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Article 154.- The Office of the Comptroller General of the Republic is the governing body of the audit system of the Public Administration and of the People’s Property.
Article 155.- The Office of the Comptroller General shall be responsible for:
1) Establishing a system of preventive auditing to ensure that funds are used only in the correct manner.
2) Continuously controlling the implementation of the General Budget of the Republic.
3) Controlling, examining and assessing the administrative and financial management of public bodies, those subsidised by the State, and public or private companies with public capital participation.
Article 156.- The Office of the Comptroller General of the Republic shall enjoy functional and administrative autonomy and will be headed by the Comptroller General of the Republic; the Comptroller General shall submit an annual report to the National Assembly and shall enjoy immunity.
Article 157.- The law shall determine the organisation and functioning of the Office of the Comptroller General of the Republic.
Article 150 point 14).- The President of the Republic is vested with the power to propose a list of three names to the National Assembly for the election of the Comptroller General of the Republic.
Article 138 point 8).- The National Assembly has the power to elect the Comptroller General of the Republic from the three names proposed by the President of the Republic.
Article 1. This Law regulates the Office of the Comptroller General of the Republic, and lays down an audit and evaluation system for resources belonging to the public administration and people’s property, and covers:
a) All the Laws, Rules, Norms, Policies, Methods, Procedures and Bodies governing the activities of Public Sector Entities and Organisations, as regards the control of their administration and the exercise of the powers, authority and duties of their staff members;
b) The steps that must be taken as precautions, and to ascertain that human, material and financial resources are being administered in a correct, efficient, effective and economical manner, so as to ensure that the ends, goals and objectives are met as per the programmes;
c) The procedures pertaining to the use of public resources by other Entities and Organisations; and
d) Finally, it includes the adoption of suitable measures to correct any deviations.
Article 2. -Purposes- The purposes of this Law are:
1. To set up a control system in the entities and organisations coming under the purview of this Law, which would include an internal control within their administrative and financial systems, supported by the external control conducted by the Office of the Comptroller General; and
2. To carry out independent and objective examinations with a view to ascertaining the degree to which the public sector Entities and Bodies and their respective employees, are performing their administrative and financial duties; as well as to formulate recommendations for improving the public sector’s operations and activities.
Article 3. -Objectives- The main objectives of this Law are:
1. To introduce dynamism in the administrative work of the Entities and Organisations coming under this Law, by determining exactly which functions they would have to perform in respect of audit.
2. To assist the external control bodies in their operations and activities.
3. To set up a reliable system of internal control.
4. To include, within the powers of the highest authority of each Entity and Body, the functions of planning, organisation, direction, co-ordination and internal control, in accordance with the rules of this Law.
5. To guarantee such an environment to the civil servants as would strengthen their honesty and integrity.
6. To contribute to increasing the productivity of the public sector Entities and Bodies.
7. To lay down individual duties and obligations of the Bodies and civil servants in respect of control.
8. To facilitate the adoption of managerial decisions on the basis of reliable and timely information.
9. To protect public resources.
10. To enhance the efficiency, effectiveness and economy in government operations and in the use of public resources.
11. To promote compliance with the relevant legal provisions, rules and policies; and
12. To facilitate in the achievement of the goals and objectives of the programmes.
Article 4. -Components- The system consists of:
a) Internal control in each one of the Entities and Bodies mentioned in the following Article of this Law;
b) Control that is incumbent on other Entities and Bodies in the field of their competence; and
c) External control that is the responsibility of the Office of the Comptroller General of the Republic of Nicaragua set up by Decree No. 86 of the Junta of the National Reconstruction Government of the 20th of September, 1979, published in Gazette No. 16 of the 22nd of September, 1979 and its amendments.
Article 5. -Scope of Application.- The system shall govern all financial and administrative operations carried out by the National Reconstruction Government and all other public sector Entities and Bodies. It shall expressly cover:
1. State, regional and sectional enterprises.
2. Mixed economy companies.
3. Different types of business associations and civil companies, whose capital is derived totally or partly from public funds, or financed by permanent allocations from public budgets, whatever be the nature of the enterprise, company, partnership or entity, regardless of whether it is set up by statutes, decree or law of legally recognised juristic persons.
4. It shall also have under its purview the Nicaraguan Institute of Social Security; all the institutions forming part of the National Finance System; the Central Bank of Nicaragua; the Nicaragua Finance Corporation; the Nicaraguan Institute for Insurance and Reinsurance; branches of foreign banks and foreign insurance companies; general stores and stocks; stock exchanges and natural and artificial persons that carry out financial transactions or render services of this type, that by law or by their characteristics affect the interests of the State and the public in general, in accordance with the rules to which they are subject and the special characteristics of the National Finance System and other Institutions, entities or natural or artificial persons that were earlier subject to the vigilance of the Office of the Superintendent of Banks and other Institutions.
The system also covers the activities of Entities and Bodies of any other nature that, while not being included in the above sub-sections, receive allocations or partial funding from time to time from public resources or enjoy bonds or guarantees from the State or from State Entities, or State stockholding. In this case, the control system shall be applied only to that financial year in which the allocation was disbursed and to the extent of the amount of the same, or so long as the guarantee or bond was valid. While performing a control on the resources of public sector Entities and Bodies, the provisions of this Law, Rules, Policies and Norms shall be observed, both in their general application as well as their specific application to the concerned Entity or Body.
The control of public resources in private sector Entities and Bodies in which the State has a stake, shall be performed bearing in mind the relevant provisions of this law and the special provisions they are governed by.
Article 6. -A priori Control- Public, as well as private sector Entities and Bodies coming under the purview of this Law, shall set up the mechanisms and procedures to analyse the operations that they plan to perform, before receiving authorisation for the same, or before the authorisation comes into effect, with a view to determining the propriety of the said operations, their legality and truthfulness and, finally, whether they are in keeping with the budget, plans and programmes.
Article 7. -A posteriori Control- The a posteriori scrutiny of the financial or administrative operations of an entity or body will be done by means of internal auditing and external auditing. However, the decisions by which individual claims were settled may not be scrutinised.
TITLE II
Supreme Audit Institution
Article 8. - Authority- The Office of the Comptroller General of the Republic is the governing body of the control system for public administration and the people’s property and, as the supreme control institution, it also has exclusive responsibility for conducting the external audit of public resources in the field referred to in this Organic Law.
Article 9. -Independence and Autonomy.- The Office of the Comptroller General of the Republic is an autonomous body in its functions and will not be subject to the general laws that in any way might affect or undermine its independence and autonomy.
Article 10. -Functions and Powers.- The functions and powers of the Office of the Comptroller General are the following:
1. To carry out financial and operational audits of the Entities and Bodies coming under its control, in accordance with the generally accepted rules of auditing.
2. To review and asses the quality of the audits performed by the internal audit units.
3. To classify, select and enter into exclusive contracts with private firms that would conduct independent audits of the Entities and Bodies coming under its control, and to supervise their work.
4. To implement special scrutinies using audit techniques.
5. To conduct partial or total external audit, or special scrutinies, with regard to the implementation of public works projects, employing accounting methods, audit methods and methods from other related disciplines in order to be able to control each one of their stages.
6. To classify, select and enter into contracts with professional private firms for the external control of public works projects.
7. To oversee the correct collection and handling of public funds, and to carry out special inspections with regards to receipts, whether from taxation or not, on the public Entities and Bodies, particularly for purposes of:
a) Recommending improvements in the procedures regarding the issue of credit instruments and the collection of receipts; and
b) Asking, when there is is no legitimate reason to continue collecting certain receipts, that they no longer be collected.
8. To announce and update the rules, policies, norms handbooks and instruction books, in accordance with the Law, in respect of the following subjects:
a) Government audit;
b) Government accounting, including the collection of financial data;
c) Internal control;
d) External control of public works projects;
e) Control of material and financial resources;
f) Control of automatic data processing systems;
g) Control of the contractual sureties and bonds for the exercise of public positions; and
h) Any other subject covered by the Law.
9. To determine the form and contents of the financial reports that are to be presented to the Ministry of Planning, the Finance Ministry, the Office of the Comptroller General and to the Junta of the National Reconstruction Government, as the case may be.
10. To provide technical advise to Entities and Bodies regarding the introduction of systems and subjects falling within its domain of competence.
11. To control and co-ordinate, along with the Nicaraguan Institute for Public Administration, the technical training offered to civil servants of public sector Entities and Bodies, in those subjects it is responsible for.
12. To keep a check over the implementation of government accounting systems and control systems for public resources.
13. To make recommendations to improve the operations and activities of the Entities and Bodies subject to its control.
14. To formulate and communicate the conclusions arrived at from the examinations, while they are being carried out, by means of reports.
15. To insist that the respective officers and employees collect the amounts payable to public sector Entities and Bodies, and that the said Entities and Bodies should meet their own obligations.
16. To carry our special examinations with regard to the amortisation and interest service of public debt, with a view to demanding the fulfilment of the corresponding obligations.
17. To establish: individual administrative responsibilities for violating the legal provisions, and going against the rules and the norms of this Law; civil responsibilities due to financial loss suffered by the respective Entity or Body because of an act of commission or omission by their employees, and presumptions of penal liability through the investigation of facts incriminated by the Law. In order to exercise this power and the power referred to in point number 18 of this Article, the Comptroller General shall make the corresponding rules and regulations.
18. To name the main liable party and order the immediate refund of any financial resources that were unduly disbursed to artificial or natural persons belonging to the private sector who have received the amount disbursed, and name the person who by an act of commission or omission gave rise to this error as the secondary liable party.
Undue disbursement will be understood to be the transfer of any financial resources from one public sector Entity or Body to any artificial person or natural person in the private sector, as payment or for any other purpose, when the transfer had no legal or contractual basis to have been made, or was not to have been made for a particular amount to a particular person, or in the circumstances in which it was made, for example, when by mistake an amount of money is given as payment to a person other than the creditor.
If the debtor or the liable party is due other payments as well, the Office of the Comptroller General shall order the refund by offsetting or combining them with other amounts due to him; in case the person concerned is serving in the Entity or Body, the amount to be repaid may be set off by withholding his remuneration in the ratios stipulated by the Labour Law. At the same time, it shall order the accounts books giving the entries of the case. When the debtor or the secondary liable party has refunded the principle, his rights shall be subrogated to the creditor Entity of Body and he can repeat the payment against the principle by execution.
For this purpose, the certified copy of the official letter from the Office of the Comptroller General ordering the refund and the voucher of the corresponding payment shall be treated as the documents granting the right of execution; the corresponding debt shall also be deemed official.
19. To order for official proceedings to be initiated against the officers or employees, and against their assets and guarantors, when the credits favouring the Entities and Bodies under the purview of this law arise from differences in money or other values, being the responsibility of the said officers or employees.
20. To inform the highest authority of the Entity of Body, in writing, about the expenditure made and the use of public property, when such expenditure or use was illegal.
21. To evaluate the implementation of the budgets of public sector Entities and Bodies in accordance with the provisions of the Law of Budgetary System.
22. To impose fines and to implement administrative and civil liabilities that are incumbent on the Office of the Comptroller to impose and establish.
23. To regularly publish statistical and accounts data that it deems necessary, with the relevant analysis of the operations carried out.
24. To furnish a preliminary report on the draft reforms or codification of this law.
25. To give an opinion, when consulted, on budget proposals and drafts of fiscal laws.
26. To keep a check on the Register of State Assets that must be maintained by each one of the public sector Entities or Bodies, and make sure that they are being properly kept and used.
27. To ensure that the following types of documents are properly safeguarded:
a) All documents giving evidence of the assets possessed by the State, such as shares, titles of immovable property or other documents crediting guarantees in favour of the treasury;
b) The paid up documents of Public Debt, after verifying their authenticity.
28. To evaluate the use of:
a) Tax receipts which must be issued by the tax collection offices of the Republic;
b) Receipts from other public offices.
29. To supervise the incineration of all types of matter relating to tax, post and currency.
30. To oversee and record the issue of Public Bonds.
31. To check that the Law of Moral Integrity of Public Officers and Employees is being complied with; and
32. In respect of the control of the National Financial System and other institutions, Entities or persons subject to its control, according to Article 5, point 4 of this Law, the Office of the Comptroller General shall also have the following duties and powers:
a) To see to it that the general laws and the rules and regulations governing its constitution, functioning, transformations and dissolution are complied with;
b) To ensure that there is compliance with the norms pertaining to policies on finance, exchange, currency, economics, and rules governing upper management and administration that are legally dictated by the authorised bodies, and to see to it that such norms are in keeping with the plans and programmes dictated by the Central Government;
c) To supervise the performance of each financial institution’s administration, with regards to the goals set out in the economic and financial plans of the Government;
d) To inspect, by whichever means it considers appropriate, the transactions and activities of the financial institutions in order to verify and ascertain that the relevant laws, rules and provisions are being followed;
e) To examine and evaluate the state of financial and economic solvency of each one of the financial institutions, with a view to having a healthy administrative and financial policy;
f) To check and verify the financial and economic plans and budgets of the financial institutions and to determine the degree of efficiency, economy and effectiveness with which they are managing the monetary, financial and material resources. To also check and verify that the rules on systems and procedures and management information systems are being adhered to.
g) To conduct either systematic or random checks to see whether the grants given to institutions are being used for the purposes stated, and to this effect, check whether the funds are being correctly used, even if site visits are required.
h) Revoked;
i) With regard to the Nicaraguan Institute of Insurance and Reinsurance, to ensure that the said institution works in accordance with the provisions of the law that created it and follows the rules governing it, especially those laying down the manner in which the reserves are to be calculated, investment of the said reserves and entering into reinsurance contracts;
j) To pose queries regarding the technical and legal aspects of their business and operations;
k) To audit their accounts, except the administrative departments, in those cases coming under the purview of special, banking, commercial, civil, administrative and common laws, governing this matter;
l) To impose administrative fines on financial institutions in case of infringement of the applicable laws and rules, or for non-compliance with the instructions legally issued by the Office of the Comptroller. Such fines shall go from one thousand to one hundred thousand cordobas depending on the seriousness of the infraction;
m) To carry out any other function or activity within the ambit of its powers affecting the interest of the institutions or the interest of the community. The above listed duties do not exclude or limit those conferred on the Office of the Comptroller by other special laws;
n) To keep a check on those persons or entities that transact with public financial resources or who generally act as mediators between the supply and demand of such resources. These persons or entities may not make offers, or issue publications or advertisements without the prior authorisation of the Comptroller General of the Republic; any breach will attract a fine of between one thousand to ten thousand cordobas to be decided by the Comptroller himself.
When, in his opinion the seriousness or importance of the case so warrants, the Comptroller General of the Republic must report to the Financial Cabinet about cases of disobedience to the stipulated requirements and about the sanctions imposed on the institutions, entities or persons referred to in this point.
The decisions taken by the Comptroller in respect of the provisions contained in this point 32 do not allow for subsequent appeal, except an appeal for review and objection as established in the present Organic Law.
Any private information concerning the National Financial System and other entities that might be required and obtained by the Office of the Comptroller General in the performance of its duties and in the exercise of its powers, shall be treated as confidential.
Such information can not be used for purposes of prosecution nor can it constitute the bases for disputes between third parties. The Courts of Justice can only request the information obtained by the Comptroller for evidence in a trial, in so far as it is not possible to obtain the said proof through direct evidence obtained from the entity or institution under inspection.
33. Any other duties and powers conferred on it by the laws, in respect of the powers and functions contained in this Article.
Article 11. -Contracts Inspection- All contracts involving the outflow of resources belonging to the public sector or resources from the people’s property, shall be inspected by the Office of the Comptroller. When the contracts do not adhere to the relevant provisions of this Law, the provisions given in Article 177 of the same may be enforced.
Article 12. -Exclusive Use of Designations- No other public sector Entity or Body can create or maintain administrative units called "Office of Comptroller", nor can they use the designation of "Comptroller".
Article 13. -Supreme Audit Authority- The Comptroller General is the supreme authority entitled to audit public resources, within the terms of this Law; he is responsible for representing the Office of the Comptroller General, exercising the powers that the law confers on the supreme audit institution, directing its integrated organisation and functioning, and implementing its work plans.
Article 14. -Requirements- In order to be appointed and occupy the post of Comptroller General or Deputy Comptroller, the following requirements must be met:
1. To be a Nicaraguan national, of more than thirty years of age.
2. To either hold an academic degree awarded by a centre of higher education or else have sufficient experience which is relevant to the field of financial administration and control.
3. He should not have been penalised, in the three years prior to the date on which he qualified to be considered for the post, for delay in submission of financial information, when it was his duty to do so as an officer or employee of the Entities or Bodies subject to the control of the Office of the Comptroller General; and
4. He should not be covered under any of the general prohibitions given in the Law for the Performance of Public Duties.
Article 15. -Appointment- The Comptroller General and the Deputy Comptroller General shall be appointed by the Junta of the National Reconstruction Government and they shall hold these positions for an indefinite period of time.
Article 16. -Rank of Minister and Deputy Minister of State- The Comptroller and the Deputy Comptroller shall be given the rank of Minister and Deputy Minister of State respectively. They shall have the right to speak but not to vote in the Cabinet meetings for which they are called.
Article 17. -Accountability- The Comptroller General and the Deputy Comptroller General shall be answerable to the Junta of the National Reconstruction Government for their own official acts as well as for those of their subordinates, when there is proof of negligence by the Comptrollers.
Article 18. -Removal- The Comptroller General and the Deputy Comptroller General can only be removed from their posts or suspended from their duties by the Junta of the National Reconstruction Government for gross negligence or fraud in the performance of their duties, or due to permanent disability.
Article 19. -Final Decisions- The decisions of the Comptroller General are final and are not open to any type of appeal before other authorities through executive action, notwithstanding the appeal for review contained in Article 141.
Article 20. -Substitution- The Deputy Comptroller General shall substitute the Comptroller in case of disability, illness or any other temporary absence, as also in the case of permanent absence until a new Comptroller is appointed.
Article 21. -Delegation of Powers- The Comptroller General can delegate the exercise of his powers, when he deems fit to do so. The official acts of those employees, officers, or special or permanent representatives who have been delegated certain powers by the Comptroller General, shall have the same force, effect and shall entail the same joint responsibility as if they had been acts of the Comptroller himself. The representatives cannot, in turn, delegate powers, however they may entrust specific jobs in connection with their own delegated powers to other persons, the results of which must be submitted to them for their information and evaluation, in so long as they are acting as delegates at the time of approving such jobs.
Article 22. - Appointment and Removal of Staff- The Comptroller General shall appoint and remove officers and employees of the Institution, in accordance with the corresponding rules and regulations.
Article 23. -Conflict of Interest due to Relationship- Spouses or persons related up to the fourth degree of blood relationship and the second degree of other relationship can not become officers with responsibility or decision making power, nor can they become auditors in the Office of the Comptroller.
In case supervening conflict of interest were to occur, the officer or employee who is lower in the hierarchy will resign; in case of officers of the same rank, the more recently appointed one shall resign.
Article 24. -Competence of the Staff- The staff working in the Comptroller General’s Office shall be of proven capacity and competence in the performance of their respective duties. In order to ensure such conditions, the staff in the Comptroller’s Office shall be required to appear for tests in the relevant subjects, pass technical, basic and advanced level courses, and attend regular refresher courses, in accordance with the specific rules of the Institution.
Article 25. -Academic Qualifications for the Managerial Staff- The managerial personnel working in the Comptroller’s Office must necessarily have a university level degree or else sufficient experience as required for the performance of their duties.
Article 26. -Staff of the Substantive Units of the Comptroller’s Office- The audit units of the Comptroller’s Office shall consist of public accountants having a university degree or its equivalent, and assistants that meet the minimum established requirements. They shall be subject to evaluation with respect to their competence, capacity and professional ethics, as well as their up-to-date technical knowledge.
Likewise, the rest of the substantive units shall consist of professionals belonging to the relevant stream, having a university degree or its equivalent, and assistants meeting the requirements laid down in the previous paragraph.
No person shall be appointed to a post entailing audit duties if he has a record that gives rise to doubts regarding his integrity and honesty, or has been penalised, as a financial director or accountant, for delay in presenting financial reports to the Office of the Comptroller General in the three years prior to the date of his meeting the requirements for being a candidate to the post.
Article 27. -Signing of Reports- The audit and special inspection reports prepared by the government auditors of the Comptroller General’s Office, shall be signed by a professional having the post of director or in-charge of the administrative unit issuing the said reports.
When the reports include the auditor’s certificate on the financial status, they shall be signed by the director or the person in charge of the corresponding audit unit.
Article 28. -Staff Rules and Regulations - The Comptroller shall prepare the rules governing the staff working in the Comptroller’s Office, that shall include the general scale of basic pays and valuation of the posts for staff members in the Institute, as well as a career development plan for the promotion of the employees, in accordance with this Law.
Article 29. -Other Functions- Notwithstanding the provisions of the special laws, the officers and employees of the Office of the Comptroller General will not be allowed to assume any other duties of any type in any other service, including short, medium or long service commissions, without the prior authorisation of the Comptroller.
Article 30. -Organic Rules of Functioning - The Comptroller General shall issue and constantly update the organic rules of functioning of the Comptroller’s Office which shall define both the organic structure as well as the functions of the different administrative units that are necessary for their efficient, effective and economical functioning; he can also issue and update the rest of the rules that are required for the organisation and functioning of the Institution.
Article 31. - Contracting of Technical Consultancy Services- When he does not have the required specialists, the Comptroller General may hire the services of technical consultants in any subject or specific matter that is relevant to his functions; likewise, he may enter into contracts with private auditing firms and companies as well as other concerns dealing with the control of public works projects, whenever he so requires in the performance of his control duties, in accordance with the relevant rules that the Comptroller himself shall dictate.
Article 32. -Policies- The Comptroller General shall issue the government audit policies as general guidelines for audit work that must be undertaken.
Each Entity or Body shall lay down its own internal control policies in consultation with the Office of the Comptroller General.
Article 33. -Technical Norms- The Comptroller General shall issue the technical norms for internal control which shall form the basic provisions regulating internal control of public sector Entities and Bodies.
He shall also issue the technical norms for government audit that will define in detail the nature and scope of information to be obtained by the government auditor, the quality of his tasks, the presentation and contents of his report, as well as the general and personal requirements in the auditor.
Article 34. -Generally Accepted Audit Norms- The basic criteria for carrying out government audits are given in the generally accepted audit norms that the Comptroller General considers applicable in the subject.
Article 35. -Exclusive Power of the Office of the Comptroller General- The Office of the Comptroller General is the sole authority empowered to dictate secondary norms on the control of public resources. Any other rules pertaining to general or specific administrative systems shall include the necessary aspects with regard to internal control and shall be in keeping with the rules dictated by the Comptroller General’s Office.
The Comptroller General’s Office shall have the exclusive power to prescribe general and specific rules on government audit.
Article 36. - General Handbook- The Comptroller General shall publish a general handbook on government audit that, in a single instrument, shall contain a description of the requirements, techniques, methods and procedures to be applied in government auditing.
Article 37.-Specialised Handbooks- The Comptroller General shall approve and publish specialised handbooks for the exercise of government audit on groups of public sector Entities and Bodies engaged in similar activities and having similar characteristics.
SECTION I
Generalities
Article 43. -Government Audit- Government audit consists of an objective, systematic and professional scrutiny of the financial or administrative operations, or of both at the same time, undertaken after the operations have been executed, with the purpose of checking and evaluating them and preparing the corresponding report containing comments, conclusions and recommendations. In case the financial balance sheets were also examined, it must also contain the auditor’s certificate.
Article 44. -Activities Included- Government audit includes the following activities:
1. To check the transactions, entries, reports and financial statements relating to the period of examination.
2. To determine compliance with the legal provisions, rules, policies and other applicable norms.
3. To review and evaluate the internal financial control.
4. To examine and evaluate the planning, organisation, management and internal administrative control.
5. To review and evaluate the efficiency, effectiveness and economy with which human, material and financial resources have been employed; and
6. To review and evaluate the results of the operations as planned, with a view to determining whether they attained their proposed goals or not.
Article 45. -Purpose- The purpose is to establish a unified mechanism for internal and external audit, based on government audit rules, in order to ensure effective a posteriori auditing of the financial and administrative transactions of each public sector Entity and Body, for the following purposes:
1. To improve public administration through the introduction of recommendations pertaining to audit.
2. To ensure ethics in public administration by means of efficient a posteriori control.
3. To check the reliability, propriety and relevance of financial and administrative information.
4. To reveal and correct the irregularities, errors, misappropriations or lacunae in government operations.
5. To check that human, material and financial public resources were duly controlled and applied to the programmes, activities and purposes for which they were sanctioned and that they were used in an efficient, effective and economical manner.
6. To verify that the legal provisions regarding administrative and financial management were complied with.
7. To determine whether all the income and receipts resulting from public operations have been correctly fixed, charged and entered; and
8. To evaluate the internal control systems and propose recommendations to improve them.
Article 46. -Executing Personnel- Government audit shall be conducted by Public Accountants, holding a university degree or its equivalent, and by professionals belonging to other disciplines who, in either case, must meet all the requirements established by the State Personnel Bodies in conjunction with the Office of the Comptroller General of the Republic.
Article 47. -Confidentiality and Ethics- The persons working in government auditing, before assuming their duties, shall be sworn to maintain confidentiality and observe profession ethics.
Observance of the Professional Code of Ethics applicable to government auditors as issued by the Comptroller General, shall be compulsory for all personnel working in government audit for the Comptroller’s Office, as well as for personnel working in internal audit and for private concerns under contract.
Article 48. -Types of Audit- Government audit is called internal when it is conducted by specific administrative units in public sector Entities and Bodies, and external when it is carried out by the Comptroller General’s Office through its own audit units or private firms under contract. From another point of view, government audit is either financial or operational. In both cases it must be undertaken by a single team of professionals who shall be responsible for producing a single report, in accordance with specific techniques, methods and procedures.
The use of the words "audit" and "auditor" shall be limited to inspections conducted by the units mentioned in the above paragraph.
Article 49. -Operational Audit- Operational audit consists of the examination and evaluation conducted on an Entity or Body in order to determine the level of efficiency, effectiveness and economy in its planning, organisation, management, internal control and use of its resources; to verify the observance of the relevant provisions and to formulate comments, conclusions and recommendations with a view to improving the activities and subjects examined; it shall focus its attention in a selective manner on the activities and subjects that, in its opinion, are critical.
Article 50. -Financial Audit- Consists of the examination of the registers, vouchers and other documentary evidence supporting the financial statements of an Entity or Body, conducted by the auditor in order to formulate a verdict with regard to the reasonableness with which the results of transactions, the financial situation, the changes occurring in the said situation and the assets are presented; in order to ascertain whether the legal provisions have been met and in order to formulate comments, conclusions and recommendations meant to improve procedures dealing with financial management and internal control.
Article 51. -Special Examination- Entails the verification, study and evaluation of limited aspects or one part of the financial or administrative operations and transactions, subsequent to their execution, applying techniques and procedures pertaining to audit, engineering or others as may be similar, or specific disciplines, in accordance with the subject being examined, for the purpose of evaluating the fulfilment of the policies, rules and programmes and preparing the corresponding report which must contain comments, conclusions, recommendations, and should also indicate the facts or situations that could give rise to any type of liability.
Article 52. -Selective Review- If, from the evaluation of the internal control and the selective examination of transactions or operations, the government auditor obtains sufficient and relevant evidence on the reliability of the same, he may, at his discretion, limit the examination to a part of those transactions or operations.
SECTION 3
Audit Conducted by Private Firms
Article 66. -The Need to Give Contracts- Before undertaking a pre-planned audit, or in view of the urgent need to conduct an external audit on an Entity or Body subject to its control, the Comptroller General shall decide whether the work should be done by auditors belonging to the Comptroller’s Office, or whether a contract should be given to a private professional firm for this purpose, bearing in mind the nature and objective of the examination, the availability of auditors in the Comptroller’s Office, the possibilities of obtaining finances for the contract and the actual benefit that can be derived.
Article 67. -Selection, Qualification and Contracting- On deciding to give a contract to a private firm to undertake the audit of an Entity or Body subject to his control, the Comptroller General shall ensure that the procedure for selection, qualification and contracting is followed, in accordance with this Law and the Rules that he himself has to issue for this purpose.
Article 68. -Panel of Qualified Firms- An updated panel of professional firms that are fit to be awarded contracts by this Body shall be maintained in the Comptroller General’s Office.
Article 69. -Requirements to be Met by Private Firms- In order to be registered, a private firm must meet the requirements set out in the Rules referred to in Article 67 of this Law.
Article 70. - The Firm’s Personnel- The professional and non-professional staff working for a private firm that has been awarded work by the Comptroller General’s Office, shall meet the same minimum requirements as those set out in the technical norms of auditing, and must have no links whatsoever with the functions, activities and interests of the Body subject to the inspection nor with its officers.
Article 71. -Observance of the Norms- The audit personnel belonging to the private firm awarded a contract shall be obliged to abide by the legal provisions and all the rules pertaining to government audit.
It shall give particular importance to the maintenance of its independence vis-ŕ-vis the Entity or Body being inspected and its employees.
Article 72. -Limitation of Responsibility- When in the course of an audit, the private firm given the contract discovers criminal acts such as those mentioned in Article 64 of this Law, or acts that might give rise to civil or administrative responsibility, it shall immediately notify only the Comptroller General’s Office, which may then conduct a special investigation into the matter. The private firm will not be responsible for this special investigation but shall render assistance at the request of the Comptroller General.
If from the special investigation referred to in this Article, responsibilities are established on account of the criminal acts mentioned, the Comptroller’s Office shall proceed in accordance with the provisions of Article 138 of this Law.
Article 73. -Evaluation- The audit work of the contracted firm shall be subject to evaluation by the Office of the Comptroller General of the Republic, who shall be responsible for ensuring the technical quality of the examination and shall see to it that the relevant rules were followed. The officers assigned from the Office of the Comptroller General of the Republic shall have access to all the audit programmes, working papers and any other documents prepared or obtained by the private firm contracted.
Article 74. -Submission and Acceptance of the Report- The report by the private firm contracted shall be presented to the Comptroller General of the Republic for his acceptance, and shall be signed by the authorised person. Acceptance of the report means that, after evaluating the audit work, the Comptroller General’s Office has come to the same conclusions as the private firm and agrees with the results of the examination.
Once the report has been accepted, the Comptroller shall send it to the highest authority in the Entity or Body examined and to the corresponding officers, and shall let them know that the Office of the Comptroller General agrees with the contents of the report.
In case the report submitted by the private firm is not accepted, the terms of the contract shall be respected as far as the responsibilities of the private firm are concerned, and as far as the audit of the unaccepted Report are concerned, the Comptroller General must take the necessary steps to avoid loses to the State wealth.
Article 75. -Collaboration from Personnel in the Comptroller’s Office- The Comptroller General may agree that the audit personnel in the Office of the Comptroller General should collaborate in the work of the contracted audit, and thus form a single audit team along with the private firm’s personnel.
SECTION 4
Audits by the Comptroller General’s Office
Article 76. -Planning- The Comptroller General’s Office shall prepare an annual government audit plan designed to meet the need for carrying out controls, bearing the following factors in mind:
1. The professional human and financial resources at its disposal.
2. The level of effectiveness of internal control introduced in the respective Entities and Bodies, including the effectiveness of the internal audit units.
3. Sectors or activities requiring control on a priority basis, especially new Entities, Bodies and programmes as well as those existing ones in which substantial changes have taken place.
4. The chances of giving out contracts to private firms to obtain services.
5. The legal or contractual obligation to carry out certain inspections.
Article 77. -Flexibility in the Plan- The annual audit plan shall have sufficient flexibility to enable it to undertake special unforeseen audits and inspections arising from emergencies, urgent requests, serious accusations and other reasons.
Article 78. -Execution of Audits- Operational and financial audits that have to be undertaken by the Comptroller General’s Office, shall be executed in accordance with the generally accepted audit norms and in keeping with the policies, technical norms, handbooks and instructions issued by the Comptroller General that are applicable depending on the type of investigation and the purpose it has to serve.
Article 79. -Independence of the Audit Personnel- The government audit staff belonging to the Comptroller General’s Office shall maintain complete independence vis-ŕ-vis the Entities and Bodies subject to the control of the same, and therefore cannot undertake audit tasks in such Entities or Bodies where they have rendered their services in the preceding five years; neither can they do so when their tasks involve activities carried out by any of their relatives within the fourth degree of blood relationship and second of other relationship.
Article 80. -Testimonies and Presentation of Documents- The Comptroller General, the government auditors from the Comptroller’s Office and the representatives that the Comptroller has specially assigned for the purpose, are empowered to summon witnesses and demand sworn statements for the proceedings that come within the powers of the Comptroller’s Office; they may also call for the presentation of documents. Any person refusing to appear as a witness or give testimony or exhibit documents, when such are demanded by an authorised officer in accordance with this law, shall be compelled by judicial order, under Articles 2520, 2521 and 2526 of the Civil Code.
Any person giving a false testimony or committing perjury in the statements rendered to an officer authorised to receive them in accordance with this Law, is subject, without any other requirement, to the actions and punishments established by this Law.
Article 81. -Reports- The audit and special examination reports written by the government auditors of the Comptroller General’s Office, once approved by the Comptroller, shall be sent to the highest authority in the Entity of Body in question and to other relevant officers.
Article 82. -Communication- While performing the audit or special examination, the government auditors shall be in constant communication with the employees of the concerned Entity or Body, thereby affording it the opportunity to present documentary proof, as well as verbal information regarding the matters that are subject to scrutiny. Notwithstanding compliance with the orders given in Articles 64, 72 and 138 of this Law, they shall let the provisional results of each part of the scrutiny be known, as soon as they have them, to the corresponding officers, for the following purposes:
1. To give them the chance to present their opinions.
2. To allow the government auditors to avail of all the information and evidence there is, while they are doing their job.
3. To avoid presenting additional information or evidence after the conclusion of the audit work.
4. To facilitate immediate implementation of necessary corrective measures on the part of the head or responsible officers, including the introduction of improvements on the basis of the recommendations, without having to wait for the report to be formally issued.
5. To ensure that the conclusions arrived at from the examination are final.
6. To enable the immediate return or recovery of any shortfall in the financial or material resources during the course of the examination; and
7. To identify the fields in which there is a concrete difference of opinion between the auditors and the officers of the Entity, that were not possible to solve during the course of the audit work.
Article 83. -Discrepancies- Differences of opinion between the government auditors and the officers of the respective Entity or Body shall, as far as possible, be solved during the course of the examination.
Article 84. -Auditor’s Certificate- In the case of financial examinations, the auditor’s report shall also contain the auditor’s certificate on the reasonability of the said statements, and shall also say whether they are in accordance with or run contrary to the corresponding legal and secondary provisions. The reports on examinations that do not cover the financial statements shall clearly express this point.
Article 85. -Comments, Conclusions and Recommendations- Each report, besides what is specified in the previous article, shall contain the following:
1. Comments with regard to the operations, activities and matters that were examined.
2. Conclusions with regard to the operations, activities and matters that were examined that would provide the bases for determining responsibilities, if any, and the introduction of corrective measures; and
3. Recommendations to improve the working of the Entities or Organisations in the fields of administration, finance and internal control, depending on the type of examination.
Article 86. -Corrective Actions Therefrom- The corrective actions suggested by the audit and special examinations carried out by the Comptroller General’s Office, by private firms under contract and by internal audit units, shall fall within the domain of the managerial responsibility of the Entity or Body in question, notwithstanding the measures that the Comptroller’s Office must adopt in case responsibilities have to be fixed through such examination.
When necessary, the internal audit units, or the Comptroller General’s Office, shall offer general advice on the implementation of the recommendations, but shall not take part in any decision making.
