Association of Local Government Auditors Best Practices for

Association of Local Government Auditors Best Practices for Effective Internal Controls - Citywide Presentation to: California Society of Municipal Finance Officers February 20, 2009 Ann-Marie Hogan, CIA, CGAP City Auditor, Berkeley, CA ahogan@ci. berkeley. ca. us 1

Association of Local Government Auditors Objectives 1. Review the unique internal control challenges of cities 2. Explain the challenges for finance directors in impacting “tone at the top” of the organization and operating departments 3. Best practices and bright ideas 2

Association of Local Government Auditors Internal Control: COSO and Cities. . . • Control Environment (tone at the top: elected and appointed managers) • Risk Assessment (absent the profit motive, how thoroughly is risk assessed? ) 3

Association of Local Government Auditors Internal Control: COSO and Cities. . . • Control Activities (invisible activities and problems) • Information and Communications (frank communication in a fishbowl) • Monitoring (and airing dirty laundry) 4

Association of Local Government Auditors Leadership Challenges “Tone at the Top” - Leading the way 5

Association of Local Government Auditors Leadership… Building Alliances • City Manager • Human Resources Director • Information Technology • Police Chief 6

Association of Local Government Auditors Leadership… Persistence and Opportunism • Consistent message • Good delivery • Timing is all 7

Association of Local Government Auditors Opportunity Knocks • Change in leadership • Negative press 8

Association of Local Government Auditors Leadership: Walking the Walk You can start in your own department • Internal Controls Training • Testing and Certification • Policies: Ethics, Internal Controls • Who should you tell? • Defining workforce skills needs 9

Association of Local Government Auditors Best Practices and Bright Ideas Best practices: Does your city have… • Agreement on what responsibilities are centralized where? • Clear expectations for the role of the Finance Department? 10

Association of Local Government Auditors Best practices: Does your city have… • • An Ethics Policy An Audit Committee Performance Measures A Whistle Blower Hot Line (or equivalent) 11

Association of Local Government Auditors Best practices: does your city have… An independent performance auditor? California Government Code section 1237: “All state and local agencies with an aggregate spending of fifty million dollars ($50, 000) or more annually shall consider establishing an ongoing audit function. ” 12

Association of Local Government Auditors Bright Ideas Getting the message out: On site training – Power. Point • City of Berkeley Finance Department: Cash Handling • City of Riverside Internal Controls On line training – videos • Maricopa County Auditor 13

Association of Local Government Auditors Berkeley Finance Department Training 14

Association of Local Government Auditors Inserting Videos in Power. Point 15

Association of Local Government Auditors Finance Directors can… Create a Power. Point (City of Riverside) 16

Association of Local Government Auditors Finance Directors can… Create a Video • Maricopa County, Arizona posts several on the Auditor’s web site 17

Association of Local Government Auditors 18

Association of Local Government Auditors Finance Directors Can… Educate Management • One page bulletins on Internal Control for managers from the Maricopa County auditor’s web site 19

Association of Local Government Auditors Maricopa County Control Bulletins 20

Association of Local Government Auditors ALGA Resources These resources and more are on websites for Maricopa County, City of Riverside and the City of Berkeley: see “ALGA Members – Member Web Sites” on the ALGA website. www. governmentauditors. org 21

Association of Local Government Auditors Considering a performance audit function or audit committee? ? • The Role of Auditing in Public Sector Governance and Practice Advisory 1110 -2: CAE Reporting Lines www. theiia. org • Model Legislation Guidelines for Local Government Auditors and A Government Official’s Guide to Establishing a Performance Audit Function www. governmentauditors. org 22

Association of Local Government Auditors THANK YOU FOR ADDITIONAL INFORMATION, CONTACT: ASSOCIATION OF LOCAL GOVERNMENT AUDITORS (ALGA) MEMBER SERVICES 449 LEWIS HARGETT CIRCLE, SUITE 290 LEXINGTON, KY 40503 memberservices@governmentauditors. org or Ahogan@ci. berkeley. ca. us or visit the ALGA website at: http: //www. governmentauditors. org 23