Project Anti-Corruption System Standards

PS 10: Audit 

(Note:  Please refer to the Frequently Asked Questions (FAQs) at the end of this PACS Standard for further guidance on this standard)

This PACS Standard makes the following recommendations in relation to audits.

  1. Financial audits Financial audits should be carried out on all projects.  These should be designed to ensure as far as possible that all payments by the project owner in respect of the project have been properly made to legitimate organisations for legitimate services.
  2. Technical audits Technical audits should be carried out on all major projects, and at random on minor projects.  These should be designed to ensure as far as possible that:
    • the project has been designed and specified in accordance with good technical practice and provides good value for money
    • the project has been properly built in accordance with the design and specification.
  3. These audits should be carried out upon completion of the project.  If appropriate, they may also be carried out on an interim basis during the project.
  4. These audits should be carried out by appropriately qualified independent persons or organisations.
  5. Identifying corruption: While the primary focus of the financial and technical audits is to verify the factors in clauses 1 and 2 above, the auditors should be advised to be aware that any deficiencies they identify may be caused by corruption, and to report any suspicions of corruption to the independent assessor.
  6. All financial and technical audit reports should be disclosed to the public.  (See PS 2 Transparency).
  7. This Standard may be implemented on its own.  It is, however, recommended that it is implemented in conjunction with all other PACS Standards, as far as appropriate.

Frequently Asked Questions

FAQ (1):  How can financial and technical audits assist in preventing and identifying corruption?

Financial and technical audits are good management practice.  They may identify financial irregularities, technical inadequacies, inappropriate design, failure to build in accordance with the specification, over-costing, or poor value for money, sustainability, or efficiency.  These problems may have been caused by human error, or lack of training and skill.  However, corruption may be the cause of these problems, and so it is essential that financial and technical auditors are aware that this may be the case, and are required to report suspicions of corruption to the independent assessor.  

The fact that the project is being financially and technically audited will act as a significant deterrent against corruption.  In addition, the audits may uncover actual corruption. 

FAQ (2):  Could the same person carry out the role of independent assessor and technical auditor?

Both the independent assessor and technical auditor are likely to be required to have the same or similar professional and technical qualifications and experience.  It is possible, therefore, that the same person could carry out both functions, provided that this does not result in any dilution or compromise of the essential qualities and functions of either role.  For example, the independent assessor’s role should not be limited to that of technical audit.  The independent assessor must be independent of the project.  He has a roving remit to inspect as and when he sees fit.  His duty relates specifically to identifying and reporting potential or actual corruption.  The technical auditor, on the other hand, will audit the project only at specific times in the project cycle, and will be focusing on technical issues.

FAQ (3):  Could the same person carry out the role of independent assessor and financial auditor?

This is unlikely to be appropriate.  The independent assessor should be a professional with detailed knowledge of the type of construction being undertaken (so that he can identify possible corruption during the project).  A financial auditor on the other hand is likely to be an accountant who is skilled in financial control.  It is unlikely that a financial auditor would have the necessary skill to be an independent assessor.

Updated on 10th April 2020