Strother & Associates Audit of NASA Ames Research Center Exchange Financial Statements for FY Ended September

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IG-00-041QUALITYSTROTHER & ASSOCIATES AUDIT OFCONTROL NATIONAL AERONAUTICS AND SPACEREVIEW ADMINISTRATION AMES RESEARCH CENTEREXCHANGE FINANCIAL STATEMENTS FORREPORTFISCAL YEAR ENDED SEPTEMBER 30, 1998September 11, 2000OFFICE OF INSPECTOR GENERALNational Aeronautics andSpace AdministrationAdditional CopiesTo obtain additional copies of this report, contact the Assistant Inspector General for Auditingat [phone], or visit www.hq.nasa.gov/office/oig/hq/issuedaudits.html.Suggestions for Future AuditsTo suggest ideas for or to request future audits, contact the Assistant Inspector General forAuditing. Ideas and requests can also be mailed to:Assistant Inspector General for AuditingCode WNASA HeadquartersWashington, DC 20546-0001NASA HotlineTo report fraud, waste, abuse, or mismanagement contact the NASA Hotline at [phone], [phone] (TDD), or at www.hq.nasa.gov/office/oig/hq/hotline.html#form; orwrite to the NASA Inspector General, P.O. Box 23089, L’Enfant Plaza Station, Washington,DC 20026. The identity of each writer and caller can be kept confidential, upon request, to theextent permitted by law.Reader SurveyPlease complete the reader survey at the end of this report or athttp://www.hq.nasa.gov/office/oig/hq/audits.html.AcronymsAICPA American Institute of Certified Public AccountantsCFO Chief Financial OfficerFY Fiscal YearGAS Government Auditing StandardsGAAS Generally Accepted Auditing StandardsW September 11, ...

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• Publié par: Repuv
• Nombre de lectures: 39
• Langue: English

Extrait

QUALITY CONTROL REVIEW REPORT

National Aeronautics and Space Administration

IG-00-041

STROTHER & ASSOCIATES AUDIT OF NATIONAL AERONAUTICS AND SPACE ADMINISTRATION AMES RESEARCH CENTER EXCHANGE FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED SEPTEMBER 30, 1998

September 11, 2000

OFFICE OF INSPECTOR GENERAL

Additional Copies To obtain additional copies of this report, contact the Assistant Inspector General for Auditing at [phone], or visitv//ooigfaf.igcoei.snsaus/wh.qh/qidswtwdeua.lh.mt Suggestions for Future Audits To suggest ideas for or to request future audits, contact the Assistant Inspector General for Auditing. Ideas and requests can also be mailed to: Assistant Inspector General for Auditing Code W NASA Headquarters Washington, DC 20546-0001 NASA Hotline To report fraud, waste, abuse, or mismanagement contact the NASA Hotline at (800) 424-9183, [phone] (TDD), or at ce/ooffigov/asa.qhn.ww.w#fmlmorniltth.eh/gioh/q ; or write to the NASA Inspector General, P.O. Box 23089, L’Enfant Plaza Station, Washington, DC 20026. The identity of each writer and caller can be kept confidential, upon request, to the extent permitted by law. Reader Survey Please complete the reader survey at the end of this report or at http://www.hq.nasa.gov/office/oig/hq/audits.html.

Acronyms AICPA American Institute of Certified Public Accountants CFO Chief Financial Officer FY Fiscal Year GAS Government Auditing Standards GAAS Generally Accepted Auditing Standards

W

September 11, 2000

TO: A/Administrator FROM: W/Inspector General SUBJECT: INFORMATION: Quality Control Review of Audit of Ames Exchange Financial Statements Report Number IG-00-041 The NASA Office of Inspector General has completed a quality control review of the audit of the Ames Research Center Exchange financial statements for the fiscal year ended September 30, 1998. We found that Strother & Associates, the certified public accounting firm that performed the audit, omitted specific procedures required by generally accepted auditing standards (GAAS 1  addition, the Ames Exchange In) for assessing risk and planning the audit. contracted for the FY 1999 audit in accordance with GAAS, whereas NASA policy requires that Exchange audits for FY's 1999 and later be conducted according to government auditing standards (GAS). Finally, because the firm provides extensive nonaudit services to the Ames Exchange, financial statement users may have a perception that the firm lacks independence. As a result of the omitted audit procedures, use of inappropriate standards, and the perception of impaired independence, users may not fully rely on the Exchange's financial statements. Background The Ames Exchange is a Government instrumentality, operating under NASA’s control for the benefit of Agency employees. It operates and generates revenues primarily from a cafeteria, a gift shop, vending machines, mobile service trucks, and Space Camp. 2  For the year ended September 30, 1998, the Ames Exchange reported total cash of $171,891 3 and net income of $15,633.

                                                 1   by the American Institute of Certified Public Accountants, areGenerally accepted auditing standards, promulgated broad statements of the auditors' responsibilities. The standards apply to audits of non-governmental organizations. 2   Space Camp is a nonprofit facility that provides resident programs for children to promote interest in the wonders of science. The Ames Research Center provides onsite land and a range of services to the Space Camp Foundation. 3   purchased with a maturity of 3 months or less.Cash equivalents include all highly liquid debt instruments

The Inspector General Act of 1978, as amended, requires Inspectors General to ensure that work performed by non-Federal auditors complies with GAS issued by the Comptroller General of the United States. The GAS incorporate, by reference, the GAAS for field work and reporting issued by the American Institute of Certified Public Accountants (AICPA). Compliance with GAS provides reasonable assurance that: ·   financial condition and results of operations ofFinancial statements present fairly the the Exchange in accordance with established accounting principles. ·   Internal controls are in place and operating as intended. ·   The Exchange is complying with applicable laws and regulations. In contrast to GAS, GAAS require an audit opinion 4 only on the financial statements and do not require reporting on internal controls or compliance with laws and regulations as part of the audit of the financial statements. Recommendations We recommended that Strother & Associates revise its planning process for the FY 1998 audit of the Ames Exchange financial statements to comply with GAAS   and that the Ames Exchange expand the audit of the FY 1999 financial statements to comply with GAS. We also recommended that subsequent financial statements audits be conducted in accordance with GAS. Finally, we recommended that the Ames Exchange engage an independent auditor to conduct audits of future financial statements. Management Response NASA management and Strother & Associates concurred in the recommendations. Strother & Associates has revised its planning process for the FY 1998 audit of the Ames Exchange financial statements to comply with GAAS. The Exchange intends to expand the audit of the FY 1999 financial statements to comply with GAS and to require that subsequent financial statement audits be conducted in accordance with GAS. Also, the Ames Exchange will hire a bookkeeper/accounting clerk to process accounting transactions and engage an independent auditor to perform audits of the financial statements.

[Original signed by]

Roberta L. Gross

Enclosure Final Report on Quality Control Review of Strother & Associates Audit of the National  Aeronautics and Space Administration Ames Research Center Exchange Financial  Statements for Fiscal Year Ended September 30, 1998                                                  4   financial statements are presented in conformity withGAAS require the auditor to provide an opinion on whether the generally accepted accounting principles.

FINAL REPORT QUALITY CONTROL REVIEW OF STROTHER & ASSOCIATES AUDIT OF THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION AMES RESEARCH CENTER EXCHANGE FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED SEPTEMBER 30, 1998

W

TO:

FROM:

R/Associate Administrator for Aerospace Technology ARC/D/Director, Ames Research Center ARC/D/Chair, Ames Exchange Council

Assistant Inspector General for Auditing

September 11, 2000

SUBJECT: Final Report on Quality Control Review of Strother & Associates Audit of the National Aeronautics and Space Administration Ames Research Center Exchange Financial Statements for Fiscal Year Ended September 30, 1998 Assignment Number A0002500 Report Number IG-00-041

The subject final report is provided for your information and use.  Please refer to the Executive Summary for the overall audit results. Our evaluation of your responses has been incorporated into the body of the report.   The recommendations will remain open for reporting purposes until corrective action is completed. Please notify us when action has been completed on the recommendations, including the extent of testing performed to ensure corrective actions are effective. If you have questions concerning the report, please contact Mr. Patrick Iler, Director, Audit Quality, at [phone], or Ms. Bonnie Armstrong, Auditor-in-Charge, at [phone]. We appreciate the courtesies extended to the audit staff. The report distribution is in Appendix C.

Russell A. Rau

Enclosure

cc:

B/Chief Financial Officer B/Comptroller BF/Director, Financial Management Division G/General Counsel

Office of Inspector General

Mr. David Strother Strother & Associates Certified Public Accountant 480 Saint John Street, Suite 120 Pleasanton, CA 94566-6597

September 11, 2000

Re: Final Report on Quality Control Review of Strother & Associates Audit of the National Aeronautics and Space Administration Ames Research Center Exchange Financial Statements for Fiscal Year Ended September 30, 1998 Assignment Number A0002500 Report Number IG-00-041

Dear Mr. Strother:

The subject final report is provided for your information and use.  Please refer to the Executive Summary for the overall audit results. Our evaluation of your responses has been incorporated into the body of the report.   The recommendations will remain open for reporting purposes until corrective action is completed. Please notify us when action has been completed on the recommendations, including the extent of testing performed to ensure corrective actions are effective.

If you have questions concerning the report, please contact Mr. Patrick Iler, Director, Audit Quality, at [phone], or Ms. Bonnie Armstrong, Auditor-in-Charge, at [phone]. We appreciate the courtesies extended to the audit staff. The report distribution is in Appendix C.

Sincerely,

[Original signed by]

Russell A. Rau

Enclosure

cc: B/Chief Financial Officer B/Comptroller BF/Director, Financial Management Division G/General Counsel JM/Acting Director, Management Assessment Division JR/Industrial Relations Officer R/Associate Administrator for Aerospace Technology ARC/D/Director, Ames Research Center ARC/D/Chair, Ames Exchange Council ARC/J/Exchange Operations Manager ARC/DL/Chief Counsel ARC/C/Chief Financial Officer

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Contents

Appendix A - Objectives, Scope and Methodology,14

Finding D.

Finding C.  

Finding B.

Finding A.

Findings and Recommendations , 2

Introduction, 1

Executive Summary,i

Appendix C- Report Distribution List, 20

Appendix B - Management's Response,16

NASA Office of Inspector General

 September 11, 2000

IG-00-041  A0002500 Strother & Associates Audit of National Aeronautics and Space Administration Ames Research Center Exchange Financial Statements for Fiscal Year Ended September 30, 1998

Executive Summary Background.The NASA Office of Inspector General performed a quality control review of the Strother & Associates audit of the Ames Research Center Exchange (Ames Exchange) fiscal year (FY) 1998 financial statements. Strother & Associates is a certified public accounting firm that has audited the Ames Exchange since 1992. The Ames Exchange is a Government instrumentality, operating under NASA’s control for the benefit of Agency employees. It operates and generates revenues primarily from a cafeteria, a gift shop, vending machines, mobile service trucks, and Space Camp. 5  For the year ended September 30, 1998, the Ames Exchange reported total cash of $171,891 6 and net income of $15,633. The Inspector General Act of 1978, as amended, requires Inspectors General to ensure that work performed by non-Federal auditors complies with GAS issued by the Comptroller General of the United States. The GAS incorporate, by reference, the GAAS 7 of field work and reporting issued by the AICPA. Compliance with GAS provides reasonable assurance that:

· Financial statements present fairly the financial condition and results of operations of the Exchange in accordance with established accounting principles. ·   Internal controls are in place and operating as intended. ·   The Exchange is complying with applicable laws and regulations. In contrast to GAS, GAAS require an audit opinion 8 only on the financial statements and do not require reporting on internal controls or compliance with laws and regulations as part of the audit of the financial statements.

                                                 5   See footnote 2. 6   See footnote 3. 7   See footnote 1. 8   See footnote 4.

Objectives.of the quality control review was to ensure that the audit of theThe objective Ames Exchange financial statements was conducted in accordance with applicable auditing standards and to determine whether the Ames Exchange had taken corrective actions on recommendations resulting from the Strother & Associates audit. Appendix A contains additional details on our objectives, scope, and methodology.

Results of Review.Strother & Associates' process for updating audit programs and the Ames Exchange's communication process need improvement. Strother & Associates' audit report to the Ames Exchange expressed an unqualified 9 opinion on the fair presentation of the financial statements and stated that the audit was performed in accordance with GAAS. However, Strother & Associates omitted specific procedures required by GAAS for assessing risk during the audit planning phase (Finding A). Strother & Associates also omitted required procedures for performing analytical procedures (Finding B). In addition, the Ames Exchange contracted for the FY 1999 audit in accordance with GAAS, whereas NASA policy requires that Exchange audits for FY's 1999 and later be conducted according to GAS. Performing an audit in accordance with GAAS provides users of the financial statements no assurance about the effectiveness of an entity's internal controls or compliance with applicable laws and regulations (Finding C). Finally, because Strother & Associates provides extensive nonaudit services to the Ames Exchange, financial statements users may have a perception that the audit firm lacks independence (Finding D). As a result of the omitted audit procedures, use of inappropriate standards, and the perception of impaired independence, users may not fully rely on the Exchange's financial statements.

In addition to providing the audit report, Strother & Associates orally communicated recommendations for improvement to the Ames Exchange. The Ames Exchange has resolved all recommendations and implemented corrective actions where required. We consider actions taken by the Exchange to be responsive to the audit firm's recommendations.

Recommendations.Strother & Associates revise its planning processWe recommended that for the FY 1998 audit of the Ames Exchange financial statements to comply with GAAS   and that the Ames Exchange expand the audit of the FY 1999 financial statements to comply with GAS. We also recommended that subsequent financial statements audits be conducted in accordance with GAS. Finally, we recommended that the Ames Exchange engage an independent auditor that does not also provide extensive accounting services such as maintaining the official accounting records.

Management's Response. NASA management and Strother & Associates have agreed to implement all recommendations. Strother & Associates has revised its planning process for the FY 1998 audit of the Ames Exchange financial statements to comply with GAAS. The Ames Exchange intends to expand the audit of the FY 1999 financial statements to comply with GAS                                                  9 means that the overall financial statements present fairly, in all material respects, theAn unqualified audit opinion Ames Exchange's financial position and results of its operations and cash flow.

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