Public sector auditing is the independent review of government financial operations to confirm that public funds are collected and spent legally, efficiently, and for their intended purposes. While private auditing protects the financial interests of shareholders, public auditing protects the citizens, taxpayers, and legislature. It serves as the final, critical mechanism in the Public Financial Management (PFM) cycle, ensuring that those who manage public resources remain accountable to the public.

Every country establishes a Supreme Audit Institution (SAI) as its highest public audit body. In many Commonwealth nations, this office is headed by an independent Auditor General, while civil law jurisdictions often use a Court of Accounts model. The SAI operates as an external, post-facto watchdog. It evaluates the financial records, operations, and internal control structures of all ministries, departments, agencies, and local government units.

       [ Constitution / Statutory Mandate ]
                       |
                       v
       [ Supreme Audit Institution (SAI) ] <-----+ Audits Post-Facto

                       |                          |
                       +==========================+=====> [ Government Entities ]
                       |                                     (MDAs, Local Units)
                       v Reports Findings
       [ The Legislature / Public Accounts Committee ]

Public sector audits are governed globally by the International Standards of Supreme Audit Institutions (ISSAIs), which are developed by the International Organization of Supreme Audit Institutions (INTOSAI). ISSAIs provide a standardized framework for public audit professionals, detailing rules on auditor ethics, quality controls, audit documentation, and the exact wording of public audit opinions.