Compliance audit is an independent assessment of whether a given subject matter is in compliance with applicable authorities identified as criteria.
In accordance with the provisions of Section 57 of the Public Finance (Control and Audit) Act, the Principal Auditor has powers to undertake compliance audits. The GAO on behalf of the Principal Auditor assess whether activities, financial transactions and information are, in all material respect, in compliance with the authorities, which govern government entities.
The GAO looks for material deviations or a departure from established criteria, which could be based on laws and regulations, principles of sound financial management or propriety.
Compliance audit plays an important role in ensuring that the principles of transparency, accountability and good governance are actually met.
Compliance auditing promotes transparency by providing reliable reports as to whether public funds have been utilised in line with the applicable authorities. It promotes accountability by reporting deviations from, and breaches of, authorities. This information makes it possible to take corrective action and to hold public officials accountable for their activities. Compliance audit promotes good governance by identifying weaknesses and deviations from laws and regulations and also by assessing the propriety of officials.
Compliance auditing is concerned with regularity (adherence to formal criteria such as relevant laws, regulations and agreements) and with propriety (observance of the general principles governing sound financial management and the conduct of public officials).