Case
PRE-PROCUREMENT AUDIT FOR PUBLIC SECTOR PROJECTS
INDUSTRY :-
AREA :ACCOUNTING & CONTROL
ORGANIZATION :-
LENGTH :0
LUMS No :01-518-2016-1
PUBLICATION YEAR : 2016
ABSTRACT:
The case has been developed to highlight the approach and challenges faced by auditors of public sector procurement projects. The focus in the case is on the pre-procurement stage of the procurement life cycle, i.e., needs assessment and options appraisal. Auditing the pre-procurement phase is a critical but challenging activity. It requires auditors to evaluate the evidence about the actual utility of the project in fulfilling a specific social need and that all other options for catering to that need were diligently explored before making a decision about the chosen option. Governments, especially in developing countries, are often criticized for spending precious public money on development projects that do not offer the best value for money. Governments often reject these criticisms on the grounds that their opponents are criticizing the projects for political considerations. However, in the absence of an independent procurement audit performed on a project, such criticism (or the defence) is seen by the general public as mere political rhetoric. It is only through a proper procurement audit that the public gains assurance that it was indeed an economically and socially worthwhile project. However, establishing the need of a project is often a matter of judgment by political leaders on the basis of the technical advice received from the experts in the area in which the procurement is taking place. This requires auditors to carefully consider the work of experts, making the audit process more complex. Rawalpindi MetroBus Service (RIMBS) was one such controversial project which commenced in February 2014 with an expected completion date of February 2015. From its inception, the project was surrounded by considerable controversy and debate. Press reports suggested that the need for such an expensive transport system was not established and other less expensive options were not being considered. Environmental issues were also highlighted considerably in the press. The case describes a scenario where the audit team is performing an assignment in which they are required to audit the pre-procurement phase of the project addressing the same questions. The case situation and assignment questions allow students to understand the complexities of such assignments and the process that should be followed by auditors to carry out them out. No. assigned on 02 January 2017 HN