Audit of PPP projects should be mainstreamed and included as a component of regular audits, says guidance note for auditors
Public Private Partnership (PPP) models have been extensively employed in infrastructure sector, which include transport, energy, water, sanitation, social and commercial infrastructure. In addition, with the evolving governance structure, the nation’s wealth/natural resources are also being dealt by private parties for delivery of public goods and services, said a guidance note in the January issue of the Journal of Government Audit and Accounts.
The guidance note “Compliance audit of Public Private Partnership arrangements” said that since these PPP arrangements/structures along with the governmental organisational hierarchies implement government policies, receive, collect or expend public money these collectively comprise our audit universe.
Given the proliferation of PPP arrangements and their growing significance, the compliance audit of PPP arrangements needs to be strengthened. The objective of this guidance note is, therefore, to mainstream the planning and conduct of compliance audits of these PPP arrangements on a regular basis, it said.
The Compliance Auditing Guidelines provide the broad dimensions for evaluation of the high risk areas as also the various documents/literature and aspects that should be reviewed for assessment of risk.
A guideline for compliance audit of PPP arrangements comprising a) a fact sheet for maintaining database of PPP arrangements, b) indicative risk parameters and c) indicative checklist for audit of PPP arrangements has been prepared to facilitate risk assessment and conduct of regular compliance audit of PPP arrangements by field offices.
The guidance note said that audit of PPP arrangements had been a focus area of concern as this involves access to the records of private parties. The supreme court, in its judgement dated April 17, 2014, has allowed audit access to records of the private concessionaire in revenue share contracts to ensure that there is no ‘unlawful gain’ to the private concessionaire and no ‘unlawful loss’ to the government/ public entity.
The guideline draws attention to the following: a) Audit of PPP projects should be taken up as per the mandate provided under the supreme court judgment. b) Audit of PPP projects should be mainstreamed and included as a component of regular audits. c) Audit should develop capacity and build specialisation in audit of PPP arrangements.
It went on to say that PPP models have been extensively employed in infrastructure sector in the country. These PPP infrastructure projects includes transport, energy, water, sanitation and social and commercial infrastructure. In addition to the PPPs in infrastructure, the government has entered into partnerships with the private sector for exploitation of valuable, monopolistic natural resources.
