Government auditors ensure that public funds are used in accordance with mandates and financial standards. Internal auditors review government agencies’ financial records, while external auditors verify non-governmental recipients’ compliance with agreements. Audits in the public sector carry greater accountability and can result in civil and criminal consequences. Internal auditors review agency records, while external auditors inspect suppliers, grantees, and contractors who receive government money. They also assess whether the government is doing its job.
A government auditor assesses whether public funds were used in accordance with the mandate associated with the funds. The position is typically divided into internal and external auditors. Internal government auditors review government agencies’ financial records to ensure compliance with financial standards. The government’s external auditors verify the activities of non-governmental recipients of government funds to ensure that funds have been spent in accordance with agreements governing the allocation of public money.
An audit is a process in which a financial specialist, typically trained in accounting methods, reviews and evaluates an entity’s financial records, uses of funds, and compliance with financial controls. In the private sector, auditing is a mechanism used to ensure that companies operate in the best interests of their investors, rather than for the financial gain of insiders. Similarly, the audit performs a similar function in the public sector, with the caveat that any discrepancies revealed by an audit could result in civil and criminal consequences.
Government audits concern the use of public funds, which carry a greater degree of accountability. Typically, public funds are allocated to government agencies for their own use or for distribution to third parties under the authorization of a country’s legislative body. The authorization of funds is usually linked to a number of things that can and cannot be done with the money described in the specific authorization and any government tax policy involving the allocation. For example, specific fund authorization may allocate money to a veteran’s administration to encourage small business development, but general government policy may prohibit public money from going to any vendor that discriminates against its hiring practices. The government auditor would need to verify not only that the funds were used as specified in the funds authorization, but also that the use was in compliance with general government policies.
Government internal auditors are usually assigned to audit an agency or a specific allocation of funds to multiple agencies under a single legislative mandate. They enter the agency and perform a checklist of tasks that include reviewing financial expenses and determining compliance with financial protocols. A government internal auditor spends most of his time reviewing agency records to establish that public money has not been used in an unauthorized manner.
External government auditors typically inspect the activities and financial records of suppliers, grantees, and contractors who receive government money. The important distinction between internal and external auditors in a government context is that the external auditor generally must also assess whether the government is doing its job. For example, an external government auditor assigned to audit a government health care reimbursement program must not only determine that financial matters are in order, but must also look at the manner in which medical care is provided to ensure that the government don’t be deceived.
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