing of systems of Internal Control and evaluate systems and

processes of the Local Government and making recommendations for

improvements to promote orderly, economical, efficient and effective

operations.

(vi) Investigation of specific matters as directed by the Nazim or as

recommended by the Council.

(vii) Using citizen based inputs concerning service delivery, institutional

processes and actual performance.

(viii) Interaction with other stakeholders to update performance indicators  and

standards of service delivery, and

(ix) Any other ancillary task assigned by the Nazim or the Council.

Explanation: The objective of internal audit is to help the audited entity to improve its risk

management, control and governance through its recommendations to achieve the policy

objectives of the Local Government.

(3) The Internal Auditor shall ensure that:

(i) the internal audit is conducted in a manner consistent with the highest Ethical

Standards.

(ii) the Nazim and the Principal Accounting Officer of a local government as

the Audited Entity are fully and currently informed concerning frauds,

abuses and deficiencies relating to the implementation of policies

administered or financed by the Audited Entity and recommend corrective

actions concerning such problems, abuses, deficiencies and to report on the

progress made in this regard.

29. Reporting.- (1) The internal auditor shall present an Annual Report on the performance of

his office to the Nazim with a copy to the Council.

(2) The internal auditor shall, according to the annual audit programme, conduct

detailed internal audits of selected offices and present his findings through periodic

reports to the Nazim with a copy to the Council.

30. Follow-Up on the reported findings to determine that corrective actions were taken

and / or achieving the desired results.- (1) Not later than two months after an internal audit

report is issued, the Internal Auditor shall follow-up on repelled findings in order to ascertain

whether the corrective actions were taken, and the desired results achieved or not.

(2) The Quality Services and Standards Officer shall inform the Nazim and the Principal

Accounting Officer on the status, of the follow-up on the supervision of the

programme, activity, function or Organizational unit audited.

(3) If a follow-up report is issued, the Internal Auditor shall submit the report to the

Nazim as well as the Principal Accounting Officer. The follow-up report shall be

provided upon request to any legislative, executive, or judicial body, and/or to

legislative auditor or an external auditor after approval by the Nazim.

31. Access of Information to Public.- (1) Audit working papers and reports shall be public

records to the extent that they do not include information specifically made confidential pursuant

to laws in force.

(2) Nothing in this section shall be construed to authorize the public disclosure and

information that is:

(i) specifically prohibited from disclosure by any other law,

(ii) a part of an on-going criminal investigation.

32. Duties and Responsibilities of the Nazims and the Principal Accounting Officer in

Respect of Internal Audit.- (1) The Nazim and the Principal Accounting Officer of a Local

Government shall take measures to restructure the existing inspection, monitoring and evaluation

functions of the respective Local Government on the recommendations the Internal Auditor,

provided that such restructuring is consistent with the laws and rules in force.

(2) The Nazim and the Principal Accounting Officer shall ensure that the rights and

privileges granted to the Internal Auditor under these Rules are not infringed upon

by an act of any officer or staff under their administrative control.

(3) Any person hindering or obstructing the work of Quality Services and Standards

Office in the performance of its functions or denying or willfully delaying access to

information required by the Quality Services & Standards Office under these Rules

shall be subject to disciplinary action under relevant Efficiency and Discipline Rules,

or any other law for the time being in force, applicable to such person.

33. Reporting a Criminal Offense.- (1) In the event that the internal audit of an Organization

raises a basis to believe that a criminal offence has been committed, the Quality Services and

Standards Office shall bring the matter to the attention of the Principal Accounting Officer and the

Nazim without delay.