1. Office of the Inspector General “Value-Added Audits” Audit, Business & Technology Committee October 5, 2004

2. 2 Internal Auditing An independent, objective assurance and consulting activity designed to add value and improve an organization’s operations.

3. 3 Internal Auditing Internal auditing helps an organization accomplish its objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

4. 4 Types of Audits Financial Performance

5. 5 Performance Audits  Program Effectiveness and Results  Economy and Efficiency  Internal Control  Compliance

6. 6 Contractor A Contributions$108,462 Legal Fees$245,000 Consulting Fees$306,412 Automobile Rental$109,731 Gifts/Entertainment$ 79,115

7. 7 Contractor B Contributions$361,083 Legal Fees$463,357 Company Party Expenses$142,113 Gifts/Entertainment$ 61,140 Club Memberships$ 23,866

8. 8 Contractor C Job Placement Services$1,629,915 Training$ 877,545 Gifts/Entertainment $ 57,289

9. 9 Potential Financial Benefits ContractorQuestioned CostsCollected A $474,629 $50,000 (?) B $300,835 -0- C $1,248,034 $473,649

10. 10 Medi-Cal Reimbursements May 2001$1,600,000 October 2004$ 550,000

11. 11 District Managers Identify Risk Evaluate Internal Controls

12. 12 District Service Consultant #1Consultant #1’s Controller Consultant #1 Consultant #2 $187,000 Consultant #3 District Staff