Office of Compliance Internal Audit Division ____________________________

Office of ComplianceOffice of ComplianceInternal Audit DivisionInternal Audit Division

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Delegate Agency Fiscal OverviewDelegate Agency Fiscal Overview

April 6, 2009April 6, 2009

April 6, 2009 Delegate Agency Fiscal Overview 2

• Ragland and Associates, LLCGabriel Rodriguez, MPM

Consultantto Office of Compliance

Delegate Agencies Fiscal Overview Delegate Agencies Fiscal Overview IntroductionsIntroductions

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Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewAgendaAgenda

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I. Office of Compliance OverviewII. Understand your ContractIII. DocumentationIV. Annual Audit

I. What is it?II. Audit Firm selectionIII. Common Issues

V. Compliance AuditsI. OMB Circular A-133 (Single Audit)II. OMB Circular A-122 (Post Payment Audit)

VI. Agreed-Upon Monitoring ProceduresVII. TrainingVIII. Deficiencies

I. Causes & Most CommonIX. Common QuestionsX. Questions



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I. Office of Compliance OverviewI. Office of Compliance Overview


Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewI. Office of Compliance OverviewI. Office of Compliance Overview

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• MissionMissionThe Office of Compliance promotes a culture of ethical

conduct and a commitment to compliance with laws, city policies, procedures, rules and ordinances.

The Office addresses compliance in the areas of equal employment opportunity, sexual harassment, workplace violence, employee safety, hiring, promotions, delegate agency audits, departmental audits and personnel rules.

The Office encourages educational training and guidance and promotes a culture of inclusion.



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• Divisions & PoliciesDivisions & Policies

Diversity & Equal Employment OpportunityDiversity & Equal Employment Opportunity• The Diversity and Equal Employment Opportunity

Division manages the City’s Equal Employment Opportunity (“EEO”) Plan and promotes diversity efforts.

• The division oversees:1) complaint resolution; 2) education, awareness and training; 3) monitors the underutilization of protected classes, barriers to inclusion and provides recommendations for corrective action.

• The City of Chicago seeks diversity in its workforce and ensures that all applicable federal, state and local laws and ordinances prohibiting discrimination are followed.



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• Divisions & Policies Divisions & Policies – cont’d

Hiring ComplianceHiring Compliance• Hiring Compliance monitors and audits the hiring procedures

under the City of Chicago’s Hiring Plan.

• Hiring Compliance seeks to ensure fair and competitive hiring by: 1) monitoring compliance with the Shakman decree by ensuring that potential applicants are free of any political influence; 2) reviewing and seeking to resolve complaints of hiring or promotions; 3) monitoring compliance with collective bargaining agreements as they apply to union employees in the areas of promotions, transfers and layoffs.

• The Hiring Plan prevents risks from becoming liabilities by creating checks and balances to deter, detect and address issues relating to the hiring process.



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Internal Audit/Process ImprovementInternal Audit/Process Improvement • The Internal Audit Division protects the City’s assets and

helps to ensure that internal controls are enforced by City departments.

• The Internal Audit Division, has three primary missions: 1) safeguard the City’s assets through audits and reviews; 2) to ensure our clients are in compliance with City, State and Federal regulations; and 3) to assist our clients in improving their processes for greater efficiency and effectiveness.

• We help you prevent, detect, and correct any systems or activities that could expose the city to loss revenue or sanctions

• We are proactive and not reactive.



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Legal ComplianceLegal Compliance• The Legal Compliance Division is responsible for City-

wide adherence to policies, procedures and federal, state and local laws.

• The Office provides assistance to operating departments on issues they face in areas as diverse as grants management, safety, privacy, and finance, by providing them with the tools to enhance processes and monitor effectiveness.

• The Office provides and coordinates training and process reviews on key areas of legal compliance.



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• Divisions & PoliciesDivisions & Policies – cont’d

Retaliation ProhibitedRetaliation Prohibited

• The City encourages the general public, its employees and contractors to raise compliance issues, including potential violations of policies and processes.

• The Office of Compliance has an open door policy that encourages employees to uphold the standards of conduct. The City of Chicago, through its Whistleblower Ordinance prohibits employees from retaliating against, punishing or penalizing another person for complaining to, cooperating with or assisting the Office of Compliance.

• Need More Information?

• For further information about Office of Compliance services, training or complaint resolution, please contact the Office of Compliance helpline at (877) 532-0007.


Our office is located at:Our office is located at:Office of Compliance - Internal AuditOffice of Compliance - Internal Audit333 S. State Street - Suite 540333 S. State Street - Suite 540Chicago, IL 60604Chicago, IL 60604

Contact Name:Contact Name:Ms. Alyse HutchinsonMs. Alyse HutchinsonDeputy Director of Internal Audit DivisionDeputy Director of Internal Audit Division312-747-5749312-747-5749


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II. Understanding your ContractII. Understanding your Contract


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ContractContract

• The contract is your starting point …. Read it in its entirety.

Fully understand the requirements, obligations, and responsibilities

When in doubt, contact your program liaison and obtain an answer

Be sure to obtain a signed budget whenever a revision or amendment is completed.

Visit the City of Chicago’s web site to download available copies at www.cityofchicago.org.

Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewII. Understanding your ContractII. Understanding your Contract

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http://www.cityofchicago.org/



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III. DocumentationIII. Documentation


Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewIII. DocumentationIII. Documentation

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DocumentationDocumentation Keep a complete set of the voucher, as it will be needed for

the post-payment reviews (invoices, cancelled checks, payroll journals, bank statements, etc.)

To support your payroll taxes, submit a copy of the payroll summary, bank deposit slip, cancelled check (both sides), and/or bank statement.

Procure a copy of the final signed budget after every revision.

Maintain current copies of your Policies and Procedures Manual. Develop and Implement, if not in existence.


Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewIII. DocumentationIII. Documentation

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DocumentationDocumentation (cont’d) Depending on the size of your agency, develop and

maintain a Cost Allocation Plan, suitable to your current programs.

When in doubt about the allowability and appropriateness of a program’s related expenditure, obtain written authorization from the funding department and keep it with your copies.

At the end of the fiscal year, make sure to contact the funding department to find out the source of the funding received. This information is critical to your auditors when planning the agency’s annual fiscal audit.



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IV. Annual AuditIV. Annual Audit


Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewIV. Annual AuditIV. Annual Audit

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I.I I.I What is it?What is it?• An annual audit of an agency’s financial statements

by an outside, independent accounting firm supports accountability and financial disclosure to external parties, including existing and potential funding entities, as well as the public. A quality and useful audit depends on the quality of the accounting firm employed, and the agency’s level of preparation achieved prior to audit beginning.



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I.I I.I What is it? What is it? (cont’d)

• An audit under Office of Management and Budget (OMB) Circular A-133 is required of non-federal entities that expend $500,000 or more in a year of Federal awards. Office of Management and Budget is part of the Executive branch of the United States. Agencies that do not meet this requirement are not required to undergo an A-133 audit, but a financial statement audit is still recommended.



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I.II Audit Firm Selection - Best PracticesI.II Audit Firm Selection - Best Practices• A change in auditors should be considered based on:

results of annual evaluation of the independent accounting firm, any agency dissatisfaction with the accounting firm, or when a new approach is desired.

• Qualities to consider in an independent accounting firm include: level of experience, industry knowledge, timeliness of performance, and communication skills.

• Agency should assist accounting firm with the annual audit during all phases as requested, review the audited financial statements and provide any necessary management feedback at the completion of the audit.



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TECHNICAL EVALUATION: SELECTING A QUALIFIED AUDITOR

• Technical evaluation is important for two reasons:

– Provides a systematic framework for selecting an auditor on the basis of your organization’s established criteria;

– Documents that the auditor was selected fairly.

• Consider separate evaluations for technical ability and price.

• Require auditors to meet certain minimum standards:

– Appropriate state licensing requirements (contact the IL Department of Professional Regulations at 312-814-4500 or use the license look-up feature at www.dpr.state.il.us.

– Applicable independence standard

– Have a record of responsible work,

– Years, quality, and appropriateness of experience

– Comply with applicable requirements for peer review and continuing professional education



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• Organizations should never select auditors without considering five basic elements of an effective audit procurement process:

– Planning (determining what needs to be done and when)

– Fostering competition by soliciting proposals (writing a clear and direct solicitation document and soliciting it appropriately)

– Technically evaluating proposals and qualifications (knowledgeable persons should evaluate the ability of prospective auditors to effectively perform the audit)

– Preparing a written agreement (documenting the expectations of both the entity and the auditor)

– Monitoring the auditor’s performance (periodically reviewing the progress of that performance)

PLANNING

• Define the entity to be audited.

• Delineate the scope of the financial audit.

– Determine the proper financial statements and schedules to include in the audit.



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• Determine the specific audit requirements.

– Professional requirements imposed by accounting bodies

– Requirements of funding agencies

• Determine whether the Single Audit Act applies to your organization.

• Identify the attributes necessary in the auditor.

– Experience in auditing grant-funded programs and non-profit organizations

– Adequate and sufficient continuing professional education

– Peer review

– Licensure

• Decide how to evaluate prospective audit firms.

– Although price is important, technical qualifications should be a critical criterion in selecting an auditor.



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• Review legal requirements.

– Ensure that both the procurement process and the audit itself will meet legal requirements contained in applicable laws regulations, and terms of grant agreements.

• Consider a multi-year agreement.

– First year of an audit involves significant start-up costs.

– Consider a multi-year agreement if authorized to do so.

• Perhaps a one-year agreement with option to extend

• Should not contract for more than 5 years.

• Evaluate the option to rotate auditors.

– Infuses the audit process with fresh views and new perspectives.

– Can allow organization to take advantage of lower priced audits.

– Carefully consider advantages and disadvantages of auditor rotation as well as any applicable legal requirements.



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• Establish a work schedule.

– For both your organization and the audit firm.

– Develop and adhere to a schedule that sets forth dates by which certain milestones in the audit process must be reached.

COMPETITION AND SOLICITATION: COMMUNICATING AUDIT REQUIREMENTS

• Most reliable method is the Request for Proposal (RFP).

– Clearly written

– Set forth all terms conditions, and evaluation criteria, as well as scope of the work required

– Be sufficiently well distributed and publicized to ensure full and open competition

• Consider compiling a list of potential auditors from general and professional directories and from past experience with audit firms.



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What Should be Included in the RFP?

• Should include enough information to provide bidders with a common basis to prepare proposals that will address the audit needs of your organization.

• Be sure that RFP conforms with the laws, regulations, and grant terms applicable to your organization.

• Include, at a minimum:– Name and address of your organization

– Entity to be audited, scope of services to be provided, and specific deliverables

– Period to be audited (with an explanation if the RFP calls for a multi-year procurement)

– Name and telephone number of a contact person at your organization

– Format in which you want proposals to be prepared



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– Address to which proposals should be delivered or sent

– Date and time proposals are due

– Number of proposal copies to be submitted

– Criteria to be used in evaluating the bid and their relative importance to each other

– Method and timing of payment

– Any other important points, including consequences if due dates are missed or work does not meet audit standards

• Proposals may also include:

– The work of your organization

– What is to be audited (financial statements, etc.)

– Description of your organization’s accounting system, administrative controls, records, and procedures



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– Whether the Single Audit Act applies to this audit

– Identification of appropriate auditing standards

– Whether data from prior years (audit reports, management letters, etc.) will be available, whether material prior year audit findings remain open, and whether any audits of sub-recipients are required.

– Requirements for workpaper retention and for making workpapers available to the organization as well as governmental auditors if they request them

– Expected audit products, required format of the audit report, and any required progress reports

– Assistance to be provided by your organization, such as staff support (which can reduce your audit costs)

– Expected work schedule (timing of field work, issuance of reports, etc.)



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• RFP should ask bidders:

– How they would conduct audit in first and subsequent years

– Qualifications of audit organization, management, and staff, including experience in auditing like entities

– Policies on notification of changes in key personnel

– Whether the proposed staff have received continuing professional education (general and in governmental accounting/auditing) during the last 2 years

– Whether audit firm has received a positive peer review within the last 3 years

– Whether they are independent, as defined by applicable auditing standards

– Whether they have been the object of any disciplinary action during the past 3 years

– The audit fee



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• Evaluation of RFPs for technical criteria:

– Audit firm’s understanding of the audit requirements, including the needs of your organization and the final products to be delivered

– Soundness of technical approach, including the meeting of your organization’s specific deadlines and benchmarks

– Qualifications of the audit firm

– Qualifications of the audit team

• Rating the proposals:

– Evaluate proposals as submitted.

– Make a list of strengths and weaknesses for each to support its technical rating.

– After completion of the technical evaluation, review the prices offered by the bidders.



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– If more information is needed before selecting a proposal, meet with the bidders who have a reasonable chance of being selected to allow them to respond to your concerns.

• If applicable, request the submission of revised proposals by a specified date.

• Do not disclose proprietary information submitted by other bidders.

– Select proposal that is most advantageous to your organization.



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THE WRITTEN AUDIT AGREEMENT

Written agreement signed by both parties must be obtained.

• Helps to avoid misunderstandings and possible future litigation.

• Written agreement should specify:

– Audit scope, objective, and purpose

– Deadlines for the work to be performed

– Audit cost

– Report format

– Type and timing of support to be provided to the auditor by your organization

– Professional auditing standards to be followed in performing the audit

– Independence of the audit firm to the audited organization (auditee)

– Terms for making changes to the scope of the agreement

– Ownership of the workpapers (audit firm), retention period, and requirement for availability to the auditee and governmental auditors upon request



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AUDIT MONITORING

• Most effective way to ensure that your organization receives the type and quality of audit services specified in the agreement.

• Allows problems to be addressed in a timely manner.

Methods for monitoring the audit firm and progress of the audit:

– Periodic progress reports

– Holding regular status meetings to discuss issues that need to be resolved

– Meeting after the completion of audit fieldwork



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I.III Common Issues Relating to AuditsI.III Common Issues Relating to Audits1. Audit Performance

* Hiring unlicensed CPA’s to perform audit

* Hiring licensed CPA’s who are not experienced with OMB Circular A-133

2. Single Audit Report Deficiencies

* The “Schedule of Expenditures of Federal Awards” is omitted

* The “Schedule of Expenditures of Federal Awards” is missing”:

- CFDA numbers

- Pass-through grant identifying numbers

- Name of pass-through agencies



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Common Issues Relating to AuditsCommon Issues Relating to Audits (cont’d) (cont’d)

- Names of federal grantor agencies

- City’s contract number(s) awarded to agency

* No corrective action plan addressing audit findings

* Management letter/comments that are federal findings are excluded from the single audit report

* The opinion of the independent auditors does not refer to the audit being performed in accordance with Government Auditing Standards

Other Reporting DeficienciesOther Reporting Deficiencies

* Late submissions of reports (even with approved extensions)



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Other Reporting DeficienciesOther Reporting Deficiencies (cont’d) (cont’d)

* Late submissions of reports (even with approved extensions)

* Omitted management letter

* Submitting Certification of Federal Expenditures forms to the City with errors (i.e. not signed, not notarized, no expenditure amount listed, wrong fiscal year listed, or not fully completed).

Communications with City of ChicagoCommunications with City of Chicago

* Not responding to letters and phone calls

* Submitting audit reports only to lead department as opposed to the lead department(s) and Internal Audit

* Not making revisions to reports submitted when deficiencies were noted



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V. Compliance AuditsV. Compliance Audits


Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewV. Compliance AuditsV. Compliance Audits

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OMB Circular A-133 Single Audit Report ReviewsOMB Circular A-133 Single Audit Report Reviews (Mandated)Audit RequirementsA. Single Audit• Any agency receiving expending federal funds under your City and

other agreements totaling $500,000 or more during your fiscal year, must submit an audit conducted in accordance with the Single Audit Act Amendments of 1996, OMB Circular A-133, the compliance requirements set forth in OMB Compliance Supplement, and any additional testing and reporting required by the City.

• If an A-133 audit is required, that audit must cover the time period specified by OMB Circular A-133 and its implementing regulations. You must submit the audit reports within six months after the end of the audit period. If you anticipate not having the audit ready by then, please contact the Office of Compliance and request an extension to file.



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OMB Circular A-133 Single Audit Report Reviews OMB Circular A-133 Single Audit Report Reviews - cont’d• If your organization has expended federal funds under this and

other agreements totaling less than $500,000 during your fiscal year, you must submit to the City a notarized “Delegate Agency Certification of Federal Expenditures” form certifying that your organization is exempt from Federal audit requirements for that year pursuant to OMB Circular A-133, Section .200(d).

B. Program-specific audit

C. Exemption when Federal awards expended are below thresholds

Agreed-upon procedures monitoring (“limited scope audits”)



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•Basis for determining Federal awards expended:

– Expense should be based on when the activity related to the award occurs.

•Sanctions for not complying with Federal audit requirements:

– Withholding a percentage of Federal awards until the audit is completed satisfactorily;

– Withholding or disallowing overhead costs;

– Suspending Federal awards until the audit is conducted; or

– Terminating the Federal award.

•Auditee responsibilities

– Identify all Federal awards received and expended and the Federal programs under which they were received.

– Maintain internal control over Federal programs to provide assurance that Federal awards are being managed in compliance with laws, regulations, and provisions of grants and contracts.



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– Comply with all applicable laws, regulations, and provisions of contracts or grants related to each Federal program.

– Ensure that audits are properly performed and submitted when due.

– Follow up and take corrective action on audit findings.

•Components of a non-profit organization’s audit report:

– Financial Statements (auditee’s responsibility)

• Statement of Financial Position

• Statement of Activities

• Statement of Functional Expenses (for Voluntary Health & Welfare Organizations)

• Statement of Cash Flows

• Notes to the Financial Statements



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– Schedules and Other Supplementary Information (auditee’s responsibility)

• Schedule of Expenditures of Federal Awards

• Other supplementary schedules required by funding agencies

• Corrective Action Plan (for current year findings)

• Summary Schedule of Prior Audit Findings

– Auditor’s Reports (auditor’s responsibility)

• Opinion of Financial Statements and Supplementary Schedule of Expenditures of Federal Awards

• Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards

• Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133



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• Schedule of Findings and Questioned Costs

– Section I: Summary of Audit Results

– Section II: Financial Statement Findings

– Section III: Findings Related to Federal Awards

•Audit report submission requirements

– To the Federal Single Audit Clearinghouse:

• Data Collection Form (Form SF-SAC)

• One copy of the audit report package for each Federal agency when the schedule of findings and questioned costs disclosed audit findings relating to Federal awards that the Federal funding agency provided directly or the summary schedule of prior audit findings reported the status of any audit findings relating to Federal awards that the Federal funding agency provided directly.



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•The Single Audit Process: Some Things the Auditor Does Before and During the Audit

– Pre-planning and planning

• Development for overall strategy for the expected scope and conduct of the audit.

• Review of appropriate standards, regulations, and guidelines.

• Obtain understanding of auditee and its industry.

• Obtain understanding of reporting requirements

– Is an A-133 required?

– Single audit or program-specific audit?

• Determine reporting requirements.

• Communicate with funding agencies, as needed.

• Confirm report submission deadlines.

• Obtain understanding of:

– Auditee’s internal control over financial statements



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– Compliance requirements that could have a direct and material effect on major Federal programs

– Internal control related to compliance requirements

• Perform tests of internal controls

• Perform preliminary assessment of audit risk at the financial statement level and the major program level.

• Consider level of materiality at the financial statement level and at the major program level.

• Establish audit approach and develop audit programs.



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• Compliance testing of major Federal programs

–14 types of compliance requirements for Federal programs

» Allowable Activities >> Allowable Costs

» Cash Management >> Davis-Bacon Act

» Eligibility >> Program Income

» Equipment and Real Property Management

» Matching, Level of Effort, Earmarking

» Period of Availability of Federal Funds

» Procurement and Suspension and Debarment

» Real Property Acquisition and Relocation Assistance

» Reporting

» Sub-recipient Monitoring

» Special Tests and Provisions



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Voucher documentation audits (Post payment (A-122))

(Mandated)

• In order to monitor the expenditure of funds passed from the City to the delegate agencies, the City has established a systematic approach to audit delegate agency reimbursement vouchers to ensure compliance with Federal, State, and City regulations.

• For selected delegate agency vouchers, Internal Audit requests complete supporting documentation including invoices, canceled checks (front and back), payroll records, leases, et. al.

• This documentation is audited for compliance with applicable Federal, State, and City regulations and for compliance with the budget and terms of the delegate agency contract with the City. Should any non-compliant expenditure be found, the agency is required to reimburse the City for these costs.

• If the delegate agency does not respond to our requests, for A-133 report or A-122 audit, as a last resort, a lien is placed on the future reimbursements of the delegate agency from the City.


Delegate Agency Fiscal OverviewDelegate Agency Fiscal Overview V. Compliance Audits V. Compliance Audits

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Voucher Documentation Audits Voucher Documentation Audits – cont’d

Vouchering for reimbursement• Advance vs. request for reimbursement• Reimbursement requests must be made only after an

expenditure has been incurred• Agency should record the following for every reimbursement

request made:–Check Number–Date–Amount–Payee–Applicable contract number–Account Number–Amount charged


Delegate Agency Fiscal OverviewDelegate Agency Fiscal Overview V. Compliance Audits V. Compliance Audits

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Voucher Documentation Audits Voucher Documentation Audits – cont’d • Reimbursement requests should represent only expenditures

that are allowed and that have been incurred (and paid)• Vouchers should be submitted to awarding agencies on a

periodic basis according to approved contract terms and at frequency to help insure a positive cash flow.



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VI. Agreed-Upon ProceduresVI. Agreed-Upon Procedures


Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewVI. Agreed-Upon ProceduresVI. Agreed-Upon Procedures

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Agreed-Upon Monitoring ProceduresAgreed-Upon Monitoring Procedures

• In order to monitor delegate agencies in accordance with the requirements of A-133, the City has implemented agreed-upon procedures to monitor the internal controls and fiscal operations of delegates that expend between $50,000 and $500,000 in Federal funds.

• Under some conditions, Agreed-Upon Procedures will be performed for delegates expending over $500,000 in Federal funds.

• While the audits listed here are the most common audits performed by the Office of Compliance, other financial or process audits may be performed at the sole discretion of the Office of Compliance.



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VII. TrainingVII. Training


Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewVII. TrainingVII. Training

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TrainingTraining• The Office of Compliance - Internal Audit

Division holds an annual training session to all delegate agencies on Fiscal Management.

• Scheduling and contact information will be forthcoming.



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VIII. DeficienciesVIII. Deficiencies


Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewVIII. DeficienciesVIII. Deficiencies

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Causes Unintentional

Human errorLack of resourcesInadequate training

IntentionalManipulation, falsification, or alteration of accounting records or supporting documentationMisappropriation of assets

Deficiencies caused by intentional acts may be Deficiencies caused by intentional acts may be considered fraud. Any acts of fraud will be referred considered fraud. Any acts of fraud will be referred

to the Office of the Inspector General.to the Office of the Inspector General.


Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewVIII. DeficienciesVIII. Deficiencies

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Common Deficiencies• Related party transactions• Bank reconciliations• Duplicate payments• Improper maintenance of financial records• Prior Expenses• Budget figures vs. Actual figures• Inadequate supporting documentation• Procurement card• Timing of allowable costs• Cost Allocations• Transportation• Unsigned budgets• Unpaid claimed expenditures



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IX. Common QuestionsIX. Common Questions


Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewIX. Common QuestionsIX. Common Questions

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““I was told there is a hold on my funding. Why?”I was told there is a hold on my funding. Why?”Lack of cooperation with our request(s).

I received a letter about another audit you are going to do. I received a letter about another audit you are going to do. Are we in some sort of a target list?Are we in some sort of a target list?No. There are different types of audits. Sometimes they may overlap. You are subject to your funding department review, the A133 report, A-122 voucher documentation audit, or an agreed-upon procedures review. These reviews are separate from those from the state or the federal agency, if you are a direct recipient.

I received a letter from you asking for a copy of financial I received a letter from you asking for a copy of financial statements but they will not be ready until March 31, statements but they will not be ready until March 31, 2009. What should I do?2009. What should I do?Validate with your auditor when final report will be available for publishing, prepare and submit an extension request to the address and attention of the person on the letter.



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““I never received a signed contract from XXXX. Where I never received a signed contract from XXXX. Where can I get a copy of it?can I get a copy of it?Contact your department’s point of contact or the name on the front of the contract.

I will not be sending the report / allowing the audit / review I will not be sending the report / allowing the audit / review because the agency is closing.because the agency is closing.Please forward a copy of the Board of Director’s resolution to dissolve the agency to us and to all funding departments. The agency still needs to provide supporting documentation to voucher audit requests. A HOLD will be placed as a precaution to protect the City.

The department knew we did not spend the funds, so we The department knew we did not spend the funds, so we were authorized to buy something else.were authorized to buy something else.Please provide a copy of the written authorization from the department, otherwise you must refund the funds to the City.



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““Those expenses are program related and it should be Those expenses are program related and it should be allowed.”allowed.”The budget dictates what expenses were approved for the program by the funding department. Please obtain authorization from the funding department allowing those expenses.

But we paid the payroll taxes. We provided the auditor with a But we paid the payroll taxes. We provided the auditor with a copy of the check and the 941.copy of the check and the 941.Unfortunately that evidence is not enough. You must provide proof that the expense was incurred and paid. A copy of the deposit slip, cancelled check, payroll journal, bank statement will demonstrate that.

The expenses we vouched for were not paid until the following The expenses we vouched for were not paid until the following month.month.Reimbursement request must only be made after an expenditure has been incurred. Reimbursements request should represent only expenditures that are allowed for, both in type and amount, in approved contract.



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““When should a new accounting firm be considered?”When should a new accounting firm be considered?”As a result of an annual evaluation of the current accounting firm.Agency dissatisfied with current accounting firmAgency desires new approach

Is an annual audit by an agency’s chosen accounting firm the Is an annual audit by an agency’s chosen accounting firm the only audit to which an agency will be subject?.only audit to which an agency will be subject?.No. An annual audit does not preclude you from additional audits mandated by awarding agencies or regulatory authorities, whether they are Federal, State, City or Private.

What topics should an engagement letter include?What topics should an engagement letter include?Topics include, but are not limited to, scope of services, audit fees, audit timeline, presentation of financial report and audit findings, number of copies of financial report and corresponding management letter, and staffing.



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““What is the benefit (s) to having an annual audit conducted?”What is the benefit (s) to having an annual audit conducted?”An annual audit provides agency management, including the Executive Director and Board of Directors, with assurances as to the agency’s financial position and results of operation. An annual audit also provides external entities with assurances that funds are recorded and managed appropriately. Entities that are provided such assurances may be more inclined to provide or increase funding.


Delegate Agency Fiscal OverviewDelegate Agency Fiscal OverviewX. Common QuestionsX. Common Questions

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Office of Compliance Internal Audit Division ____________________________

Documents

Transcript of Office of Compliance Internal Audit Division ____________________________