How to Prepare for an Audit O PERATIONS M ANAGEMENT June, 1998.

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Presentation transcript:

How to Prepare for an Audit O PERATIONS M ANAGEMENT June, 1998

How to Prepare for an Audit  An audit does not have to hit you like a bolt of lightning......if you prepare for it!

Types of Audits  State Audits - conducted by the Auditor General’s auditors  Internal Audits - conducted by the Inspector General (FAU) auditors - may be systemwide or just at FAU  External Audits - performed by a CPA firm

ComplianceCompliance  Federal & State Statutes  FAC Rules  SUS Rules  Chancellor's Memoranda  Presidential Memorandums  Department Policies & Procedures

Department’s Policies & Procedures  Do you have written policies & procedures?  If not - GET SOME!  Have they been given to employees?  Are they current?  Are they being followed?

Document! Document!  If you don’t have documentation, you have nothing!  Any deviation from the ordinary or from the written procedure must be documented.  Documentation helps to prove you did what you did and were aware of exceptions.

Document! Document!  Did you verify an action or review an employee’s work? -  Initial & Date  Were you unable to follow a policy?  Note reason, initial & date

Document! Document!  Did you make a phone call?  Note who, when & what  Did you send an , fax or letter?  Keep a copy.

Separation of Duties  Authorization  Custody of Assets  Record-keeping  The more negotiable the asset the greater the need for separation of duties.

Separation of Duties Separation of Duties  Duties are considered incompatible if someone can carry out and conceal an error or irregularity in the course of day-to-day activities.

Separation of Duties  The primary purpose is to prevent and promptly detect errors or irregularities.  They should provide a cross check

Separation of Duties  AUTHORIZATION  This refers to the person that can approve the transaction or any exceptions.  In the case of a small operation, this duty may be assigned to a supervisor.

Separation of Duties  CUSTODY OF ASSETS  Assets are not just cash and checks, but equipment, files and records.

Separation of Duties  RECORD-KEEPING  Relates to changes in any records - cash receipts, accounts receivable, SAMAS records, etc.

Useful Tips  Periodically have an “independent” review of operations and procedures - document the review  Make use of checklists and logs to document procedures  Cost/Benefit/Risk analysis

Audit Responses  Keep response brief  Address the issues and only the issues in the recommendation  Not the place for excuses, reasons or explanations - or attachments  Do not go into detail about implementing recommendation

Implementation Implementation  DO WHAT YOU SAID YOU WOULD BY THE DATE YOU SAID YOU WOULD!  THEY WILL CHECK!

AssistanceAssistance  The Inspector General’s Web Page has links to several useful sites, including booklets on......internal controls,...separation of duties...surviving an audit. -

The End The End  Thank You!