Auditor General Role of the Auditor In the

Auditor General Role of the Auditor In the Procurement Process Presenter: Nancy Tucker, CPA June 3, 2008 Auditor General 2

Discussion Points Ø Objectives of AG Audits and Reports Ø Types of Audits Ø Planning Audits Ø Auditing the Procurement Process Ø Audit Expectations Ø Audit Interactions Ø Other Audit Issues Ø MFMP Auditor General 3

Objectives of Audits and Reports Ø Audit General provides independent, unbiased, objective information on: l l l Fiscal integrity of State government and other governmental entities Public resources raised Purposes for which resources were spent Auditor General 4

Objectives of Audits and Reports Ø Identifies and audits areas considered most vulnerable Ø Communicates, by on-site presence and other audit procedures, the Legislature’s expectation that entity management and employees are accountable for: l l Proper administration of public funds Achievement of entity objectives Auditor General 5

Objectives of Audits and Reports Ø Report on whether expenditures: l l l Ø Served public purpose Made in compliance with laws, rules, and regulations Administered in economic, efficient, effective manner Report on whether: l l Governmental entities have established proper management and accounting controls Financial reports and records are reliable Assets are safeguarded Fraud, omissions, and illegal acts have a reasonable chance of being discovered. Auditor General 6

Purpose of Audits and Reports Ø Published reports: l l l Strive to make fair and balanced presentations of findings Agency management responses Recommendations to the Legislature to amend laws Ø Report distribution and availability Auditor General 7

Types of Audits Ø Periodic Operational Auditsl l l Ø State Agency Universities/Colleges District School Boards Multi-Agency Operational Audits Auditor General 8

Types of Audits Ø Financial Audits l l l Ø State Colleges and Universities District School Boards Lottery LGSFTF Federal moneys provided to the State of Florida Auditor General 9

Types of Audits Ø Information Technology Ø Legislative Auditing Committee and Citizen Petition Auditor General 10

Planning Audits Ø Planning Phase l Ø Planning engagement letter Risk Assessment l l l Prior audit findings New laws, programs, systems, contracts Appropriations, revenues, and expenditures Legislative interest Internal Audit Staff Allegations Engagement letter Ø Entrance conference Ø Auditor General 11

Auditing the Procurement Process Ø Purchasing Process: l Gain understanding of internal controls • • • l l Review policies and procedures Tone at the Top Interview staff and observe operations Analyze transactions for unusual patterns Test transactions • Ensure controls are working • Purchase was in compliance with laws, rules, and regulations Auditor General 12

Auditing the Procurement Process Ø Contract Management l Gain understanding of internal controls • Review policies and procedures • Interview staff l Review and evaluate business case, cost-benefit analysis, risk analysis l Analyze evaluation criteria l Assess independence of evaluation and negotiation teams l Review documentation in contract file l Evaluate contract provisions l Analyze contract costs l Review/test payments to vendors l Evaluate adequacy of monitoring Auditor General 13

Audit Expectations Ø Management Representations l l Made appropriate decisions Complied with applicable laws and rules Implemented effective internal controls and Maintained public records to support decisions Ø Professional Skepticism Ø Who/How/When/What? Ø WHY? Auditor General 14

Audit Interactions Ø Gathering Audit Evidence l l Interviews and inquiries Surveys Observations (Walk-Through) Records Requests • Nonpublic Information l Memos • Request documents • Clarify understanding Auditor General 15

Audit Interactions Ø Ø Ø Ethics Policies and Procedures were communicated Purchase complied with laws, rules, contract terms Good business practices Goods and services were received Procurement P&P were communicated and followed Management oversight. Auditor General 16

Other Audit Issues Ø Misconceptions l l l Gotcha vs. No Surprises Auditors audit to the criteria; auditors do not create the criteria Auditors are not part of the agency’s internal control Auditor General 17

Other Audit Issues ØF _ _ Ø FRAUD Triangle l l l Ø FRAUD inquiries l l l Ø Incentives/Pressures Opportunities Rationalization/Attitude Assess susceptibility of agency/program to fraud Status of internal controls to detect and prevent fraud Risk that management could override internal controls FRAUD detection l Design procedures to provide reasonable assurance of detecting fraud. Auditor General 18

Other Audit Issues Ø Coordination with other audit groups Ø Other side of the fence Ø Communication Auditor General 19

MFMP Audit Report 2007 -076 Ø Ø Ø Ø Ø System Performance Agency Utilization Monitoring of Transactions Fees/Exemptions Risk Assessments Security of Data and IT Resources Application systems Change Management Data Management Agency Procedural Deficiencies Statistical Sampling of Payments Continuity of Service Auditor General 20

Annual Report Ø Auditor General Annual Reports Ø http: //www. myflorida. com/audgen/ Auditor General 21

New Auditor General Ø David Martin was sworn in as the new Auditor General on October 1, 2007 Auditor General 22

Contact Information Nancy Tucker, Audit Manager State Government Audits nancytucker@aud. state. fl. us (850) 487 -4370 Don Hancock, Deputy Auditor General State Government Audits donhancock@aud. state. fl. us (850) 487 -4999 Jim Valenzuela, Deputy Auditor General Educational Entities & Local Government jimvalenzuela@aud. state. fl. us 487 -4998 Dorothy Gilbert, Deputy Auditor General Information Technology dorothygilbert@aud. state. fl. us 488 -4983 Auditor General 23