Audit Process

How We Work With You

We believe that a collaborative working relationship throughout the engagement will facilitate a successful audit. It is our intention to involve you, our management, in every step of the audit process so that you will understand what we are doing and why we are doing it.

Although every audit is unique, the audit process is similar for most engagements and generally consists of four phases:

Planning
Field Work
Reporting
Follow-up

Your involvement is critical at each stage of the audit process. As in any special project, an audit results in a certain amount of time being diverted from your department’s usual routine. One of our key objectives is to minimize the disruption of routine activities.

Generally the following process will occur once a department, area, process, or other activity is selected for audit.

Field Work

About

During this phase, Internal Audit will perform tests of transactions, analytical reviews, and test other applicable data pertinent to the audit. Internal audit will likely interview employees of the audit area to inquire about their duties and request further clarification on procedures or documentation. This work is generally performed on site at the area being audited. It is during this phase that the auditor determines whether the controls identified during the preliminary review are operating properly and in the manner described by department personnel and policy and procedures manuals, regulations, Board policies, etc.

As fieldwork progresses, the audit program is reviewed to ensure that procedures described within are appropriate to meet the audit objectives. Any significant changes are discussed with the auditee.

The duration of an audit will vary depending upon the scope, objectives and availability and accessibility of information and personnel. The level of cooperation received from the auditee also has a bearing on the duration of the audit. Access to personnel and records is vital for the prompt completion of our work.

Advice & Informal Communications

As field work progresses, the auditor will discuss significant findings with the auditee. Hopefully, the auditee can offer insights and work with the auditor to determine the best method of resolving the finding. Usually these communications are made through informal discussions. However, in more complex situations, memos are written in order to ensure full understanding by the auditee and the auditor. Our goal: No surprises!

Audit Summary

Upon completion of the fieldwork, the auditor summarizes the audit findings, conclusions, and recommendation necessary for the audit report discussion draft.

Reporting

About

Our principal product is the final report in which we present the audit findings, recommendations for improvements, and the audittee’s response.

Preliminary Draft

Once the fieldwork is completed, Internal Audit will draft a report to include the result of the audit including recommendations for improvement. After the draft report is completed, it will be forwarded to department management for review and discussion at a scheduled exit conference.

Exit Conference

The exit conference is a meeting between Internal Audit, management and applicable personnel to review and discuss the draft Internal Audit report. An exit conference will be scheduled and held between the Internal Audit team and the auditee including management with the authority to implement corrective action and other appropriate personnel. The exit conference provides an opportunity for the auditee to review draft engagement issues, observations, and recommendations. These discussions and reviews help avoid misunderstandings or misinterpretations of fact by providing the opportunity for the auditee to clarify specific items and express views about the observations, conclusions, and recommendations. During this time, we will also discuss the preliminary draft audit report and agree on any necessary changes to the observations or recommendations. If necessary, changes may be made to the draft report and reissued to management to be used in preparing a response for corrective action.

Responding to Audit Reports

The Internal Audit will require that management’s response be completed using the prescribed format. In some cases, management may choose to respond with a decision not to implement an audit recommendation and to accept the risks associated with an audit finding. In such cases Internal Audit may include in the report an additional comment explaining the consequences of accepting the risks associated with not implementing the recommendation.

To facilitate the issuance of timely and relevant Internal Audit Reports responses are generally due within 10 working days of the issuance of the final draft report. Only in unique and extraordinary circumstances when it is deemed to be in the District’s best interest is the Internal Audit manager to consider approving an extension of time to respond to the audit issues.

Failure to submit responses with corrective action steps and/or communicate with the Internal Audit within the prescribed time will result in the issuance of the final draft audit report Management and the FAC indicating that management did not respond timely nor request an extension of time to respond.

Final Report

At the conclusion of each audit the Internal Audit will issue a written report which provides its independent opinion or conclusions regarding the process, system or other subject matter reviewed. Each audit report issued will include the following:

Background
Audit Objectives
Statistics
Scope and Methodology
Conclusion
Summary of Findings
Findings

To ensure that the audit results are fairly presented the audit report will include the auditee’s response and corrective action taken or to be taken in regard to the specific findings and recommendations. The auditee’s response should include a timetable for anticipated completion of action to be taken or an explanation for any recommendations not addressed.

A copy of the completed audit report including the auditee’s responses will be distributed to the FAC, CFO, and other appropriate District personnel.

Audit reports with issues that do not represent significant risk exposures and control issues that could adversely affect the District and its ability to achieve its strategic, financial reporting, operational, and compliance objectives will be included in the information section of the FAC meeting agenda and any questions related to the audit will be addressed at the FAC meeting.

Audit reports with issues that represent significant issues that may carry unacceptable exposure to internal and external risks, including conditions related to control weaknesses, fraud, irregularities, illegal acts, errors, inefficiency, waste, ineffectiveness, conflicts of interest, and financial viability will be presented to senior management and the members of the FAC.

Comments

Finally, as part of Internal Audit’s self-evaluation program, we provide the auditee with a survey and an opportunity to comment on Internal Audit’s performance. This feedback will prove beneficial to us, and we will make appropriate changes in our procedures as a result of the auditee’s suggestions.

Follow-up

The Internal Audit is responsible for appropriate follow-up on audit findings and recommendations. All significant findings will remain in an open issues file until cleared by the Internal Audit manager. Generally, Internal Audit will conduct a follow-up audit within 12-18 months from the date of the original audit report and report the status of the implementation of the audit recommendations to the original recipients of the audit report. In addition, the Internal Audit manager will periodically report the status of the open issues file to the FAC and the CFO.