THE PUNJAB LOCAL GOVERNMENT (INTERNAL
AUDIT) RULES, 2004.
[ SOR (LG)38-1/2004]
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
mismanagement.
(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.
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