Probity Audit: objectives, benefits, guidelines and stages

A probity audit is an audit carried out while a procurement process for goods or services is still under way, based on the principle of honesty (probity). The term is most widely used in government procurement, and its official guidelines in Indonesia are intended for government procurement.

Because it runs alongside the process, a probity audit can serve as an early warning mechanism to detect potential irregularities before they become legal violations or losses, while also helping prevent fraud.

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 a Probity Audit?

A probity audit is an audit carried out while a procurement process for goods or services is under way (a real-time audit), based on the principle of honesty (probity). It is assurance provided by the auditor in the form of independent oversight of a procurement process.

A probity audit provides only reasonable assurance on the probity requirement, namely compliance with the procedures, principles, and ethics of procurement of goods or services under the applicable provisions. The assurance given is not absolute.

Indonesia's official guidelines treat a probity audit as one of the internal oversight assignments carried out by the Government Internal Supervisory Apparatus (APIP) over government procurement of goods or services. Applying the same principles in non-government organizations is an adaptation, not a standard requirement.

What Does the Word Probity Mean?

In probity audit guidelines, probity is understood as integrity, uprightness, and honesty.

In a procurement audit, the probity requirement is compliance with the procurement process under Presidential Regulation Number 16 of 2018 as amended and its implementing regulations, compliance with other related regulations, and the principles and ethics of procurement of goods or services.

What Is the Legal Basis for Probity Audits in Indonesia?

Article 76 of Presidential Regulation Number 16 of 2018 on Government Procurement of Goods/Services is the basis for Regulation of the Financial and Development Supervisory Agency (BPKP) Number 3 of 2019 on Guidelines for Internal Oversight of Government Procurement of Goods/Services.

That BPKP regulation contains four guidelines: the general guideline, the probity audit guideline, the government procurement audit guideline, and the government procurement review guideline (Article 4). It also revokes BPKP Head Regulation Number 362/K/D4/2012 on Probity Audit Guidelines for Procurement of Goods/Services for the Government Internal Supervisory Apparatus (Article 9).

Presidential Regulation Number 16 of 2018 has been amended by Presidential Regulation Number 12 of 2021 and Presidential Regulation Number 46 of 2025 (Second Amendment), so probity audit guidelines and reports should refer to the procurement regulation as amended.

Agencies can regulate the procedures further within their own organizations. For example, the Inspectorate General of the Ministry of Housing and Settlement Areas issued Circular Number 01/SE/IJ/2025 on Probity Audit Guidelines in the Ministry of Housing and Settlement Areas.

What Are the Objectives and Benefits of a Probity Audit?

According to that circular, the probity audit guidelines aim to:

• provide assurance that procurement of goods or services has been carried out in accordance with provisions, procurement principles (efficient, effective, open and competitive, transparent, fair or non-discriminatory, and accountable), and procurement ethics;
• improve the governance, control, and risk management of the work unit; and
• serve as an early warning mechanism to detect potential irregularities before legal violations or state losses occur, and to prevent fraud.

For organizations that adapt probity principles outside government, the following benefits are also commonly cited:

• 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.

Which Procurements Should Undergo a Probity Audit?

The probity audit guidelines list, among others, the following criteria for deciding whether a procurement package needs to be audited:

• the package carries high risk and is complex;
• the package has a controversial history or background or is related to legal issues;
• the package is highly sensitive politically;
• the package could give rise to conflicts of interest;
• the package relates to the interests of the wider public;
• the package serves basic public services; and
• the value of the package is relatively large compared with other packages.

Who Conducts a Probity Audit?

Probity audits are carried out by the Government Internal Supervisory Apparatus (APIP), the government bodies set up to carry out internal oversight, such as inspectorates general or inspectorates.

The guideline at the Ministry of Housing and Settlement Areas requires probity auditors who are independent, objective, of high integrity, free of conflicts of interest, and willing to sign an integrity pact before the assignment. Formally, auditors ideally hold a procurement expertise certificate, experience in procurement audits, and an auditor position certificate, with a minimum of an auditor position certification and procurement audit experience.

Probity auditors are authorized to have full access to procurement documents, but responsibility for acting on their advice rests entirely with the audited party. The guideline also refers to the Indonesian Government Internal Audit Standards (SAIPI).

What Are the Stages of a Probity Audit?

A probity audit consists of planning, execution, and communication of the audit results, using a real-time approach.

1. Planning

This stage covers a written mandate from the authorized party, an initial review through an exposition and an assignment risk assessment, and a probity statement and management representation letter. These letters affirm that a probity audit does not take over the audited party's responsibility for an honest, transparent, and ethical procurement process.

2. Implementation

The audit is carried out on the procurement stages within scope, from planning and preparation, preparation of provider selection, and provider selection, through contract execution up to handover of the work before 100% payment.

3. Communicating the audit results

The audit results are set out in a report containing conclusions and advice. The report is generally submitted to the party that requested the probity audit, and the audited party is responsible for acting on that advice.

See also:

• The importance of Audit of procurement of goods and services for the organization
• Risk Assessment is: meaning, steps, Matrix, & examples
• Audit Finding Follow-Up: Causes of Overlooked Issues and Their Solutions

What Fraud Risks Are Examined in a Procurement Probity Audit?

The probity audit guidelines ask auditors to consider fraud risk at every stage of procurement. Some of the procurement fraud schemes described in the guidelines include:

• inflating the budget, the owner's estimate (HPS), and the bid price;
• bribing procurement officials;
• rigging or engineering the tender process, for example by choosing the winner before the tender;
• forging company documents;
• setting tender requirements that limit participants;
• reducing the quantity or quality of goods or services;
• fictitious procurement, where the work under a contract is not performed;
• contracts without an available budget; and
• misuse of technology in the procurement process.

See also:

• What is audit Fraud? Definition, types of fraud, and Prevention
• What is the Fraud Triangle and how to identify it

What Principles and Ethics Do Probity Auditors Follow?

The procurement principles used as the reference for a probity audit are efficient, effective, open and competitive, transparent, fair or non-discriminatory, and accountable, together with the ethics of procurement of goods or services.

Probity auditors need to be free of conflicts of interest with the parties or objects being audited, maintain integrity, sign an integrity pact before the assignment, and comply with government internal audit standards. Auditors do not make procurement decisions but provide assurance and advice on the process under way.

Probity Audit Results Report Example

The following is a fictitious illustration to help understand how a report is structured and is not an official document. A probity audit report contains the basis for the audit, objectives and targets, scope, limits and responsibilities of the assignment, methodology, general information on the auditee, a list of the data and documents used, and the audit results in the form of conclusions and advice.

Probity Audit Results Report

Procurement Of Personnel Management Information System

XYZ Ministry

Period: January-March 2025

1. Introduction

This probity audit was conducted to ensure that the procurement of the Personnel Management Information System ran transparently, accountably, fairly, and free of conflicts of interest. The audit was carried out by the Inspectorate of Ministry XYZ based on assignment letter Number 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 audit is carried out in several ways, including direct observation during the procurement process, review of tender documents, interviews with the committee and participants, and an assessment of compliance with Presidential Regulation Number 16 of 2018 on Government Procurement of Goods/Services as amended.

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.

Inspectorate of Ministry XYZ

(signature)

[Name of Inspector]

(illustrative example)

What Are the Steps for Conducting a Probity Audit?

For organizations that adapt probity audits, the following practical steps can serve as an illustration. The official stages for government procurement are explained in the stages section above.

1. Scope determination - auditors set audit limits.
2. Identify integrity risks - the auditor identifies potential risks related to the honesty of the activity process.
3. Review of policies and procedures - auditors ascertain whether the organization has good policies, guidelines, rules and mechanisms. 
4. 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.
5. Vendor selection process Audit - auditors assess that the selection of vendors is fair, transparent, and all participants have equal access to information.
6. Contract review and negotiation - auditors examine negotiation correspondence, draft contracts, payment terms, scope of work, and changes to contracts.
7. Implementation monitoring probity audits are real-time, require auditors to monitor directly when the activity takes place.
8. Documentation of evidence the auditor collects and stores evidence that supports the audit process.
9. Preparation of findings and recommendations - the auditor documents the findings and recommendations that will be suggested on the organization.
10. Preparation of probity audit report - auditors prepare detailed reports ranging from the planning process, implementation, to reporting.

FAQ About Probity Audit

Conclusion

According to the BPKP Pusdiklatwas training catalog, probity audits used in Australia, New Zealand, and other Commonwealth countries are recognized as improving 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 is internal audit management software that can be customized. Audit teams can use it for audit planning, work program templates, notifications, follow-up monitoring, and automated reports. Audithink does not replace the probity audit guidelines that apply in your agency.

If you need more information or more complete guidance regarding the application, please contact the Audithink team at the contact available.