Volume 7, Issue 3, March – 204802 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165

Towards Enhanced Audit Quality in the

Government Sector of Uganda
Author details:

Simon Peter Mulati (main author) Nico van der Merwe (co-author and corresponding author)
MSc; Accounting and Finance PhD; Professor in Accountancy
Office of the Auditor General of Uganda Private Bag X6001
Plot 2C Apollo Kaggwa road, School of Accounting Sciences
P.O Box 7083, Kampala North-West University
ORC-ID: 0000-0001-8771-9058 Potchefstroom
ORC-ID: 0000-0003-4237-5495

Abstract:- Audit quality has been a major debate within government sector in Uganda (Kasigwa et al., 2013:26-27).
the financial reporting and auditing fraternity for decades This has sparked growing interest in the necessity and
as a result of major scandals. The current study seeks to importance of producing high quality audit reports (Francis,
propose improvements to the key engagement 2004:35), although Deis Jr and Giroux (1992:462) reported
performance quality control (QC) measures in the Office that there are limited audit quality studies focusing on the
of the Auditor General (OAG) of Uganda regarding pre- government sector. The current study seeks to establish,
engagement discussions, resource deployment, evaluate, and propose improvements to the key engagement
supervision, review and documentation. The research performance QC measures in the OAG Uganda, in order to
objective is to establish, evaluate, and propose recommend changes that will enhance audit quality at the
improvements to the key engagement performance QC engagement level. The QC measures considered in this study
measures used by the OAG and private audit firms in are pre-engagement discussions, resource deployment,
undertaking both in-house and outsourced public supervision, review and documentation.
universities’ audits. The study adopts a qualitative
research strategy; the multiple case studies being those at The broad aim of the study is to critically explore the
four public universities (as audit clients of the OAG), the role of engagement performance in enhancing audit report
OAG Uganda and five private audit firms to which quality in the public universities of Uganda (representative of
government audits are regularly outsourced. The study the government Ministries, Departments and Agencies as
used semi-structured open-ended interviews audit clients of the OAG), with a focus on practices in the
administered to 51 respondents while data was coded a OAG and outsourced firms.
priori and analysed using the Atlas.TI software. The study
shows that the OAG faces high workload, partial or no The study leans on agency theory to explain findings.
documentation using the Teammate audit software, poor Ittonen (2010:11-12) considers the appointment of auditors as
work assignment and resource deployment style, serving the interests of third parties, owners and management.
undefined audit supervision and review responsibilities Agency theory in the context of government sector audits
leading to an overlap of roles by senior managers, poor looks at the relationship between the agent (government
QC for outsourced audits, client audit stress from institutions) and the principals (citizens/electorates or tax
analogous audit activities by accountability institutions payers) and the role played by the auditor (agent to citizens)
and poor attitude of staff and management towards in harmonising the mismatch between interests of the citizens
quality management. The recommendations from this and government institutions. Moreover, this mismatch arises
study will not only benefit government sector auditing in from the separation of roles and responsibilities between the
Uganda, but also in other countries and are therefore of principals and agents, albeit with several complications
universal value. related to agents always seeking to maximise their personal
utility instead of the interests of the owners (Ittonen,
Keywords:- Audit Quality, Government Sector Auditing, 2010:18-23). Kurtenbach and Roberts (1994:220) argue that
Outsourced Audits, Supervision, Review, Documentation, agency theory does not only affect the principal-agent
Deployment, Pre-Engagement Discussions. relationships of the government vs. citizens, but also goes
further to the contracting out (outsourcing) of some entity
I. INTRODUCTION activities and functions.

Audit quality has been a major debate within the Despite the existence of quality management systems
financial reporting and auditing fraternity for decades as a and regulatory frameworks for financial reporting and
result of major corporate collapses and scandals such as that auditing, fraud involving huge sums of money was either not
of Enron (Neri & Russo, 2014:25; Deis Jr & Giroux, detected or was not reported on by the auditors which
1992:463) and Wells Fargo (Corkery, 2017) in the private Kasigwa et al. (2013:26) attribute to high prevalence of
sector, but also the OPM and Irish Aid 2012 scams in the reduced audit quality behaviour among auditors in Uganda.

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Volume 7, Issue 3, March – 204802 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
Likewise, there are trust, confidentiality, integrity and expectations and understanding while Lightle et al. (2017:47)
objectivity complications between the citizens/electorates found that they create “psychological safety and an enabling
and their agents (government and auditors), which casts environment” for the audit team to work in, which ultimately
further doubts over the quality of audit reports and financial enhances audit quality. They defined psychological safety to
reports produced by these agents. This signals the existence mean “beliefs about how others will respond when an
of problems with audit quality in the Ugandan government individual assumes the risk in a team of asking a question,
sector, but with limited research on the matter, hence the seeking feedback, offering a new idea, or admitting a
motivation to undertake a study in this area. The current mistake”.
levels of engagement performance QC in government sector
audits in Uganda might be non-existent or insufficient to  Quality considerations for pre-engagement discussions
ensure that quality audit reports are issued, which could result To ensure the success of pre-audit discussions,
in misappropriation of government funds not being detected policies/procedures must be in place to define what kind of
or reported on by government auditors. information needs to be discussed, the target participants,
how they are conducted and the value that this will add to the
The research objective of this study is to establish, audit. For instance, AICPA (2019:134), Audit Scotland
evaluate, and propose improvements to the key engagement (2017:8), IAASB (2019) and OECD (2004:84-85) revealed
performance QC measures used by the OAG and private audit that these discussions involve informing team members about
firms in undertaking both in-house and outsourced their responsibility for quality, the need to be sceptical
universities’ audits. The study utilises a cross-sectional throughout the audit, objectives of the audit procedures and
design involving the adoption of a qualitative research QC, the nature of the client’s business, possible
strategy; the multiple case studies being those at four public accounting/auditing problems, means of communication
universities (as audit clients of the OAG), the OAG Uganda during the audit and fulfilment of ethical requirements,
and five private audit firms to which government audits are responsibilities of audit partners, procedures to be used for
regularly outsourced. The study used semi-structured open- review and supervision of work, and threats/risks to
ended interviews administered to 51 respondents while data achievement of quality objectives and responses of the team.
was coded a priori and analysed using the Atlas.TI software. For supreme audit institutions (SAIs), AFROSAI-E
(2017a:19) and INTOSAI (2010) provide additional activities
The recommendations from this study will not only to include: rotation of staff; assessment of the possibility for
benefit government sector auditing in Uganda, but also in external quality reviews; usefulness of the report to the
other countries and are therefore of universal value. This legislature and government priorities; need for involvement
study contributes significantly to the theoretical and empirical of other stakeholders such as CSOs, the media and the public
understanding of audit quality and QC in the government to share their views and experience about the auditee for
sector. The results are therefore relevant to the OAG, key consideration by the audit team; and the financial reporting
stakeholders like parliament and civil society organisations framework of the auditee.
(CSOs), and international jurisdictions like standard setters,
academics and the research community. B. Resource deployment
Audit personnel/team management is vital for an audit
The remainder of this article is structured as follows: institution if it is to strike the right quality balance and ensure
first, a summary of recent and relevant literature is presented; optimal resource utilisation. According to the Centre for
next, the research methodology is expounded; then, the main Audit Quality (CAQ, 2019:12) as well as Maijoor and
study findings are elucidated and recommendations are made Witteloostuijn (1996:549), engagement team management
on how to enhance audit quality in the government sector. constitutes policies and procedures associated with
The article is concluded with a summary of major recruitment, retention and promotion, professional
recommendations. development and assignment of engagement teams with the
aim of getting an appropriate team mix that can deliver the
II. LITERATURE OVERVIEW highest audit quality. Accordingly, GAO (2008:14) states that
the quality objective of deploying staff is to ensure that the
This section provides an overview of available literature engagement teams possess appropriate competence and
on the five chosen QC measures, focusing majorly on capability for the engagement. AICPA (2019:129), GAO
requirements and guidelines of various professional and (2008:14) and Jaenicke (1980:70) provide that the
regulatory bodies and findings of prior research studies. engagement partner is responsible for deploying teams with
an appropriate skills mix, including specialists, to ensure that
A. Pre-engagement discussions high quality audits are performed, while GAO (1993:24)
For any tasks, preparation is vital to achievement of pre- proclaims that, where such expertise is not available in the
set objectives which is not any different with audits. organisation/firm, it can then be outsourced.
However, according to Lightle et al. (2017:46), where the
firm’s environment is characterised by fear to openly seek According to Dobre et al. (2012:204), personnel are the
clarifications and admit mistakes by teams, audit quality is most important resource to the firms. However, Balachandran
compromised. This therefore justifies the need for pre- and Zoltners (1981:801) found that despite firms having
engagement discussions because Marschman (1993) quality personnel, poor assignment or deployment affects
indicates that they allow for discussion of auditor and client their morale, motivation and productivity which affects the

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Volume 7, Issue 3, March – 204802 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
quality of their output. Similarly, there exists a scarcity of in Uganda, an engagement partner is required to spend five
skilled audit personnel especially for the government audits years on one engagement and then they are rotated until a
which may result in deployment of less experienced staff three-year period has elapsed prior to being given
resulting in poor quality audits (Chang et al., 2017:1). consideration to be involved with that client again. Of course
this is applicable in the private sector only because, for
 Quality considerations for team deployment government auditing, the Auditor General (AG) is the sole
Prawitt (1995:444) holds that assignment of audit teams head of the SAI and has no rotational clauses except for
depends on management and their deployment style, which termination in accordance with the Constitution; although the
justifies the existence of different factors that guide AG’s staff can be rotated. On the contrary, Schelker
management during team deployments. Indeed, AICPA (2013:277) reported that regular rotation of staff and/or audit
(2019:134), Balachandran and Zoltners (1981:801-802), firms means that new audit teams need more time to
KPMG Canada (2017:14) and Udeh (2015:3) reported that understand the entity, which may impact negatively on the
when assigning audit teams, the major consideration is their quality of audits performed, especially in the first years of
competence and capability because, for clients, what matters learning.
is the team’s competence and not how big the firm is. They
indicate that the competence of teams can be assessed using: C. Engagement supervision
team members’ experience with similar audits; understanding According to GAO (1993:26; 2008:21), INTOSAI
of professional standards, legal and regulatory requirements; (1998:53; 2010) and Salehi and Rostami (2010:1668), the
practical training and participation; first time versus quality objective for audit supervision is: to provide coaching,
continuous engagement; quality of internal controls; mentoring, direction, monitoring and guidance to
expertise/specialist skills; knowledge of the client’s industry; engagement teams at all audit stages to ensure that work is
ability to apply professional judgement and scepticism; and performed and complies with professional standards; that
understanding of the firm’s QC policies. significant exceptions are identified and reported/resolved;
engagement objectives are achieved; audit documentation is
Dobre et al. (2012:204-208) provided a regression complete and supports findings, opinions, conclusions and
model for team assignment based on factors such as: financial recommendations; reviews are conducted; staff members
performance indicators; account significance; review, develop their competence and knowledge; and feedback from
supervision and delegation skills; and time allocation to auditees is managed. To operationalise this objective, Egan et
audits (where, for first year audits, more time is given to less al. (2016:6) suggested the need for a supervision policy which
experienced team members and less time to the more prescribes requirements for effective supervision of
experienced ones while for a highly risky/complex client engagements and work of engagement teams.
environment, time is increased irrespective of the team’s
experience levels). Likewise, Udeh (2015:4-5) revealed that  Supervision QC activities
team continuity is also vital during deployment because it AICPA (2019:135), GAO (2018:90), IAASB (2009b),
minimises ‘information asymmetry’ – a key feature of agency ISCA Singapore (2016:25), Jaenicke (1980:70), and KPMG
theory. Canada (2017:8) revealed that engagement supervision
involves: tracking the audit progress and checking whether
 Training audit objectives are being met; checking that conclusions are
Undoubtedly, irrespective of a firm’s deployment style, supported by relevant audit evidence; outsourced audits and
Udeh (2015:4) points out that provision of training and/or work of external experts is closely supervised; considering
continuous professional education (CPE) enhances team competence and capabilities of individuals on the team;
knowledge for professional standards and industry and thus addressing/guiding teams on significant findings; considering
the quality objective of CPE is to ensure that all staff maintain to modify the audit approach and resolve judgemental
the knowledge and skills necessary for conducting audits differences; identifying matters for consultation by the
competently. For instance, GAO (2008:15) revealed that they engagement team members with appropriate skills; assessing
require team members to achieve at least 80 CPE credits in the sufficiency of available time to complete the audit;
each two-year period, of which 24 credits must be in subjects instructing and guiding teams especially about the objective
related to government auditing and that staff who fail to get of the audit procedures performed; reviewing the work
the CPEs are eliminated from the engagement teams. Staff performed; and dealing with differences of opinion.
must also prepare an annual individual development plan
which acts as a basis for CPE while the human resources (HR) D. Audit review
department provides periodical reports to management The OECD (2004:20) defines engagement review as
showing the extent of staff compliance with CPE “assessing the adequacy of audit planning, execution and the
requirements. resulting report”, while Asare and McDaniel (1996:139) as
well as Fedor and Ramsay (2007:91) denote that it involves a
 Rotation of staff rigorous review of specific areas of the audit to check that the
To eliminate threats to independence, it is desirable that teams implemented the plans effectively and appropriately,
audit institutions maintain a policy on regular staff rotation to significant issues/errors have been identified and
avoid overstaying with one client. For example, Scott resolved/reported, feedback is given to preparers to improve
(2003:206) indicates rotation of assignments every five years their performance, conclusions and audit reports are well
especially for managers, while ICPAU (2014:6) reported that supported, auditing standards and other legal and regulatory

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Volume 7, Issue 3, March – 204802 International Journal of Innovative Science and Research Technology
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requirements are complied with and that an appropriate audit audit evidence while appropriateness considers quality
report is issued. Ordinarily, audit reviews are categorised as (relevant, valid and credible/reliable evidence).
either hot reviews (conducted during the engagement) or cold
reviews (conducted after the engagement).  Document retention, archiving and destruction
According to AFROSAI-E (2017b:21; a:40) and IAASB
 Types of reviews (2018:18-19), audit institutions should design policies that
In terms of review types, Agoglia et al. (2010:27) define the retention, archiving and destruction period of audit
provide for electronic reviews that could be done through documents to ensure that they are available whenever needed;
email or electronic workpapers (WPs) which allows especially in relation to confidentiality of the archived
reviewers to review preparers’ work from a remote location information, the form in which they will be kept, period of
and hence reduce turnaround time. In contrast, Favere- retention, retrieval procedures, destruction period and
Marchesi (2006:53) points out that reviewers can also procedures. Consequently, AFROSAI-E (2017a:38), IAASB
undertake reviews in-person either concurrently (preparers (2009a), ICAEW (2010:15) and ISCA Singapore (2016:31)
and reviewers meeting face-to-face to review and discuss provide for completion and archiving of final engagement
work together) or post review (a face-to-face meeting files after 60 days from the audit report date and that
between the reviewer and the preparers to discuss review thereafter, no deletions or amendments should be made on the
notes after the review has been completed). However, he information in these files, while GAO (2008:27) and IAASB
disclosed that concurrent reviews may be dominated by (2009a) suggest that the retention period for documents
influential preparers, hence impairing the judgement of the should be no less than 5 years from report issuance date. The
reviewer about the team’s performance while post-reviews ICPAU (2014:28) confirms that documentation by Ugandan
significantly enhance the performance of the teams because firms should not be kept for a period of less than 7 years.
preparers may not feel comfortable to contribute freely when
in concurrent sessions with their reviewers.  Contents of audit documentation
The IAASB (2009a:151) indicates that documentation
 Audit review quality considerations for a smaller entity is not as comprehensive as for the larger
AFROSAI-E (2017b:25; a:23), AICPA (2019:135) and entities. However, according to AFROSAI-E (2017a:37), the
IAASB (2018:38-39; 2019; 2009b) revealed that review form and contents of WPs “should be sufficiently complete
involves checking whether: the audit plan was followed and detailed to provide a clear understanding of the audit”.
during audit performance; that all working papers and steps AFROSAI-E (2017b:47-48), IAASB (2018:18-19) and
are adequately completed and signed off; significant ICAEW (2010:2) suggest the need for audit institutions to
variances from the Overall Audit Strategy (OAS) are document their quality management system to ensure that all
documented; adequate coverage of all material areas is personnel understand it and their roles towards quality,
achieved; related party relationships, transactions and especially in relation to: a firm’s quality objectives; risks and
disclosures are considered by the team; significant risk assessment procedures performed; responses to assessed
judgements made are well documented and supported; risks and monitoring and remediation processes; materiality
significant matters are resolved or reflected in the (basis, qualitative and quantitative, revisions made); audit
conclusions; whether work has been performed in accordance team compliance with audit regulations; and in case of
with legal, professional and other regulatory frameworks; outsourcing, the basis used to determine the appropriateness
appropriate consultations were made and well documented of resources from a service provider.
and implemented; objectives of audit procedures were
achieved; the need to revise the nature, timing and extent III. METHOD
(NTE) of work performed (audit scope); work performed is
well documented with sufficient and appropriate evidence; Due to the complexities and differences in engagement
and timing, development, retention and deployment of performance and audit quality perceptions and
competent and capable staff. interpretations, the interpretivist paradigm was adopted for
this study. Furthermore, a qualitative research
E. Engagement documentation strategy/approach and an inductive process were used to
AFROSAI-E (2017a:35; b:20) and GAO (2018:190) collect data based on the participants’ understanding of the
define engagement documentation as a record of work context and perceptions in which engagement performance
performed throughout the audit, results obtained, and contributes to high quality audits. A multiple case study
conclusions reached by auditors. According to AFROSAI-E involving four public Ugandan universities (as government
(2017a:35), GAO (2008:22) and IAASB (2004; 2009b), the sector audit clients), the OAG and five private audit firms
quality objective of engagement documentation is to ensure (outsourced auditors) was adopted which enriched the
that auditors prepare on a timely basis audit documentation diversity of discussions and ideas during data collection.
that provides a sufficient and appropriate record of the basis Open-ended, semi-structured interviews were conducted with
for the auditor’s conclusions and the report/opinion reached the aid of an interview guide that was carefully developed
and evidence of work performed in compliance with the based on the literature review conducted.
auditing framework and applicable legal and regulatory
requirements, while Backof (2015:2177) emphasises the The study covered 51 respondents spread across the
value of engagement documentation especially in negligence cases selected for the study and the selection of respondents
lawsuits involving the firm. Sufficiency looks at quantity of was done using purposive sampling, as alluded to by

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Groenewald (2004:8), whereby possession of experience Fig 1: Word cloud for the most quoted QC measure
relating to engagement performance and audit quality
especially in the government sector was a key consideration.
The distribution of interviewees are indicated in Table 1:

Table 1: Number of interview participants per region

Case Geographical regions in Uganda
Northern Eastern Western Central
University 1 3
University 2 4
University 3 3
University 4 3
OAG Uganda 4 6 4 17
Private audit 7
firms
Total 11 6 7 27

The study collected both primary and secondary data,

whereby primary data was collected through observation and
in-depth semi-structured one-on-one interviews and
discussions with respondents while secondary data was ‘Audit’ and ‘quality’ were the most quoted words by
obtained through reviewing available information provided participants, which further confirms the high knowledge base
by the respondents as additional evidence, although with a of the selected respondents towards the study phenomena, as
major guiding principle as suggested by Mason (2010:2), illustrated below.
being saturation of themes. In line with the interpretivist
approach, the research questionnaire was shared with the Fig 2: Word cloud for the most quoted words
participants beforehand, to ensure that they have an
understanding of the key areas due for discussion and this was
divided into two sections for the auditors and the auditees.
The study adhered to research ethics requirements, including
voluntary and anonymous participation.

All interviews were recorded and later transcribed. The

ATLAS.ti software package was used to analyse, identify and
organise themes from interview transcripts by employing an
a priori coding approach.

‘Supervision’ was the most quoted QC measure closely

followed by ‘deployment’, with the least mentioned being
‘outsourcing’ as illustrated in Figure 1 below. This signifies
the relevance that participants attached to audit supervision
and deployment in enhancing quality of government audits as
well as the fact that audit outsourcing is a new area in
government auditing that is perhaps not well understood and
appreciated by the majority of the participants, hence the need
for greater sensitisation by the OAG towards its staff and
stakeholders.

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Volume 7, Issue 3, March – 204802 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
IV. FINDINGS AND RECOMMENATIONS B. Resource deployment, training and coaching
The study results highlighted that the OAG has no
The study findings are structured in accordance with the deployment policy but instead, the assignment of work is
five identified QC measures as coded themes from the subjectively left to the discretion of supervisors by virtue of
interview transcripts: their experience, which is inconsistent with conceptual
arguments by CAQ (2019:12) as well as Maijoor and
A. Pre-engagement discussions Witteloostuijn (1996:549) that an audit institution must put in
The study results revealed that unlike the outsourced place policies and procedures associated with professional
firms, the OAG has no policy or clear guidelines to govern development and deployment of engagement teams with the
pre-engagement discussions. Fortunately, participants aim of getting an appropriate team mix that can deliver the
recounted that the OAG’s audit methodology embedded in highest audit quality. In terms of approach/style, findings
the Teammate software provides for pre-engagement team showed that the OAG has adopted a structured deployment
discussions and supervisors sign off the QC checklist to style whereby deployments are carried out at office-wide
confirm they were held. This information is critical for the level, at directorate level and at entity and audit areas level.
OAG, regulators and standard setters to ensure that standards, This practice is not much different from previous literature
regulations and QC policies/procedures are developed to review revelations by AICPA (2019:129), GAO (2008:14)
guide governance, conduct and quality management for pre- and Jaenicke (1980:70) that engagement team deployments
engagement discussions in SAIs and outsourced firms. are originated by engagement partners and cascaded down to
managers and team leaders.
Findings also revealed that the OAG and outsourced
firms undertake several pre-engagement QC activities such as Despite the absence of a deployment policy, the study
discussing engagement tasks/scope, assignment of teams to results revealed several guidelines and practices utilised by
specific audit areas and assessing team knowledge of audit the OAG, such as the audit manuals and methodology
methodology, approach, framework, materiality and embedded in the Teammate software which provides a
sampling concepts. Participants also emphasised the need to ‘competency matrix’ for assessment of staff competences and
review and discuss the effects of prior year audits, those kept the OAG HR manual. These manuals guide deployments at
in view and QC issues, materiality level and base, current directorate and team levels albeit that they are characterised
media and public attention towards the audit or entity, by very low or no involvement of lower level supervisors,
preliminary risk discussions, agreeing on the approach for resulting in the assignment of teams with an inappropriate
highly risky areas, threats/risks to achievement of quality and skills mix.
responses, and audit timelines (although findings indicated
that this is limited by the OAG’s failure to establish the unit More remarkably, study findings revealed several
cost and time per audit). limitations to OAG deployments, notably the non-
involvement of the HR department in deployment activities,
Moreover, the study findings further confirmed that differences in staff competencies, limited staff training, the
teams discuss the different data analysis tools and procedures, negative attitude of staff towards work and rotations, the
audit libraries to be used, objectives of the thematic and absence of a database of multi-skilled staff to ensure an
compliance areas selected, the need for stakeholder effective skills mix, undefined deployment considerations in
involvement to provide pointers, the possibility for external the OAG HR manual, and a mismatch between the Shared
assurance reviews, the existence of an acceptable financial Overall Risk Assessment (SORA) results and deployments.
reporting framework and agreed upon audit approach, Fortunately, participants disclosed that the OAG had
integrity of management, the consistency of audit evidence to procured and installed a Management Information System
be collected, the availability of staff, the competency and (MIS) for capturing and storing key staff information in order
capacity of team members and their supervisors/reviewers, to enhance effectiveness, equity and impartiality in staff
entity policies and their implications for the audit, lessons deployments and promotions.
learnt and challenges from previous engagements plus
appropriate responses, the extent of documentation and As opposed to OAG deployments, the study results
agreeing on appropriate responses to emergency situations revealed that private firms’ (i.e. outsourced) deployments are
(such as COVID-19) for business continuity and staff safety. carried out continuously throughout the year to ensure
effective resource utilisation guided by the results of entity
 Recommendations risk assessments and that most of their newly recruited staff
Even though the study findings revealed that pre- are placed in a pool to obtain an overall understanding of all
engagement discussions occur and are reasonably effective, industries prior to specialisation at senior and senior associate
the OAG should publish a policy and clear guidelines to levels.
govern pre-engagement discussions as this is currently
missing. The standard setters and regulators also need to The study findings also suggested that the OAG needs
develop regulations and standards that require audit to adopt the ‘pooling of resources’ approach to enhance
institutions (government and private) to conduct these efficiency and effectiveness in its deployments and put in
discussions and the guidelines and accountability place an effective monitoring, communication and
mechanisms. documentation system that guarantees provision of all
available deployment options without bias. Indeed, the study

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results reported on a number of benefits of pooling resources envisaged when the OAG adopted the ‘integrated audit
such as encouraging recruitment of multi-skilled staff to approach’, whereby some sectors were rotated amongst
ensure an appropriate team mix, universal access to directorates to reduce their workload, though it was not made
specialists by all teams, timely commencement and into policy. However, the study results suggested that this
completion of assignments, elimination of idle/slack time practice can only succeed if the OAG puts mechanisms in
common with the OAG directorate system, proper place to deter rotated entities and staff from meeting again
deployments and work allocation, eliminating the directorate sooner and if the rotation relates to sectors and not entities,
system and its related challanges of belonging to one and not given that the OAG utilises a sector-wide audit approach
the other, encouraging joint audit planning and that staff are which makes it difficult to rotate an entity out of a sector.
able to learn from each other and specialise. Notwithstanding
the benefits, participants disclosed likely limitations to the In terms of CPE, the study results highlighted that the
pooling system such as difficulty to supervise staff who are OAG provides in-house and international professional
assigned tasks under different supervisors, resistance from workshops, sponsors staff to attain professional qualifications
staff who feel affiliated to certain directorates or entities and while providing opportunities for postgraduate education
the specialised nature of some directorates and sectors. scholarships, pays annual membership subscriptions for its
staff, has an in-house standards forum that provides staff
Participants disclosed that deployments largely depend CPE, and that the OAG is an ACCA global certified employer
on the competency, qualifications, experience and skills of which means that its work automatically earns its staff CPE
the engagement team and experts and suggested other factors points. However, findings cautioned that the OAG has not
to include the team member’s industry experience, placed much emphasis on staff CPE compliance, hence
understanding of the audit objective, management leadership attending CPE programmes is a personal initiative of each
skills and training levels and knowledge of prior year audit staff member. More specifically, the study findings revealed
issues, the legal, auditing and financial reporting frameworks the OAG’s inability to set the minimum annual mandatory
and audit methodology adopted. Moreover, study participants CPE hours for every staff member, staff frustration due to
recommended considerations such as sufficient time stagnated career growth and development, and that some staff
availability, timelines for reporting, ethical considerations obtained their professional qualifications to secure their jobs
like team independence, staff availability, supervision and and consequently have reduced interest in CPE and
review skills and levels needed, workload in a particular registering with professional bodies. This is in contrast to
directorate, the availability of partners and cost elements for results found for outsourced audits that staff CPE in private
the audit. firms is well guided by policies, staff are sponsored to attain
the mandatory 40 CPE hours, and new staff must qualify
The study results also highlighted that the OAG ensures professionally within three years of appointment.
that each team has a minimum of two auditors and a
supervisor at all supervisory levels and that they have the Training in the OAG faces several obstacles such as the
ability to mentor and coach others, while other considerations absence of a training plan and policy, detachment of the HR
include team members’ soft skills (attitude, teamwork, department from the audit division, a poor appraisal system,
character and commitment) and their average learning curve. no structured training programme and considerations for
Other reported deployment considerations by the OAG selecting staff for trainings, promotions without management
include SORA results (risk level of the entity), budget size of and leadership training which limits staffs’ ability to perform,
the entity, the nature of the audit assignments, the auditors’ lack of monitoring and follow-up mechanisms to report the
aging list, gender sensitivity (where female staff with impact of its trainings to its staff and quality of work, and that
established families are given due consideration), staff training abroad is preferred to local trainings despite it being
flexibility and age (where staff of advanced age are deployed expensive, hence denying staff training opportunities.
in areas with less geographical and distance difficulties), the However, findings also disclosed that the introduction of the
effects of disasters such as COVID-19 and the pooling of staff MIS with a training module should resolve most of these
to avoid redundancies. impediments because all staff capacity development
programmes and training needs will be captured, uniformly
The study results revealed that despite the OAG having considered and monitored.
a three-year rotation policy for its teams and outsourced
firms, it is consistently implemented for outsourced firms, Participants reported that, despite the OAG putting in
unlike OAG teams, which breeds complacency, familiarity place a coaching and mentoring committee, it failed to
and demoralises staff due to a lack of new challenges. This function due to limited time and high workload, which
was attributed to the existence of staff with specialities whose revelation is inconsistent with study findings from the private
movements are limited and the desire to retain some staff with firms that reported the existence of a mentoring policy,
institutional knowledge to reduce the learning curve timelines whereby every staff member is assigned to a mentor and that
for new teams. Given the viability and consistency involved mentoring and coaching is part of the firm’s annual
in the OAG rotating outsourced firms after three years, it performance review criterion.
would be prudent that the office also replicates this for its in-
house audit clients to act as a complementary control for the
already inconsistent audit team rotation. Actually, the
findings indicated that this particular practice had been

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 Recommendations member’s annual development plan; there must be well-
The findings are relevant to the OAG to ensure that it documented considerations/criteria for selecting staff to
puts in place deployment guidelines to guarantee uniformity, undergo different trainings; ICPAU must be partnered with to
consistency and equity in resource deployment and work develop and implement a clear monitoring and follow-up
assignment, to revise the OAG HR manual to ensure that mechanism for its staff CPE and training activities; and more
deployment considerations and roles are clearly spelt out, to urgently full operationalisation of the training module in MIS
include the HR department in deployment decision making must be facilitated to ensure that all staff capacity
and operationalise the HCM module in MIS to ensure that all development programmes and training needs are captured,
staff skills and competences are captured and appropriately uniformly considered and monitored.
utilised to ensure a proper skills mix, effectiveness and
impartiality in staff deployments and promotion. This area is C. Engagement supervision
also vital for professional bodies like AFROSAI to undertake Study participants revealed that the OAG and
regular QA reviews of the QC practices of SAIs to confirm outsourced firms had no supervision policy but instead follow
that they can guarantee quality for government audits and supervision guidelines provided for in International Standard
safeguard public interests. on Quality Management (ISQM) 1, audit manuals, as well as
audit framework and methodologies embedded in their audit
To overcome the challenge of specialised directorates software which has enhanced timely engagement supervision,
and sectors brought about by the ‘pooling of resources’ especially in receiving feedback from teams and that
approach, participants suggested that the respective principal supervision is even more stringent with private firms where,
auditor (PA) and senior principal auditor (SPA) be retained for any supervision deficiencies established, teams are asked
permanently for learning continuity purposes while other to re-work and respective supervisors bare the opportunity
staff are put in the pool for appropriate skills mix or that the cost of a poor performance rating.
directorate system should be retained with directors who
make requests for staff from the pool, although with the worry The study results revealed several factors utilised and/or
that the pooling system may not succeed under the directorate supposed to be utilised by the OAG in engagement
system because of directors’ bias in requesting the staff they supervision, among which was the competence of audit staff
want and rejecting others. and supervisors, the extent of training provided to supervisors
and their social skills, the experience of team
The effects of the COVID-19 disaster have been leaders/supervisors and supervision workload although with
catastrophic and the magnitude of damage is still unknown to a suggestion for the OAG to establish an ideal number of
many and consequently the OAG needs to develop a business audits per staff category, which are coherent with the
continuity and disaster recovery plan (BC&DRP) to ensure arguments of GAO (2018:86-91) that the NTE of supervision
that appropriate responses to emergency situations exist for is influenced by the skills and proficiency of supervisors,
business continuity and staff safety. Standard setters also supervision load, experience and progress tracking.
need to develop standards that provide allowed practices to
audit institutions in periods of disaster. The results from the study identified vital engagement
supervision QC activities like the coaching and mentoring of
An increase in the regularity of hot reviews is teams, monitoring audit progress, assessing the team’s
recommended to curb the risks of familiarity and knowledge and applicability of the auditing and accounting
complacency due to the non-rotation of directors, while in the frameworks, checking the appropriate documentation of work
long term it is recommended that the OAG rotation policy in Teammate and the appropriateness of conclusions derived,
must be reviewed to three years for auditors and lower level adherence to engagement objectives, the adequacy of
managers and five years for senior and top management, a information flow from entities based on requests made, the
suggestion which concurs with the disclosure by ICPAU appropriateness of reviews and checking whether significant
(2014:6) and Scott (2003:206) that the engagement partner issues are being identified.
and managers are rotated after every five years respectively.
Regrettably, study participants indicated that most OAG
Regarding CPE, training and coaching, the OAG needs supervisors micromanage their staff instead of empowering
to set the minimum annual mandatory CPE hours/points for them, which leaves them feeling demoralised and results in
every staff member; staff need to be sponsored to attend CPE limited value addition, a view shared by Dogas (2011:57)
programmes; a coaching and mentoring policy and plan needs who found that excessive supervision leads to
to be developed to enhance knowledge sharing across teams; micromanagement which in turn negatively affects employee
its career growth and development programme must be morale and slows down the audit. Equally important, the
revamped and a policy developed that provides for a plan and results of the study revealed the existence of excessive
procedures that ensure meritorious promotion of staff based supervision levels, undefined supervision roles and
on their competence, skills and performance; and a maximum responsibilities, that often results in the overlapping of roles
period must be set within which staff must attain professional by top level supervisors, limited training of managers in
qualifications and register with the ICPAU. Also, the OAG supervisory activities, poor information sharing and
needs to develop a training policy with the HR department as teamwork among supervisors, inadequate use of Teammate
the key accountability unit; a structured training by supervisors, delayed supervision of teams and work which
programme/plan must be developed based on each staff results in tension when supervisors ask questions that they

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should have asked during fieldwork, delayed response to audit portfolio, this is not done by most OAG teams because
coaching notes by teams and high workload amidst low of the absence of proper follow-up mechanisms and high
staffing levels. Distressingly, the study findings further workload.
revealed that most OAG supervisors cannot differentiate
between audit supervision and review, which results in the The study results reported factors influencing the NTE
fusion of these activities. They then spend a lot of time of review to include the audit type being performed, the
performing audits instead of supervising, which results in experience and competency of reviewers, prior year audit and
poor supervision and delay in the production of reports. QC issues, the assessed risk of material misstament (RMM),
knowledge of the client’s business and industry, review
 Recommendations workload, the timelines of the assignment, risk levels of the
These findings are significant to the OAG and entity, the extent of reviewer involvement in the audit with
outsourced firms to ensure that they develop a supervision close involvement meaning minimal reviews, the timing of
guide for their supervision activities with specific audits, cooperation and timely provision of information by
consideration for factors influencing the NTE of supervision clients, and the availability of staff whereby staffing gaps
and supervision roles or QC activities. It is further imply that the reviewers have to prepare as well as review
recommended that supervisors receive specific training work which limits the quality and timeliness of reviews
interventions on supervision best practice. performed.

D. Audit review According to Dal Bo (2006:204) and James (2000:333),

According to the study findings, the OAG does not have regulation capture takes place when legislations are set up to
defined eligibility criteria for reviewers but it is based on serve the greater good but end up benefiting only a few people
positions held by reviewers. An example of such a case can with the power to influence activities. Accordingly, a rather
be seen with engineering audits whose reviewers are not astounding revelation by the study results was that the OAG
engineers, but because they hold higher positions, they review has no independent local regulatory body to guide its
these reports. However, this casts doubts on their quality standards and regulation adoption and consequently the OAG
since study findings disclosed that it is not the most effective is a self-regulating entity and at risk of regulation capture.
review approach because being high up in the hierarchy does This therefore justifies the strong drive to have a formidable
not mean the reviewer has the capacity to review all engagement performance QC framework to counter these
assignments. The OAG thus needs to build specialised teams threats and forms a new body of knowledge to ignite debates
to ensure a clear review line from the lower to top levels. among regulators, stakeholders and scholars, especially in
Astonishingly, participants revealed a number of situations assessing the likely existence of regulation capture attributes
whose manifestation leads to alteration in the review levels in OAG activities and audit quality effects.
whereby some audits may be audited by SAs under direct
supervision of directors and consequently bypassing all other Participants also disclosed limitations like the absence
review levels. These situations include limited time to finalise of a review policy or criteria, undefined review roles and
audits, type of requesters (e.g. parliament), high political reliance on reviewers’ knowledge and experience which are
sensitivity, confidentiality and risk levels of the audit. In subjective and lead to review inconsistencies. They also
contrast to the OAG, the study findings reported that expounded other limitations that are congruent to those
outsourced firms have clearly documented review criteria and reported by Jaenicke (1980:73) such as the use of incorrect
guidance and hence this offers a benchmarking base for the audit procedures, inappropriate timing of reviews especially
OAG to scale down on the review levels in order to enhance by directors (i.e. errors slip through to the audit report),
efficiency in engagement reviews. delayed response to coaching notes, competence of reviewers
and lack of training for reviewers, leading to capacity issues
The OAG has adopted email or electronic reviews and inconsistencies.
(Zoom meetings) which was necessitated by the COVID-19
pandemic and the use of Teammate software through which The study results confirmed the likelihood of reviewers
coaching notes and subsequent feedback are administered, relaxing their reviews as a result of placing too much trust in
albeit with concerns over team delays especially when staff, hence gaps pass undetected, a condition referred to by
coaching notes are misunderstood. Other notable review Rich et al. (1997:481) as “reviewer’s susceptibility to the
types reported include joint reviews with all reviewers and the preparer’s work paper stylisation” because it involves
team in one place, desk or face-to-face reviews that encourage preparers preparing WPs in a manner intended to
staff mentoring, field reviews for inspections and group influence/persuade the judgement of reviewers and/or
reviews with the team’s supervisor as the lead. Other review conform to their preferences. Moreover, other significant
types highlighted by participants include making independent study discoveries include the overlapping of roles which
calls to clients to corroborate information provided by teams, signals possible mistrust and failure to follow the review
the use of review checklists, pre-issuance (hot) reviews by the eligibility criteria prescribed by SORAs, whereby the risk
Quality Assurance and Audit Development (QAAD) ranking of entities would influence their review levels and
department, peer reviews and inter-directorate reviews staff deployment.
although with a warning that despite the intention of peer and
inter-directorate reviews being perfection of selected audits
and replicating this knowledge and practices to the remaining

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In like manner, the study results found that peer reviews documentation, adequacy of the audit plan/OAS, the attitude
demoralise staff because of fault finding by reviewers instead of the audit teams towards documentation, the risk level of
of understanding the basis of the team’s conclusions, the the entity or audit, the auditing standard requirements, the
presence of a multitude of review levels within the OAG availability and competency of audit teams, the extent of audit
which makes accountability for work review difficult, the fact procedures developed, and the agreed upon minimum
that Teammate reviews have not only killed the creativity and required level of documentation for all audit components.
innovativeness of reviewers but also made review an event
where reviewers just tick off processes, copy and paste In regards to information archiving, retention and
information and then sign off without assessing the quality of destruction, the study findings revealed that this is governed
the information provided and that outsourced firms are and guided by the 2017 Treasury Instructions, the National
limited in their reviews by their small size, capacity and high Records and Archival Act, and the OAG Records and
labour turnover, limiting their ability to exercise segregation Archives Policy that stipulate a retention period of seven
of duties. years prior to destruction for the OAG and outsourced firms.
On the other hand, this does not apply to the OAG’s
 Recommendations consolidated audit reports that are permanently kept.
The findings are significant to the OAG and outsourced Outsourced firms retain documents until they get
firms to ensure that they develop comprehensive audit review communication from the OAG about their destruction, since
guidelines defining circumstances under which many review all working papers belong to the OAG. Some study
levels can be merged to eliminate bureaucracy, the eligibility participants cited discomfort with the seven-year retention
criteria for reviewers, ensure promotion of specialists to period as being too short, given that there is no legally defined
higher positions with the capacity and competence to review period within which OAG reports can be challenged in courts
lower level staff, documented follow-up mechanisms to of law and due to delays by the Public Accounts Committee
ensure replication of agreed upon review practices to all (PAC) in discussing OAG reports.
audits that were not selected for review, and emphasis on
operationalisation and compliance with SORA review In respect to audit project closure or archival period,
guidelines. Likewise, outsourced firms need to structure and despite most regulatory bodies providing for closure of
perform their audits systematically to avoid poor quality engagements and files after 60 days from the audit report date,
reviews resulting from low staffing levels. Parliament needs the current study found that outsourced firms, especially from
to take an interest in developing a local board or commission the ‘Big 4’, adjusted their archival periods to between 20 and
responsible for guiding the OAG in the formulation, adoption 45 days to ensure prompt closure of projects ready for any
and implementation of different QC policies, standards and subsequent external assurance reviews, while the OAG’s
regulations, while standard setters should ensure that as they archival period was not specified which casts doubts over the
issue standards, there are clear and stringent conditions to be appropriateness of its policy. Notwithstanding the
fulfilled for their adoption to avoid possible regulation documentation challenges of the OAG, the study findings
capture. reported that the adoption of the Electronic Document
Management System (EDMS) module in MIS will ensure
E. Audit documentation easy retention, archiving and retrieval of documents and that
Study participants disclosed that the OAG utilises its the OAG has also recruited professional staff to manage the
own records and archives policy, the National Records and records and archives department.
Archives Act, professional standards, audit manuals and audit
methodology for guidance on documentation, archiving, The study participants revealed various considerations
retention and destruction, while private firms additionally for determining the sufficiency and appropriateness of audit
utilise the ICPAU documentation guidelines. Alarmingly, the evidence to include the significance of risks identified
study results also showed that most OAG participants were (RMM), audit procedures carried out, materiality levels and
not aware of the existence of a documentation policy which base used, corroboration of evidence by another professional
perhaps indicates that it is poorly communicated and/or there third party and documenting issues that are dropped and risks
is poor staff attitude towards documentation. that are identified, but which never materialised. Particularly
for appropriateness, the study highlighted some of the
Generally, the study results identified some factors both attributes of a quality information source to include third-
desirable and practiced by the OAG and outsourced firms party/external, auditor generated, original, written
infuencing the NTE of documentation, among which was representations and the reliability of financial internal
complexity of the client’s business, level of auditee controls and relevance of evidence to conclusions reached.
automation and auditors’ operations and strength of controls
in the entity. The study findings also reported reliance on the  Recommendations
auditor’s professional judgement, the requirements of In light of discomfort with the seven-year information
Teammate and the ‘physical file submission structure’ to retention period, indefinite storage of audit documents is
guide the extent of documentation needed for the final audit recommended and the Ugandan parliament should amend its
report and management letters (MLs), stakeholder interests in regulations to match the retention period with the maximum
the audit/entity, time pressures and the workload. Other delay period allowed to the PAC for discussing OAG reports.
considerations identified include availability and quality of
information, whereby low quality means collecting more

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The study findings also imply that the OAG needs to audit reports; the need for standard setters to revise
revise its documentation and archiving policy to International Standards for Supreme Audit Institutions
comprehensively define QC activities such as the NTE of (ISSAIs) to provide guidance on quality management for in-
documentation, the role of supervisors and audit teams, house and outsourced government audits and allowed
considerations for sufficiency and appropriateness of audit practices to audit institutions in disastrous periods; while
evidence, increased sensitisation and training of staff to researchers need to assess the impact of government audit
improve awareness and applicability of the policy, and setting outsourcing on the OAG’s workload and audit quality and the
the maximum audit archival period to ensure timely project effectiveness of ISSAIs and International Standards on
closures. Likewise, there is need to document supervision and Auditing (ISAs) triangulation in conducting and reporting on
reviews carried out on working papers for outsourced audits government audits. The results are relevant to the OAG, key
to confirm compliance with terms of reference (TORs) and stakeholders like parliament and CSOs and international
QC measures, to fully computerise its operations such that jurisdictions and standard setters in the development of
documents are kept electronically indefinitely to meet policies, regulations, standards and guidelines for
emergencies such as legal challenges and fully operationalise improvement of government sector auditing.
the EDMS module in MIS to enhance documentation
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