North Carolina’s EAGLE Program

1. The North Carolina Office of the State Controller North Carolina’s EAGLE Program August 13, 2013 David T. McCoy State Controller

2. North Carolina’s EAGLE Program Enhancing Accountability in Government through Leadership and Education

3. Statewide Accountability and Internal Control Act Chapter 143Ddefines State agency as: “Any department, institution, board, commission, committee, division, bureau, officer, official, or any other entity for which the State has oversight responsibility, including, but not limited to, any university, mental or specialty hospital, community college, or clerk of court.”

4. Statewide Accountability and Internal Control Act North Carolina General Statute 143D-7 states: “The management of each State agency bears full responsibility for establishing and maintaining a proper system of internal control within that agency. Each principal executive officer and each principal fiscal officer shall annually certify, in a manner prescribed by the State Controller, that the agency has in place a proper system of internal control…”

5. Statewide Accountability and Internal Control Act North Carolina General Statute 143D-6 states: “ The State Controller, in consultation with the State Auditor, shall establish comprehensive standards, policies, and procedures to ensure a strong and effective system of internal control within State government. These standards, policies, and procedures shall be made readily available to all State agencies.”

6. Statewide Accountability and Internal Control Act North Carolina General Statute 143D-6 also states: “ . . . the State Controller shall make appropriate education efforts to inform relevant State agency staffs of the standards, policies, procedures, and internal control practices. These efforts shall include the development of training courses . . . to promulgate internal control standards, policies, procedures, and best practices throughout all State agencies.”

7. North Carolina’s EAGLE Program The EAGLE Program is an internal control methodology established to assist state agencies in meeting their statutory responsibility as put forth in Chapter 143D of the North Carolina General Statutes, the “State Governmental Accountability and Internal Control Act.”

8. EAGLE Program’s Framework • Financial Reporting • OSC has adopted the widely-accepted internal control framework established by COSO (Committee of Sponsoring Organizations of the Treadway Commission) and COBIT (Control Objectives for Information and Related Technology), which was issued by the IT Governance Institute. • Compliance • OSC Compliance Assessment is based on “Circular A-133 - Audits of States, Local Governments, and Non-Profit Organizations,” published by the Federal Office of Management and Budget. OMB Circular A-133 is commonly referred to as the Federal Compliance Supplement.

9. EAGLE Program’s Methodology • Top-Down, Risk-Based Approach • Identify, understand and evaluate risk at a financial statement level • Document the flow of transactions for the accounts and processes in scope to gain an understanding of the highest risks within those processes • Identify the internal controls that either prevent or detect an error from occurring during transaction processing • Design a testing strategy to focus on the effectiveness of the controls identified as either preventing or detecting errors within the highest risk processes

10. North Carolina’s EAGLE Program • Why does the State need an internal control program? • Meets the public’s growing expectations for effective operations and accountability • Solidifies the State’s status as a national leader in governmental accountability and fiscal management

11. Implementation Approach • Phase I: • Internal Control over Financial Reporting • Phase II: • Compliance with Applicable Laws and Regulations • Efficiency and Effectiveness of Operations • Provided by the Office of the State Controller: • Internal Control Guidance Manual • Assessment Tools (Templates) • Case Studies • Training

12. Implementation Approach • Appointment of agency Internal Control Officers – serves as primary liaison on internal control matters between their agency and the Office of the State Controller • Formation of an internal control assessment team – consisting of key business process owners; led by the agency’s Internal Control Officer • Guidance and consultation provided by the Office of the State Controller’s Risk Mitigation Services staff • Segment program deliverables into achievable milestones

13. EAGLE Program Monitoring • Microsoft’s SharePoint software – a web-based collaboration tool • Agencies upload self-assessment deliverables to the EAGLE SharePoint web portal • OSC Risk Mitigation Services staff reviews agency documentation and provides feedback

14. Lessons Learned • Strong executive leadership and support of your program is essential • Recognize and manage program risk – implement your program in phases  • Establish a target date for completion of the self-assessment – provide a timeline for the completion of each milestone • Provide agencies with a concise list of the required procedures to be performed for each milestone • Training is essential – provide customized, one-on-one training with each agency assessment team at the beginning of each milestone • Review program deliverables for each milestone to ensure that agencies remain on track – provide constructive feedback

15. Contact Information For further information about North Carolina’s EAGLE Program, please contact: Ben McLawhorn Risk Mitigation Services Manager NC Office of the State Controller 1410 Mail Service Center Raleigh, NC 27699-1410 Telephone: (919) 707-0757 Email: ben.mclawhorn@osc.nc.gov Website: http://www.osc.nc.gov/eagle