Completing the process of auditing national target program for new rural development conducted by the state audit office

ynthesized according to the system of research indicators serving the evaluation of the procedure of auditing NTP-NRD conducted by SAV. After obtaining information on the current status of the procedure of auditing NTP-NRD conducted by SAV, the author applied data analysis methods such as descriptive statistical method, comparison method, scoring method, and priority ranking method. 6. The scientific and practical significance of the thesis The completion of the dissertation has scientific and practical significance as follows: Theoretically: The dissertation is a scientific research document for theoretical issues on NTPs, management mechanisms, auditing activities for NTPs of state audit agencies. This theory can be the premise and basis for forming the theory for the types of thematic audits performed by the SAV. Practically: The dissertation studies the current situation of the NTP-NRD auditing procedure conducted by the SAV, thereby proposing several solutions and recommendations to contribute to the completion of the auditing NTP-NRD conducted by the SAV. The findings of the dissertation are the manual to the SAVs in the implementation of the NTP audit procedure in general and the NTP-NRD in particular, as well as revise some steps of the audit procedure. 7. Dissertation structure In addition to the introduction, conclusion, list of tables, diagrams, references, and appendices, the thesis consists of 3 chapters: Chapter 1: Basic theories of process of auditing the national target program conducted by the State Audit office. Chapter 2: Current status of process of auditing the national target program for new rural development conducted by the State Audit Office of Vietnam. Chapter 3: Solutions to complete the process of auditing the national target program for new rural development implemented by the State Audit Office of Vietnam. CHAPTER I BASIC THEORIES OF PROCEDURE OF AUDITING THE NATIONAL TARGET PROGRAM CONDUCTED BY STATE AUDIT OFFICE 1.1. GENERAL THEORY OF STATE AUDIT OFFICE 1.1.1. The concept of State audit office 1.1.2. State audit concept The State audit office is a professional organization of the state administrative apparatus. State audit activity is the process of collecting audit evidence objectively, independently, systematically to determine compliance with the law in management and use of finance and public properties. Thereby implementing accountability to the legislature, law enforcement, people about the economics, efficiency, and effectiveness of programs and projects funded by the State budget. 1.1.2. The role of a state audit Firstly, it contributes to improving the economics, effectiveness of the management, and usage of financial resources of the State. Secondly, it contributes to improving the observance and improvement of laws on the economic and financial management of the State. Thirdly, contribute to creating transparency of economic-financial relations. Fourthly, contribute to improving the effectiveness in management and usage of State finance. 1.1.3. The function of State audit w General function: Function of verifying and expressing opinions w Specific functions: Function of assessing, confirming, concluding and recommending of the management and usage of a nation's public finance and assets 1.1.4. Organizational model of the State audit office (1) The organizational model of the completely independent SA office: the State Audit Office of the Federal Republic of Germany, the Court of Appeals of the Republic of France, the SAV of Spain, Greece, Switzerland, Portugal, Indonesia, and a few other countries. (2) The organizational model of the SA office under the executive (Government): China, Japan, Thailand, Sweden, Laos, and some other countries. (3) The organizational model of the SA office under the legislature (parliament): USA, Russia, UK, Denmark, Australia, Netherlands, and many other countries. (4) The organizational model of the SA office belongs to the head of State (President): South Korea, India, Bangladesh, Paraguay, and some other countries apply. 1.2. BASIC THEORY OF NATIONAL TARGET PROGRAM 1.2.1. The concept of the target program and national target program Target program: It is understood that a public investment program includes projects aimed at realizing one or several government objectives in a certain industry or sector that are facing urgent issues to be addressed. National target program: A public investment program aimed at realizing the socio-economic objectives of specific periods nationwide. 1.2.2. Characteristics of target program, national target program Characteristics of Target program: The target program usually has a narrow scope in a certain industry or territory, the influence of the program is therefore also limited in a certain scope, in-depth content according to the problem needs to be solved in each region or field, the program implementation time can be many years. Characteristics of National target program: - Regarding the content: The NTP includes sustainable development programs associated with the country's comprehensive development strategy in a specific period, deeply affecting people's lives. - Regarding the structure of capital sources: The capital for implementation of NTPs is usually from many sources such as Central budget sources; Local budget sources; Legally mobilized resources from organizations, businesses, and the community; Credit funds; and integrated resources from other programs and projects, so the management will be very complex, requiring scientific management and administration. - Regarding the regulations on management and administration: The management and administration of NTPs from the central to local levels with specific powers and obligations of each unit. 1.3. PROCESS OF AUDITING NATIONAL TARGET PROGRAMS CONDUCTED BY STATE AUDIT OFFICE Firstly, preparing for the audit (1) Prepare, approve and send the survey outline; (2) Collect information of NTPs; Review of collected information and internal control system of the audited entity; Identify audit risks and critical contents of the audit; (5) Plan the audit. Secondly, implementing the audit Auditors deploy the contents established in the general audit plan in general and the detailed audit plan in particular, through audit methods and techniques to collect audit evidence in a sufficient way, and reliable basis for making conclusions. Thirdly, preparing and approving the audit reports The auditors must collect all audit evidence in order to make comments and assessments on the contents of the audited NTP, from which to prepare audit records and audit reports. Fourth, monitoring and inspecting the implementation of audit conclusions, recommendations Monitoring and inspecting the implementation of audit conclusions and recommendations is a separate step of the State audit. This activity demonstrates the competence and responsibility of the State audit in evaluating the implementation of the audit conclusions and recommendations made by the State audit office to the audited entity and the settlement of issues raised in the audit reports. 1.4. EXPERIENCE OF SOME COUNTRIES IN THE WORLD ON THE NATIONAL TARGET PROGRAM AND LESSONS LEARNED FOR VIETNAM 1.4.1. Experience of some countries in the world when auditing NTPs 1.4.1.1. Japanese experience 1.4.1.2. Australian experience 1.4.1.3. Chinese experience 1.4.2. Lessons learned in conducting audit of NTPs in general and NTP-NRD in particular Firstly, determine the scope and content of the audit in accordance with the ability to perform, focusing on major issues that are decisive to the effectiveness of the program, avoiding spreading, dispersing resources, reducing quality. amount and efficiency of auditing; Secondly, it is necessary to arrange a reasonable time and personnel so that the auditor can deeply assess the implementation situation, evaluate the use of program and project outputs, evaluate results, and evaluate them. the adaptability of the program in the socio-economic development; Thirdly, the State audit office needs to apply expert methods, with consulting of experts from specialties related to projects in the NTPs into expert contracts for high-tech work sections such as formulating evaluation criteria; Fourthly, to make the audit process more transparent, and at the same time help the auditors have more reference information, the SAV should apply information technology in updating electronic diaries, in reporting progress of audit inspection teams, in requesting audit inspection teams to review the work of the team, to assign responsibilities to each auditor when the audit content is missed; Fifthly, it is necessary to attaching importance to organizing the evaluation and drawing experience after each audit phase to review and to carefully evaluate the limitations in order to draw experience before conducting the audit for the next batch. Sixthly, it is essential to surveying to collect feedback on the satisfaction of the subjects using information from the NTP audit results to evaluate the effectiveness of the audits. CHAPTER II CURRENT PROCESS OF AUDITING THE NATIONAL TARGET PROGRAM FOR NEW RURAL DEVELOPMENT CONDUCTED BY THE STATE AUDIT OFFICE OF VIETNAM 2.1. BRIEF INTRODUCTION OF AUDITING THE NATIONAL TARGET PROGRAM FOR NEW RURAL DEVELOPMENT IN VIETNAM 2.1.1. Brief introduction of the NTP-NRD in Vietnam 2.1.1.1. The national target program for new rural development in Vietnam The NTP-NRD in Vietnam is a program which consists of a set of related government funding projects to target the goal of constructing Vietnam rural areas with modern socio-economic infrastructure; rational economic structure and forms of production organization, combining agriculture with the rapid development of industry, services and urban following the planning; stable rural society, rich in national cultural identities; improving the intellectual standard, ecological protecting the ecological environment; strengthening the rural political system under the leadership of the Communist Party. 2.1.1.2. Characteristics of the NTP-NRD and those impacts on the auditing process conducted by SAV a/ Characteristics of the NTP-NRD First, subjects: The NTP-NRD is taken commune as a basic unit when implementing, in the process of organization, management, and implementation. The rural people must be the subject. Second, contents: The NTP-NRD was concretized through 11 contents (Government, 2010): (1) Planning of new rural development; (2) Developing socio-economic infrastructure; (3) Restructuring, developing the economy, raising incomes; (4) Reducing poverty and improving the social security; (5) Innovating and developing effective forms of production organization in rural areas; (6) Developing of education - training in rural areas; (7) Developing a medical system to better provide healthcare for rural residents; (8) Building a cultural life, information system, and rural communication; (9) Supplying clean water and rural environmental sanitation; (10) Improving the quality of Party organizations, authorities, and socio-political organizations in the area; (11) Maintaining security and rural social order. Third, capital sources: The Program was implemented with a large amount of capital funded by local budgets, central budgets, credit funds, capital from citizens, and other sources. In addition, the Program also used capital integrated from other programs and projects, so the management will be extremely complicated, requiring scientific and strict management and administration. Four, management and administration: The NTP-NRD was managed and adminised by many levels from central to local. b/ Outcomes of the NTP-NRD in Vietnam After nearly 10 years of implementing the program, the life of rural people has made positive changes. Most of the 19 criteria of the NTP on new rurual construction has been met the standard according to the aggregated data of the Central new rural development Coordination Office. Besides the achievements, the process of implementing the new rural development still has had some existences in localities such as rural environmental pollution, social evils, poor infrastructure, program sustainability, etc.. These existences are unavoidable problems and required to be gradually removed in local areas to ensure the construction of new rural areas in their localities in a sustainable manner. c/ Impacts on the auditing process conducted by SAV The NTP-NRD is a set of synchronous goals, tasks, and solutions in terms of economy, politics, society, environment, health, education, etc. to achieve some goals of agriculture, rural areas and farmers which are associated with the overall socio-economic development strategy of the country in the period 2010-2020 and subsequent periods. In order to achieve the set of goals, the NTP-NRD has implemented many programs and projects with large investment capital funded by the state budget, credit, and mobilization from enterprises, people, organizations, and other sources. As the program's subjects are the State and the rural people then the audit objects must include financial audits, compliance audits and operational audits to ensure that the audit results will contribute to the completion of the law on managing and operating the program, to create transparent economic relations when deploying, as well as to improve the economic efficiency and effectiveness in managing and using the Program's capital sources and the objectives of the Program which are set out in each phase. However, The NTP-NRD is a program that has capital sources integrated with many other project programs. The capital amount is large and has a long implementation time, some Program’s issues had been audited by other audit phases. Hence, with given limited resources, the SAV should consider with care the potential risks of the Program to determine the Program audit objectives on the basis of auditing grounds including relevant legal documents, the handbook guiding on the organization, management and implementation of the Program. 2.1.1. Introduction to the auditing the NTP-NRD conducted by SAV With its important nature and great influence, the NTP-NRD is one of the subjects that the SAV devotes a lot of resources to assess. Due to the complex nature of the Program, the SAV assigned the Specialized State Audit equity I to chair and conduct the first 2 trial audits in Hanoi and Bac Ninh City in 2013 (SAV, 2013). These are premise audits as a basis for building a large-scale audit process to evaluate the management, implementation, program implementation in ministries, branches, and localities in the following years in 2015 and 2016. 2.1.2.1. Audit objectives With its role, function, and position, the SAV wishes to provide the National Assembly and the Government with comprehensive and systematic information on the status of management, administration, organization, and implementation of the NTP-NRD, State Auditor General has approved Decisions to audit the Program with eleven specific goals. 2.1.3.2. Audit content The NTP-NRD includes many major projects related to many fields such as economy, politics, society, environment, education, construction, and health; involving several ministries and branches from the central to local levels; is implemented in all provinces and cities in Vietnam so that the audit contents are specifically assigned to each audit units by the SAV. However, whether auditing at central or local levels, at ministries, branches, or at provinces, districts, communes, the program’s audit contents all consist of financial audits, compliance audits, and operational audits (SAV, 2016e ). 2.1.3.3. Audit technique In order to carry out the contents of the auditing NTP-NRD, the SAV applied the general basic technical tools of the audit such as Reconciliation, analysis, comparison, sampling ... In addition, due to the peculiarity of the NTP-NRD of which the rural people are the main subjects, the SAV conducted the interview number of rural citizens by designed questionnaire. The SAV also applied other techniques such as field observation, recalculating the volume from the completed drawing, design to compare with final settlement A-B, winning bid price according to the process of auditing investment projects for projects. basic construction investment as an effective tool when auditing. 2.2. CURRENT PROCESS OF AUDITING THE NTP-NRD CONDUCTED BY STATE AUDIT OFFICE OF VIETNAM 2.2.1. Preparing for the audit First, survey and gather information of the NTP-NRD - Information on the internal control system of the NTP-NRD such as organizational structure, functions, and duties of the Program management apparatus (responsibilities of ministries, central branches, responsibilities of local departments,...); legal documents on Program management and administration; internal management regulations of the unit on supervision, implementation, acceptance and final settlement; financial and accounting management work such as the applicable accounting policies, the organization of the accounting apparatus, the organization of accounting; - Other relevant information such as changes in an organizational structure at agencies and units funded by the provincial budget; Errors and frauds detected from previous audits, related inspection, and examination agencies; Economic disputes, lawsuits related to the audited units; Information on the mass media on pressing issues in society, complaints and letters related to individuals and organizations in the management and use of Program funds. Second, assess the information gathered and the internal control system of the audited entity - Evaluating of information and internal control system: auditors assess the assignment, decentralization of functions and tasks of the Program’s management and implementing units: whether they are doing with a clear, reasonable, and convenient guarantee for the implementation process or not. At the same time, assessing the factors affecting the management and administration activities of the unit such as economic fluctuations, policies, regulations of the unit, changes in personnel, the complexity of Programme. - Overall assessment of the implementation of the Program: it needs to analyze and evaluate the Program's characteristics from the beginning of implementation to the time of the audit; funding for implementation and mechanisms for management, allocation, and integration of Program funds; preliminary assessment of economics and social efficiency of the Program. Third, identify critical audit contents and auditing risks Identify critical audit contents: From the results of the analysis and general assessment of the implementation of the Program as well as the internal control system of the audited units, auditors identify key issues when auditing the NTP-NRD including (1) Organization, the direction of the Program implementation; (2) The observance of regimes and policies in managing construction investment projects and financial and accounting regimes. (3) Compliance with other Program provisions such as assessing inadequacies in the implementation of 19 criteria in the national set of criteria compared to actual conditions in local areas. Identify audit risks - Potential risks: Potential risks are highly appreciated, but auditors have not yet pointed out specific potential risks that are hidden in each feature of the program, as a basis for making a fit audit plan. Although the potential risks are appreciated, the audit was conducted by auditors from 13 Local state audit entities under the general management of specialized state auditor II, so it is difficult to control the quality of auditors in the audit delegations. - Control risks: The control risks identified by the auditing team is high based on the evaluation of the surveyed information on the internal control system of the audited entity. However, the potential risk is specifically based on the characteristics of the program, so the control risk has only been assessed quite generally by the auditors, not yet indicated the control regulations which are needed to prevent or detect potential risks, thereby making assessments on the quality of the internal control system at the audited units as well as determining the level of control risks in each audited entity. - Detection risk: From the assessment results, the potential risk and control risk of NTP-NRD are identified at high levels, so the detected risk is determined at a very low level to ensure the overall risk of the audit at an acceptable level. Thus, by not being able to assess the specific level of risk in each audited content, only determining the level of detected risk to be achieved is at a very low level, making the audit plan spread out, and difficult ineffective staffing. Four, plan the audit Based on analyzing the crucial contents and risks of the audit, the auditing team prepares the audit plan and submits it to the SAV leader for approval, the audit plan includes the following contents: Audit objectives; Audit contents: auditing of capital funding and settlement of funding; auditing the compliance with State policies, regimes, and laws; audit the management, direct the implementation of the program, audit the implementation situation of the Program's contents, objectives, economic audit, evaluate the social efficiency and effectiveness of the Program. The audit plan also determines the audit scope; audit limits; criteria for evaluating the Program's economics, efficiency and effectiveness; audit methods; staffing plan. 2.2.2. Implementing the audit Financial auditing: The content of financial auditing the NTP-NRD has been done fairly methodically, adhering to the contents instructed in the outline of the audit such as auditing funding sources; auditing the use and settlement of funding. Compliance auditing: Compliance auditing the NTP-NRD has been a focus on auditing the cost estimation and allocation; auditing the compliance with estimation, and auditing the budget settlement. Activities auditing: In order to implement the content of activities auditing the NTP-NRD, auditors have audited the performance of the program contents and objectives; auditing the economics, efficiency, and effectiveness of the program. Although the audit plan has established evaluation criteria in performance auditing, during the audit implementation period, the use of such criteria in the assessment is still very modest and limited. 2.2.3. Preparing and approving the audit reports The auditing of NTP-NRD has been carried out by many audit delegation, and audit teams, so at the end of the audits, the heads of the auditing teams shall prepare a draft audit report on the basis of summarizing the audit results according to the minutes of the audits with agreement among team members on the content of evaluation, audit conclusions. The draft audit report will be reviewed and resolved by the head of the audit team before any audit team report is prepared. The head of the assigned units for the audit task will then organize the appraisal and review of the unit audit report before sending it to the General Department, Department of Legal Affairs, Department of Auditing Regime & Quality Control for controlling and evaluating according to current regulations; at the same time, send that report to the Specialized State Auditor II to join with 03 Departments to appraisal and submit to the SAV leader for direction before organizing the announcement of audit results and issuing audit reports. 2.2.4. Monitoring the implementation of audit conclusions and recommendations Monitoring the implementation of audit recommendations has a great influence on the effectiveness and efficiency of the audit conducted by the SAV in general and the audit of NTP-NRD in particular. Specialized state audit entity II is the trusted unit that has been pointed to be chair of the auditing NTP-NRD. That entity is always paying attention, focusing on and considering the management, monitoring, and inspection of petition implementation as one of the important tasks, since then they have proposed may directions, and timely solutions to improve the audit quality in this period. Specialized state audit entity II after has been checking the implementation of the recommendations of the audit, often urging the continued implementation. For cases of low petition implementation results, the entity has issued a dispatch, set a working schedule, sent a leader of the entity together with the staff of the General Division and auditor to directly discuss, to understand and to analyze more clearly the reasons why the audited unit has not implemented, as a basis for reporting to the SAV leader, and for finding solutions to solve the shortcomings together. 2.3. ASSESSMENT OF THE AUDI