Internal Audit Department Status Report to the Board of Supervisors

Description

EXHIBIT A IAD’S MONTHLY ACTIVITY REPORT FOR DECEMBER 2006 TO THE BOARD OF SUPERVISORS Recipient of the Institute of Internal Auditors “Award for Excellence” The Internal Audit Department is an independent audit function reporting directly to the Orange County Board of Supervisors. by the Director of Internal Audit Dr. Peter Hughes, MBA, CPA Certified Information Technology Professional (CITP), Certified Internal Auditor (CIA), Certified Fraud Examiner (CFE) Assistance in assembling this report provided by: Eli Littner, Deputy Director, CPA, CIA, CFE, CFS, CISA Alan Marcum, Audit Manager, MBA, CPA, CIA, CFE Michael J. Goodwin, Audit Manager, CPA, CIA Autumn McKinney, Audit Manager, CPA, CIA, CGFM Board Date: January 30, 2007 Exhibit A, Page 1 of 9 MONTHLY SUMMARY – December 2006 Status Report to the Board of Supervisors by IAD DECEMBER AUDIT ACTIVITY: WE FINISHED 5 PROJECTS FOR THIS MONTH AS SUMMARIZED BELOW: We completed 1 Audit: 1. District Attorney – Spousal Abuser Prosecution Program We found the financial statement presents fairly, in all material respects, the approved budget, expenditures, and costs claimed and accepted for the District Attorney’s Office Audit of Spousal Abuser Prosecution Program, for Fiscal Year Ending June 30, 2006. We issued 2 Reports of Monthly Computer Assisted Audit Techniques (CAATs) for the Months of November and December 2006: 2. Auditor Controller - Duplicate Payments ...

Informations

• Publié par: Vufuk
• Nombre de lectures: 21
• Langue: English

Extrait

EXHIBIT A

Board Date:

January 30, 2007

Exhibit A,

Page 1 of 9

IAD’

S

M

ONTHLY

A

CTIVITY

R

EPORT

FOR

DECEMBER

2006

TO THE

BOARD OF SUPERVISORS

Recipient of the Institute of Internal Auditors “Award for Excellence”

The Internal Audit Department is an independent audit function reporting directly to the Orange County Board of Supervisors.

by the Director of Internal Audit

Dr. Peter Hughes, MBA, CPA

Certified Information Technology Professional (CITP),

Certified Internal Auditor (CIA), Certified Fraud Examiner (CFE)

Assistance in assembling this report provided by:

Eli Littner, Deputy Director

, CPA, CIA, CFE, CFS, CISA

Alan Marcum, Audit Manager

, MBA, CPA, CIA, CFE

Michael J. Goodwin, Audit Manager

, CPA, CIA

Autumn McKinney,

Audit Manager

,

CPA, CIA, CGFM

MONTHLY SUMMARY – December

2006

Status Report to the Board of Supervisors by IAD

DECEMBER AUDIT ACTIVITY:

WE FINISHED 5 PROJECTS FOR THIS MONTH AS SUMMARIZED

BELOW:

We completed 1 Audit:

1.

District Attorney – Spousal Abuser Prosecution Program

We found the financial statement presents fairly, in all material respects,

the approved budget, expenditures, and costs claimed and accepted for

the District Attorney’s Office Audit of Spousal Abuser Prosecution

Program, for Fiscal Year Ending June 30, 2006.

We issued 2 Reports of Monthly Computer Assisted Audit Techniques

(CAATs) for the Months of November and December 2006:

2.

Auditor Controller - Duplicate Payments to Vendors

We identified

1

duplicate payments made to vendors, totaling

$142

or

.0001%

of the

$106

million of vendor invoices processed during October

2006 that are being pursued by the Auditor-Controller.

3.

Auditor Controller - Duplicate Payments to Vendors

We identified

7

duplicate payments made to vendors, totaling

$252,462

or .11% of the $80

million

of vendor invoices processed during

November 2006 that are being pursued by the Auditor-Controller.

One

of the duplicate payments was for

$223,670

. The Auditor-Controller

informed us that it has contacted the applicable department (HCA) and a

full credit is expected to be received by December 29, 2006.

Due to the large dollar amount involved, we will further review this issue

to determine the cause of the duplicate payment and will document our

findings in a separate report.

We completed 2 Follow-Up Audits:

4.

JWA - Avis Rent A Car Systems

1

st

Follow-Up Audit and Final Close-Out of the Limited Lease Review of

Avis Rent A Car.

Corrective action was taken on all

3

recommendations.

Board Date:

January 30, 2007

Exhibit A,

Page 2 of 9

MONTHLY SUMMARY – December 2006

Status Report to the Board of Supervisors by IAD

Board Date:

January XX, 2006

Exhibit A,

Page 3 of 9

5.

RDMD - Sand Canyon LLC (Strawberry Farms Golf Club)

2

nd

Follow-Up Audit and Final Close-Out of the Limited Lease Review

of Sand Canyon LLC (Strawberry Farms Golf Club).

Corrective action

was taken on all

3

remaining

recommendations.

MONTHLY SUMMARY – December 2006

Status Report to the Board of Supervisors by IAD

Board Date:

January 30, 2007

Exhibit

A, Page 4 of 9

For a copy of the complete audit report that contains the audit objective,

scope, findings, recommendations, and management’s response,

contact the Internal Audit Department’s website at http://www.ocgov.com/audit/

MATERIAL FINDING:

Department and Description

Comments

None issued during December 2006.

MONTHLY SUMMARY – December 2006

Status Report to the Board of Supervisors by IAD

Board Date:

January 30, 2007

Exhibit

A, Page 5 of 9

For a copy of the complete audit report that contains the audit objective,

scope, findings, recommendations, and management’s response,

contact the Internal Audit Department’s website at http://www.ocgov.com/audit/

NON-MATERIAL FINDINGS

Department and Description

Comments

1.

DEPT:

District Attorney

TITLE:

Audit of Spousal Abuser

Prosecution Program (Grant

Award No. 05SA12B017)

Audit No.:

2612

ISSUED:

December 27, 2006

Scope:

We audited the District Attorney (DA) Office’s financial statements for the Grant

to determine that budgeted amounts, expenditures, and costs claimed and accepted were

fairly stated, i.e., the amounts are recorded accurately, completely, and timely.

Also, in

planning and performing our audit we reviewed internal controls over financial reporting

and performed tests of the DA Office’s compliance with certain laws, regulations and grant

requirements.

Conclusion:

In our opinion, the financial statements presents fairly, in all material

respects, the approved budget, cumulative expenditures, and allowable costs.

In addition,

we found no matters involving the internal controls that we considered a material weakness

and nothing came to our attention that caused us to believe that the DA office’s had not

complied with the laws, regulations, and grant requirements tested.

Background:

The grant is funded by the California Department of Justice, and the

2005/2006 fiscal year grant award totaled $95,033.

The grant requires the DA to provide a

20% ($19,007) in-kind match, which is funded from the County General Fund.

The grant agreement requires that the DA obtain an annual audit of the financial

statements.

The DA has the option of outsourcing the audit to an outside CPA firm or

requesting that the County Internal Audit Department conduct the audit.

Type of Recommendations:

None

MONTHLY SUMMARY – December 2006

Status Report to the Board of Supervisors by IAD

Board Date:

January 30, 2007

Exhibit

A, Page 6 of 9

For a copy of the complete audit report that contains the audit objective,

scope, findings, recommendations, and management’s response,

contact the Internal Audit Department’s website at http://www.ocgov.com/audit/

Department and Description

Comments

2.

DEPT:

Auditor-Controller

Human Resources

CEO/Purchasing

TITLE:

CAAT November

Audit No.:

2620-E

ISSUED:

December 21, 2006

S

COPE

:

The monthly CAAT routines are automated queries applied to large amounts of

electronic data searching for specified characteristics.

We currently perform 5 CAATs

routines utilizing selected payroll and vendor data.

Depending on the nature of the CAAT,

we perform them monthly, annually, or as necessary.

C

ONCLUSION

:

•

Duplicate Payments to Vendors:

We identified

1

duplicate payment made to vendors,

totaling

$142

or

.0001%

of the

$106 million

of vendor invoices processed during

October 2006.

We perform this analysis monthly to identify duplicate payments made

to vendors. We analyzed 14,807 invoices paid in October 2006 amounting to

$106,456,006. The Auditor-Controller currently has a recovery rate of about

71%

on

these duplicate payments.

Our prior research has indicated that the duplicate

payments are typically caused by a compounded human clerical error.

•

Deleted Vendors:

No findings.

B

ACKGROUND

:

The CAATs differ from our traditional audits in that the CAATs can query

100% of a data universe whereas the traditional audits typically test but a sample of

transactions from the population.

The resulting matches identified by the CAATs are subjected to further review and analysis

by the Internal Audit Department.

We then forward any resulting findings to the A-C, HR,

or CEO/Purchasing for their review and concurrence, and subsequent correction/recovery.

We also work with these departments to identify internal control enhancements with the

purpose of preventing future occurrences of the type of findings identified by the CAATs.

MONTHLY SUMMARY – December 2006

Status Report to the Board of Supervisors by IAD

Board Date:

January 30, 2007

Exhibit

A, Page 7 of 9

For a copy of the complete audit report that contains the audit objective,

scope, findings, recommendations, and management’s response,

contact the Internal Audit Department’s website at http://www.ocgov.com/audit/

Department and Description

Comments

3.

DEPT:

Auditor-Controller

Human Resources

CEO/Purchasing

TITLE:

CAAT December

Audit No.:

2620-F

ISSUED:

December 28, 2006

S

COPE

:

The monthly CAAT routines are automated queries applied to large amounts of

electronic data searching for specified characteristics.

We currently perform 5 CAATs

routines utilizing selected payroll and vendor data.

Depending on the nature of the CAAT,

we perform them monthly, annually, or as necessary.

C

ONCLUSION

:

•

Duplicate Payments to Vendors:

We identified

7

duplicate payments made to vendors,

totaling

$252,462

or

.11%

of the

$234 million

of vendor invoices processed during

November 2006.

We perform this analysis monthly to identify duplicate payments made

to vendors. We analyzed 17,937 invoices paid in November 2006 amounting to

$234,353,950. The Auditor-Controller currently has a recovery rate of about

71%

on

these duplicate payments. Our prior research has indicated that the duplicate payments

are typically caused by a compounded human clerical error.

One of the duplicate payments was for

$223,670

.

The Auditor-Controller informed us

that it has contacted the applicable department (HCA) and a full credit is expected to be

received by December 29, 2006.

•

Deleted Vendors:

No findings.

B

ACKGROUND

:

The CAATs differ from our traditional audits in that the CAATs can query

100% of a data universe whereas the traditional audits typically test but a sample of

transactions from the population.

The resulting matches identified by the CAATs are subjected to further review and analysis

by the Internal Audit Department.

We then forward any resulting findings to the A-C, HR,

or CEO/Purchasing for their review and concurrence, and subsequent correction/recovery.

We also work with these departments to identify internal control enhancements with the

purpose of preventing future occurrences of the type of findings identified by the CAATs.

MONTHLY SUMMARY – December 2006

Status Report to the Board of Supervisors by IAD

Board Date:

January 30, 2007

Exhibit

A, Page 8 of 9

For a copy of the complete audit report that contains the audit objective,

scope, findings, recommendations, and management’s response,

contact the Internal Audit Department’s website at http://www.ocgov.com/audit/

Department and Description

Comments

4.

DEPT:

John Wayne Airport

TITLE:

Final Close-Out - First

Follow-Up Audit of Limited Lease

Revenue for Avis Rent A Car

Systems, Inc.

(Original Audit No.

2585)

Audit No.:

2650-D

ISSUED:

December 18, 2006

S

COPE

:

1

st

Follow-Up Audit and Final Close-Out of Limited Lease Revenue Review for

Avis Rent A Car to determine the implementation status of recommendations made in our

original audit report dated July 31, 2006. In that audit, we identified

3

control findings

resulting in

3

recommendations.

C

ONCLUSION

:

We are pleased to report that satisfactory corrective action has taken place

on all

3

recommendations.

As such, this report represents the final close-out of the

original audit.

B

ACKGROUND

:

The original audit was a limited review of lease revenue pertinent to the

lease agreement between the County and Avis Rent A Car System, Inc., dated December

14, 2000. Avis became a wholly owned subsidiary of Cendant Car Rental Group (Cendant)

and the lease agreement was assigned to Cendant in June 2001. The lease agreement was

for the operation of a rental car concession at John Wayne Airport.

T

YPE OF

R

ECOMMENDATIONS

:

Lease compliance or improvements to internal controls

regarding:

a reporting error for fuel reimbursements; format of the monthly gross receipts

statement; and unapproved vending machines.

MONTHLY SUMMARY – December 2006

Status Report to the Board of Supervisors by IAD

Board Date:

January 30, 2007

Exhibit

A, Page 9 of 9

For a copy of the complete audit report that contains the audit objective,

scope, findings, recommendations, and management’s response,

contact the Internal Audit Department’s website at http://www.ocgov.com/audit/

Department and Description

Comments

5.

DEPT:

Resources Development

and Management Department

TITLE:

Final Close-Out - Second

Follow-Up Audit of the Limited

Lease Review of Sand Canyon

LLC (Strawberry Farms Golf

Club) (Original Audit No. 2340)

Audit No.:

2654-C

ISSUED:

December 21, 2006

S

COPE

:

2

nd

Follow-Up Audit and Final Close-Out of Limited Lease Revenue Review of

Strawberry Farms Golf Course to determine the implementation status of

3

recommendations not fully implemented at the time of our 1

st

Follow-Up Audit, dated

October 4, 2006.

No material or significant issues were identified in the original audit

report.

C

ONCLUSION

: We are pleased to report that satisfactory corrective action has taken place

on the remaining

3

recommendations.

As such, this report represents the final close-out

of the original audit.

B

ACKGROUND

:

The original audit was a limited review of lease revenue pertinent to the

lease agreement between the County and Sand Canyon LLC (Strawberry Farms Golf

Club), dated November 8, 1996.

The lease agreement is primarily to operate an eighteen-

hole golf course, driving range, and pro-shop on properties owned by the County and the

Irvine Ranch Water District.

T

YPE OF

R

ECOMMENDATIONS

:

Lease compliance or improvements to internal controls

regarding: rent owed due to reallocation of advance reservation fees, pro-shop fees, tee

pack fees, and environmental fees; categorization of banquet/event equipment rentals;

categorization of other site fees; approval for handicap and membership fees; required

financial statements; reimbursement of audit costs; supervisory review of vending cart

sales; and documentation of register voids.