MANUAL OF PROCEDURES OF

INTERNAL AUDIT
Plurinational State
of Bolivia

Approved by: Ministerial Resolution No. 070 of March 24, 2010

MANUAL OF PROCEDURES
FROM THE INTERNALAUDIT UNIT
FIRST PART

INTRODUCTION

1. OBJECTIVE

The Audit Manual has been prepared in response to the need for
regulate the work of the staff of the Internal Audit Unit and of
document their operations according to the requirements of the General Comptroller
of the State, this manual should be established as a guide for action for the
different activities carried out by the Unit, with the aim of improving quality and
efficiency in their operations.

In this sense, the procedures and functions will be oriented towards

carrying out different types of audits using the criteria efficiently,
standards and principles of Government Auditing, through efficient management that
allow issuing quality reports, for this, a Program must be in place
Annual Operations POA based on your strategy, to address the activities of
audits whose factors will influence the nature, scope, and timeliness of their
planning.

2. RELATIONSHIP WITH GOVERNMENT AUDITING STANDARDS

The Government Audit Standards approved with Resolution

CGR/079/2006 by the General Comptroller of the Republic describes the aspects
general and basic guidelines for conducting different types of audits
covered by Law 1178 of July 20, 1990, which must be
applied in the development of internal audit work, mainly those that are
detailed below:

General Standards for Government Auditing

Competition
Independence
Ethics
Professional diligence
Quality Control
Administrative legal order and other applicable legal norms and
contractual obligations.
Information gathering
Execution
Follow-up

Financial Audit Standards

Planning
Supervision
Internal Control

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INTERNAL AUDIT
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of Bolivia

Evidence
Communication of results
Operational Audit Standards

Planning
Supervision
Internal Control
Evidence
Communication of results

Environmental Audit Standards

Planning
Supervision
Environmental controls
Evidence
Communication of results

Special Audit Standards

Planning
Supervision
Internal Control
Evidence
Communication of Results
Clarification Procedure

Audit Standards for Public Investment Projects

Planning
Supervision
Internal Control
Evidence
Communication of Results

Standards for Information and Communication Technology Auditing

Planning
Supervision
Internal Control
Evidence
Communication of Results

Standards for the Practice of Internal Auditing

Scope of the internal audit

Statement of purpose, authority, and responsibility
Interpersonal relationships
Strategic planning and annual operations programming
Planning, supervision, and audit evidence
Communication of Results
Other evaluations

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 MANUAL OF PROCEDURES OF
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of Bolivia

3. STRUCTURE OF THE MANUAL

For a better understanding of the use of this manual, we have

identified the main phases of the internal audit work as follows:

Planning
Execution of the work
Communication of results
Consideration of the presented defenses
Follow-up on the recommendations made

SECOND PART

PLANNING

Planning is essential in any type of work regardless of its

nature and size to adequately achieve the objectives
proposed.

In this aspect, the knowledge and experience of the members of the Unit
they are very necessary.

The planning of the audit aims to organize the work to be carried out.
allowing:

 Consider the significance of the risk, this allows for a focus on the aspects
important especially in high-risk issues that require special
attention.
 Determine the scope and the planned sources for the completion of the audit
required.
 Determine the operating units and components that make up the states
financial.
 Determine the significant errors or irregularities that may arise in
the development of the exam.
 Evaluate the controls implemented by the Institution to reduce these risks and
the risks of auditing.

1. INFORMATION SURVEY

The information gathering aims to obtain information.

general about all the important aspects of the area or activity to be examined. The
information must be organized for easy understanding and to serve as a
working tool to schedule the next phases and future exams that
A significant part of the information to be obtained will be contained in the file.
permanent of the UAI, which will be updated for this purpose.

The information gathering allows the auditor to collect, update the

basic information and identify the main objectives and functions of the area or unit

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 MANUAL OF PROCEDURES OF
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Plurinational State
from Bolivia

to examine, in order to plan the audit and schedule the detailed review of the
activities and their controls.
The updated basic information must be documented to ensure that it has
was considered in the planning and communicated to the team members

In the initial exam of the institution, activity, or area, it must be obtained a

adequate knowledge of the operations to be examined and the environment in which
which operates, for which the following must primarily be obtained:

 Background and legal framework for the creation of the Ministry of Environment and Water.
 Changes in legislation
 Organizational structure and organizational charts of the institution.
 Internal rules, manuals, and regulations of the institution.
 Heritage of the Institution.
 Identification of the organisms under guardianship and their degree of dependence
 Nature of activities carried out by the Ministry of Environment and Water.
 Information System used by the Entity for the registration of transactions, the
development, use, and degree of systematization in the process of its transactions
and related information.
 Audit history.
 Relationship with employees, number of them, existing labor agreements.
 Structure and location of the level of the Internal Audit Unit of the Ministry
Environment and Water.
 Key consultants, such as lawyers, banks, system advisors, consultants
tax agents, insurers, etc.
 Main sources of resource generation.
 PED environment. (Electronic Data Processing), on Systems of
Application and use of microcomputers by users.

All the previous documentation and any other that is at the discretion of the government auditor
useful information about the entity should be filed, constituting the
Permanent Audit File.

The information gathering must follow the following procedure:

a) Programming of the Information Survey.

The information gathering is carried out through the application of programs.

audit uniforms, which identify the main aspects to consider
in its development.

These programs must be adjusted (modified, expanded, or limited) from

agreement with the specific characteristics of each area to be examined, a situation that
requires the supervisor's authorization.

b) Organization of the collected documentation

In order to plan the next phases of the internal audit and

identify the activities that require significant improvement, it is prepared
summaries, or a list of the documents that support the activities
substantive and adjective of the examined area.

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c) Report for the Internal Audit Unit

At the conclusion of the audit survey, a report will be issued to the Head of the Unit.
of Internal Audit. The characteristics and content of it are as follows:

i. Directed to the Head of the Internal Audit Unit

ii. Prepared in a timely manner for the knowledge and decision of the Chief of the
Internal Audit Unit.

iii. The fundamental characteristic of this report must be conciseness.

iv. Include the important aspects to guide the following phases of the
audit, such as:

Reference to the work order and report on the completion of

survey.
Introduction that includes the scope of the work, the limitations or
existing difficulties and the positive aspects to carry it out.
efficiently.
In exceptional cases, it must be supported by evidence.
documented reasons for postponing the next phase
of the evaluation or the limitations that prevent its realization. Of
Such a situation does not exist, it will suggest the corresponding phase.
Results of the survey identifying the substantive activities and
the components of internal audit to guide the work.

v. Signed by the manager and the audit supervisor.

The survey report allows for communicating the results obtained to the Chief of the
Internal Audit Unit, in a formal, synthesized, and technical manner regarding progress
In the execution of the internal audit, the guidance followed to achieve the objective
Generally, determine the class and scope of the audit to be scheduled and schedule it.
evaluation of the Internal Control structure.

2. ANALYTICAL TESTS

Analytical tests mainly in the case of financial audits us

allow identifying conditions, trends or deviations in the projections, that
they can highlight material errors in the financial statements.

 Analysis of variations in Financial Statements (Horizontal and Vertical).

 Inventory turnover.
 Portfolio Aging Analysis.
 Other relationships according to the activities of the Ministry of Environment and Water.

3. EVALUATION OF ADMINISTRATION AND CONTROL SYSTEMS

INTERNAL

Carry out the evaluation of the administration and control systems (SAYCO) of
Ministry of Environment and Water, according to the following details:

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of Bolivia

 Operations Programming
 Administrative Organization
 Personnel Management
 Administration of Goods and Services
 Budgets
 Treasury and Public Credit
 Integrated Accounting
 Government Control, consisting of Internal Control and Subsequent Internal Control

Regardless of the analysis of the systems, the design must be evaluated.

the internal control systems based on transaction cycles are cited
main cycles:

 Purchasing cycle, expenses, payments, and accounts payable.

 Revenue cycle, collections, and accounts receivable.
 Inventory Cycle
 Payroll cycle

Each of the transactional systems and cycles will be documented as

follows:

 Conclusion of the System

 Internal Control Deficiencies
 Summary of Strengths
 Summary of Weak Points
 Internal Control Questionnaire Based on General and Basic Control Standards
internal for the Bolivian public sector.
 Backup of the questionnaire responses (Using auditing techniques).
 Flowcharts and narratives
 Route tests carried out
 Work programs to verify system compliance

Upon its conclusion, the report of the evaluation and design of the
administration and internal control systems, fundamentally based on the
explanation of the following attributes:

Condition, criterion, cause, effect, and recommendations. In other words, to expose the
deficiency or exception found, identification of potential risk of remaining
the current procedure or condition and the measures aimed at addressing the causes
that originate deficiencies or exceptions.

4. MEMORANDUM OF AUDIT PROGRAMMING (MAP)

This document will summarize the key information obtained during the process of
audit scheduling, constituting a way to summarize decisions
important and serves as a guide to the members of the audit team.

The MPA must mainly contain the following:

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4.1. Terms of Reference

This section must clearly document the following

aspects:

 Nature of the work, identifying the references or background for which

the audit work is being developed.

 Objectives of it, for example, issuance of the report on the reliability of the
records and financial statements.

 The scope of the review to be carried out and the restrictions on the scope of work
(if there had been any).

 Legal norms and provisions to be applied in the development of work.

 Dates for the tasks to be carried out, for scheduling, execution of tests and
presentation of the draft report to the Audit Department.

4.2. Information about the background and activities

In this section, the information that allows for understanding should be indicated.
of the entity or activity under examination, according to the following context:

General

Indicate the background of the creation of the Entity, organizational framework, and level
of dependence on the bodies that exercise guardianship, and main sources of
income as a resource generation.

Identify the main activities that the Entity engages in, the nature
of the same and their processing.

Specific

Clearly identify the operations subject to the audit examination.

4.3. Accounting Policies

The main accounting policies of the Ministry of Water should be described or

in their case, the accounting operations originating from the analyzed areas, providing
special emphasis on the changes produced in accounting policies between one management
and another, even if it is the first audit.

4.4. Expected audit approach

This section should specify the existing risk factors in the

Ministry of Environment and Water or activity being examined.

For each of them, indicate the effective and efficient audit approach, okay.
to state the procedures to be applied with the least possible investment of resources,

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of Bolivia

guiding them to reduce the identified risk factors and towards those
necessary procedures to meet the objectives of the joint audit.

4.5. Considerations on materiality

Significance in audit planning means considering the level

of error or irregularity that may exist without distorting the financial statements or the
document analyzed. This provides the following benefits:

 The nature and scope of audit procedures are better planned.

and are more effective.

 The members of the audit committee are better informed about what
what is considered significant and therefore the emphasis on the
insignificant items.

There are no rigid criteria on which to base the evaluation of

significance, professional judgment prevails, however it is important to consider:
the total assets, net results, total liabilities and total equity, all at
the closing date.

4.6. Work Management

It should include a detail of the assigned personnel, the budget of hours for
the programming, execution of tests and report.

Additionally, in this section you can document whether for the development of
the tests will require the support of specialists in different disciplines, such as
lawyers, computer engineers, etc.

5. PRELIMINARY AUDIT APPROACH

Once the information about the risk factors has been obtained, the auditor in charge
it should determine the preliminary audit approach, indicating in terms
generate the audit procedures to be applied, orienting them to reduce
the identified risk factors.

6. WORK PROGRAMS

Work programs are the culmination of the planning process.

each of the audits to be developed. Therefore, it constitutes in
a written document that outlines a plan of action to be followed, describing in
general terms the scope of work and specifically the procedures of
audit that were selected according to the circumstances. In this way, the
audit programs provide us with a description of the methods, techniques and
audit procedures that are suggested to be applied to meet the objectives of
audit exam.

The important thing regarding work programs is related to

fact that the staff responsible for its execution truly understands the
procedures indicated in the program.

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 PROCEDURES MANUAL OF
INTERNAL AUDIT
Plurinational State
from Bolivia

The information that must be included in a work program is as follows:

 Audit Objectives

 Details of the audit techniques or procedures that will be used in the

exam, the same ones that must have a logical relationship.

 Column established to record evidence of reference to working papers.

 Column established to provide evidence of the auditor's signature responsible for the
execution of audit procedures.

 Evidence of the completion and approval by the Head of Audit.

The benefit of applying work programs translates to:

 Identify and document the procedures to be performed before they begin

the tests.

 Facilitate the delegation of functions and supervision.

 Ensure that the scheduled procedures are carried out.

 Document the execution of the procedures carried out.

7. AUDIT PROCEDURES

Audit procedures are defined as that technique

the set of selected audit techniques, whose purpose is to achieve one or
several objectives proposed in a specific audit program.

8. AUDIT TECHNIQUES

Audit techniques are those practices or methods used by the

auditors, whose objective is to obtain audit evidence. The audit techniques
commonly used are the following:

Physical examination

It consists of the inspection and/or counting of tangible assets, this technique of

The audit provides us with direct physical evidence of the existence of assets.

Independent confirmation

It consists of obtaining an independent person's statement about

any situation, balance in favor or against. The confirmations can be positive,
negatives or blind. This auditing technique provides testimonial evidence.

Observation of the operations

It consists of the visual inspection that indicates the existence of assets or the
existence of a certain operational procedure. Generally translates to

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INTERNAL AUDIT
Plurinational State
of Bolivia

a memorandum, photographs, graphics or maps. This audit technique provides

physical evidence.

Inquiry

It consists of obtaining information by public servants,

they are generally translated into memorandums and provide us with testimonial evidence.

Calculation and recalculation

It consists of a check or verification of the data provided by the

Unit subject to examination. This technique provides us with analytical evidence.

Analysis of accounts or operations

It consists of the evaluation of the financial or operational information obtained from

the institution. The use of this technique is generally the complement of several
of the previously mentioned techniques, as it constitutes a comparison of the
information prepared with the corresponding records. This technique provides us
analytical evidence.

Techniques for analyzing the design of control procedures

internal

Which in turn, could be documented through: Questionnaires of

Internal Control, Workflow of Administrative Processes and Financial
Analysis of Function Segregation, Narrative Description of the Activities
administrative operations and Route Tests.

All these audit techniques are aimed at

diagnosis of the internal control systems of an entity and allow us to ensure
the integrity of the financial operations carried out, as well as allowing us
determine if the controls implemented in the Entity worked in a certain
moment, to detect irregular operations. These auditing techniques us
allow to obtain physical, documentary, testimonial, and analytical evidence.

9. AUDIT RISKS

Concept
The audit risk is the possibility of issuing an audit report.
incorrect, for not having detected significant errors or irregularities that
would modify the opinion expressed in the report. The auditor's work is
will then focus on executing tasks and procedures aimed at reducing that
risk at an acceptable level.

Classes of Risks
The global audit risk is the result of the conjunction of:

Aspects applicable exclusively to transfers to the municipalities,

prefectures and the type of operations that are carried out in the volume of
transactions, regardless of the control systems

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Plurinational State
of Bolivia

developed, what is referred to as inherent risk. This risk is outside

of control by the auditor.
Aspects attributable to control systems, including auditing
internal, what is referred to as control risk, that is, the systems
control mechanisms are incapacitated to detect or prevent errors or
significant irregularities in a timely manner.
Aspects originating from nature, scope and opportunity of the
audit procedures for a particular job, what it
it is called detection risk, which is controllable by the work of
auditor and depends exclusively on how they are designed and carried out
the audit procedures.

The auditor does not examine 100% of the transactions of an entity, but instead...
based on the work done on a sample and extend those results to the universe
from the transactions, the poor determination of the sample size can lead to
erroneous conclusions about the universe of those applications.

That is to say, the audit risk is the conjunction of an error existing.

significant in the financial statements (Inherent Risk and Control Risk) and that
we fail to detect it (Detection Risk), except on rare occasions, the
the auditor may be in a position to issue a technical opinion with absolute certainty
about the validity of the statements contained in the financial statements. This lack
It certainly generates an audit risk; the auditor's work then focuses on
in carrying out tasks and procedures aimed at reducing that risk to a level
acceptable.

COMBINATION OF AUDIT RISKS

INHERENT RISK CONTROL RISK DETECTION RISK

HIGH MINIMUM
HIGH MODERATE MINIMUM
LOW MODERATE
HIGH MODERATE
MODERATE MODERATE MODERATE
LOW UNDER
HIGH UNDER
LOW MODERATE HIGH
LOW HIGH

Risk Assessment

The assessment of audit risk is the process by which, based on the

risk factors are measured at the level present in each case.

The audit plan must record the reasons for which the emphasis of
audit is necessary, through the identification of particular risks, or in case
on the contrary, the circumstances that justify the lesser emphasis on auditing. However,
it is not essential that all aspects of the risk are documented, but that they
risks in themselves should be considered and understood.

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 PROCEDURES MANUAL OF
INTERNAL AUDIT
Plurinational State
of Bolivia

Audit risk can be classified into four levels: Minimum, low,

medium and high.

The assessment of the degree of risk is a completely subjective process based

in the criteria, experience and ability of the auditor. Nevertheless, it is used for such
evaluation three tools:
a) The significance of the component
b) The existence of risk factors and their relative importance
c) The probability of occurrence of errors

LEVEL OF SIGNIFICANCE FACTORS PROBABILITY

RISK OF RISK OCCURRENCE OF
ERRORS
LOW Significant There are some Improbable
But no
important
MODERATE Very significant There are some Possible
HIGH Very significant There are several and Very probable
They are important

Effect of risk on the audit approach

The assessment of audit risk will be directly related to

nature, scope and opportunity of the audit procedures to be applied. A
once the inherent, control, and detection risks have been evaluated, and knowing the
audit risk, we must evaluate various combinations of procedures
what is the most efficient set that meets the objectives for each of the
affirmations.

GREATER TURNOVER A: LOWER ROTATION A:

Lower inherent risk Greater inherent risk

Effective control environment Weak control environment
Financial solidity High indebtedness
Internal and reliable financial statements Unreliable Financial Statements
Strategic and budget planning Absence of planning and
effective. budgeting.
Previous audits with few or no significant error detections and
error identified. numerous in previous audits.

The assessment of risks, according to professional criteria of

The supervisor and the person in charge will include the following information:

A = High to identify the presence of a high level of risk

evaluate the key and important internal controls

M = Moderate, when rating the applied controls as reasonable

B = Low, when the risks determined in the control evaluation

internally do not require additional verification procedures.

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Internal Audit
Plurinational State
from Bolivia

The audit approach must decide on the additional efforts of

team for verification or removal of the risk area so that it is not necessary
continue the exam.

THIRD PART

EXECUTION OF THE AUDIT WORK

The documentation of the audit process will essentially be presented in the

the following work papers:

 Permanent
 Current
 Resumen

1. PERMANENT FILE (PF)

These files include continuous application information on jobs of

audit. This information must be updated in each review.
constantly in order to provide data that is used at all stages of the
audit process, facilitating the Internal Audit Department staff with their
familiarization with the dependencies of the Ministry of Environment and Water to be
audited.

The documents that can make up this file are varied; and as it has been done
mention its name, its main characteristic is to serve as a reference for one or more
exercises, in such a way as to provide audit evidence according to the
circumstances, which unlike the documents of the current file provide
audit evidence exclusively for the period under review.

1.1. Legislation

Corresponding to the legal information linked to the Entity

under examination or with the operations subject to examination. Therefore, it will be possible to
document the history of the creation of the Entity, the legal provisions related to it
creation and those related to modifications if they exist.

Documents related to their statutes must also be filed.

regulations, and the provisions related to their implementation.

1.2. Contracts and agreements.

This part of the file must contain information regarding contracts and
agreements signed by the MINISTRY with third parties and/or vice versa. However, the
The characteristic of these contracts and agreements is based on the fact that their validity
must be at least superior to one management and the agreed sum is
significant. If possible, it is desirable to obtain a copy of the contracts
respective, however if not possible, a summary must be made of the
most important clauses, of the formulas or calculation bases established in the
contract.

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Plurinational State
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1.3. Propiedades: Inmuebles y vehículos

In this part of the permanent file, information must be obtained about the
real estate and the vehicles that the institution has. For the same purpose, it must
obtain the following information:

 Description of the type of asset (real estate or vehicle).

 Reference to the document that proves the ownership of the asset (registration in
the registry of real rights, mayor's office and/or transit.

 Location (in the case of real estate)

 Date of purchase, transfer, donation or others

 Pledge, lien and/or mortgage with which the asset is affected.

 Verification of the existence of alodial certification.

2. CURRENT FILE (CF)

All information and documentation obtained will be kept in this file.

prepared by the government auditor during the execution process of
audit exam that allows evidence:

The fulfillment of the scheduled activities and the decisions

adopted during the programming stage.

The documentation and information that, in the auditor's opinion, will constitute
this file may refer to documentation prepared by the
staff of the Ministry (original documentation or photocopies),
documentation obtained by the auditor directly from third parties
(confirmations) or certificates prepared by the auditor themselves or reports
prints of procedures executed through magnetic media.

2.1. Working papers

The working papers serve as a link between the fieldwork

developed and the internal auditor's report. Therefore, they constitute a
set of prepared documents or records obtained by the auditor that register
data and information collected, as well as the results of the tests conducted
during the respective exam.

In any case, it should always be clear from the working papers:

the origin of the data; if they are information obtained from the operational sectors, the
name of the employee who provides them or the source from which they were obtained
information; if they are receipts to be registered, the denomination of these and finally
when applicable, the number and scope of the review.

Information that must be included in the working papers:

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Plurinational State
of Bolivia

Heading of the working papers

Name of the entity subject to examination.

Type of work assigned (according to memorandum).
Date on which the exam is held.
Purpose of the certificate (Example: Analysis of material existence).

In the upper right corner

The name of the auditor who prepared the respective working paper.
The name of the auditor who reviewed the respective work paper.
The date on which the form was prepared.
The index or reference that must be inscribed in the upper right part of
each work paper.
Source from which the information was obtained
Audit marks or ticks used and explanation of them.
Data and information that truly assist in the audit examination.
Date and signature of the Head of Audit, as evidence of the review of the
working papers, if applicable.
Additional recommendations for the preparation of working papers.

 In the presence of an error or audit finding, it should be noted.

through the use of numbers

 enclosed in a circle. Ex: 1, 2, 3

 Use a red colored pencil to mark:

Index or reference
The marks or accents of audit.

 Ensure that all outstanding issues have been resolved and that it has been achieved.
to conclusions.
 The auditor must keep the papers under custody and confidentially.
work.

2.2. Ownership of Work Papers

The working papers that support any audit examination are

property of the MINISTRY OF ENVIRONMENT AND WATER, for which they must
establish the mechanisms capable of placing them in adequate safeguarding.

2.3. Access and Confidentiality of Working Papers

While an internal audit report is not finalized, the papers of

work constitutes confidential documents, therefore they cannot
to be disclosed. As for the working papers that support the reports with
indications of administrative, civil and/or criminal responsibility, they must maintain
its confidentiality until the process has been completed
clarification and the issuance of the respective complementary report. Once issued the
internal audit report the working papers may be known to
third parties like the following:

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Plurinational State
of Bolivia

2.4. External auditors and the General Comptroller's Office of the State.

Regarding the former, in order to establish a relationship with the auditors.

externals, they may require the working papers prepared for an audit
Determined. For which the following should be considered:

 The external auditor must make a written request addressed to the Chief Auditor.
Internal, which will clearly indicate the documentation that needs to be examined.
 The Head of Internal Audit will analyze the submitted request and may authorize
that the respective documents be exhibited.
 It will not be possible to obtain duplicates of the working papers; however
The respective annotations of the requested will be allowed.
 The reviews of the working papers will be carried out in the offices of the Unit of
Internal Audit of the MINISTRY OF ENVIRONMENT AND WATER.

Regarding the second point, the General Comptroller's Office of the State as part of
post-audit external work may require programs, tasks, and documents
of work prepared by the Internal Audit Unit, for which it should be taken
take the following into account:

Access to the requested item will only be granted with authorization from the Chief of
Internal Audit.

 In those cases where the auditors from the Comptroller's Office actually identify themselves.

 In very necessary cases or at the express request of the General Comptroller of the State,
It will be possible to obtain duplicates of the working papers with the
authorization from the Chief of Internal Audit.

2.5. Public servants

Because in many circumstances it is necessary to provide information

additional about any internal audit report, the internal auditor may resort to
the working papers to provide more details on what was examined. However, not
the working papers can be delivered to public servants.

2.6. Recipients of the reports

More detailed information can be provided to the recipients.

from the audit reports, as long as there is an express request from
these people and with the authorization of the Head of the Internal Audit Unit.

2.7. File and Security of Working Papers

The auditor has the responsibility to oversee during the development of a

audit, that the working papers resulting from the performance of their work are
keep with the proper security, for which there must be one or two shelves with
key and that the assigned office has the necessary security conditions
to prevent free access by third parties.
The working papers resulting from an audit belong to the Unit and
They must be stored and archived properly to prevent their theft or misuse.
improper and facilitate his behavior.

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The information obtained during the audit and recorded in the papers
work must be disseminated through reports, so that they are
understood as a whole and to prevent them from being distorted or misrepresented.

1. Content of the Working Papers

a) The work has been planned and supervised properly, and also
indicate that the first auditing standard related has been fulfilled
to the execution of the work.

b) The internal control system has been sufficiently studied and

evaluated to determine if other procedures should be limited
audit, indicating compliance with the second auditing standard
related to the execution of the work (substantive tests)

c) The evidence obtained during the audit, the procedures of

audits applied to the tests performed have provided
sufficient competent evidentiary support to sustain the
to express an opinion on reasonable grounds indicating the
compliance with the third auditing standard relating to execution
of the work (substantive tests).

2. Ownership and custody of the working papers.

They are part of this Audit Procedures Manual the Policies of

Ownership, conservation, and protection of the work papers of the Management of the
Internal Audit Unit.

3. Objectives and Importance of Working Papers

The working papers must meet the following objectives:

a) Provide evidence of the work carried out and the conclusions

obtained during the development of the exam.
b) Allow auditors to adopt a uniform and disciplined approach
in the execution of their work.
c) Allow supervision on a systematic basis and serve as
evidence of such supervision.
d) Document that information that can be used in exams
futures.
e) Serve as a criterion to evaluate the technical performance of
the auditors.

4. Characteristics of Working Papers

The working papers must meet certain characteristics and requirements,

which are detailed below:

Clarity: In order for any other auditor or reader to be able to

understand the purpose, nature, scope, and conclusions about the
work completed.

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Plurinational State
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Conciseness: What it means for the working papers to be used only

of themes and relevant aspects for achieving the objectives of
audits defined during the programming stage, avoiding inclusion
extensive superfluous comments that create confusion or hinder the
supervision. However, it is important to understand that if necessary,
the working papers must contain sufficient explanations
to meet the clarity requirement

2.8. Referencing and co-referencing systems

A referencing system is a method used by auditors, whose

The purpose is to identify each of the working papers by using indices.
The use of a methodology allows the auditor to maintain a logical order and
rationale in the work developed; on the other hand, it facilitates supervision tasks
especially when there is a large volume of processed information.

Co-reference is nothing more than a system of cross-referencing.

which must consider the following aspects:

 Only matching numbers can be crossed out.

 Any exchange of information must be conducted in both directions; that is to say:

where the information is located and where it was obtained.

 The position of the reference generally indicates an order, a way of

use the indices. In this way, the order we will base ourselves on for sorting
our working papers will be similar to the movement of the clock hands;
that is: the reference indicated on the left or at the top of a figure,
it means the base figure or the one that will be broken down into others and the referenced indicated
on the right side or at the bottom, it indicates the location where it is located
audited that figure.

2.9. Audit marks or accents

They are conventional signals or signs used by the auditor, which indicate
generally the application of an auditing technique and/or procedure, also
are used to highlight some aspect or some specific fact.

2.10. Additional recommendations for the use of the marks or accents

of auditing

The meaning of each audit mark or tick used in all the papers
of work, it must always be clarified at the bottom of them or on a slip.
separated; in this last case, it must be indicated on the working paper the reference
respective place where clarifications of the brands or accents are found (For example:
T/R see in P/100).

 One must always be careful not to use the same brand or accent with double.
meaning.
 In general, the fact of overloading the working papers should be avoided with the
use of audit marks or accents, as this situation complicates the process of
supervision of the same.

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INTERNAL AUDIT
Plurinational State
of Bolivia

 It has been determined that we will not use defined brands for the jobs of
audit. On the contrary, internal auditors may make use of the brands or
necessary tildes, uniforming them in each task and considering the above
marked.

2.11. Correspondence

In the development of the auditing work, it is often necessary to leave

evidence that a certain procedure was carried out or to leave a record
about a specific situation (for example: request for submission of documentation).
Therefore, in this section those documents can be archived, including the
lawyer reports.

2.12. Supervision and Pending Points to Conclude

The supervision shall be exercised by the Head of Internal Audit, the same
will consist of:

That all working papers must be reviewed, in this way it

will be able to guarantee that the audit procedures were carried out and that the
reports have the respective backing.

All situations that are not clearly defined must

make oneself known through a form called 'Pending Points to Finish'
the same ones that, once clarified by the auditor, must be verified again.

2.13. Internal Control Observations in the execution of audits

The deficiencies or weaknesses represent non-compliance with the

procedures and control structure, that is, procedures and techniques that
are needed to ensure the achievement of the objectives of the different systems.
Additionally, provide the auditor with a valuable tool to recommend.
solutions that correct and prevent the occurrence of errors in the future
irregularities.

Below we describe the aspects that must be included in this

form:

Ref. P/T
This column must include the reference to the form from which it originated.
the exception.

Condition
The condition is the revelation of 'what is'. that is, the deficiency or
exception as they were found during the audit. The wording
include indicating the number of errors, briefly but
sufficient. As far as possible, it will be necessary to include details
complete or examples of the errors found.

Criterion
The criterion is the revelation 'what must be,' that is, the reference to:

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Plurinational State
from Bolivia

Laws, internal control regulations, function and procedure manuals,

policies and any other written instrument; in some cases the meaning
common and in others the auditor's criteria. In many cases it can be used in a
same paragraph the criterion and the conclusion.

Effect
The effect or consequence is the result or the risk of the potential outcome.
what results from maintaining the current procedure or condition, when comparing it
what it is, with what it must be (Condition vs. Criterion). The identification of
"Effect" is very important to highlight the significance of the problem.

Cause
The cause is the revelation of the origin of why the weakness occurred and
exception, the causes are of great help to properly guide the
recommendations.

They are very common causes, the lack of: training, communication, induction to
the manuals, just e and instructions, human or material resources, good
judgment or common sense, honesty, interest or motivation, supervision
adequate, delegation of authority, etc.

Recommendation:
The recommendation constitutes the auditor's criteria and must reflect
knowledge and good judgment regarding what is most beneficial for the
Institution. To a large extent, a good recommendation is based on the analysis of
the resources and in the consideration of its cost/benefit.

Supervisor's disposition
This column will include the Supervisor's perception of the deficiency.
observed, which must be completed by documenting the actions that must be
address this matter, clearly indicating among other aspects, whether it is
Weakness should be included in the recommendation report.

3. FILE SUMMARY

The purpose of this file is to include information that is related to

the conclusion phase of the audit examination. Its purpose is to summarize the aspects
that will ultimately be included in the respective audit report. The
documents that must be included in this file are the following:

3.1. Pending points to conclude

In this part of the file, the sheet called 'Points' must be archived.
pending to conclude," marked in the supervision section carried out on the work of
Internal Audit.

3.2. Issued report

In this part of the file, a copy of the audit report must be filed.
internal, which must also be referenced to the working papers, where
the audit evidence is found.

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Plurinational State
of Bolivia

At the same time, all those matters must be filed in this section
that may affect the exam of the next management.

3.3. Minutes of discussion on important aspects

We must document, as part of this section, the minutes that show

evidence of the meetings held with the public servants, to whom it was explained
the content of the audit report.

3.4. Time consumed and budgeted

A summary of the time spent on should be included in this part of the file.
the audit exam and the explanation of time variations. This document
It can help us to schedule the audit tasks.
next.

FOURTH PART

COMMUNICATION OF RESULTS CONSIDERATION OF

Downloads and Issuance of Report

COMMUNICATION OF RESULTS

1.1. During fieldwork

In the partial results, during the exam, communication may occur.

verbal on specific issues that need clarification but it is advisable that the
The auditor should rather document this action in writing, with the purpose of
both your communication and the response remain as working papers of
audit.

In the case of conducting the audit exam and it shows indications of

civil or criminal liability, the auditor must bring to the attention of the unit
legally through a report, substantiating these indications.

1.2. At the end of the work

It is the normal procedure by which the Internal Auditor informs the

immediate superiors the partial or total results of your exam.
The final product of the work developed by the Internal Auditor, previously
It must be discussed with the responsible executives and must be recorded.
necessarily in an Internal Audit Report, which must be published a
once the audit exam is completed.

For a better arrangement of internal audit reports, in cases

including recommendations for responsibility and internal control is
It is advisable to issue reports separately.

Such reports will contain characteristics such as those we pointed out to

continuation:

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Plurinational State
from Bolivia

 It must be addressed to the holder of the portfolio of MINISTER OF THE MINISTRY OF

ENVIRONMENT AND WATER.

 It must be signed by the Head of Internal Audit as a sign of approval.

 It must be issued once the respective audit exam has been completed.

 The conclusions and recommendations must be discussed with the levels.

respective appropriates from Management before being published. The way of
Documenting this situation will be explained in the Summary File.

 Finally, as stated in Law 1178 of 07/20/90 in its Articles 15 and 42 inc.

b) and D.S. 23215 of 07/22/92 in its Article 35, the Internal Audit reports
must be sent to the General Comptroller of the State.

In cases with indications of civil, criminal, and/or administrative liability,

In addition to the previous points, the Internal Audit report must contain what
next

 A report from the legal advisor or lawyer that confirms what is stated in the report of
Audit.

 Duly legalized photocopies of the documentation capable of supporting the

observations.

Additionally, in the case of civil liability the following:

 Determination of liquid sum payable in Bolivianos and its equivalent in Dollars

Americans

 Identification of those involved with full names;

 Identity card numbers, and

 Classification of the respective paragraph for violation of Art. 77 of the "Law of the System of
Fiscal Control.

On the other hand, these reports that indicate signs of responsibilities,

they must undergo the respective clarification process, as indicated by the Arts.
Article 39 and 40 of Supreme Decree 23215 of 07/22/92, so that it can later be issued the
respective supplementary report.

2. PROCESS OF CLARIFICATION AND CONSIDERATION OF THE CHARGES

PRESENTED

The initial report referred to as preliminary or, if applicable, the relevant part,
compliance with Art. 40º of D.S. 23215 of 07/22/92, must be delivered to the
involved persons. In case they cannot be located, the MINISTRY OF ENVIRONMENT
ENVIRONMENT AND WATER will invite through a press notice in a circulating newspaper
national, so that they can collect the aforementioned copy.

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of Bolivia

The people involved will have a period of ten business days to submit
your explanations or justifications, attaching the supporting documentation
corresponding and/or request any necessary clarifications. The deadline may be
extended upon justified request of the interested party.

The submitted defenses must be analyzed carefully by the

Audit Unit, whose results will suggest:

 Raise the initial charges based on valid documentation that allows the
same.

 Modify the involved values and/or affected people, in this last case it will be
it is necessary to notify the affected individuals again, and/or

 Ratify the observations and responsibilities indicated in the preliminary report,

due to the lack of documentation or sufficient information to raise
the established charges. This situation may also apply to cases where
the involved parties do not present any documentation for rebuttal or clarification
some within the established deadline.

According to Article 50 of D.S. 23215 in cases where it is noted

the existence of indications of possible criminal liability or civil liability
significant, the audit unit may request from the General Directorate of Affairs
Legal representatives of the MINISTRY OF ENVIRONMENT AND WATER, are dispensed from
clarification procedure.

3. ISSUANCE OF THE FINAL OR COMPLEMENTARY REPORT

Mainly, the supplementary report is necessary in cases of

administrative, civil, and criminal liability, which will contain information related to
the communication of the results of the preliminary report, an explanation of the
recommended points and fundamentally the analysis of the presented defenses and
its final disposition. The supporting documentation, duly legalized, will form
part of this type of reports.

Legal opinion will be necessary in the following cases:

 When the supplementary report confirms the initial charges.

 When the supplementary report modifies or partially lifts the charges.
initials.
 When the supplementary report fully lifts the initial charges.

4. SUBMISSION OF REPORTS TO THE OFFICE OF THE ATTORNEY GENERAL OF THE STATE

In compliance with Art. 15 and 42 b) of Law 1178 of the System

Fiscal Control of July 20, 1990, the reports that contain recommendations
of Administrative and Civil liability application, to facilitate its evaluation and
compression will be sent jointly (preliminary and complementary) to the
Office of the Comptroller General of the State.

Administrative responsibility recommendations can be processed without

previous evaluation of the reports by the General Comptroller of the State.

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INTERNAL AUDIT
Plurinational State
of Bolivia

On the contrary, the recommendations for civil and executive liability, for their
execution necessarily requires the approval of the Comptroller General of the State.

FIFTH PART

FOLLOW-UP ON THE REPORTS

OF INTERNAL AUDIT

In order to verify compliance with the recommendations included in the

internal audit reports issued will be carried out annually
follow-up on the recommendations made in the different reports, therefore
the Annual Operational Program of the Internal Audit Unit necessarily
it will consider among its activities the follow-up work of the reports of
Internal Audit.

To properly carry out the monitoring tasks of the

recommendations included in the Internal Audit reports must be proceeded with
how does it continue:

 Create a Database that at least contains the following:

Audit Report Number

Reference or title of the Audit Report
Institution or Entity.
Type of report (Internal control or Responsibilities)
Recommendation number
Recommendation

 Define the moment, the number of auditors and the number of hours to carry out the
follow-up work.

 Working documents must be prepared describing the

recommendation specified in the internal audit report and whether it was
adopted by the Entity.

 As part of the procedures outlined to carry out the monitoring of the

audit reports, the auditor must obtain sufficient evidence that the
recommendations were implemented or, if applicable, suggest the application of
administrative responsibility.

 Finally, the monitoring work must be reflected in an audit report.

Likewise, follow-up will be conducted on the audit reports issued by

external auditors and the General Comptroller's Office.

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 PROCEDURES MANUAL OF
INTERNAL AUDIT
Plurinational State
from Bolivia

SIXTH PART

ADMINISTRATIVE ASPECTS RELATED TO THE

INTERNAL AUDIT WORK

1. TIME CONTROL IN INTERNAL AUDIT WORK

For adequate control of compliance with the estimated time in the

Annual Operational Program of the Internal Audit Unit, assigned to each job,
Through forms designed for the purpose, the number of hours will be controlled.
charged to each job and for each auditor. This form will serve as the basis for
the consolidation of information in a document called evaluation of the
execution of the Annual Operational Program of the Internal Audit Unit, which must
being fed and updated permanently, on the other hand this document must
to be constantly evaluated and will serve to project future programming and
make changes to estimates mainly regarding the times.

2. EVALUATION OF THE INTERNAL AUDITOR

For proper management of the human resources of the Unit

Internal Audit requires a continuous evaluation to be conducted of the
professionals members of this Unit, which is why a has been designed a
auditor evaluation form.

The staff evaluations must be carried out by the Head of Audit.

Internal, upon completion of each audit job.

These evaluations will be considered for promotion and assignment purposes.

of tasks, according to their capacity and experience.

3. DECLARATION OF INDEPENDENCE OF THE INTERNAL AUDITOR

The document called declaration of independence of the Internal Auditor,

will ensure the execution of our exams in accordance with standards
Government Audit, fundamentally related to independence with
the manner in which the designated audits must be executed.

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