1 office of the city auditor city and county of honolulu audits efficiently: tools and techniques to...
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Office of the City AuditorCity and County of Honolulu
Audits Efficiently:Tools and Techniques to Improve Performance Audit Productivity
AGA Training Audio ConferenceNovember 14, 2007
Leslie I. Tanaka, CPA City Auditor, City and County of Honolulu
Conducting Performance
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Session Objectives
1. Describe a framework for improving audit efficiency in your organization
2. Provide some office management techniques to increase audit efficiency
3. Explain the use of specific audit procedures and tools to help increase audit efficiency
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Framework for Audit Efficiency (Presentation Roadmap)
Governance Structure
(1st Gear)
Office Management
Strategies(2nd Gear)
Audit Process, Procedures and
Tools(3rd Gear)
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Governance Structure(1st Gear)
Provide some background about Hawaii’s geographic and economic challenges
Hawaii’s government structure
Office of the City Auditor
Performance auditing in Hawaii
Definition of audit efficiency
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Office of the City AuditorCity and County of Honolulu
Office created by a charter amendment in 2002 and structured around N.A.L.G.A.’s Guidelines and Model Legislation for Local Government Auditors
Appointed by the City Council on July 1, 2003 to a six-year term
Independent powers to audit both the executive and legislative branch agencies
Required to follow GAGAS
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Performance Auditing in Hawaii
Long history of performance auditing in Hawaii
Office of the Legislative Auditor (State) was established in the mid-1960s
Office name changed to the Office of the State Auditor (Ms. Marion Higa current State Auditor of Hawaii)
I and five of my six audit staff have worked for the Hawaii State Auditor and collectively we have a combined total of over 60 years of experience in performance auditing
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Definition of Audit Efficiency
We define audit efficiency as follows: completion of a comprehensive audit by a single audit staff within six to eight months—
Two months for planning,
Three months for fieldwork, and Three months for report development
and report issue
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Office Management Strategies(2nd Gear)
Some overarching principles— Be flexible in the management of your human
capital Leadership is about how we respect and
treat people—value individual strengths Build teamwork through trust, effective
communication, and shared values Use technology to increase work efficiency Implement a telecommuting program for staff
to increase work efficiency
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Office Management Strategies(Tone from the Top)
Tips to improve the management of your office and work environment Build trust with staff through communication and
sharing of information View mistakes as learning opportunities
Understand generation differences to help shape your office and work policies
Empower staff through a Results Only Work Environment with self-monitoring possibilities
Use technology and telecommuting options to create an “office without walls”
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Use of Technology
How to increase work efficiency through the use of technology— Laptops with wireless network cards and
docking stations Wireless routers for home telecommuting Virtual private network (VPN) access to the
city’s intranet/servers Wireless mobile broadband air cards Use of email and electronic forms to
communicate and transfer files between staff
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Telecommunication/Network
Office of the City Auditor
Staff in the Field
City Servers/Intranet
City Auditor in Washington D.C.
Staff Telecommuting
WiFi Connection
Wireless Router
Cable Modem Provider
Cell Phone Provider
Wireless Broadband Card
VPN Via the Internet
VPN Via the Internet
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Telecommuting Policies and Strategies
Scheduled telecommuting policy As-needed telecommuting policy Must bring added work efficiency to the individual
staff’s work responsibilities Affords staff the flexibility and efficiency to handle
and manage personal commitments and responsibilities within the work day
Has resulted in a 24/7 type work approach Saves on gasoline, time sitting in traffic, reduces
pollution and traffic
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Audit Process, Procedures and Tools(3rd Gear)
Some overarching efficiency tips—
Develop a prescriptive audit manual P&P should follow your audit process Learn from other audit shops Participate in a peer review program Use audit tools/templates to streamline your
audit process
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Audit Tools and Techniques
Three audit tools to increase efficiency— Audit planning and scoping process (planning
phase) Audit standards review form and process
(planning/fieldwork/report development) Preliminary findings, recommendations and
report outline program (report development)
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Audit Planning and Scoping Statement
1. Reasons for the audit
2. Issues to be addressed—the audit question
3. The real question—what are we really trying to answer
4. Sub-questions help to answer the real questions—what work you’ll do (forms the beginning of some audit objectives)
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Audit Planning and Scoping Statement
5. Identify key functions, processes, or factors being reviewed
6. Identify those areas where “what should be” criteria will have to be developed
7. Identify major work tasks
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Audit Planning and Scoping Statement
8. For each real question above:a. Draft a framework that answers the
questionb. Identify the types of analyses you
really think you’ll doc. Identify likely sources of informationd. Identify any barriers you think you
might run into
9. Estimated time to complete—issue report
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Audit Standards Review Process and Form
Used on every audit to ensure compliance with our office audit procedures and GAGAS
Form adopted from the Office of the City Auditor, City of San Jose, CA
Functions as an audit checklist reminder, serves as an internal peer review of the audit, and documents supervisory review of working papers
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Audit Standards Review Process
General Standard on Independence
OCA’s Controls to Ensure Compliance
Workpaper Reference
1. Audit organizations are responsible for establishing an internal quality control system to assure compliance with the independence standard.
Audit Manual (AM) procedure (Section II-4) requires that prior to assignment, auditors should complete and sign the Project Statement of Independence form which requires them to identify any potential impairment. It also alerts staff that they are to notify the city auditor of any impairment that may arise during the assignment.
Project Statement of Independence form(s):
W/P # _______________
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Audit Standards Review Process
Reviewer In-charge Signature
Date Supervisor Signature
Date
FIRST AUDIT STANDARDS REVIEW
(Generally performed upon completion of the planning phase to ascertain that audit staff have complied with the applicable general and planning standards as described in the OCA Audit Manual policies and procedures)
SECOND AUDIT STANDARDS REVIEW
(Generally performed upon completion of fieldwork to ascertain that the audit staff have complied with the applicable general and fieldwork standards as described in the OCA Audit Manual policies and procedures)
FINAL AUDIT STANDARDS REVIEW(Performed upon completion of the audit report and prior or soon after the official release to ascertain that audit staff have complied with the applicable general and reporting standards as described in the OCA Audit Manual policies and procedures)
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Preliminary Findings, Recommendations and Report Outline Program
PF&R and RO—performed after the completion of fieldwork and prior to the report drafting
Purpose of the PF&R—to break down all of the audit findings in the elements of a finding (Condition, Cause, Effect, Criteria, and Recommendations)
Purpose of the Report Outline—to frame the structure and organization of the audit report
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Preliminary Findings, Recommendations and Report Outline
Finding 1:The department lacks sufficient authority to effectively implement and monitor a citywide IT security management system
Condition:Current administrative guidance divides the policymaking responsibility from the monitoring and enforcement responsibility
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Preliminary Findings, Recommendations and Report Outline
Cause:The mayor’s directive 99-1 is inadequate to ensure effective management of the city’s IT security
Effect:The department does not know if its security policy is effective
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Preliminary Findings, Recommendations and Report Outline
Criteria:Federal information systems controls audit manual
Recommendation:The IT department should resolve issues related to enforcement, oversight, planning and management of the city’s security program
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Preliminary Findings, Recommendations and Report Outline
Report OutlineAudit of Selected City IT Controls
Chapter 1Introduction<L1>Background<L1>Audit Objectives<L1>Scope and Methodology
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Preliminary Findings, Recommendations and Report Outline
Chapter 2Report theme statement<L1>Summary of findings<L1>Finding 1
<L2>Detail support of finding<L3>Sub-detail support
<L1>Conclusion<L1>Recommendations
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Summary
Audit efficiency can be achieved by following an integrated process that puts all of the pieces together—
from issues and policies related to your office governance,
to how you manage your staff and work environment,
to the use of technology and telecommuting,
to the streamlining of your audit policies and procedures, and
finally through the use of specific audit tools and techniques.
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Does It Work?
Zero staff turnover since the creation of the office
Won the 2005 Silver Knighton Award from N.A.L.G.A. for our road maintenance audit
Passed our first GAGAS peer review in 2006 with a “clean” opinion with no GAGAS related written comments, no informal comments, and no verbal comments
Issued 16 performance audits since July 2003 Over the past year and a half, shared our audit
manual with about 17 national and international governmental audit type agencies