MODULE IV :

SPECIFIC CONTROLS IN THE

FRAMEWORK OF PROJECT AUDIT
SUMMARY

I- SPECIFIC ELEMENTS

A. THE SPECIAL ACCOUNT

1. Definition and objectives

2. Operation

3. Control Techniques

4. Report on the special account

B. THE EXPENSE STATEMENT

1. Definition and objectives of audit

2. Checks to be made
During an audit mission, it appears
It is clear that after conducting a review
complete procedures. It is necessary
to define a process for the revision
actual accounts.

After the procedure review phase,

a work program is drafted by
the auditor for each category of
account.
As part of the project audit, we
find the traditional techniques of
account reviews, particularly the implementation
implement detailed testing.
Beyond the controls generally
operated, the auditor is required to carry out
certain specific controls required by the
Bank.
SPECIFIC ELEMENTS

The audit of a project funded by the Bank

World presents certain
characteristics. It exists in this
context of the specific elements that the
bank requires, and that the auditor must
necessarily control. These elements
represent in principle the functioning
of the project.
THE SPECIFIC ELEMENTS

THE SPECIAL ACCOUNT

Definition and objectives (1/3)

The special account is an open account.

in a commercial bank, fueled by
the payment of an advance deducted from the
loan from the bank and exclusively intended
upon the settlement of expenses
admissible, in national currency or in
currencies, to be financed by the Bank
and the funds are renewable afterwards
justification.
 THE SPECIAL ACCOUNT
Definition and objectives (2/3)

The opening of a special account is for

main objective of helping the borrower who
is the State through the agency
manager to avoid problems of
cash flow and to accelerate the
disbursements by the following means:
 THE SPECIAL ACCOUNT
Definition and objectives (3/3)

by making the funds easily available

accessible.
by reducing the duration of the process
payment, by reducing the number of
withdrawal requests.
by giving the borrower a better
mastery of information concerning the
payments.
 THE SPECIAL ACCOUNT
Operation (1/4)

The special account is opened by the organization.

project manager with a bank
commercial place, and in a currency
fully convertible.
The World Bank disburses in advance
an amount of the loan that is deposited in this
account to be used for payment
of eligible expenses.
 THE SPECIAL ACCOUNT
Operation (2/4)

Indeed, the amount disbursed by the bank

to fund the special account is
called "Startup Advance" and this one
must be reconstructed based on the documents
justifications of expenses. Thus,
the managing body of the project established some
requests for fund reimbursement that he
sent to the Bank. These requests are
attachments of supporting documents for expenses
carried out.
 THE SPECIAL ACCOUNT
Operation (3/4)

Based on each of the requests, the

Bank withdraws from the allocated credit account and
deposit the amount into the special account
requested. the therefore the supporting documents
attest that it has been made on the account
special from the project management organization
the payment of eligible expenses.
 THE SPECIAL ACCOUNT
Operation (4/4)

The balance of the special account must always be

equal to the opening balance, minus the amount
total of the invoices that have been settled (those
whose reimbursement has not yet been made
carried out).
The interest potentially received on the
amounts deposited into the deposit account
can be used in accordance with
state regulations. They must not
to be credited to the special account.
 CONTROL TECHNIQUES
L 'objectif d'audit (1/6)

The special account is the most

important of the project audit. The bank
impose its verification by an auditor
independent, to have the assurance that the
allocated funds are used in a manner
efficient.
 CONTROL TECHNIQUES
The audit objective (2/6)

The special account must lead the auditor to

questioning the elements related to one's
supply, then on those relating to
the use of funds. This question
highlight one of the objectives of the table
of financing or resource table and
jobs.
 CONTROL TECHNIQUES
The audit objective (3/6)

The audit of the special account is similar to

the audit of the financing table.
The auditor must first ensure the
provenance of the funds and this, according to the
instructions contained in the agreements of
ready; then ensure the validity of
their uses.
The use of funds must be carried out as follows
que décrite dans les accords de prêts; et
according to the categories of expenses.
 CONTROL TECHNIQUES
The audit objective (4/6)

According to the bank's procedures, all

special account must be subject to an audit
Annual. This audit primarily aims to
to ensure that the account statements
special presents an accurate image and that
the withdrawals made on the account are
justified and in accordance with the provisions of
the applicable loan agreement.
 CONTROL TECHNIQUES
The audit objective (4/6)

According to the bank's procedures, anything

The special account must be subject to an audit
Annual. This audit mainly serves to
the purpose of ensuring that the account statements
special presents an accurate image and that
the withdrawals made from the account are
justified and compliant with the provisions of
The applicable loan agreement.
 CONTROL TECHNIQUES
The audit objective (4/6)

According to the bank's procedures, everything

special account must be subject to an audit
Annual. This audit mainly aims to
object of ensuring that the account statements
special presents a true image and that
the withdrawals made from the account are
justified and in accordance with the provisions of
the applicable loan agreement.
 CONTROL TECHNIQUES
The audit objective (4/6)

According to the bank's procedures, everything

special account must be subject to an audit
Annual. This audit mainly aims to
object of ensuring that the account statements
special presents an accurate image and that
the withdrawals made on the account are
justified and in accordance with the provisions of
the applicable loan agreement.
 CONTROL TECHNIQUES
The audit objective (5/6)

The auditor must therefore proceed with all the

necessary checks to be able to
conclude that the special account statement
presents well the operations that took place
carried out and the funds that have been
deposited were only used in the interest of
project.
 CONTROL TECHNIQUES
The audit objective (6/6)

To achieve the audit objectives,

the auditor must implement
necessary diligences that must
meet the requirements of the Bank in
audit subject of the special account.
 CONTROL TECHNIQUES
The measures to be implemented (1/15)

The compliance with the Bank's requirements

Worldwide in project auditing
must go through the implementation of
diligences adapted to the context. It is
why the auditor must necessarily
to have a very deep knowledge of
requirements of the Bank.
 CONTROL TECHNIQUES
The measures to be implemented (2/15)

He must especially become aware of

all the documentation related to the project
to better understand how it works
of the special account.
 CONTROL TECHNIQUES
The steps to be implemented (3/15)

In light of the interviews and documents

Once he is aware, the auditor must
develop a work program tailored to
special account. It should be noted that the
special account is primarily an account
banking, and that is why the auditor must
preliminary to implementing the program of
work related to cash accounts in the
framework of a traditional audit.
 CONTROL TECHNIQUES
The actions to be implemented (4/15)

Thus, he will have to carry out the

following operations:
circularize the commercial bank in
which the account was opened, ensure
what reconciliation statements are
regularly developed,
 CONTROL TECHNIQUES
The actions to implement (5/15)

compare the bank account balance in

the accounting to that of the bank statement,
point out the items not registered by
the bank in the general ledger before closing and
in the subsequent bank statement.
identify the unregistered items by
the project management organization in
bank statement function, and ensure
of the regularity of the amounts,
 CONTROL TECHNIQUES
The actions to implement (6/15)

highlight supplier regulations or

other third parties in transit with the states of
rapprochement of suppliers or of
concerned tiers.
 CONTROL TECHNIQUES
The measures to be implemented (7/15)

Moreover, the special account responds in

reality with the characteristics of the table of
financing according to the requirements of the

Bank. The auditor must ensure that

all expenses incurred from
These accounts are eligible expenses
as provided for in the loan agreement.
 CONTROL TECHNIQUES
The actions to be implemented (8/15)

The work done by the auditor must allow

to ensure the origin of the resources that
allowed to fund the account and of the
destination of the expenses that have been incurred
with them.

Indeed, the auditor must beforehand

carry out a bank circularization
Global in order to obtain information
following:
 CONTROL TECHNIQUES
The actions to be implemented (9/15)

the total amount of the credit agreement.

the amount allocated to the management body
of the project,

the total amount of disbursements

granted to the management body of
project (category by category).
the summary situation of Requests
Refund of funds for the fiscal year
audited.
 CONTROL TECHNIQUES
The actions to be implemented (10/15)

the summary situation of

refunds honored during
the audited exercise, the cumulative situation of
refunds honored since the
project start to finish
the year of the audited exercise.
the cumulative situation of reimbursements
not yet honored and the rejections as of the 31st
December.
 CONTROL TECHNIQUES
The actions to be implemented (11/15)

the situation of Payment Requests

direct honors during the course of the exercise
audited and those not yet paid to
suppliers as of December 31,

Based on this information, the auditor

will be able to establish a work program that
will be executed by a collaborator
experienced.
This program could be presented as follows:
 CONTROL TECHNIQUES
The measures to be implemented (12/15)

obtaining a summary statement of

Fund Refund Requests
presented during the audited financial year,
identification of Requests for
Refund of received funds and
assurance of their accounting
identification of expenses by category
and assurance that they are real,
eligible and fit well with the activity
of the project,
 CONTROL TECHNIQUES
The steps to be implemented (13/15)

obtaining bank statements from

special account, and ticking of the
Requests for Fund Reimbursement
with the summary statement of these requests
to identify the resources that have
transited through the account.
specific control of the last
bank reconciliation
 CONTROL TECHNIQUES
The actions to be implemented (14/15)

identification of Requests for

Refund of unmet funds
by the World Bank, and ensure
that correspond to expenses
real and eligible,
exploitation of the response given by the
World Bank and the bank
commercial during the circularization.
 CONTROL TECHNIQUES
The actions to be implemented (15/15)

Following the verification work of

special account, the auditor will have to conclude to
respect for the following equality.

Balance of Balance of
Expenses
account Requests for account
carried out
special in Refund special to the
start + the honored funds -= no of
closure
refunded
of exercise the exercise

This closing balance should correspond to

the one shown in the balance sheet.
 Report on the special account
Establishment and content (1/15)

The report on the special account relates to

the expression of the listener's opinion on
the accuracy and eligibility of expenses
provided for in the Loan Agreements.
The presentation of this report is similar to
that of a classic audit report. It is
the expression of the listener's opinion who ...
this report and related notes
in the Jobs/Resources table.
 Report on the special account
Establishment and content (2/15)

We emphasized earlier that the account

special records all transactions that
concerning the project, both in terms of
resources only in terms of spending or
jobs.
The financial state that emerges from this situation
is the financing table or also the
table of Jobs and Resources.
 Report on the special account
Establishment and content (3/15)

It is based on the developed structure of

Table of Jobs/Resources established by
the managing body of the project that
the auditor will express an opinion on
the accuracy of the expenses that constitute
jobs and especially their degree
eligibility.
 Report on the special account
Establishment and content (4/15)

The auditor must mention in this report

if the Bank's procedures have been
respected, Contrary to the report
of audit or statutory audit, the
report on special accounts is
structured in two parts: one part
introductory and a part that presents
the opinion of the listener.
 Report on the special account
Establishment and content (5/15)

This report does not contain a

section related to information
specific ones such as those found in the
report of the auditor.
 Report on the special account
Establishment and content (6/15)
It is customary for the auditor to be able to
present his report on the accounts
specials while respecting the requirements of the
Bank. Thus, in response to the established standard.
through the Bank, we could have a
presentation of this report titled from the
the following way:
 Report on the special account
Establishment and content (7/15)

In the context of our review of the statements

financiers of the project ... for the closed fiscal year
on December 3rd ..., we proceeded to
the examination of resource statements and
funds employment of the special account ci-
joints, established by X (the organization of
project management) in compliance with
provisions of Loan Agreement No. ...
 Report on the special account
Establishment and content (8/15)

We also proceeded to the

reconstitution of the start-up advance
put in place due to the provisions of
the aforementioned Loan Agreement.
Our diligence has been carried out according to the
international auditing standards, which
expect that our audit is scheduled and
carried out in such a way as to obtain
the reasonable assurance that the accounts do not
are not tainted by inaccuracy
significant.
 Report on the special account
Establishment and content (9/15)
An audit includes the examination...
We believe that our due diligences support
reasonably our opinion
 Report on the special account
Establishment and content (10/15)

This part corresponds to the introduction of the

report that allows the reader to situate on
the work that has been done. She to him
allows to get an idea of the approach
and especially the diligence that have been given to him
implementation.
 Report on the special account
Establishment and content (11/15)

After this introductory presentation of

the mission and the way it was
After it is conducted, the auditor will express their opinion.

in the second part of the report. The

the recommended structure for the Bank is the
next:
 Report on the special account
Establishment and content (12/15)

In our opinion, the entire set of operations

mentioned in the attached statements
presented in a regular and sincere manner
the resources and uses of funds of
special account mentioned above as of the 31st
December ..
 Report on the special account
Establishment and content (13/15)

The expenses incurred and requested in

reimbursement or not have been incurred
according to the procedures contained in the
Letter of Agreement.
The procurement procedures and the
the selection of consultants was in accordance with the
provisions of the Credit Agreement letter, and
the no-objection notices from the Bank have
always been required before the signing of
contracts
 Report on the special account
Establishment and content (14/15)

It should be noted that our example

express an opinion without reservations. From
just like the traditional audit report,
the auditor may express reservations and
refuse to certify the special accounts,
This will depend on the degree of incidence of the
reserve on the job and
resources.
 Report on the special account
Establishment and content (15/15)

It also follows from this example that

adhering to procedures is an element
important for the work of the auditor, since it
must mention it in his report.
 Report on the special account
Establishment and content (15/15)

It also follows from this example that

compliance with procedures is an element
important to the work of the auditor, since it
must mention it in his report.
 Report on the special account
Link with the audit report (1/5)

The report on the special account does not

does not present an apparent direct link with
the audit report. The fundamental element
what can be noted is the special account
properly speaking. We have explained more
higher than the special account is an account
bank account opened in a bank
commercial of the place.
We find this same account among the
balance sheets that will be mentioned in the
audit report.
 Report on the special account
Link with the audit report (2/5)

Furthermore, the auditor must express a

opinion on the financial statements in the
audit report. the auditor will express their
opinion a second time in the report
on the special account, regarding the
elements already included in the report
of the audit.
 Report on the special account
Link with the audit report (3/5)

In general, if the special account

of the bank is tainted by irregularity or
inaccuracy, one will find in the
audit report as in the report on
the special account, an identical reserve.
 Report on the special account
Link with the audit report (4/5)

Indeed, if the irregularity can have a

impact that is not very significant on
the financial statements in general, the auditor
can issue a report in the audit
reserve but do not refuse to certify
the accounts, However, in the report
sur le compte spécial, il doit évoquer un
refusal to certify insofar as only the
the bank account is concerned.
 Report on the special account
Link to the audit report (5/5)

Moreover, when the procedure

recommended in the Credit Agreement, is
tainted by irregularity, the auditor will not do
not mentioned in the audit report.
However, this malfunction of the
the procedure may be subject to a reservation
in the report on the special account.
 EXAMPLE

As part of the funding for micro projects, the

The World Bank has granted a loan of 10,000 KF.
(N°718-D) to the NGO BAMAS in 2009.
During the year, the NGO carried out the
following operations:
-expenses of 1300KF of which 100KF are
refunded
-Reimbursement of 1500KF in January and
2500KF in April
The balance of the special account at the end of year N-1 is
5000KF
 EXEMPLE

This NGO has chosen consultants

in accordance with the provisions of the
letter of agreement.
The expenses she incurred have not
respected the clauses of the contract.
Work to do:
1- calculate the balance of the special account at the
end of the fiscal year.
2-write the special report
 CORRECT(1/5)

1- let's calculate the balance of the special account at closing

of the exercise.
Amount of non-reimbursed expenses (in KF):
1300-100=1100KF
Amount of reimbursed honored funds
KF):
1500 + 2500 = 4000KF
the balance of the special account at the end of the financial year:
11000 + 4000 - 400 = 14600KF
 FIX(2/5)

Let's write the special report.

As part of our review of the financial statements

of the "financing of micro projects" project,
The World Bank granted a loan of 10,000 KF for
the fiscal year ending December 31, 2009, we have
proceed to the examination of resource statements
and uses of funds from the attached special account,
established by the NGO BAMAS in respect of
provisions of Loan Agreement No. 718-D.
 CORRECT (3/5)

We also proceeded with the reconstruction

advance start set up due to
the provisions of the aforementioned Loan Agreement.

Our efforts have been carried out according to the

international auditing standards, which provide that

our audit should be planned and carried out in a manner
to obtain reasonable assurance that the accounts
are not tainted by significant inaccuracy.
 CORRECT (4/5)

An audit includes the analytical examination of

accounts.

We believe that our due diligence supports in a way

reasonable our opinion.

In our opinion, all operations

mentioned in the attached statements presents
manière régulière et sincère les ressources et
funds of the special account mentioned here
before December 31, 2009
 CORRECT(5/5)

The expenses made and requested in

refund or not have been incurred
according to the procedures contained in the
Letter of Agreement.
The procurement procedures and the
the choice of consultants was in accordance with
provisions of the Credit agreement letter, and
the non-objection opinions of the Bank have
has always been required before the signing of
contracts.
 THE EXPENSE REPORT
Definition and objectives of audit (1/6)

Project management organizations

financed by the World Bank, whatever it may be
Be the type. Must periodically establish
a statement of expenses.
 THE EXPENSE REPORT
Definition and objectives of audit (2/6)

The expense report must correspond

to the expense items provided for by the
Loan agreements. Thus, the procedure of
simplified and accelerated expense reports
the disbursements of the loans because it
dismiss the staff of the Bank of
check, before any authorization of
withdrawal, the documents justifying
numerous small expenses.
 THE EXPENSES STATEMENT
Definition and objectives of audit (3/6)

Indeed, the Bank requires that the organization

project management cannot use
expense reports only if beforehand,
satisfactory measures are being taken
to ensure control by an auditor
external. Thus, it is quite evident
that the auditor can ensure
the existence of expense reports and
carry out the necessary checks.
 THE STATEMENT OF EXPENSES
Definition and objectives of audit (4/6)

In reality, the expense reports

are generally integrated into the Requests
of Fund Refund, this for
justify the expenses incurred
executed and able to benefit from a
replenishment of the special account.
 THE EXPENSES STATEMENT
Definition and objectives of audit (5/6)

It goes without saying that the audit of the statements of

expenses do not occur in a manner
isolated in most cases since they
are usually integrated into the states
financiers. The auditor implements the
related diligences for the limited examination
check the validity of the expenses
appearing on the statement.
 THE EXPENSE STATEMENT
Definition and objectives of audit (6/6)

Il faut noter que ces dépenses doivent

to be provided for in the Loan Agreement and to be
classified on this document according to the
planned expenditure categories.
 THE EXPENSE REPORT
Checks to be performed (1/3)

The expense report is not an element

indispensable financial statements. It is a

document that outlines by category, the

expenses incurred by the project. The auditor

perform controls on this document,

coherence, namely:
 THE EXPENSE REPORT
Controls to be performed (2/3)

verification of the legitimacy of expenses

carried out,
verification of the eligibility of expenses,
rapprochement of the different
spending categories in relation to
the Loan Agreement,
reconciliation of the expense report
with the Refund Requests from
Funds,
 THE EXPENSE REPORT
Controls to be performed (3/3)

reconciliation of the expense report

integrated into the financial statements with the

response to the circularization.

verification of existence, of the

regularity and appropriate ranking
supporting documents for expenses
appearing on the expense report.