Agenda. External Audit Liaison What Does It Mean to YOU? The Basics of Internal Auditing October 9 10, 2014

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1 The Basics of Internal Auditing October 9 10, 2014 Charles McCool Office of Inspector General Florida Department of Transportation Agenda Standards Scope Role of a Liaison External Audit Entities Suggestions and Tips Additional Resources External Audit Standards Florida Statutes (2)(g): IG Coordination Role in External Audits (2) It shall be the duty and responsibility of each inspector general, with respect to the state agency in which the office is established, to (g) Ensure effective coordination and cooperation between the Auditor General, federal auditors, and other governmental bodies with a view toward avoiding duplication." 1

2 External Audit Standards Florida Statutes (5)(h): IG Monitoring and Follow Up (5) In carrying out the auditing duties and responsibilities of this act, each inspector general shall (h) monitor the implementation of the state agency s response to any report on the state agency issued by the Auditor General or by the Office of Program Policy Analysis and Government Accountability. External Audit Standard Florida Statutes (5)(h): IG Monitoring and Follow Up (h) No later than 6 months after the Auditor General or the Office of Program Policy Analysis and Government Accountability publishes a report on the state agency, the inspector general shall provide a written response to the agency head on the status of corrective actions taken. The Inspector General shall file a copy of such response with the Legislative Auditing Committee. Scope External audits are those audits performed by non department agencies on offices of the department and on programs that the department participates in or oversees. 2

3 Scope External audits and reviews can be viewed as a partnership with the external audit entity. The performs the liaison role between department units and the external entities for purposes of efficiency and thoroughness. Importance and Benefits of Coordination Added Value Coordination between external and internal auditors is important because of the potential to increase the economy, efficiency and effectiveness of the total audit activity for the enterprise. Sawyers Internal Auditing, 5 th Edition Importance and Benefits of Coordination Avoid Duplication the CAE should share information and coordinate activities with other internal and external providers of assurance and consulting services to ensure proper coverage and minimize duplication of efforts. Standard 2050 Coordination 3

4 Importance and Benefits of Coordination Avoid Duplication Without effective coordination and reporting, work can be duplicated or key risks may be missed or misjudged. Practice Advisory Importance and Benefits of Coordination No Surprises External auditors issue a formal report at the conclusion of their report, including their observations and opinions. If on going communications have been adequate, there should be no surprises in the final report. The IIA s CIA Learning System, 2011 Role of a Liaison The is responsible for: facilitating and coordinating scheduling of all Entrance Conferences, Pre Exit and Exit Conferences and any other formal meetings; coordinating all requests for access to department buildings, office space and IT resources; requesting termination of such accesses at the conclusion of each engagement or review; and acting to resolve communication or other issues that may arise in the course of an engagement or review, with appropriate supervisory guidance. 4

5 Role of a Liaison The Liaison coordinates department responses to the following. Engagement Letters Non Public Record Contact Letters Fraud Interviews Notes Disclosures requests Legal Contingencies responses Management Representation Letters Confirmation Memos Responses to Preliminary & Tentative Findings and Audit Report dissemination and follow up. Role of a Liaison In our agency, we prefer external audit entities to request routine audit related information directly from relevant department contacts. These types of requests include audit interviews, standard, ongoing communication and s. External Audit Entities 5

6 External Audit Entities Auditor General Section 11.42, Florida Statutes, designates the constitutional state auditor as the Auditor General (AG). The AG conducts financial audits of the accounts and records of state agencies and other state entities including operational and performance audits of public records and information technology systems. AG Audits are always followed by a 6 month update to the Joint Legislative Auditing Committee (JLAC). External Audit Entities Office of Program Policy Analysis and Government Accountability (OPPAGA) OPPAGA, an office of the Legislature, provides data, evaluative research, and objective analyses to assist legislative budget and policy deliberations. OPPAGA reviews also require a 6 month follow up notification to the Secretary and JLAC. External Audit Entities Department of Financial Services The mission of the Division of Accounting and Auditing at the Florida Department of Financial Services is to safeguard public assets, settle the state s financial obligations, report financial information, and improve accountability of the state. The Department is statutorily required to conduct grant and contract reviews in every state agency. 6

7 External Audit Entities Specific to DOT Federal Highway Administration Florida The Florida Division of the FHWA provides funding for qualifying state and local highway and other related transportation projects. The division also offers technical assistance and oversight to ensure federal requirements are met. External Audit Entities Specific to DOT US Department of Transportation Office of Inspector General The US DOT OIG works within the US DOT to promote effectiveness and head off, or stop, waste, fraud and abuse in departmental programs through audits and investigations. Obviously, they are transportation focused but occasionally they do review or work with other than transportation agencies. External Audit Entities Other agencies that may conduct audits or reviews. US Government Accountability Office (GAO) Federal Transit Administration (FTA) US Office of Management and Budget (OMB) Federal Bureau of Investigation (FBI) 7

8 Joint Legislative Auditing Committee The JLAC is established by Joint Rules of the Florida Legislature. The Committee s charge is to provide continuous oversight of government operations, in part through the auditing and review activities of Auditor General (AG) and the Office of Program Policy Analysis and Government Accountability (OPPAGA). AG audits and OPPAGA reviews require a 6 month follow up by FDOT to JLAC. Auditors and agency employees can be called to testify before JLAC in regard to AG Audit findings and OPPAGA reviews. Suggestions and Tips Communicate Proactively! Actively Monitor Track and Report Document 8

9 RAMS- Recommendations & Actions Management System RAMS is used to track audits, monitor responses to recommendations and for following up with and reporting to Executive Management. 9

10 Additional References Auditor General OPPAGA JLAC ommitteesdetail.aspx?committeeid=

11 Thank you Charles McCool Department of Transportation Office: