The CAO is an independent organization and judicial person attached to the Peoples Assembly. It shall aim basically at achieving control over the State funds, funds of public entities, and funds of any other bodies mentioned in this law. The CAO shall help the Peoples Assembly perform its controlling, as stipulated in this law.
The CAO shall perform the following types of controls:
1) Financial control, including both accounting and legal aspects.
2) Performance control and following up the implementation of the national plan.
3) Legal control over resolutions concerning financial violations.
The entities under the CAOs jurisdiction are as follows:
1) Entities of State general government administration and local governments.
2) Public corporations, public organizations, public business corporations and their affiliated companies and cooperative societies working in different fields according to their respective laws.
3) Companies not considered as public sector companies in which one of the public entities, public sector companies, or public sector banks has a share of not less than 25 percent of their capital.
4) Labour and professional syndicates and unions.
5) Political parties, national and partisan press agencies.
6) Entities subject to the CAO jurisdiction to their acts.
7) All units subsidised by the State, units for which the State guarantees minimum profits, or those whose funds are deemed by law as publicly owned by the State.
The CAO shall also audit and examine the work and accounts of any other entity, assigned to it by the President of the Republic, the Peoples Assembly, or the Prime Ministers. The CAO shall report them findings of auditing such entities.
The Peoples Assembly may entrust the CAO with auditing one of administrative departments, executive of administrative agencies, public corporations and organizations, public business firms, cooperative societies, mass organizations under State supervision, enterprises in which the State participates, subsidises or guarantees minimum profits, public utilities enterprises; or operations and activities performed by such entities.
The CAO has to report to the Peoples Assembly on such special assignments. The report would include the actual position of the financial and the economic conditions under examination also the Peoples Assembly may ask the CAO to reports about its findings of the following up of the national plan and what has been realized of its objectives, and to give its opinion of the follow-up reports prepared by the Ministry of Planning in the same regard.
The CAO shall perform its controlling functions, mentioned in Article 2 of this law, as follows:
First In the Area of Financial control:
1. The CAO shall control the State general administration and local governments entities, public service corporations, political parties syndicates, and trade unions.
In performing such control, the CAO has the right to:
a) Control the accounts of revenues and expenditures of different State entities; examine documents, books, records of public receipts, public dues and public expenditures; assure that financial transactions and accounting entries of collections and disbursements are properly conducted in accordance with financial and accounting acts and regulations, and general rules of the State budget.
b) Audit the accounts of pensions, gratuities, insurance and social security indemnities, and subsidies; to ensure their conformity with laws and regulations.
c) Audit personnel resolutions in entities mentioned in Article 3 of this law, in connection with recruitment's, wages, salaries, promotions, increments, travelling allowance, transportation expenses, and like, to ensure their compliance with the State general budget, and the related acts, regulations and resolutions.
d) Audit current, intermediate and reconciliation accounts to ensure the correctness of their transactions, their entries, and their supported documents.
e) Audit loans and credit facilities concluded by the state to ensure payment of their principal amounts and interests to the Treasury in case of lending and repayment of them by the State in case of borrowing.
f) Audit of grants, gists and donations given by foreign and international agencies to ensure their compliance with laws, regulations, the prevailing rules, and the provisions of agreements and contracts.
g) Survey the stores and examine their books, records, issuing and receiving documents, then study reasons behind spoiled, or slow moving items.
h) Examine records, books and documents of collection and disbursements, reveal defalcation, negligence, and financial violations, and study their motives and the working systems which allow them to occur, then suggests remedial actions.
i) Audit final accounts of the general State budget and of different accounting units.
2. The CAO shall control public economic corporations, organizations, public business corporations, establishments, and their affiliated companies and cooperative societies in which one of the public entities, companies, or banks has a share of not less than 25 percent of their capital. The CAO shall also control national and party press agencies as well as syndicates and other entities stated in Article 3 in this law.
Without prejudice to the right of companies which are not considered as public sector companies stated in this article, or to the right of nationalised party press agencies to have their own auditors, the CAO shall perform its function according to this law and in its capacity as auditor of these entities.
Control of such entities includes auditing of their final accounts, financial positions, and balance sheets to ensure their correctness and fair representation of the entities activities according to the generally accepted accounting principles and systems. It also includes auditors observations about errors, violations and defects in applying laws, regulations as well as the assurance of the sound application of the standardised Accounting system, the correctness of their books and the sound recording and treatment of different transactions, in accordance with accounting principles.
In performing such control the CAO has the right to:
a) Indicate whether accounts of the entity subject to audit include all what should be entered as prescribed in laws and systems, whether the balance sheet fairly presents the real financial position of the entity at the end of the period under audit, and whether current operation accounts, profit and loss accounts, revenues and expenses accounts fairly present results of operations, profits or losses, revenues and expanses of such period, in conformity with generally accepted accounting principles.
b) Endorse and supervise stock taking inventory procedures at the entity under audit to ensure that stock taking and valuation of items had been conducted in accordance with such procedures as well as generally accepted principles. Any change in basis and methods of valuation and stock should be noted.
c) Judge the adequacy of provisions set up by the entity to cover all obligations, responsibilities and expected losses, and indicate whether any required reserves are not shown on the balance sheet.
d) Indicate and branch to the provisions of laws and systems which have occurred during the fiscal year in such a manner that affects activities, financial position, or profits of the entity under audit. Then indicate what has been taken in this respect, and whether such a breach is still existing at the balance sheet date.
e) Verify the soundness of accounting and internal control systems of the auditee, and ensure the correctness of accounting transaction treatment and recording in books. Such verification should not be confined to documentary audit, but should be extended to embrace the verification of transaction soundness as well as the proper application of the already determined general rules and systems. It ensure that the assets recorded in books and registers are existing, they have been recorded at their original cost and they are properly depreciated. Such verification establishes the correctness of revenues and expenses as well as the seriousness of obligations.
f) Audit personnel resolutions, to verify the fairness of recruitment's, wages, salaries, promotions, increments, travelling allowances, transportation expenses, additional remunerations, incentive payments, fringe benefits and the like to ensure their conformity with the working budget, laws, regulations and resolutions.
g) Participate whenever it is possible in stock taking of the auditee stores and cash counting of its treasuries. also the auditors should, occasionally perform sudden partial or complete stock takings in the audited units. and indicate their results in the audit reports.
h) Endorse tax declaration of the audited unit, along with declarations to be submitted to governmental authorities and need such endorsement.
i) Comply with the principles, the duties and the ethics of the public accounting profession that especially include the disclosure of events the auditor may discover during the course of audit, which do not appear on the papers and accounts he endorses and when such disclosure is necessary. Also, they include the disclosure of whatever comes to his knowledge of what is missing, falsified or distorted in these papers and accounts, and of any constraints that affect the auditees financial position and results of operations. The auditor should also consider professional standards of examination and reporting and should get all explanations that enable him to discover any errors or fraud in the accounts.
Second: In the area of reviewing plan implementation, and performance evaluation:
In the area of plan implementation and performance evaluation, control over the public funds will include economy, efficiency and effectiveness and its. The CAO shall basically perform in this area the following duties:
1. Controlling and evaluating the performance of units under the CAO jurisdiction and working in fields of service and production, both on the unit level and that of all units of similar activities. To this it shall specially.
a) Follow the implementation of commodity and service production objectives in both quantity and quality.
b) Verify personnel numbers, types, positions, and paid wages, then comparing the actual with the predetermined one.
c) Examine productivity to ensure the attainment of the planned increase in its efficiency, ensure that the production inputs actually used have not exceeded the predetermined rates, then examine the size of production capacity actually used compared with the attainable full capacity.
d) Control production costs to ensure their reduction according to the set-up plans, and verify the ratio of each type of cost to the overall costs and to the production value.
e) Follow up the achievement of the enterprises exporting objectives.
f) Trace the results of the implementation of national plan projects and evaluate such results against cost investment and production inputs.
2. Draw up detailed reports indicating the areas of weaknesses and deficiencies which the evaluation reports of entities and activities have shown.
3. Follow up the implementation of investment projects against their esteemed costs, and predetermined time tables, as defined in the plan.
4. Follow up and evaluate loans and grants agreements concluded with foreign countries, international and regional organizations, and foreign banks, then evaluate indebtedness to the outside world.
5. Follow up the changes in prices of supplying and consuming commodities as well as other goods and services, and compare them with those of previous periods.
6. Follow up the changes in the national consumption, savings and national income and ascertain that such changes comply with the plan.
7. Follow up to what extent the plan was achieved and economic equilibrium among different sectors of the economy, and spotting bottleneck areas that preclude the execution of the plan and the achievement of the predetermined objectives.
8. Evaluate indices and other numerical data especially those of the economic aggregates.
9. Audit records maintained for the national plan of economic and social development, and those maintained for following up its implementation.
Third: In the area of legal control over resolutions concerning financial violations:
The CAO shall examine and audit the resolutions taken by the entities under its jurisdiction with regard to the financial violations committed by their members to ensure that suitable measures in connection with such violations have been taken, responsibility was determined and disciplinary action was taken against responsible officials. The aforementioned resolutions along with all relevant papers should be communicated to the CAO, within thirty days after the date of insurance. Then the CAO President may:
1. Request within 30 days after receiving all the related documents, if he deems it necessary, to present the offender to the disciplinary courts. The competent authority in this connection should institute disciplinary procedures with the following 30 days.
2. Request the administrative entity that has issued the resolution, in respect of the financial violation, to review the said resolution within a period of 30 days after receiving all the related documents. The administrative entity must notify the CAO, of what has been taken in this regard within 30 days from receiving the CAO request. If the administrative entity does not respond to the CAO request, its President can ask - within the following 30 days - to president the offenders to disciplinary court which should institute disciplinary procedures within the following 30 days.
Fourth: In the area of controlling companies not considered as public section companies in which a public entity, a public sector company, or a public sector bank participates in less than 25% of their capitals:
The people body should submit to the CAO, the annual audit report within two weeks after the date of receiving this report. It must also submit any data, statements, or other documents related to the firm which it participates in, within two weeks after the date at which the CAO asks for audit and expressing its opinion on them.
The CAO shall prepare its related report and send it to the participating public body and to the concerned official authorities within two months after the date at which the annual audit report, the statement, the documents and the asked for were received.
The CAOs President shall be entitled to retain auditors from among those practising the public accounting profession outside the civil service to audit public sector banks, firms mentioned in Article (3.3) of this law, and entities that their laws require such retention. The retained auditors shall report to the CAO and to those entities. The CAO may prepare a report of its observations and send it to the concerned entity to be presented accompanied with the auditors report to its respective general assembly.
The CAO shall perform the examination and the auditing processes, set froth by this law, at the auditees premises where records accounts, and their supported documents exist, or in the CAO premises, according to the CAOs president opinion of where the public interest could be met.
The CAO shall be entitled to examine- beside the documents, records, and books, mentioned in laws and regulations - any document, records, meeting minutes, and other papers the CAO may think they are necessary for the complete achievement of its functions. The CAO is also entitled to ask for any data, information, or explanations it considers necessary, to perform such functions. The CAO has also the right to keep whatever the audit process may require of documents, registers or papers until auditing is completed.
To persue its duties mentioned in this law, the CAO may perform physical review and inspection of activities and units under its jurisdiction.
The CAO shall examine administrative and financial regulations to ensure their adequacy, and suggest means whereby to overcome their defects.
The CAO shall perform its functions mentioned in this law through sampling test or, if it is necessary, through full scope audit.
The CAO shall be entitled to get direct access to the financial officials of all levels, including those attached to the Ministry of Finance, in the entities under the CAO jurisdiction.
The following acts shall be considered, according to this law, as financial violations:
1. The violation of financial rules and procedures set forth by the applied constitution, laws, and regulations.
2. The violation of rules procedures concerning the implementation of the State general budget and controlling such implementation.
3. The violation of rules and procedures concerning purchases, sales, and stores, also the violation of all prevailing financial and accounting rules, procedures and systems.
4. Any mistakes action due to negligence of intentional errors that result in spending unauthorised amounts of State funds wasting any financial dues for the State as well as public organizations, corporations, or other entities under the CAO jurisdiction, or jeopardising the financial or economic interests of such entities.
Also, the following acts shall be considered as Financial violations:
1. The non-submission of copies of the contracts, agreements or bids which this law requires to be submitted to the CAO.
2. The non-submission to the CAO of the accounts, the results of operations and their supported documents within the predetermined periods, also the non-submission of the papers, the data, the resolutions, the meeting minutes, the documents, and the other which the CAO asks for to be under its disposal for examining, auditing, or reviewing in accordance with the law.
The following shall be considered as administrative violations according to this law:
1. Abstain from answering the CAO observations, or its correspondence in general, or a delay in replying them within the dates specified in this law without accepted excuse. Any answer given by the concerned employee with the object of gaining- time or procrastination shall be considered as abstaining from answering.
2. Non-submission to the CAO, of the awards and the resolutions issued in respect of the financial violations within the period specified in this law.
3. The groundless delay in informing the CAO within the dates specified in this law, of measures taken by the competent entity concerning the financial violation notified to it by the CAO.
The Ministry of Finance has to provide the CAO with the State final accounts, along with their detailed data, and their regulating acts.
The entities under the CAOs jurisdiction should send to it their balance sheets, their final accounts accompanied with any additional effected modifications or adjustments, the monthly, quarterly and the annual financial accounts along with the results of annual stock taking of their stores as well as the performance reports.
These documents must be submitted to the CAO on the dates specified by this law, (Law No. 53 of 1973) concerning the State general budget, and (Law No. 127 of 1981) concerning the governmental accounting and its explanatory note.
The Ministry of Finance representatives and the financial officials at the entities under the CAO jurisdiction should notify the CAO of all cases of financial violation in spending, within one month from the data of their occurrence.
The heads of entities under the CAO jurisdiction should notify the CAO of any case of defalcation, theft, squander, damage, fire and negligence, on the day of their discovery. Also they have to send to the CAO the resolutions concerning them once they are issued.
Entities under the CAOs jurisdiction should submit to it the date and the indicators which are necessary for reviewing the plan implementation and performance evaluation, according to the systems; and the forms prepared by the CAO.
Entities carrying on investment projects should send to the CAO a copy of the feasibility study of each project, and the modifications which have been done on the study during the execution of the project which the reasons behind such modifications.
Entities under the CAO jurisdiction should submit to the CAO the answers to its observations within one month from the date the CAO notifies the observations to them.
The CAO shall present the following reports about: -
1) Its observations that result from the controlling processes stated in chapter 2 of this law. These reports are to be sent to the heads of the concerned units.
2) Results of auditing the final accounts concerning the budgets of the units mentioned in Item (1) of Article (3) of this law. These reports are to be sent to the Ministry of finance in addition to the said units within two months from the date of receiving the final account or the balance sheet by the CAO.
3) Results of auditing the balance sheets, the final accounts and the statements of the units mentioned in Item (3) of article (3) of this law. These reports are to be sent to the Ministry of finance, to the said entities, and to their concerned senior authorities, within two months from the date of receiving them.
The CAO reports should include auditing observations, what actions have been taken towards them, whether the CAO has got whatever deemed necessary of explanations and data, and whether the balance sheet and the final accounts obviously represent the actual financial position of the audit, and the actual result of operations - surplus or deficit - at the year end.
The report should also refer to the methods used by the unit for stock-taking and valuation, their fairness, and their compliance with CAOs endorsed procedures along with the generally accepted principles.
Also, the report should indicate any changes in the methods and basis of stock-taking and valuation, with their effect on the results of the accounts.
The CAOs observations should be presented to the concerned board of directors within one month from the date of receiving them by entities.
The CAOs reports should be discussed in the meetings of the general assemblies and the board of directors held for the endorsement of the balance sheets and the final accounts of the aforementioned units, otherwise any resolution taken by them in this respect is deemed invalid.
4) Its observations on the final accounts of the State general budget. This report should be sent by the CAO to the peoples Assembly within a period not exceeding two months from the date of receiving the final accounts from the Ministry of Finance. A copy of such report should be sent to this Ministry.
5) The following up of the plan implementation and the performance evaluation stated in the second item of article (5) of this law. In this regard, a report is prepared for each fiscal year. Such reports should be sent to the Peoples Assembly as well as the concerned entities.
The CAOs annual reports on its general audit findings, and any other reports it prepares are sent to the president of the Republic, to the Peoples Assembly and to the Prime Minister. Also the CAO shall send to the Peoples assembly any report the CAO is asked to prepare.
The CAO shall be formed of a President, two deputy presidents, a number of vice-presidents and technical members. The CAOs board shall set up its organisational structure which determine its major line and staff units. Such structure will be defined by CAO Presidents resolution.
The President of the CAO shall be appointed upon the nomination of the president of the Republic and the approval of the Peoples Assembly. Such appointment shall be issued by a Presidential decree in which financial and pension treatments are determined.
The president of the CAO may be relieved from his position by a presidential decree after the approval of the majority of the Peoples assembly members. Should the President of the CAO resigns, his resignation must be presented to the Peoples assembly.
The accusal and trial of the President of the CAO shall be subject to the respective provisions of the law regulating the trial of ministers.
The CAO Deputy President shall be appointed by a presidential decree in which his financial and pension treatments are determined.
The President of the CAO shall undertake the administrative, professional, financial, and the technical supervision over the activities of the CAO and of its employees. He shall issue the necessary resolutions for organising and administering the CAOs work. He shall represent the CAO in front of courts and in its relations with the third party. The most senior Deputy - President shall take his place in case of his absence or leaving his post.
The technical member of CAO should hold a university degree or its equivalent that comply with nature of the CAOs controlling function.
The CAO board shall be formed of the CAOs president, his two Deputies, and the most senior vice-president. The board shall be called for meeting by the President. The boards resolutions shall be passed by the majority of the members present. In case of equal votes, the side on which the President votes shall prevail.
When the number of the boards members becomes less than four, the next senior vice-president shall complete its membership.
The board shall perform the functions assigned to it in this law and in the CAOs staff regulations.
The CAOs President, Deputy-Presidents, and vice-presidents are not allowed to perform any other work for a salary or for a bonus to be paid by either the State Treasury or by any other entity.
Contributions to scientific and research fields as well as training activities are exceptions and only subject to a permission from the president of the CAO. In case of the Presidents contributions to such fields, the permission shall be from the Peoples Assembly Speaker.
They are also barred from purchasing or renting any of the state funds, from renting, selling or exchanging one of their properties to the State, and from getting any privileges in dealing with the public sector units or any other entity under the CAOs jurisdiction. Such prohibition does not apply to dealings conducted within the general applied rules.
Directors of accountancy controlling departments, their deputies, and comptrollers are neither entitled to perform any other work nor to do work or render service to the third party with charge or free of charge.
Also they cannot be appointed in the entities under their audit before three years from leaving auditing of such entities.
The president of the CAO shall have the prerogatives authorised to the Minister of Finance, as stipulated by the law and statutes, concerning the application of the endorsed appropriations of the CAOs budget as well as the organisation and administration of its activities.
He shall, also, have the prerogatives of the Minister responsible of administrative development, and those of the President of the Central Agency for organisation and Administration, in connection with the CAO and its staff.
He shall, also, have the authority of giving permission to his staff to travel abroad. The permission for his to travel abroad shall be given be the Peoples Assembly speaker.
The CAO shall have a separate budget, shown as a lumpsum on the general state budget.
The president of the CAO shall prepare a draft of the detailed budget, and send it on the specified dates to the Peoples Assembly. The detailed budget shall be applicable, after being approved by the Assembly, from the date of the general State budget application.
The Assembly shall endorse the final accounts of the CAO budget according to the rules of endorsing the Peoples assembly own accounts.
The CAOs board shall set up the rules for organising the CAOs accounts, spending and stock-taking system, and other financial and administrative affairs.
For regulating the CAOs personnel affairs, a special regulation having the same strength of acts and laws shall be adopted by Peoples Assembly upon a proposal by one of its members or by the president of the CAO. Such regulations shall include all rules required in this regard.
Without infringing on the provisions of this law, the old personnel regulations issued by the Peoples assembly during its session dated July 6, 1975 and all its amendments shall be valid until a new personnel regulation is issued upon a proposal submitted to the Peoples Assembly by the CAOs President within the six months after the date of putting this law into force.