Name : Abdul Wahid Sherani

Senior Auditor / PIPFA

Performance Audit Assignment
Q.5. (a) Describe the inter-relationship between audit objective, audit scope and audit criteria
in Performance Auditing. ( summer paper 2019)

AUDIT OBJECTIVE, AUDIT SCOPE AND AUDIT CRITERIA

audit objective, audit scope and audit criteria are interrelated and dependent on each
other. The scope of audit should be define according to pre-developed objective of performance
audit and should cover intended area and period . the criteria for audit should defined and
agreed in such way that can support the overall objective and in coverage of audit scope.
During the planning stage audit objectives should be clearly defined . The audit objectives
broadly define the extent of audit examination and the approach to be adopted by the auditors. All
performance audits try to focus on economy, efficiency and effectiveness. However, in each
assignment there could be other significant objectives as well. The auditors list down all these
objectives. The idea is that the senior audit management should have some idea of the objectives
the audit would be pursuing. There are overall objectives for each audit assignment. The auditors
conceptualize those objectives quite early in the audit assignment and most often during the
preliminary survey stage. But while developing the audit program they should specify their
objective of the examination for each issue. This very objective will, to a large extent, determine
the audit procedures and their sequence to be followed during the audit execution phase.

Audit scope refers to the extent of audit coverage in terms of time period, stage of the
project of program or organization, the locations and facilities to be included in audit coverage and
any aspect which will not be covered with reasons for exclusion. Audit scope determines the
responsibility of the audit team in the assignment. The auditors have to determine the scope of
each performance audit assignment. It will depend, besides other things, upon audit objectives,
state of record-keeping and data management of the audited body
The auditor program should state clearly the audit criteria for all each issue of potential
significance. For each performance audit, the auditors have to lay down audit criteria for each issue
of potential significance. In performance auditing, there is no single source of audit criteria. The
auditors have to undertake a sort of research to determine the benchmarks against which they
would assess the performance of the auditee. Good practice in performance auditing requires that
the audit criteria be shared with the auditee. Following may be sources for audit criteria
• Objectives of the organization, project or program
• Generally accepted management practices
• Historical performance standards
• Sector studies
• Comparison with similar organizations, projects or programs
• State-of-the-art studies
• Academic pronouncements of the profession
Standard operating procedures (SOPs) of the organization
• Rules and regulations applicable to the organization
• Performance specifications of manufacturers of an equipment
2. management and their agreement obtained at this stage of planning
 Q.4. (a) You are developing a PSR on a Government hospital which has recently invited
tender for procurement of a high-tech medical equipment costing Rs. 35 million.
Required: Identify five issues of potential significance in tendering process and determine audit
criteria against each of them.
Following can be major issues in tendering process

1. Method of advertisement : the intended purchase should advertised on public media

( both on print and electronic media )
Criteria :
According to PPRA-2004 , Rule 12 (B)All procurement opportunities over two million
rupees should be advertised on the Authority’s website as well as in other print media or
newspapers having wide circulation. The advertisement in the newspapers shall principally appear
in at least two national dailies, one in English and the other in Urdu.

2. Response time. – after tendering a reasonable time should be given to intended

bidders for submitting quotations / bidding
Criteria :
According to PPRA-2004 , Rule 12) The procuring agency may decide the response time
for receipt of bids or proposals (including proposals for pre-qualification) from the date of
publication of an advertisement or notice, keeping in view the individual procurement’s
complexity, availability and urgency. However, under no circumstances the response time shall be
less than fifteen days for national competitive bidding and thirty days for international competitive
bidding from the date of publication of advertisement or notice.
3. Open competitive bidding
Contract for procurement should be provided on open competitive bids.
According to PPRA-2004 , Rule 21. Subject to the provisions of rules 22 to 37 the
procuring agencies shall engage in open competitive bidding if the cost of the object to be procured
is more than the prescribed financial limit which is applicable under sub-clause (i) of clause (b) of
rule 42

4. Bid security.- the successful bidders should deposit the 5 % of bid security .
According to PPRA-2004 , Rule 25. The procuring agency may require the bidders to
furnish a bid security not exceeding five per cent of the bid price.
 5. Evaluation criteria should predetermined an assessment and evaluation criteria .

According to PPRA-2004 , Rule 29 Evaluation criteria.- Procuring agencies shall formulate an

appropriate evaluation criterion listing all the relevant information against which a bid is to be evaluated.
Such evaluation criteria shall form an integral part of the bidding documents. Failure to provide for an
unambiguous evaluation criteria in the bidding documents shall amount to mis-procurement.
6. the contract should be awarded to lowest bidder
According to PPRA-2004 , Rule 38 . Acceptance of bids.- The bidder with the lowest evaluated
bid, if not in conflict with any other law, rules, regulations or policy of the Federal Government, shall be
awarded the procurement contract, within the original or extended period of bid validity.