Roles and Responsibilities
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GAO-03-673G Government Auditing Standards > Chapter 1 Introduction > Roles and Responsibilities
1.17 Officials of the audited entity entrusted with handling public resources and auditors of government programs fulfill essential roles and responsibilities in ensuring that public resources are used efficiently, economically, effectively, and legally. Audit organizations also have the important responsibility of ensuring that auditors can meet their responsibilities. These unique roles involve using sound management practices and providing professional audits and attestation engagements.
Management’s Role
1.18 Officials of the audited entity (for example, managers of a state or local governmental entity or a nonprofit entity that receives federal awards) are responsible for
a. applying those resources efficiently, economically, effectively, and legally to achieve the purposes for which the resources were furnished or the program was established;1
b. complying with applicable laws and regulations, including identifying the requirements with which the entity and the official must comply and implementing systems designed to achieve that compliance;
c. establishing and maintaining effective internal control to help ensure that appropriate goals and objectives are met; resources are used efficiently, economically, and effectively, and are safeguarded; laws and regulations are followed; and reliable data are obtained, maintained, and fairly disclosed;
d. providing appropriate reports to those who oversee their actions and to the public in order to be accountable for the resources used to carry out government programs and the results of these programs;
e. addressing the findings and recommendations of auditors, and for establishing and maintaining a process to track the status of such findings and recommendations; and
f. following sound procurement practices when contracting for audits and attestation engagements, including ensuring procedures are in place for monitoring contract performance. The objectives and scope of the audit or attestation engagement need to be made clear. In addition to price, other factors that may be considered in evaluating bid proposals include the responsiveness of the bidder to the request for proposal; the prior performance and experience of the bidder; the availability of the bidder’s staff who have the appropriate professional qualifications and technical abilities; and the results of the bidder’s peer reviews.
Auditors’ Responsibilities
1.19 In discharging their professional responsibilities, auditors need to observe the principles of serving the public interest and maintaining the highest degree of integrity, objectivity, and independence. The public interest is defined as the collective well-being of the community of people and entities the auditors serve. These principles are fundamental to the responsibilities of auditors.
1.20 Auditors should act in a way that will serve the public interest, honor the public trust, and uphold their professionalism. A distinguishing mark of a profession is acceptance of its responsibility to the public. This responsibility is critical when auditing in the government environment. GAGAS embody the concept of accountability, which is fundamental to serving the public interest.
1.21 Auditors need to make decisions that are consistent with the public interest in the program or activity under audit. In discharging their professional responsibilities, auditors may encounter conflicting pressures from management of the audited entity, various levels of government, and others who rely on the objectivity and independence of the auditors. In resolving those conflicts, auditors are responsible for acting with integrity, guided by the precept that when auditors fulfill their responsibilities to the public, these individuals’ and organizations’ interests are best served.
1.22 To maintain and broaden public confidence, auditors need to perform all professional responsibilities with the highest degree of integrity. Auditors need to be professional, objective, fact-based, nonpartisan, and non-ideological in their relationships with audited entities and users of the auditors’ reports. Auditors should be honest and candid with the audited entity and users of the auditors’ work in the conduct of their work, within the constraints of the audited entity’s confidentiality laws, rules, or policies. Auditors need to be prudent in the use of information acquired in the course of their duties. They should not use such information for any personal gain or in any manner that would be detrimental to the legitimate and ethical objectives of the audited entity.
1.23 Service and the public trust should not be subordinated to personal gain and advantage. Integrity can accommodate the inadvertent error and the honest difference of opinion; it cannot accommodate deceit or subordination of principle. Integrity requires auditors to observe both the form and the spirit of technical and ethical standards; circumvention of those standards constitutes subordination of judgment. Integrity also requires auditors to observe the principles of objectivity and independence.
1.24 Auditors should be objective and free of conflicts of interest in discharging their professional responsibilities. Auditors are also responsible for being independent in fact and appearance when providing audit and attestation services. Objectivity is a state of mind that requires auditors to be impartial, intellectually honest, and free of conflicts of interest. Independence precludes relationships that may in fact or appearance impair auditors’ objectivity in performing the audit or attestation engagement. The maintenance of objectivity and independence requires continuing assessment of relationships with the audited entities in the context of the auditors’ responsibility to the public.
1.25 In applying GAGAS, auditors are responsible for using professional judgment when establishing scope and methodologies for their work, determining the tests and procedures to be performed, conducting the work, and reporting the results. Auditors need to maintain integrity and objectivity when doing their work to make decisions that are consistent with the broader public interest in the program or activity under review. When reporting on the results of their work, auditors are responsible for disclosing all material or significant facts known to them which, if not disclosed, could mislead knowledgeable users, misrepresent the results, or conceal improper or unlawful practices.
1.26 Auditors are responsible for helping management and other report users2 understand the auditors’ responsibilities under GAGAS and other audit or attestation coverage required by law or regulation. To help managers and other report users understand an engagement’s objectives, time frames, and data needs, auditors need to communicate information concerning planning, conduct, and reporting of the engagement to the parties involved during the planning stages of the audit or attestation engagement.
Audit Organizations’ Responsibilities
1.27 Audit organizations also have responsibility for ensuring that (1) independence and objectivity are maintained in all phases of the assignment,
(2) professional judgment is used in planning and performing the work and in reporting the results, (3) the work is performed by personnel who are professionally competent and collectively have the necessary skills and knowledge, and (4) an independent peer review is periodically performed resulting in an opinion issued as to whether an audit organization’s system of quality control is designed and being complied with to provide reasonable assurance of conforming with professional standards.
1.28 While management is responsible for addressing audit and attestation engagement findings and recommendations and tracking their status of resolution, audit organizations are responsible for establishing policies and procedures for follow-up to determine whether previous significant findings and recommendations are addressed and are considered in planning future engagements.
1This responsibility applies to all resources, both financial and physical, as well as informational resources, whether entrusted to public officials or others by their own constituencies or by other levels of government.
2Other report users may include officials of the audited entity, the audit committee, the board of directors or other audit oversight body, management or auditors of granting or funding agencies, and individuals contracting for or requesting audit services.
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