Auditor General

Auditor GeneralAuditor General 22

Auditor GeneralAuditor General

Role of the Auditor

In the

Procurement Process

Presenter: Nancy Tucker, CPA

June 3, 2008


Discussion PointsDiscussion Points Objectives of AG Audits and Objectives of AG Audits and

ReportsReports

Types of AuditsTypes of Audits

Planning AuditsPlanning Audits

Auditing the Procurement ProcessAuditing the Procurement Process

Audit ExpectationsAudit Expectations

Audit InteractionsAudit Interactions

Other Audit IssuesOther Audit Issues

MFMPMFMP


Objectives of Audits and ReportsObjectives of Audits and Reports

Audit General provides Audit General provides independent, unbiased, independent, unbiased, objective information on:objective information on: Fiscal integrity of State Fiscal integrity of State

government and other government and other governmental entitiesgovernmental entities

Public resources raisedPublic resources raised Purposes for which Purposes for which

resources were spentresources were spent



Identifies and audits areas considered Identifies and audits areas considered most vulnerablemost vulnerable

Communicates, by on-site presence and Communicates, by on-site presence and other audit procedures, other audit procedures, the Legislature’s the Legislature’s expectationexpectation that entity management and that entity management and employees are accountable for:employees are accountable for: Proper administration of public funds Proper administration of public funds Achievement of entity objectivesAchievement of entity objectives



Report on whether expenditures:Report on whether expenditures: Served public purpose Served public purpose Made in compliance with laws, rules, and regulations Made in compliance with laws, rules, and regulations Administered in economic, efficient, effective mannerAdministered in economic, efficient, effective manner

Report on whether:Report on whether: Governmental entities have established proper Governmental entities have established proper

management and accounting controlsmanagement and accounting controls Financial reports and records are reliableFinancial reports and records are reliable Assets are safeguardedAssets are safeguarded Fraud, omissions, and illegal acts have a reasonable Fraud, omissions, and illegal acts have a reasonable

chance of being discovered.chance of being discovered.


Purpose of Audits and ReportsPurpose of Audits and Reports

Published reports:Published reports: Strive to make fair and balanced Strive to make fair and balanced

presentations of findingspresentations of findings Agency management responsesAgency management responses Recommendations to the Legislature to Recommendations to the Legislature to

amend lawsamend laws

Report distribution and availabilityReport distribution and availability



Periodic OperationalPeriodic Operational AuditsAudits- - State AgencyState Agency Universities/CollegesUniversities/Colleges District School BoardsDistrict School Boards

Multi-Agency Operational Multi-Agency Operational AuditsAudits



Financial AuditsFinancial Audits StateState Colleges and Colleges and

UniversitiesUniversities District School BoardsDistrict School Boards LotteryLottery LGSFTFLGSFTF

Federal moneys Federal moneys provided to the State provided to the State of Floridaof Florida



Information TechnologyInformation Technology

Legislative Auditing Legislative Auditing Committee and Citizen Committee and Citizen PetitionPetition


Planning AuditsPlanning Audits

Planning PhasePlanning Phase Planning engagement letterPlanning engagement letter

Risk AssessmentRisk Assessment Prior audit findingsPrior audit findings New laws, programs, New laws, programs,

systems, contractssystems, contracts Appropriations, revenues, Appropriations, revenues,

and expendituresand expenditures Legislative interestLegislative interest Internal Audit StaffInternal Audit Staff AllegationsAllegations

Engagement letterEngagement letter Entrance conferenceEntrance conference


Auditing the Procurement Auditing the Procurement ProcessProcess

Purchasing Process: Purchasing Process: Gain understanding of internal controlsGain understanding of internal controls

• Review policies and proceduresReview policies and procedures• Tone at the TopTone at the Top• Interview staff and observe operationsInterview staff and observe operations

Analyze transactions for unusual patternsAnalyze transactions for unusual patterns Test transactions Test transactions

• Ensure controls are working Ensure controls are working • Purchase was in compliance with laws, rules, and Purchase was in compliance with laws, rules, and

regulationsregulations


Auditing the Procurement Auditing the Procurement ProcessProcess

Contract ManagementContract Management Gain understanding of internal controlsGain understanding of internal controls

• Review policies and proceduresReview policies and procedures• Interview staffInterview staff

Review and evaluate business case, cost-benefit analysis, Review and evaluate business case, cost-benefit analysis, risk analysisrisk analysis

Analyze evaluation criteriaAnalyze evaluation criteria Assess independence of evaluation and negotiation teamsAssess independence of evaluation and negotiation teams Review documentation in contract fileReview documentation in contract file Evaluate contract provisionsEvaluate contract provisions Analyze contract costsAnalyze contract costs Review/test payments to vendorsReview/test payments to vendors Evaluate adequacy of monitoringEvaluate adequacy of monitoring


Audit ExpectationsAudit Expectations

Management RepresentationsManagement Representations Made appropriate decisions Made appropriate decisions Complied with applicable laws and rulesComplied with applicable laws and rules Implemented effective internal controls Implemented effective internal controls andand Maintained public records to support Maintained public records to support

decisionsdecisions

Professional SkepticismProfessional Skepticism

Who/How/When/What?Who/How/When/What?

WHY?WHY?


Audit InteractionsAudit Interactions

Gathering Audit EvidenceGathering Audit Evidence Interviews and inquiriesInterviews and inquiries SurveysSurveys Observations (Walk-Through)Observations (Walk-Through) Records RequestsRecords Requests

• Nonpublic InformationNonpublic Information MemosMemos

• Request documentsRequest documents• Clarify understandingClarify understanding


Audit InteractionsAudit Interactions Ethics Policies and Ethics Policies and

Procedures were Procedures were communicatedcommunicated

Purchase complied with Purchase complied with laws, rules, contract laws, rules, contract terms terms

Good business practicesGood business practices Goods and services were Goods and services were

receivedreceived Procurement P&P were Procurement P&P were

communicated and communicated and followedfollowed

Management oversight.Management oversight.



MisconceptionsMisconceptions Gotcha vs. No SurprisesGotcha vs. No Surprises Auditors audit to the criteria; Auditors audit to the criteria;

auditors do not create the auditors do not create the criteriacriteria

Auditors are not part of the Auditors are not part of the agency’s internal controlagency’s internal control


Other Audit IssuesOther Audit IssuesF F _ _ _ __ _ _ _ FRAUD FRAUD TriangleTriangle

Incentives/PressuresIncentives/Pressures OpportunitiesOpportunities Rationalization/AttitudeRationalization/Attitude

FRAUDFRAUD inquiriesinquiries Assess susceptibility of Assess susceptibility of

agency/program to fraudagency/program to fraud Status of internal controls to Status of internal controls to

detect and prevent frauddetect and prevent fraud Risk that managementRisk that management could could

override internal controlsoverride internal controls FRAUD FRAUD detectiondetection

Design procedures to provide Design procedures to provide reasonable assurance of reasonable assurance of detecting fraud.detecting fraud.



Coordination with other audit Coordination with other audit groupsgroups

Other side of the fenceOther side of the fence

CommunicationCommunication


MFMP Audit Report 2007-076MFMP Audit Report 2007-076 System PerformanceSystem Performance Agency UtilizationAgency Utilization Monitoring of Transactions Fees/ExemptionsMonitoring of Transactions Fees/Exemptions Risk AssessmentsRisk Assessments Security of Data and IT ResourcesSecurity of Data and IT Resources Application systems Change ManagementApplication systems Change Management Data ManagementData Management Agency Procedural DeficienciesAgency Procedural Deficiencies Statistical Sampling of PaymentsStatistical Sampling of Payments Continuity of ServiceContinuity of Service


Annual ReportAnnual Report

Auditor General Annual ReportsAuditor General Annual Reports

http://www.myflorida.com/audgen/http://www.myflorida.com/audgen/


New Auditor GeneralNew Auditor General

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


Contact InformationContact Information

Nancy Tucker, Audit ManagerNancy Tucker, Audit ManagerState Government AuditsState Government [email protected]@aud.state.fl.us(850) 487-4370(850) 487-4370

Don Hancock, Deputy Auditor GeneralDon Hancock, Deputy Auditor GeneralState Government AuditsState Government [email protected]@aud.state.fl.us(850) 487-4999(850) 487-4999

Jim Valenzuela, Deputy Auditor GeneralJim Valenzuela, Deputy Auditor GeneralEducational Entities & Local GovernmentEducational Entities & Local [email protected]@aud.state.fl.us487-4998487-4998

Dorothy Gilbert, Deputy Auditor Dorothy Gilbert, Deputy Auditor GeneralGeneral

Information TechnologyInformation [email protected]@aud.state.fl.us488-4983488-4983

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