MINISTRY OF EDUCATION BURKINA FASO

SECONDARY AND HIGHER Unity-Progress-Justice

………………………

UNIVERSITY OF OUAGADOUGOU
………………………

BURKINABE INSTITUTE OF ARTS AND CRAFTS

(IBAM)
……………………….

MASTER ACCOUNTING CONTROL AUDIT

AUDIT COURSE
PROJECT/PROGRAM OF
DEVELOPPEMENT

Course instructor
Drs Djarius Teacher at OUAGA II

University of Ouagadougou_IBAM_Project/Program Development Audit Course_Master CCA

Chapter 1 General Information on Project Audits

Section 1. Notion of project and program

1.1. Notion of project

A project is a planned action that includes coordinated activities and

interdependent designed to achieve certain specific objectives in a

limited period and with a determined budget. A project generally forms part of
a broader action, a development program to which it will not contribute

a contribution. In other words, the project can then be defined as a

action oriented towards the delivery of a good or service within a specified timeframe

and with limited resources.

1.2. Notion of program

A program is a coherent framework of actions aimed at achieving specific objectives.

global including sets of activities grouped under different

components and oriented towards specific objectives.

Any project or program, whether it is for development or private purposes, must satisfy the

simultaneous achievement of three (3) objectives:

performance objective: achievement of a good or service

deadline objective: within a given timeframe

cost objective: with limited resources.

Section 2. Accounting and budget organization of a project

2.1. Accounting Organization

The accounting organization of a project/program is based on general accounting.

and budgetary accounting. This organization must allow for the recording

exhaustive of all project transactions to ensure reliability of

records with the aim of presenting summary statements reflecting a

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faithful image of the project situation. These records must be supported by
a supporting document.

Projects/programs are required to maintain management records. These

supports can be accounting documents or non-accounting documents. They are between

others:

the big book

the bank fog

the fog of cash

the cash journal;

the bank journal;

the payroll journal;

the registers of durable goods;

the fuel management register;

the journal of various operations.

Etc.

2.2. Budget management

The budget is the financial translation of the project/program activities. It summarizes

the total contributions of the stakeholders to the financing of the project. The management

budgetary aims to create a realistic budget that meets the needs

project staff and ensure control of expenses in order to avoid the

budget overruns. Budget management also helps to update the

budget to take into account the actual evolution of activities on the ground.

Section 3. Cash management

Cash management is to ensure the proper maintenance of accounts, to settle

expenses incurred by the project. As part of carrying out its activities, the
the project has financial resources which are reflected by the existence of accounts
bank accounts. The project can have several bank accounts for its

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open operations, either at the central bank or in local banks. The
The functioning and nature of each account must be clearly defined, and the
nature of the operations concerning him.

3.1. The fund receipts

The project account is funded by the advances granted by the

financial and/or state partners. These advances are made by transfer or

Reconciliation must be performed for each bank account.

monthly even if the account has not seen any movement during the month.

3.2. The disbursements of funds

Disbursements are made to process invoice payments or for

fund the cash registers. These disbursements must be authorized by

authorized persons. The supply of the cash register occurs when the level of
deposits fall below a predetermined threshold. It is always preceded by a
cash register report. The cash register may have other sources of funds if the project is to

nature to generate income from its activities or as a result of a redistribution.

The cash register must undergo periodic and unannounced physical checks. At the end of this

control, the amount of cash held must be equal to the balance recorded in
fog on the control date. Otherwise, any discrepancies noted must be subject to a

justification.

3.2. Direct payments

Financial partners can, at the project's request, pay directly a

Supplier. This direct payment request must indicate the references of

beneficiary and any other relevant instructions.

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Section 4. Management procedure

4.1. Acquisition of goods and services

The acquisition of goods and services in projects is done according to a procedure, the
more generally specified. The rule to be followed for the acquisition of goods and

services is the competition.

Generally, public procurement is classified into three (03) categories regarding

the importance of the amount of these purchases. The following purchases are distinguished by a 'voucher'

order", the following purchases "an order letter" and the purchases following a

A market. The mechanism for consulting suppliers and service providers.

is conducted for any acquisition of a certain amount deemed low, there is a
written request for prices addressed to at least three suppliers who respond in writing

closed.

For any purchase of a considered high amount, the project is required to proceed with a call.

of offer after seeking the opinion of financial partners. The call for tenders can be
national or international.

4.2. The management of durable goods

The assets acquired under the project remain the property of the financial partner.

who funds the project, until they are formally transferred. That is why
These goods must be managed strictly. This management aims for optimal monitoring of

heritage of the project and must particularly allow for precise identification during
its entry into the project's heritage, a protection against losses, thefts and the
abuse. It is recommended to conduct a periodic inventory of these assets in order to

ensure their existence and their states.

The documents related to the acquisition of these must be archived in

a file called "fixed assets file". All assets acquired in the context of

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of the project must also be recorded in a register called 'registers of
Durable goods» this register is generally maintained by the project accountant.

4.3. Inventory Management

The project, in the context of its normal operation, may proceed with purchases of

office supplies, cleaning products that are being stocked. When the
The ordered quantities are significant, it is important to manage these stocks well.

This management aims to ensure that the project has an optimal stock within it for
avoid any disruption that could slow down the progress of activities. The

inventory management order for maintaining a stock register that provides traceability
quantities out and in.

4.4. Fuel management

The project's fuel needs are covered by purchases of tickets or vouchers.

fuel from oil companies. These purchases most often follow the same

procedure for the acquisition of goods and services. Fuel vouchers constitute
values whose entries and exits are carried out based on the vouchers. The

Different movements are tracked in a register called 'fuel register'.

The regular maintenance of this register allows for the production of statistical data from which

the monthly fuel consumption statement.

Section 5. Monitoring/evaluation and project completion

5.1. Monitoring/Evaluation

Monitoring and evaluation are two essential management functions.

complementary tools that assist stakeholders in the implementation of a project to

better track the progress of activities and the use of resources. Monitoring is the

fonction qui consiste à superviser l’exécution du projet afin de veiller à ce que ses
Various stages take place in accordance with the work or management plan.
project. Monitoring helps to identify potential or real problems in a timely manner and to

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take corrective measures to improve the execution of the project's activities.
This monitoring can be ensured through field visits, supervision missions and
control and audit missions.

The evaluation is a time-limited exercise aimed at assessing in a ...

systematic and objective the level of achievement of immediate objectives, the

results and impacts of the project. The evaluation allows for improving the functioning
or to redirect a project in progress if necessary. There are different types
evaluation methods that can be classified based on whether one is interested in the evaluation agent

(internal or external evaluation) at the time of evaluation (evaluation at mid-course,

final, a posteriori) and in the field of project evaluation (sectoral evaluation).

Regardless of the type of evaluation chosen, it must be mentioned in a document of
project and be the subject of appropriate preparation at the time of its implementation

and a report after execution. The evaluation is carried out by a mission of

consultants recruited for this purpose. They must work independently and
submit a report at the end of his mission.

5.2. Project completion and audits

In principle, all development projects/programs must be subject to a

audit at least during their execution period. The audit is a management mechanism
which aims to improve the operation of projects and to provide to the whole of

stakeholders a reasonable assurance and a reasoned opinion that the resources

allocated to the project are managed in accordance with the agreement protocol between the parties.

The audit mission is carried out by an internal person, or by a person

external as an independent consultant or a consulting firm. The auditor at the
At the end of his mission, he must produce a report in which he indicates his observations.

to which he has reached during his audits.

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5.2.1. The internal audit

The internal audit is an independent mission from the audited activities but is carried out

by an auditor who is part of the project staff. According to the Audit Institute

Internal audit (IIA) can be defined as an independent activity and

objective that gives an organization assurance about the degree of control over its

operations, provides him with advice to improve them, and helps create some
added value. It helps an organization achieve its objectives by evaluating, through a
systematic and methodical approach, its risk management processes,
of control, and corporate governance, and making proposals for
strengthen their effectiveness.

In other words, the internal audit function provides reasonable assurance that
the operations carried out, the decisions made are "under control" and that they
therefore contribute to the project's objectives. And if that were not the case, it would bring

recommendations to address them. To do this, the internal audit evaluates the level

of internal control, that is to say the ability of organizations to achieve

effectively the objectives assigned to them and to manage the inherent risks

their activity.

5.2.2. The external audit

The audit is called external when it is carried out by a person outside the organization.

audited and having no relationship with the audited operations. We have: independence
in relation to the audited operations and independence from the structure

audited.

In other words, the External Audit is an independent function whose mission is

to certify the accuracy of accounts, results, and financial statements; and more specifically,

if we retain the definition of auditors: certifying compliance,

sincerity and the faithful representation of accounts and financial statements.

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However, it should be noted that internal audit and external audit are functions
complementary. Internal audit is a complement to external audit since where
there is an internal audit function, the external auditor is naturally led to
appreciate differently the qualities of consistency, sincerity and faithful image of

accounts presented to him. He may even be led to assert certain

work of the internal audit to support its judgment or substantiate its demonstration.

On the contrary, the external audit is a complement to the internal audit, an element

of appreciation on business mastery: where a talented professional operates

activity, the mastery of business is strengthened. The auditor therefore takes on

takes this aspect of things into account and may also be led to invoke certain
work of the external audit to substantiate its judgment or support its demonstration.

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Chapter 2. The audit mission and its different phases
Section 1. Fundamental Principles
1.1. Integrity
The integrity of an auditor is the foundation of the trust and credibility granted to

their judgment. Integrity means that the auditor must carry out their mission with
honesty, diligence, and responsibility to respect the law and regulations in force
and make the disclosures required by the laws and regulations of the profession. The auditor does not

must not knowingly participate in illegal activities or engage in acts

dishonoring his profession.

[Link]
The auditor must demonstrate the highest degree of professional objectivity in collecting,

evaluating and communicating information related to the activity or process

examined. it fairly assesses all relevant elements and does not let itself
not to influence their judgment by their own interests or those of others. What

means that he should not participate in activities or establish relationships that

could compromise or risk compromising the impartiality of their

judgment. He must disclose all the material facts of which he is aware and which, if they

were not disclosed, would result in distorting the report on activities

examined.

1.3. Confidentiality

Auditors must respect the value and ownership of the information they
they receive; they only disclose this information with the required permissions,

less than a legal or professional obligation requires them to do so. They must
use with caution and protect the information collected as part of their

activities.
They are prohibited from using this information gathered in the context of their mission.

to make a personal gain from it, or in a way that would contravene the

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legal provisions or would harm the ethical and legitimate objectives of their
organization.
1.4. The competence
The auditor must use and apply knowledge, skills, and experiences.

requirements for the execution of his work. He is permitted to commit only in

work for which they have the knowledge, know-how, and experience

necessary. He is also called to strive to improve their skills, effectiveness and

the quality of their work.

Section 2. The approach of the auditor

A good approach is one that is simple. The approach in the practice of auditing.
is the one that makes it easily understandable and applicable. The

déroulement d’une mission d’audit exige la plus grande rigueur et pour s’appliquer
this one must obey rules. The requirement of a method is imperative because it

conditions the rigor of the work. To do this, the auditor uses several tools or

techniques: les outils d’interrogation et les outils et les outils de description.

The interrogation tools are:

statistical surveys or sampling;

the interviews and written questions;

computer tools
les vérifications et rapprochements divers ;

etc.
The description tools are:

physical observation;
the narration ;
the functional organizational chart;

task analysis grid;

the traffic diagram ;

the audit trail.

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Section 3. The techniques for collecting evidence
3.1. The Inspection

The inspection includes the examination of the project documents and supporting documents.

expenses incurred under the project. It is also reflected in the verification of

the physical existence of an asset, inventory, fixed assets, cash, etc.

The examination of documents created by or received by the project concerns pieces

justifications such as invoices, letters, files, and any other documents

allowing to verify a procedure or an accounting balance. The auditor does not verify

never blindly any room, because the use of the polling technique
it allows one to navigate towards a certain number of documents and pieces to
founding one's opinion. The inspection is therefore to verify the real existence of a thing.

physical and to ensure their belonging to the project.

3.2. Observation

The technique of physical observation should not be confused with the technique of

the inspection of physical assets. The inspection is a technique that leads to a

auditor to verify the physical existence of an asset himself while the observation

Physique consists of looking at what others do. It is this technique that is

used during stock inventories, etc. the physical stock inventory is conducted by

the project staff and the auditor observe them to ensure that the procedures
of inventories are respected.

3.3. Confirmation requests

The confirmation is a response to a request aimed at corroborating elements.

contained in the accounting documents. This technique is also called the

circularization. It involves asking a third party with business relationships

with the project, to directly confirm the auditor of the information, of the operations

or balances that appear in the accounting.

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[Link] requests
Requests for information or explanation allow the listener to obtain
information from competent individuals, both inside and outside
the outside of the project. They encompass the formal written requests addressed to

tiers and informal oral requests to individuals within the project. It is necessary to
note that verbal information has the weakest probative force in

the scale of evidence.

Section 4. The different stages of an audit mission

4.1. The preparation phase
The preparation phase opens the audit mission, requiring the auditor to have the ability

important for reading, attention, and learning. Outside of any routine, it

it calls for the ability to learn and understand, it also requires a good
knowledge of the structure to be audited because you need to know where to find the right one

information and whom to ask for it.

It is during this phase that the auditor must demonstrate synthesis skills.

and imagination. It can be defined as the period during which will be

completed all the preparatory work before taking action. It is the clearing

from the audit mission. It is during this phase that the auditor will build their
reference framework, that is to say the model towards which the result of its mission must tend.

The preparation phase can consist of three (03) main steps. However,

given that the auditor operates in a more or less

Already known, these steps do not carry the same importance in the same way.

The order of mission, the acknowledgment, and the description of procedures.

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4.1.1 The mission order

The mission order or the mission letter is a document that mandates

the auditor to proceed with the examination of his control. From this definition, we will retain

two essential functions: a mandate function in that it authorizes it to proceed

to certain checks within the designated project and an information function in

what is amplified 'for all practical purposes' to the project manager audited when the
the project involves relocations.

4.1.2. Acknowledgment

Cette étape a pour objectif une meilleure connaissance de l’entité où l’auditeur va

intervene. It consists of the collection of permanent information regarding the

project, this information may relate to the organizational context and

functional of the project.

4.1.3. The description of procedures

The evaluation of internal control is framed around a reference framework that remains the

manual of administrative, financial, and accounting procedures of the project.

In-depth knowledge of these procedures is essential for the auditor in charge.
to evaluate their application and perhaps beyond, their effectiveness. The description of

the procedures therefore aim to familiarize the auditor with the procedures that he will

check the application.

However, it is not necessary at this stage of the mission preparation to

describe all the procedures of the function that will be audited. However,
The auditor should nevertheless note down on paper the main steps of the procedure.

defined in the manual and that should be subject to control during its work.

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4.2. The implementation phase
The implementation phase relies much more on observation skills,
dialogue and communication. Being accepted is the first imperative of
the listener, being desired is the criterion of successful integration. It is at this stage that

It makes the most use of analytical skills and the sense of deduction. It is, in
In fact, at this moment the listener will proceed with the observations and findings that will

allow him to speak.

Unlike the preparation phase, which mostly takes place in the office, the
The implementation phase takes place in the field, at the audited entity. It could involve three

steps: the opening meeting, the interviews and the compliance tests.

4.2.1. The opening meeting

The opening meeting is a framework for meetings and exchanges with the management of
the audited entity. Its purposes are to introduce the team members and to make

familiarity with the main interlocutors; to remind the objectives of the

mission; to present the proposed approach, the duration of the intervention and

gather the observations of the main responsible parties; schedule the appointments
necessary.

4.2.2. The interviews

They constitute the real phase of the mission's execution. They have the following objectives

to describe the process of carrying out the different constitutive operations of

the audited function. This description begins with the main steps of the function

defined above by the auditor. During the interview phase, he takes notes of the
main operations described; fundamental controls performed and their

responsibles; mentions made on the documents providing evidence of their control.

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4.2.3. Compliance testing

Compliance tests are checks carried out by the auditor to verify

the application of the process and controls identified during the interview phase

with the various managers. They lead to the use of the Sheets of
Revelation and Problem Analysis (FRAP).

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 FRAP model

Problem Revelation and Analysis Sheet

Working paper reference: FRAP No :

________________________________________________________________

Problem:

________________________________________________________________

Observation:

________________________________________________________________

Causes:

________________________________________________________________

Consequences:

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4.3. The conclusion phase
The conclusion phase also requires, above all, a strong ability to synthesize.
and a certain aptitude for writing, although dialogue is not absent from
this last period. The auditor will this time develop and present their product

after gathering the elements of his harvest: it is time for the earnings
and planning. This phase marks the end of work in the field. It could

consist of three (03) steps which are: the draft report, the synthesis meeting and
the drafting of the report.

4.3.1. The draft report

It is stated in an evaluation mission of internal control that all of the

anomalies and weaknesses identified should be brought to the attention of the first ones

concerned (manager or executing staff) and discussed with them. In addition

ample information should then be collected from the person in charge of

project to outline the different aspects of the problem and refine viewpoints. From

Even so, the various weaknesses identified should be systematically documented.

as they are observed. This would allow for discussion of the observations

raised and the relevance of the recommendations made during the meeting
of synthesis. The draft report is a firsthand report submitted to

the appreciation of the audited. They must provide their comments on it or

observations that could prompt rephrasing or modifications and

integrated into the provisional report to make it final.

In view of the specific cases of project audit missions, the auditor is called to
execute its mission, combined with an examination of accounting documents and evaluation of

internal control. Its mission report must include the following points:
the reminder of the intervention period and the nature of the mission;

the general objectives of the mission;

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 the synthesis of the conclusions of the work (detailed numerical breakdown of the identified anomalies

on accounting documents and weaknesses observed in the application of

internal control procedures) ;
the auditor's opinion on the sincerity and regularity of the documents

accountants of the audited period;

4.3.2. The synthesis meeting

It represents a solemn framework where the listener reiterates their encouragement to

staff and project managers for their efforts made in compliance

project procedures, but also draws their attention to the weaknesses that he may have

identified during its work. All the weaknesses noted and

the recommendations formulated should, in this case, be presented in a manner

detailed to the management team. A timeframe should be given to them for

gather their comments and observations on the various points presented.

The main goal is to agree on the terms of the report that will be produced or

to explain any potential discrepancies that persist.

4.3.3. The drafting of the report

It should consist of a review and correction of the draft report for

take into account the observations and comments made by the audited entity. In
In his report, the auditor must recall the context and objectives pursued in the framework

from the implementation of its mission and the accounting standards to which it relates
controls on the basis of which he decides.

Project audit reports are generally accompanied by a 'letter of

Recommendation » which is a report on internal control and procedures

operational aspects of the project. This letter is based on the checks carried out by
the auditor during his mission. A letter of recommendation also gives

information on the status of the implementation of previous recommendations.

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As part of the financial statement audits of a project, the auditor in their report,
must express an opinion on the financial statements. He can formulate an opinion
sans réserve (certification pure et simple) avec réserve (certification avec réserve),
unfavorable (refusal to certify) or else to refrain from expressing an opinion (impossibility)

of certifying).
unreserved opinion

An unqualified opinion means that the auditor is satisfied with the preparation of
financial statements, their consistency, their adequacy, and their compliance with

applicable standards, legal requirements, and all other provisions set out by the
auditor's mandate.
Opinion with reservation

The auditor can express a qualified opinion when they have restrictions on

specific points and it is impossible to express an opinion without reservation but

consider that any potential disagreements or uncertainties or the limited nature of

checks do not require him to issue an unfavorable opinion or a refusal of

certifier. When the auditor expresses reservations in their report, the subject of the reservation

and its financial impact must be clearly indicated in its report.

A unfavorable opinion

A negative opinion is expressed when the disagreement has an effect that is so extensive and so

concrete for the reliability of financial statements that the auditor reaches the conclusion

that merely adding a caveat to his report would not be enough to show how much

The financial statements are incomplete or likely to be misleading.

Refusal to certify

The auditor issues a refusal to certify when, due to uncertainties that

characterize the financial statements or limitations of the scope of the audits he was able to

proceed, is not in a position to express an opinion regarding the said states.

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Chapter 3. Audits and Risks

Audits can be extremely diverse depending on the objectives, activities, and

expected reports or results from the projects.

Section 1. According to the scope

1.1. The operational audit

The operational audit is an efficiency audit aimed at proposing solutions.

measures to address the shortcomings and dysfunctions of the organization

and the functioning of activities and/or to enable the rapid detection of risks
potentials and possibles. The operational audit of a project is intended to evaluate the

performance and effectiveness of operations and project management.

In other words, an operational audit involves a more in-depth analysis.

management methods in the project and their performance. It facilitates
the identification of execution problems in order to take measures
correctives at the project level. The main result of an organizational audit is a

report containing recommendations for improvements to

the efficiency and effectiveness of the project's operations.

1.2. Organizational audit

The organizational audit ensures the structural logic of a project.

audit according to its general organization, the objectives to be achieved and

the adequacy of the people and skills that constitute it. Its objective is
to analyze and highlight the dysfunctions and/or elements of
underperformance linked to the structural components of the organizational chart and to the

shape of the organization chart, to the hierarchical and functional links of the different

components of the organizational chart and the functioning of the organization (missions and

attributions), à l’autorité et au système de management qui en découle.

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Events that may lead to an organizational audit include among others: the
discrepancy that can be observed between the current organizational configuration
at the level of the audited project and the official organizational chart, partial and/or completion

ineffective missions and assignments at the level of the organizational structure

the existence of certain non-operational structures at the system level

current organizational structure. The organizational audit helps to understand how

an organization mobilizes its resources in service of its objectives.

1.3. Audit of financial statements

The financial audit aims to examine the financial statements in order to verify
sincerity, conformity, and regularity and to ensure that it gives an image
faithful to the audited entity. The financial and accounting audit is a compliance audit.

or of regularity carried out by an auditor to certify that the information

financial statements contained in the financial statements provide a true and fair view
of the project. This means that the audit of the financial statements has the objective of

determine if the aforementioned financial statements are presented in accordance with the standards

generally accepted accounting principles, that is to say recognized principles that are deemed to provide

required information.

1.3.1. The notion of regularity

Regularity implies compliance with accounting rules and procedures.

The expression accounting rules and procedures includes the rules and methods.

d ’évaluation, les règles d ’organisation comptables,les formes et contenues

standardized financial statements, the other accounting rules and methods in force
within the project.

1.3.2. The concept of sincerity

Sincerity involves the clear and honest presentation and communication of

the information, without the intention of concealing reality behind appearance and respect
from the rule of non-compensation. Indeed, the rule of non-compensation requires that

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the assessment of asset and liability items should be carried out separately. The exception to the

The rule of non-compensation is the only case where compensation is justified by law.
or a contract. It is the application of good faith of the rules and procedures

accountants.

In the context of projects, the audit of financial statements generally focuses on

determine if the disbursements indicated in the financial statements have been made
in accordance with the financing agreements or the memorandum of understanding. He is considering

also on disbursements by examining the expense statements and accounts

special/designated. The financial audit also aims to establish whether each of the expenses

included in the total of expenditure statements has been authorized, recorded

in accordance with accounting principles and rules and are supported by documents

preserved in chronos or files.

1.3.3. The concept of faithful image

The faithful image is the principle to be respected, when the rule does not exist or when the

The rule is insufficient to translate reality. It is a faithful image depending on.

accounting principles and the rules and accounting methods in force within
of the company.

1.4. Legal audit

The legal audit in a project mainly focuses on the audit of contracts.

markets and on technical assistance. It consists of a diagnosis of the contracts:

parties prenantes, titre, contenu, objet du contrat, possibilité de révision du contrat,

guarantee of confidentiality, etc.; and to a legal analysis of contracts:

qualification of the contract and legal regime, contractual partners, territories

application, all contractual relations of the audited entity, relations

contractual with each contractual third party.

The legal audit is also reflected in a legal assessment of the clauses.

contractual: compliance with legal and regulatory provisions, regular monitoring of

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the execution of the contract and existence of means of proof, compliance and validity
the clauses of the contract, the opportunities of the operations of the contract and an evaluation

financial contracts: determination (without dispute) of the sums of money paid or

received, negotiation of contractual clauses, forecasting the consequences
legal and financial aspects of the discrepancies between forecasts and financial results, circuit

information between 'the legal department' and 'financial and accounting department', etc.

Section 2. According to the purpose of the audit

2.1. Compliance or Regularity Audit

Its principle is to ensure and confirm the compliance of operations with the
procedures and regulations in effect within the project. The compliance audit of

to report to the authorities the distortions, the non-application and the

misinterpretations of established provisions (or a reference framework) and

to analyze the causes and consequences in order to eventually propose some

recommendations. In other words, a compliance audit consists of going through

review, test and evaluate the control systems and organizational procedures of

project, particularly regarding compliance with regulations, contracts and

the legislation to which the project is subject.

[Link] audit

The effectiveness audit is the assessment of the quality of the internal control system.
(existence, exhaustiveness, accuracy...) notably of methods, procedures, analyses

positions, organization of work for a given activity.

It encompasses both the concepts of effectiveness (achieving results) and efficiency (the
best way to achieve results). Its objective is to diagnose a

element (situation, activity, operation...) in order to detect weaknesses and strengths.

to analyze the causes and consequences and possibly propose some
recommendations for achieving better results.

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Section 3. Audit by the risk-based approach

3.1. The concept of risk

Risk is the probability or possibility that an undesired event occurs.

This risk is different from audit risk. Audit risk is the risk that an opinion
expressed by an auditor may be inappropriate. The reduction of audit risk is carried out

by identifying and implementing audit procedures to collect

elements with sufficient and appropriate probative value allowing to draw

reasonable conclusions based on an audit opinion.

The audit risk is the conjunction of the risk that the financial statements include

des erreurs ou omissions significatives (risques d’anomalies significatives) et le risque

that the procedures implemented by the auditor do not allow them to be detected
(risk of detection). The auditor must implement procedures to evaluate

the risks of errors or omissions and also implement procedures

audit based on this evaluation.

The audit process implements professional judgment in the definition of

the audit approach through the search for significant anomalies and in
the execution of audit procedures covering the assessed risks, and this with a view to

to obtain sufficient and appropriate evidence.

The auditor is responsible for significant anomalies. The significance of the

omissions identified at the individual assertion level by account groups or
by cycles and the type of information to be provided and at the overall level of the financial statements

is appreciated at the entity level or in the financial statements as a whole.

3.2. Audit risk and the threshold of significance

The risks of significant anomalies at the global level of the financial statements are
risks with global influence potentially affecting multiple assertions. The risks
of this nature generally relate to the control environment or to

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other factors such as the deterioration of the economic conditions in the sector,
country or region. The listener's attitude towards these risks of errors or
of omissions requires staff with knowledge, tools and
appropriate capabilities and possibly even experts.

The auditor must also take into account the risks of errors at the level

groups of accounts, cycles, and information to be provided to them

associated. This consideration allows for the determination of the nature, the deadline
and the scope of the audit procedures to be implemented at the assertion level.
The auditor will seek to obtain the evidence at this level that he
will allow, at the end of its audit, to express an opinion on the financial statements in

their set and at an acceptable audit risk level.

3.3. The typology of audit risks

The risk of significant anomalies at the assertion level includes two

components: inherent risk and control risk.

3.3.1. The inherent risk

The inherent risk is the possibility that a retained assertion contains an anomaly.
which can be significant either individually or cumulatively with other errors or omissions for

other assertions notwithstanding the existing internal controls. This risk depends on
the nature of the accounts (with complex calculations, accounting estimates, circumstances

external factors increasing business risks such as development

technological, insufficient working capital or an industry in recession

characterized by a significant number of business failures.

3.3.2. The risk of control

It is the possibility that a statement contains a significant anomaly; in isolation.

or combined with other errors or omissions that are unidentified, or undetected and not

corrected on time by the internal control system. This risk is dependent on the

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effective and operational character of internal control. The risk of non-detection is
function of the effectiveness of audit procedures. This risk cannot be reduced to zero
due to the polling techniques, the implementation of an audit procedure
inappropriate or a misapplication of an appropriate audit procedure or of

the misinterpretation of the results of an audit procedure or an audit. It is

related to the nature, timing, and extent of the audit procedures determined by the auditor

to reduce the audit risk to an acceptable level. For a risk of discrepancy

high significant, the accepted detection risk must be low and vice versa.

Inherent risk and control risk are independent risks of the audit.
financial statements. The auditor must assess the risk of significant misstatement at the level

of the assertion as the basis for audit procedures although this assessment is a

judgment and not a precise measure of risk. If this risk assessment

includes an expectation of the effectiveness of controls, the auditor must perform tests

of control to justify its risk assessment.

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Chapter 4. Evaluation of control in projects

The definitions of control are numerous, but there is agreement on the essentials. The
external auditors, statutory auditors, accountants have been the

first in France to develop and deepen the concept of internal control, and this
to achieve the specific objectives assigned to their role: to certify compliance,
the sincerity and faithful representation of accounts and results.

Internal control is therefore a means for them while for the managers
of companies and organizations (General Directors, Administrators, Managers,

etc.) it is a goal. From the 1960s-70s, the French Order of Experts

Accountants, the Company of Statutory Auditors, have identified and defined this

notion demonstrating that the implementation of internal control systems

exhaustive and adequate in financial and accounting areas allows for obtaining
regular, sincere, and faithful results; and that in order to appreciate these qualities, the

auditors in the broadest sense of the term must examine the arrangements

in question.

Internal Control is the set of safeguards contributing to the management of

the company. Its purpose is, on one hand, to ensure protection, the safeguarding of

heritage and the quality of information, on the other hand the application of instructions from

the management and to promote the improvement of performance. It manifests itself by

the organization, the methods and the procedures of each of the activities of

the company, to maintain its sustainability.

Section 1. The concept and its evolution

Beyond these historical definitions, internal control has found itself placed
at the center of concerns for managers from all sides and all

affiliations. This renewed interest stems from a conjunction of

phenomena among which we can cite the increasing complexity of companies and
the dispersion of activity centers. It should be noted that laws, regulations, constraints

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professional, budgetary, and social factors have also contributed to promote the

development of internal control in companies because compliance with these rules

impose themselves.

It is to address these questions and a few others that initiatives have

were taken, which allowed for precise definition of the specifics of the control

internal and assign objectives to it.

Section 2. The objectives of internal control in a project

Internal control contributes to achieving a general objective that can be

décliner en objectifs particuliers.L ’objectif général c ’est l ’atteinte des résultats du

project in the context of achieving the pursued goals. In particular, the control

the internet is not a set of static elements, it must also be appreciated

in a dynamic way, each of the elements that compose it having its place in

the operational process of the project. All components of the project are
concerned.

However, we realistically assign the reasonable assurance as the finality.

to achieve the objectives. Indeed, an internal control aimed at a functioning

perfect for achieving the expected results would be both paralyzing and

Priceless, therefore unrealistic. Internal control is not designed to guarantee the

the success of the organization, its objective is relative and not absolute.

To achieve this general objective, internal control is assigned specific goals.

permanents, which can also be found in the definition of the order of experts-
accountants. The Institute of Internal Auditors (IIA) defines five (05) objectives of

internal control includes: asset security; information quality, the

compliance with directives and optimization of resources.

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2.1. Asset Security

The initial statements of the rule spoke of 'the protection and safeguarding of
heritage." Indeed, a good internal control system should aim to preserve the
heritage of the project. But we need to expand the notion and understand thereby not

only fixed assets of any kind, inventory, and intangible assets.

2.2. The quality of information

The image of the project/program reflects in the information it gives to

the outside and that concern its activities and its performances. It is necessary that

everything is in place for the 'information manufacturing machine' to operate

without errors and without omission. And more specifically, these internal controls must

to allow the information chain to be reliable and verifiable; comprehensive;

relevant and available.

2.2.1. Reliable and verifiable

It is not enough for information to be good; the system must also allow it.

to verify its accuracy. It is thus asserted that all internal control must
to include a proof system without which there is neither guarantee nor justification

possible. For the accountant or the manager for example, it will be the system
archiving and preservation of documents.

2.2.2. Exhaustives

It is pointless to have accurate information if it is not complete. What

means that the internal control system must ensure the quality of

records at the source of the underlying data and ensure that all the
elements should be taken into account in the processing chain.

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2.2.3. Relevant

The information must be adapted to the intended purpose, otherwise it is superfluous. From our

Nowadays, databases often generate excessive flows of information.

an abundance of goods that ultimately prevents finding one’s way and does not improve

so not the knowledge.

2.2.4. Available

Everyone knows examples of information that arrives too late or that is not
easily accessible. Here too, the adapted internal control must prevent from

similar situations.

2.3. Compliance with the directives

It is a broader concept than the 'respect for policies, plans, procedures, laws and
regulations. Indeed, the directives naturally include the provisions.
legislative and regulatory, but they are not limited to policies, plans and
procedures (there may be individual or circumstantial provisions). However, the

internal control devices must prevent compliance audits from revealing

faults, errors, or shortcomings due to the lack of respect for

The root causes of this phenomenon can be various: poor

communication, lack of supervision, confusion of tasks, etc. in any case, the
the quality of internal control is in question. This restrictive aspect of internal control,

who is required to respect all internal and external rules will find themselves

in the analysis of devices.

2.4. Resource optimization

This is what the IIA states when talking about 'the economic and efficient use of

resources. Are the means available to the project being used effectively?
optimal? Does he have the means for his policy? This adequacy in the sense of the

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greater efficiency is an important element that internal control must take into account
to take into account to allow the project's activities to grow and thrive.

Section 3. Achieving the set objectives

Internal control also aims to achieve the objectives set for

operational activities and programs. Achieve these control objectives

internally it is to take a serious option on the good mastery of the activities. One can
to say, in this sense, that the first four objectives of internal control provide to the

definition of the concept its operational dimension.

3.1. Methodology

The uniqueness of the internal control evaluation mission to which an auditor

In a project, the process is divided into specific and identifiable periods. The evaluation

The internal control in a project aims to ensure that:

The recorded operations are supported by supporting documents.

reliable;

the operations have been exhaustively accounted for in the statements

accountants and extra-accountants;

the expenses incurred by the project and recorded in the different statements
accountants have complied with the procedures in force;

the off-balance sheet, accounting, and summary statements have been maintained

in accordance with the provisions of the procedures manual;

the project assets benefit from effective protection;

etc.

The methodology proposed below is an approach that is inspired by reality.

operations carried out by the audited project. It has the advantage of controlling at

first chef the respect of procedures related to operations effectively

executed by the project, to correct and prevent the shortcomings of the managers.

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It is practical and not theoretical in that it starts from bank fogs and
cash register and other accounting and non-accounting documents kept by the
manager.

3.2. The tools for assessing internal control

For the purposes of carrying out the missions of evaluating internal control and oversight

periodic accounting statements of the project, the following tools are generally used

proposed. These are summary tables of the diligences that could be put in place.
implemented during the periodic checks and, cumulatively, verify compliance with

procedures and related ones defined in the procedures manual. These tables are
accompanied by a assessment grid of the conclusions of the work (Observations) and

from a reference framework for the recommendations that could be made following
on the identified weaknesses (Recommendations).

The best letter for cases of satisfactory controls or compliance with

procedures. This box is checked when the implementation of the defined due diligence is carried out

reveals no anomalies or significant anomalies that could be questioned

the reliability of an operation.

The case is reserved for situations where major anomalies are observed or

that the defined procedures are not applied. The marking of this box
necessarily implies a recommendation in the last column of the table.

The recommendations must be written in accordance with the defined scheme.

above. If necessary, the 'Recommendations' column could include the

references of the page of the file where the recommendation was written in a

detailed.

The mention A is reserved for non-applied procedures or non-diligent actions.

implemented for reasons related to the non-maintenance of such states by the structure

auditée. En exemple, il sera marqué AN pour la vérification du respect des procédures

acquisition of goods and services if during the review period, the project

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has not made any acquisition requiring the implementation of the procedures therein

relatives.

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 Cycle Objectives

Bank o Reliability of supporting documents

o Exhaustiveness of records;
o Compliance with the procedures related to the operations performed;

o Asset protection.

Observations Recommendations

Works B AR NA

Verification of operations listed in the bank fog

a) Obtain the bank fog of the controlled period;

b) Obtain the timeline of bank supporting documents;

c) Check for each operation that the amount written in the draft
corresponds to the amount shown on the supporting document

d) Verify that each invoice includes:

a. The identification of the supplier (company name, references of

Trade Register (RC), IFU number, complete address,
etc.)
a number and the date of issue;
c. The identity of the recipient (the Project);

d. The references of the purchase order, etc.

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 e. The references of the delivery slip;
f. The certification of the manager;
a stamp of FCFA 500 for the invoices;
The discharge of the beneficiary of the payment (number of the

chèque, nom de la banque, montant, date de paiement,

etc).
e) Check that each invoice is accompanied by:

From an original purchase order signed by the manager;

a duly signed delivery slip;
k. A statement of account, if applicable.
f) Verify that the check references on the invoice match
to those registered in the fog.

g) Ensure that the bank reconciliation has been reviewed by the manager.
superior hierarchy and that this control has been materialized.

h) Carry a visa materializing the checks carried out on the documents

justifications.

Observations

Works B AR NA Recommendations

2. Arithmetic accuracy of bank fog

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a) Check that the balance from the previous period has been carried over to the period

controlled corresponds to the balance checked during the previous intervention.

b) Total the expenses and revenues for the review period and ensure
that the new balance recorded in the draft is arithmetically correct.

3. Verification of the bank reconciliation status

a) Verify that the end-of-period balances (in the bank statement and
on the bank statement) reported in the reconciliation statement are correct.

b) Check that the pending items submitted by the accountant but not
still gone through the bank are indeed recorded in the fog of
bank or in the accounting statements.

c) Verify that the pending items passed to the bank but not yet
registered in the bank's fog by the accountant are really
transcripts on the bank statement.

d) Obtain the necessary explanations for the suspensions.

e) Check that the items passed to the bank have not yet been recorded in the draft of
bank charges (overdraft fees, various fees, etc.) were incurred after the bank reconciliation.

Propose their accounting in case and formulate a recommendation

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for their registration after reconciliation.

f) Verify that the outstanding items noted in the reconciliation statement

from the previous period were deposited in the bank during the period under
review.

g) Total the pending operations according to the DRS or the DS and those according to
bank and ensure the arithmetic accuracy of the bank reconciliation.

Observations

Work B AR NA Recommendations

4. Exhaustiveness of operations recorded in the bank fog

a) Ensure that the number of the first check is recorded on the first page of
The fog of the controlled period is a consequence of that of the last check.
carried on the last page of the fog of the previous period.

b) Check that the references of the checks recorded in the draft are
chronological.

c) Ensure that the check numbers not entered in the fog

corresponding to canceled checks whose stubs are kept at the
stubs (crossed out or marked "canceled");

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d) Obtain explanations about the check numbers used but not
registered on fog and not canceled.

e) Obtain explanations about the checks used but not

registered on fog and not canceled

5. Compliance with procedures related to the operations carried out

a) Select all the expenses recorded in the bank statement of the

review period not corresponding to supplies of
box.

b) Ensure that these expenses meet the purpose of the Project and were
recorded in the budget of the relevant period.

c) For expenses corresponding to purchases on purchase order:

i- Check that these are supported by an expression sheet

duly signed needs;
ii- Ensure that there is consultation with at least three (03) suppliers
agree;
iii- Ensure that the selected supplier is the lowest bidder
to obtain the reasons for his non-choice;
iv- Check that the supplier choice was made by the DRS or
the MCD is materialized on the proforma invoice of it.

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