Institutional and Management System

In order to assess the efficiency and effectiveness of financial resources management of government budgetary agencies and other agencies falling within the audit jurisdiction of the RAA, nine elements have been identified. Each Element consists of several indicators, and each indicator consists of several sub-indicators. The indicators and sub-indicators will indicate the performance of agencies in managing their financial resources.
Some of the elements are not directly related to financial resources management, but have been included since they are vital to overall resource management of an organisation.

For assessment purpose, the agencies have been broadly divided into two, i.e. Government Budgetary Agencies and Other Agencies. Agencies such as Corporations, Religious Organisations, Civil Society Organisations, etc., will fall under the category of other agencies. In other words, other agencies are those agencies, which do not receive annual budgetary support from the government exchequer.

Institutional and Management System

The ability of an organisation to pursue a prudent and sound financial management practice and deliver its mandate effectively depends largely on its institutional set up and management practices including the corporate governance principles. Corporate governance encompasses aspects like size and structure of organisation, clear mandates and targets, commitment to ethical principles, transparency of decision making, internal controls including segregation of duties, internal audit, delegation of power and constitution of committees.

Therefore, this element includes indicators such as vision & mission, corporate governance, human resource management, risk management practices, monitoring and evaluation, etc. These indicators are the key aspects or the controls that would support an organisation for management of its financial resources.

The objective of assessment of institutional and management system is to ascertain to what extent the agencies have established an effective structure, system and procedures that would aid effective management of financial resources.

The auditor verifies, observes and compares the compliances to the established systems and procedures reflected as indicators and sub-indicators against specific criteria derived from applicable laws, rules and regulations and other relevant documents.

The main indicators and sub-indicators to assess and evaluate the institutional and management system are given in Table – 1.

Sl. No. Main Indicators Sub-Indicators
1 Mandate, Vision and Mission i. Clarity in Mandate (Acts, Laws, Charter and other authoritative sources)
ii. Statement of Vision and Mission
iii. Identification of Core Values
2 Corporate Governance and Establishment i. Organisational Chart
ii. Committees
iii. Internal Audit
iv. Delegation of Powers
v. Segregation of Duties
vi. Information Dissemination and Reporting
vii. Ethics and Principles
viii. Corporate Social Responsibility
ix. Strategic Plan and Operational Plan
x. Innovation
3 Human Resource Management and Human Resource Development i. HRM Policy
ii. HR Master Plan
iii. HR Committee Decision
iv. Personnel Information
v. Performance Management
4 Information Management System i. ICT Policy
ii. ICT Master Plan
iii. Information Management System
iv. Website
5 Risk Management Process i. Risk definition and identification
ii. Risk Assessment
iii. Risk Prevention and Mitigation
iv. Responsiveness and Effectiveness of mitigation measures
6 Monitoring and Evaluation i. Supervisory and Monitoring Mechanism
ii. Progressive/Periodic Reporting
iii. Quality Assurance Review/Checks