The Firm of Choice. Solutions.Character. Depth.

The Firm of Choice. Institute of Internal Auditors Performance Auditing Ron Conrad, Partner Cherry, Bekaert & Holland, L.L.P.

The Firm of Choice. Course Objectives Discuss standards for performance audits Discuss application of performance audits among session participants Discuss practical applications and situations encountered in performance audits

The Firm of Choice. Objectives of Performance Audits Provide an independent assessment of the performance Provide an independent assessment of the management of a program Provide information to improve program operations Facilitate decision making Improve public accountability

The Firm of Choice. Types of Performance Audits Assessing program effectiveness and results Assessing economy and efficiency Assessing internal control Assessing compliance with legal requirements Assessing analyses and other information

The Firm of Choice. General Standards Independence –Free in fact and appearance from organizational, personal and external requirements –Internal audit is free of organizational impairments if the head of the audit organization is: Accountable to the head or deputy head of the governmental entity Required to report audit results to the head or deputy head of the governmental entity

The Firm of Choice. General Standards (continued) Is located organizationally outside the staff or line management function of the unit under audit –Internal audit should be sufficiently removed form political pressures to ensure objectivity –Independence is enhanced if reporting to an audit committee or oversight body –Internal audit should document the conditions that allow it to be free of organizational impairments

The Firm of Choice. General Standards (continued) Professional judgment –Reasonable care and diligence –Objective, independent, integrity Competence –Adequate staffing –Training Quality control and assurance –Peer review every three years –Policies and procedures

The Firm of Choice. Fieldwork Standards Work is to be adequately planned –Understand the program –Consider internal controls –Design the audit Supervision is to be documented Evidence should be sufficient, competent and relevant –Findings should include the condition, effect, cause and criteria

The Firm of Choice. Fieldwork Standards (continued) –Criteria are the standards, measures and expectations of what should exist –Condition is the situation that exists Audit documentation should be sufficient to enable an experienced auditor, who has no previous connection to the audit, to ascertain that evidence supports the auditors judgments and conclusions

The Firm of Choice. Reporting Standards Audit reports should include the objectives, scope and methodology used Audit reports should include findings, conclusions and recommendations Audit reports should reference GAGAS and include views of responsible officials Audit reports should include the nature of any privileged and confidential information omitted

The Firm of Choice. Reporting Standards (continued) Audit objectives, scope and methodology –Identify the audit subject, why the audit is performed, the depth of audit work performed, the period covered, the organizational unit audited, any limitations or scope impairments, the relationships between samples and what was audited and how audit objectives were accomplished –Report findings, conclusions, and recommendations, criteria, condition, cause and effect

The Firm of Choice. Reporting Standards (continued) –Views of responsible officials are normally written. If oral, auditors should summarize in writing and provide the summary to officials of the audited entity –When written views oppose the auditors’ findings, the auditors should state the reasons for disagreeing with the written views –Report should be timely, complete, accurate, objective, convincing, clear and concise

The Firm of Choice. Solutions.Character. Depth.