Probity audit refers to one of the types of audits conducted by auditors in an organization or company. Types of audits it focuses on the integrity of the processes carried out by the company. Whether the work process is transparent, accountable, in accordance with regulations, fair, or not.
These checks allow companies to detect fraud early on. That way, the next work process can run transparently, fairly, without any conflict of interest.
This article will further explain the definition of probity audit, its objectives and benefits, guidelines, examples of Outcome Reports, and steps to run the examination.
What is Probity Audit?
Probity audit is an independent examination process to ascertain the activities carried out by an organization or company.
In this examination, the auditor ensures that the activities take place in accordance with the principles of upholding integrity, truth, honesty, and meet the provisions of applicable legislation.
The activities reviewed can be in the form of procurement of goods or services, tender for construction and infrastructure projects, selection or recruitment of employees, provision of grants, social assistance, or assistance funds, appointment of consultants or strategic partners, and so on.
Purpose and benefits of Probity audits
Probity audit checks are conducted for various purposes and benefits as follows. That way, the results of the examination can provide a number of positive impacts for the institution or organization or company.
- Minimize or detect corrupt practices early.
- Avoiding conflicts and problems
- Improving corporate integrity through behavioral and organizational change
- Increase the confidence of investors and clients that all activities in the company are carried out honestly and reliably.
- Avoid legal problems in the future.
Probity Audit Guidelines
The audit probity guidelines are a set of rules, principles, and standards that auditors must adhere to when carrying out the audit process.
These guidelines serve to ensure that the process of procurement of goods or services, project management, or the use of public funds is transparent, fair, conflict of interest free, and accountable. In general, the contents of the audit probity guidelines include some of the following.
1. Probity Audit Principle
In carrying out checks on the work of institutions or companies, auditors must run based on audit principles.
- Integrity - auditors guarantee that the organization's activities are carried out without manipulation, pressure or hidden interests.
- Transparency - every decision and process must be supported with relevant documentation.
- Accountability - the decision-maker must be able to explain and account for his choice.
- Justice and equality - each participant performed equally based on predetermined criteria.
- Conflict of interest management - any potential conflicts should be disclosed and managed from the outset, as procurement teams that have relationships with vendors should be excluded.
2. Scope Of Audit
Scope of audit relating to the area examined and the stage to be run by the auditor. This section covers the preparation of procurement needs, the creation of tender documents, and the process of entering bids.
In addition, the scope of the audit also provides evaluation of technical and pricing, the appointment of the winning bidder, and contract management. For example, in this case the auditor checks whether the assessment criteria have been set before the tender is opened or not.
3. Roles and responsibilities of Auditors
The probity audit, auditor. not making decisions. Rather, it monitors compliance of the process with regulations, providing input when there is a risk probity (integrity, truth, and honesty), supervises the objectivity of evaluations, ensures complete documents, and assesses process integrity.
4. Probity Audit Procedures
Examination of probity it can be done in several ways that are relevant and accountable.
Starting from document review, direct observation of the tender process, interviews with procurement officials, checking evidence of transactions and decisions, to verification of compliance with procurement regulations.
5. Probity Risk Assessment
The probity audit guidelines also contain a list of risks that could potentially arise in the procurement process. It is important to be focused and supervised by auditors.
Some common risks that can arise, such as collusion between vendors, bribery, leakage of tender information, tender requirements favoring a particular vendor, manipulative or subjective assessments, and inconsistent evaluation documents.
6. Probity Reporting
The auditor's findings during the process of identification, matching, interviewing, and observation are recorded in the report probity.
In conducting probity audits, auditors can provide direct input when monitoring the procurement process to prevent violations or conflicts of interest. After the procurement process is completed, the auditor makes a report containing the following.
- Discrepancy findings
- Supporting evidence
- Emerging risks
- Process recommendations
- Process integrity statement
7. Ethics and Auditor independence
This guideline also contains the ethics that must be owned by auditors during the audit process ongoing. Thus, the auditor's independence is not compromised.
Some of the ethics that auditors must adhere to such as, should not accept gifts, recommend vendors, involved in tender decisions, must maintain the confidentiality of documents, and comply with public audit standards.
Probity Audit Results Report Example
Probity Audit Results Report
Procurement Of Personnel Management Information System
XYZ Ministry
Period: January-March 2025
1. Introduction
Probity audit is conducted to ensure that the procurement process of Personnel Management Information System is transparent, accountable, fair, and conflict of interest free. The Audit was conducted by an independent Probity Auditor team based on assignment letter No, 15/ST/2025.
2. Scope
The audit process includes the preparation of tender documents, announcement and registration of participants (providers of goods or services), administrative, technical and price evaluation, as well as the determination of the winner of the tender.
3. Methodology
Probity audits are conducted in several ways. Among them are direct observation during the procurement process, review of tender documents, interviews with the committee and participants, and assessment of compliance with the Presidential Regulation on procurement of goods or services.
4. Main Findings
- All tender documents are available and accessible to all participants (providers of goods or services). No indication of any information restriction was found.
- The evaluation process runs according to the criteria written in the selection document. No specific treatment of specific vendors was found.
- The procurement committee has followed the procedures of the Presidential Regulation on the procurement of goods or services. However, one drawback was found, namely the minutes of technical evaluation did not include details of the weight of the assessment.
- One of the committee members said that there was a previous working relationship with one of the vendors. The committee immediately replaced the member and noted it in the minutes.
5. Recommendations
So to improve the procurement process of goods or services that are transparent, fair, in accordance with regulations, and avoid conflicts of interest, several recommendations are suggested.
- Improve the evaluation documentation by attaching weights and reasons for the assessment.
- Strengthen the mechanism of conflict of interest declaration since the beginning of the formation of the committee.
- Conducting training probity for members of the committee forward.
6. Conclusion
Based on the results of the probity audit that has been carried out, the procurement process is considered to have run with good integrity and in accordance with the principles of transparency and accountability, although there are still areas that need to be improved regarding the completeness of the evaluation documentation.
7. Cover
Thus, this report is prepared as a form of independent monitoring to ensure the integrity of the procurement process.
Tim Probity Auditor
(signature)
Nathan Pratama
Kap Setia Budi
Steps To Conduct A Probity Audit
In general, the implementation of probity audit is carried out in the following steps.
- Scope determination - auditors set audit limits.
- Identify integrity risks - the auditor identifies potential risks related to the honesty of the activity process.
- Review of policies and procedures - auditors ascertain whether the organization has good policies, guidelines, rules and mechanisms.
- Examination of the planning process - auditors examine the initial stages before the activity takes place, such as the need for procurement and justification for the selection of methods.
- Vendor selection process Audit - auditors assess that the selection of vendors is fair, transparent, and all participants have equal access to information.
- Contract review and negotiation - auditors examine negotiation correspondence, draft contracts, payment terms, scope of work, and changes to contracts.
- Implementation monitoring probity audits are operated, require auditors to monitor directly when the activity takes place.
- Documentation of evidence the auditor collects and stores evidence that supports the audit process.
- Preparation of findings and recommendations - the auditor documents the findings and recommendations that will be suggested on the organization.
- Preparation of probity audit report - auditors prepare detailed reports ranging from the planning process, implementation, to reporting.
Closing
Probity audits in Australia, New Zealand, and other Commonwealth countries are recognized to improve the quality of corruption prevention.
Therefore, this type of audit is promoted as one way to realize more open, responsible, transparent management, and money is used appropriately.
To obtain reliable and trusted audit results, not only professional auditors are needed, but also tools that are able to support systematic audit planning, implementation, and reporting.
Audithink's Comprehensive Features presenting the best audit application as an innovative solution for audit management of various companies. This Software is supported by automatic report feature, so that the audit process is easier, faster, and integrated.
If you need more information or more complete guidance regarding the application, please contact the Audithink team at the contact available.
