Preparing for an Audit

Roy De LauderCPPM, CFNOVA ChapterGeneral Dynamics Advanced Information Systems

Today’s Topics?•Why audit? / What is an audit?•What to do when notified of an audit?– Coordinate with the auditor.– Coordinate with your team.– Data needed.– Choreographing the audit.– Day of the Audit.

What is an Audit?•Can someone define the word “audit”?

Audit?•Most of us have heard the word “audit” but we rarely know what it actually means. . . . An audit is basically an accounting technique in which the . . . records of an organization, company or an individual are inspected accurately to ensure that they are precise and accurate.”• Article Source: http://EzineArticles.com/2774235

Why do we do audits?• Any Thoughts?

Why do we do audits?• Any Thoughts?

• Identify or Prevent the Misuse of Funds

Why do we do audits?• Any Thoughts?• Can you describe in one word why we do audits?

Why do we do audits?• Any Thoughts?• Can you describe in one word why we do audits?

S N E A K Y

Why do we do audits?• Any Thoughts?• Can you describe in one word why we do audits?

S N E A K Y

•“Trust but verify”. - Verification

Why do we do audits?• Any Thoughts?• Can you describe in one word why we do audits?

S N E A K Y“Trust but verify”. - VerificationRemove inaccuracies - Accurate

But an audit is more than just Records, Isn’t it?

•Audits are more than Verification of Accurate records. •Also about process.– Can you duplicate the results? If you follow your process

will you come up with the same results?– Are you following your process?

A Property Audit?•“A property audit is a systemic, objective review and evaluation of an organization’s property control system, which includes the organization’s established procedures and its application of, implementation of, and compliance with those procedures.” NPMA Intermediate Studies Manual p.7-1

An Audit?•In other words the Property auditor wants to know:– What do your procedures say? And– Does your organization follow your own procedures?– Do your procedures if followed, result in a positive

outcome?

Strategic Business Processes

What to do?

•You have just received word that you will have an audit! You should:

What to do?

•You have just received word that you will have an audit! You should:• Run in circles?

What to do?

•You have just received word that you will have an audit! You should:• Run in circles?• Scream and shout?

What to do?

•You have just received word that you will have an audit! You should:• Run in circles?• Scream and shout?• Quit your job and move to Cucamonga?

What to do?

•You have just received word that you will have an audit! You should:• Run in circles?• Scream and shout?• Quit your job and move to Cucamonga?• None of the above?

What to do?•You have just received word that you will have an audit! You should:• Run in circles?• Scream and shout?• Quit your job and move to Cucamonga?• None of the above?

The correct answer is “d” – None of the above. This presentation should give you some ideas of what to do.

How to prepare for an audit?•What can I do before I even get word of an audit?•What steps should I take after I have been notified of an audit?•Who are the other players that I need to involve in my audit preparations?•How do I choreograph the audit itself?•Self disclosure? Yes, No, maybe?

What can I do before I even get word of an audit?

•Review your procedures.•Conduct internal audits.

What steps should I take after I have been notified of an audit?

•Coordinate with the auditor.– Who?– What?– Where?– When?– How?

Coordinate with the auditor.Who? Who is coming? Who does the auditor want to see?

•What? What is he/she going to look at? Which contracts and what time frame?•Where? Which of your facilities will he visit or will you be going to his office?•When? When will the audit take place? Does the auditor want some data before he shows up? (If so, what and when.)•How? How will this audit be conducted? (Interviews, record to floor checks, questionnaire, etc.?)

After coordinating with the auditor•Once you have talked with the auditor and you have the Who, What, Where, When, and How – what next?

– You need to brief the players on your side of the fence.• Who will the auditor want to visit with when they are there?

– You will have a bunch of data requirements that the auditor needs to see (list of equipment, list of material, Copies of some Purchase Orders, a copy of the procedures, etc.).

– Which of the players on your side are going to provide which of the data sets? Does the data set get sent off or do they need to be ready when the auditor shows up?

Data Sets•Copy of your procedures.•List of all open contracts that are applicable.•List of all contracts closed within the last year.•Listing of all equipment.•Listing of all material.•Listing of all Purchase Orders.

– Copies of selected Purchase Orders.•A listing of all applicable subcontracts.•All LTDD (Loss, Theft, Damage, & Destruction) reports for the last 5 years.•Internal audit results and findings.•Results of the last external audit.•All open disposal schedules

Processing the Data Sets•Now that we know what the auditor wants to see:– Who is going to prepare which Data Set?– When will it be due?– Will it be forwarded to the auditor before he arrives or

given to him when he walks in the door?

Choreographing the Audit

Choreographing the Audit• Directions to your facility.

Choreographing the Audit•Directions to your facility.•Security Clearances & access.

Choreographing the Audit•Directions to your facility.•Security Clearances & access.•Entrance Brief?

Choreographing the Audit•Directions to your facility.•Security Clearances & access.•Entrance Brief?•Exit Brief?

Choreographing the Audit•Directions to your facility.•Security Clearances & access.•Entrance Brief?•Exit Brief?•Multiple Buildings?– Group visits (Scheduling)?

Choreographing the Audit•Directions to your facility.•Security Clearances & access.•Entrance Brief?•Exit Brief?•Multiple Buildings?– Group visits (Scheduling)?

•Guest office.

Choreographing the Audit•Directions to your facility.•Security Clearances & access.•Entrance Brief?•Exit Brief?•Multiple Buildings?

– Group visits (Scheduling)?

•Guest office.•Meals?

Choreographing the Audit•Directions to your facility.•Security Clearances & access.•Entrance Brief?•Exit Brief?•Multiple Buildings?

– Group visits (Scheduling)?

•Guest office.•Meals?•Samples?

Self Disclosure•Should you?

– Yes – if you know you have a problem and are working to fix it.– No – If you know you have a problem and are not working to fix

it. Or if you are not aware of the problem.– Maybe – If you suspect you have a problem and want advice on

how to fix it. Or you want to do something better or easier.•Remember the key is you do not want to appear to be Sneaky.

Day of the Audit•Meet the auditor at Security. Try to be there before the auditor is.•Have the data sets that the auditor requested printed out and ready to go when he/she asks for them.•Be flexible.•Escort the auditor around.– We in Property may not do all of the business processes

but we do have to explain them to the auditor.

• Do Not argue with the auditor.

Day of the Audit cont.•Answer just the questions that the auditor asks. Do Not volunteer information.– Instruct your Organization’s other players to follow this

guidance.– But what about Self Disclosure?

After the out brief•Start getting ready for the next audit by correcting the issues that the auditor found.– The auditor will almost always find something that needs

work. (Hopefully it won’t be anything major.)– The auditor is Not out to “get you”. His purpose is to make

sure that you are controlling the items entrusted to your organization

Questions?

• ?

Questions?

• If your organization failed the previous audit, how would you prepare differently for the next audit?

This concludes my presentation.• Thanks for coming today