1. Presented by Sandra Healy, CGFM Principal Auditor Idaho Transportation Department 1

2. Office of Internal Review Org Chart 2 Principal Auditor

3. ITD Office of Internal Review Internal Review conducts independent reviews to assess the effectiveness, compliance, and efficiency of department programs, procedures, and internal controls (GAGAS compliant) Internal Review reviews records and financial reports for certain third parties contracting and sub granting with ITD 3

4. Internal Review Staff & Duties Manager and five auditors Both internal & external audits Allocation of staff hours between internal & external Management requests for non-audit services 4

5. Audit and Review Work Plan Based upon Audit Risk Assessment Criteria Management Need Date of Last Audit Amount of Monies involved Inherent Control Risk 5

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7. Risk Assessment Process Process begins mid-Dec Review running list of audit requests Meet with executive management Meet with FHWA Add new requests to running list Rate high, medium and low risk 7

8. IR Audit Risk Assessment Top 5-7 high risk projects IR Audit Risk Assessment Template Assess level of risk for each project 8

9. Internal Audit Risk Assessment Criteria Weight Factor Value Extension Dollar Impact 5 >$ 10 mil.5 $ 5 mil. approximately3 <$100 K1 Federal Responsibility/Requirement 5 Importance of Federal Regulations to this Program – Degree (5-0) Public Impact 5 Degree (5-0) Prior Audit Performed (by IR, Legislative Auditor, FHWA) 5 >5 Years5 Within 2 Years-2 Past 12 Months-5 Management Need/Request 5 Within 6 Months5 No Hurry1 9

10. Internal Audit Risk Assessment (cont.) Inherent Risk Factor 3 Potential for Irregularity or Fraud – Degree (5-0) Internal Controls/Administrative Controls 3 Degree (5-0) (Very strong = 0; Very weak = 5) Legal Responsibility/Requirement 3 Degree (5-0) Department Impact 3 Degree (5-0) Reported Audit Problems on Most Recent Audit 3 Degree (5-0) Potential Efficiency Improvement 2 Degree (5-0) Audit Time Estimate 1 <10 Man-Weeks5 >60 Man-Weeks1 Total Audit Risk Value 10

11. Internal Review Audit Coverage 200920102011201220132014 Division of Motor Vehicles XXXXXX Division of Transportation Performance XXXX Division of Aeronautics XXX Division of Highways XXXXXX Division of Administration XXXXXX Division of Human Resources XXXX 11

12. Audit Plan Development Hours required for an Internal Audit Staff availability hours External audit hours Resulting Internal Audit hours available Audit work plan 12

13. Estimate Time Required (Internal Audits) Formula: Take top 3-4 and estimate time required Planning: 4 weeks Field Work: 8–12 weeks (complexity, travel, etc.) Wrap-up: 4 weeks Total: 16 – 20 weeks (team lead) 16 weeks x 40 hours/week = 640 hrs. 20 weeks x 40 hours/week = 800 hrs. Team member: 320–400 hrs. (1/2 time) Thus, each internal audit time estimate: 960–1200 hrs. 13

14. Estimate Staff Availability 5 Auditors @ 2,080 hours 10,400 Less vacation & SL @ 200 ea. 1,000 Less training @ 50 ea. 250 Net 9,150 Lost productivity (20%) 1,830 Estimated available time 7,320 (Not an exact science!) 14

15. External Audits Need to deduct from staff availability (high est.) 40 Pre-award reviews 24-40 hours ea.1,600 60 Overhead rate reviews 16-24 hours ea. 1,440 2-3 Cognizant reviews@80 hrs. 240 2 Post audits/yr. @120 hrs. 240 1-2 Sub-grantees/yr. @ 80 hrs. 160 Total 3,680 15

16. Internal Audits - Staff Availability Estimated available staff hrs.7,320 Less: Est. external audits3,680 Est. FHWA joint audits 160 Available time for internal audits & non-audit services3,480 (about 2-3 internal audits) 16

17. Audit Work Plan 17 Key:

18. Audit Work Plan (cont.) 18

19. Audit Work Plan (cont.) 19

20. Annual Report to the Board Panel presentation – all auditors Last years audits and reviews (Internal, external & non-audit services) Each auditor speaks 1-2 mins. on a particular audit/review or effort involved in Audit and review work plan for current year (Internal, external and non-audit services) 20

21. Audit Resolution Log Prior audit recommendations Audit Resolution Committee meets quarterly Requests status updates Update audit resolution log Audit Mgr. presents to Executive Team 21

22. Summary Risk Assessment Process Audit Work Plan Audit Resolution Follow Up 22

23. Office of Internal Review Thank You/Questions 23

24. Contact Information Sandra Healy, CGFM Principal Auditor Idaho Transportation Department Office of Internal Review 3311 W State St Boise, ID 83703 sandra.healy@itd.idaho.gov 24