Auditor General

1. Auditor General Role of the Auditor In the Procurement Process Presenter: Nancy Tucker, CPA June 3, 2008 Auditor General

2. Discussion Points • Objectives of AG Audits and Reports • Types of Audits • Planning Audits • Auditing the Procurement Process • Audit Expectations • Audit Interactions • Other Audit Issues • MFMP Auditor General

3. Objectives of Audits and Reports • Audit General provides independent, unbiased, objective information on: • Fiscal integrity of State government and other governmental entities • Public resources raised • Purposes for which resources were spent Auditor General

4. Objectives of Audits and Reports • Identifies and audits areas considered most vulnerable • Communicates, by on-site presence and other audit procedures, the Legislature’s expectation that entity management and employees are accountable for: • Proper administration of public funds • Achievement of entity objectives Auditor General

5. Objectives of Audits and Reports • Report on whether expenditures: • Served public purpose • Made in compliance with laws, rules, and regulations • Administered in economic, efficient, effective manner • Report on whether: • Governmental entities have established proper management and accounting controls • Financial reports and records are reliable • Assets are safeguarded • Fraud, omissions, and illegal acts have a reasonable chance of being discovered. Auditor General

6. Purpose of Audits and Reports • Published reports: • Strive to make fair and balanced presentations of findings • Agency management responses • Recommendations to the Legislature to amend laws • Report distribution and availability Auditor General

7. Types of Audits • Periodic OperationalAudits- • State Agency • Universities/Colleges • District School Boards • Multi-Agency Operational Audits Auditor General

8. Types of Audits • Financial Audits • State • Colleges and Universities • District School Boards • Lottery • LGSFTF • Federal moneys provided to the State of Florida Auditor General

9. Types of Audits • Information Technology • Legislative Auditing Committee and Citizen Petition Auditor General

10. Planning Audits • Planning Phase • Planning engagement letter • Risk Assessment • Prior audit findings • New laws, programs, systems, contracts • Appropriations, revenues, and expenditures • Legislative interest • Internal Audit Staff • Allegations • Engagement letter • Entrance conference Auditor General

11. Auditing the Procurement Process • Purchasing Process: • Gain understanding of internal controls • Review policies and procedures • Tone at the Top • Interview staff and observe operations • Analyze transactions for unusual patterns • Test transactions • Ensure controls are working • Purchase was in compliance with laws, rules, and regulations Auditor General

12. Auditing the Procurement Process • Contract Management • Gain understanding of internal controls • Review policies and procedures • Interview staff • Review and evaluate business case, cost-benefit analysis, risk analysis • Analyze evaluation criteria • Assess independence of evaluation and negotiation teams • Review documentation in contract file • Evaluate contract provisions • Analyze contract costs • Review/test payments to vendors • Evaluate adequacy of monitoring Auditor General

13. Audit Expectations • Management Representations • Made appropriate decisions • Complied with applicable laws and rules • Implemented effective internal controls and • Maintained public records to support decisions • Professional Skepticism • Who/How/When/What? • WHY? Auditor General

14. Audit Interactions • Gathering Audit Evidence • Interviews and inquiries • Surveys • Observations (Walk-Through) • Records Requests • Nonpublic Information • Memos • Request documents • Clarify understanding Auditor General

15. Audit Interactions • Ethics Policies and Procedures were communicated • Purchase complied with laws, rules, contract terms • Good business practices • Goods and services were received • Procurement P&P were communicated and followed • Management oversight. Auditor General

16. Other Audit Issues • Misconceptions • Gotcha vs. No Surprises • Auditors audit to the criteria; auditors do not create the criteria • Auditors are not part of the agency’s internal control Auditor General

17. Other Audit Issues • F _ _ _ _ • FRAUD Triangle • Incentives/Pressures • Opportunities • Rationalization/Attitude • FRAUDinquiries • Assess susceptibility of agency/program to fraud • Status of internal controls to detect and prevent fraud • Risk that managementcould override internal controls • FRAUD detection • Design procedures to provide reasonable assurance of detecting fraud. Auditor General

18. Other Audit Issues • Coordination with other audit groups • Other side of the fence • Communication Auditor General

19. MFMP Audit Report 2007-076 • System Performance • Agency Utilization • Monitoring of Transactions Fees/Exemptions • Risk Assessments • Security of Data and IT Resources • Application systems Change Management • Data Management • Agency Procedural Deficiencies • Statistical Sampling of Payments • Continuity of Service Auditor General

20. Annual Report • Auditor General Annual Reports • http://www.myflorida.com/audgen/ Auditor General

21. New Auditor General • David Martin was sworn in as the new Auditor General on October 1, 2007 Auditor General

22. Contact Information Nancy Tucker, Audit Manager State Government Audits nancytucker@aud.state.fl.us (850) 487-4370 Don Hancock, Deputy Auditor General State Government Audits donhancock@aud.state.fl.us (850) 487-4999 Jim Valenzuela, Deputy Auditor General Educational Entities & Local Government jimvalenzuela@aud.state.fl.us 487-4998 Dorothy Gilbert, Deputy Auditor General Information Technology dorothygilbert@aud.state.fl.us 488-4983 Auditor General