ISSAI 1240

ISSAI 1240
practice note 240
Consideration can be given to the following in terms of the more intensified planning process:
Procurement System
• Enquire from management whether a procurement system has been developed, implemented and deals
with both the acquisition of goods and services and the disposal and letting of state assets;
• Inspect the procurement system documentation for any requirements that may lead to the system not
being fair, equitable, transparent, competitive and cost-effective;
• Compare the procurement system documentation to the applicable legislation and requirements;
• Inspect the procurement system documentation in order to determine whether it deals with standards or
benchmark requirements for such a system.
Conflict of Interest
• Through discussions with management and inspection of the procurement system documentation and
minutes of tender committee meetings, inspect whether procurement officials and other role players:
– recognized and disclosed any conflict of interest that may arise;
– treated all suppliers and potential suppliers equitably;
– did not use their position for private gain or to improperly benefit another person;
– did not compromise the credibility or integrity of the procurement system through the acceptance
of gifts or hospitality or any other act;
– were scrupulous in their use of public property;
– assisted accounting officers/authorities in combating corruption and fraud in the procurement
system.
• Enquire and inspect whether the institution implemented controls to report conflict of interest and that
these controls have been communicated to staff;
• Inspect any supporting documentation to ascertain if the system of compliance with ethical standards
was in place during the period under review.
Improper Conduct/Failure to Comply
• Enquire from management whether any allegations of improper conduct or failure to comply with the
procurement system were made during the period under review;
• For any breach of, or failure to comply with the procurement system identified during any other part
of the audit process, check that this has been reported and dealt with appropriately. Also confirm that
appropriate authorities have been alerted;
• Enquire from management whether any instances occurred during the period under review of bidders
committing fraudulent acts in competing for a contract. If such instances did occur, enquire from management
whether proposals from such bidders were rejected;
• If the audited entity is using a mechanism for whistle-blowers, inspect how the cases are reported and
dealt with in the organization. Discuss and inspect the results of any whistle-blowing with internal
audit and inspect the remedial actions taken in cases of non-compliance;
• Enquire from management whether complaints regarding procurement processes / information were
received from the relevant stakeholders during the period under review. If such complaints were received,
determine what action was taken.
The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements 231