INTERNAL AUDITING: AUDIT PROCESS


The best way to assure that audits go smoothly is for Clerk and County divisions to create and maintain good records. The Division of Internal Audit relies on central databases and records whenever possible. However, often the information needed, e.g., the back-up documentation for an expenditure or revenue item, resides in a division. A strong audit trail of complete, orderly divisional records makes an audit easier for both auditor and auditee. An audit typically consists of a review of existing financial records. Often, additional information about the transactions being reviewed is needed, which may require personal interviews with Clerk or County staff, written responses to questions posed by the auditors, or the furnishing of other documentation.

Scheduling Audits

Audit Risk Assessment:
A risk assessment program for analyzing and classifying potential auditable areas by audit risk level is used to schedule audits for both areas under the Board of County Commissioners and areas under the Clerk.

Special Requests:
Clerk staff, the Board of County Commissioners , or Board staff may request audits of areas of special concern at any time. Special requests are forwarded to the Clerk for his decision.

Draft Reports

Discussion Draft:
A draft of the final report for discussion purposes is issued prior to the exit conference. Management comments or requests for corrections or wording changes must be returned to the auditor no later than 4 working days after the exit conference.

Response Draft:
The response draft will be issued when all corrections and wording changed agreed upon by the auditor and the auditee have been finalized, normally within 3 to 5 days after the exit conference. The responsible auditee/director has 12 working days after receipt of the response draft to respond to any audit recommendations. The Clerk may approve extensions to the 12-day response time.

Reports

The following types of audit reports may be issued:

Notification of Observation Memorandum:
This is used for situations or items found during audit which are outside the scope of an audit, or situations which an auditor observes during the conduct of other work, but where no audit verification is done. The memorandum serves to bring the matter to the attention of management, for their action. The observation may include a recommendation.

Numbered Reports:
A numbered report includes a brief background narrative, scope, objective, audit findings and recommendations, conclusion of the auditor (if appropriate), and auditee response to recommendations.

Responses to Reports

Auditee responses to findings and recommendations made in a numbered report are included in the body of the report. The auditee response includes

(a) a date by which the recommendations will be implemented,
(b) alternative action which will accomplish the intent of the recommendation, if the auditee prefers an alternative to the recommended action, and a date by which that action will be completed, or
(c) a clear statement of why the audit recommendation will not be implemented.

Any implementation periods longer than 1 year must be approved by the Board of County Commissioners, for Board audits, or the Clerk, for Clerk audits.

Follow-up

The Division of Internal Auditing performs follow-up procedures to determine whether corrective action has been taken on recommendations made during internal audits. Follow-up will take place on a quarterly basis for recommendations which were scheduled for completion during the quarter.