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FAPAD Discusses Improving Audit Quality With Staff of ADB-Assisted Projects

DHAKA, BANGLADESH (22 August 2002). A joint meeting of Foreign Aided Project Audit Directorate (FAPAD) and Project Directors of the Asian Development Bank (ADB) assisted projects was held on 7 August 2002 at the conference room of LGED Bhaban, Agargaon, Dhaka. The meeting discussed audit requirements, audit observations on project accounts and financial statements, accounting practices, and various problems with an overall objective to improve accounting and auditing practices as well as the quality of audit reports. The Bangladesh Resident Mission of ADB facilitated the meeting in order to improve quality of the audit exercise and to lessen the number of audit queries in the auditors' report.

About 72 participants from FAPAD, ADB-assisted projects, and ADB attended the discussion meeting. The FAPAD team, led by Mr. Md. Motaher Hussain, Director General, gave a keynote presentation providing guidance to the Project Directors in observing essential accounting practices as required by the Government and ADB. Toru Shibuichi, ADB Country Director, addressed the business session and stressed the need for maintaining proper project account, its audit by the authorized audit agency of the Government, and submission of the audited account to the ADB within the stipulated time. This requirement is an integral part of each Loan Agreement for any ADB-funded project for ensuring transparency, accountability, and prevention of fraud and corruption in the use of the loan proceeds. ADB strictly enforces compliance with this requirement as part of its current efforts to promote good governance in project implementation. Failure to submit the audited project accounts by the given deadline would result in the suspension of loan disbursement, which, in turn, would adversely disrupt project implementation. Head of ADB's Portfolio Management Unit in Dhaka, Charoen Bunchandranon, also spoke in the meeting.

In the keynote presentation, Director of FAPAD, S.M. Aminul Haq emphasized that auditing of project accounts is intended to assure that financial resources from the Government and donors are being managed in accordance with financial regulations, rules, practices and procedures to achieve project objectives. He stressed that proper and timely auditing of project accounts is essential for ensuring transparency and accountability in project expenditures. Project accounts must be maintained in a transparent and auditable manner acceptable to international accounting standards. These are key elements of good governance.

FAPAD has recently improved timeliness in submitting audited project accounts and now seeks to improve the quality of audit. It was discussed and agreed that recurrence of common audit observations, such as violation of financial disciplines, misuse of money, and unauthorized expenditures would be minimized, and the number of pending audit observations, which at present is very high compared to international standards, would be reduced through tripartite discussions among FAPAD, Project Directors, and concerned Ministries. The meeting also ascertained that both FAPAD auditors and projects' accounting staff need training to improve skills in their respective fields. ADB assured the participants to financially assist in the training through ongoing and forthcoming projects.