1. Auditor General1

2. 2 Role of the Auditor In the Procurement Process Presenter: Nancy Tucker, CPA June 3, 2008

3. Auditor General3 Discussion Points  Objectives of AG Audits and Reports  Types of Audits  Planning Audits  Auditing the Procurement Process  Audit Expectations  Audit Interactions  Other Audit Issues  MFMP

4. Auditor General4 Objectives of Audits and Reports  Audit General provides independent, unbiased, objective information on: Fiscal integrity of State government and other governmental entities Fiscal integrity of State government and other governmental entities Public resources raised Public resources raised Purposes for which resources were spent Purposes for which resources were spent

5. Auditor General5 Objectives of Audits and Reports  Identifies and audits areas considered most vulnerable  Communicates, by on-site presence and other audit procedures, the Legislature’s expectation that entity management and employees are accountable for: Proper administration of public funds Proper administration of public funds Achievement of entity objectives Achievement of entity objectives

6. Auditor General6 Objectives of Audits and Reports  Report on whether expenditures: Served public purpose Served public purpose Made in compliance with laws, rules, and regulations Made in compliance with laws, rules, and regulations Administered in economic, efficient, effective manner Administered in economic, efficient, effective manner  Report on whether: Governmental entities have established proper management and accounting controls Governmental entities have established proper management and accounting controls Financial reports and records are reliable Financial reports and records are reliable Assets are safeguarded Assets are safeguarded Fraud, omissions, and illegal acts have a reasonable chance of being discovered. Fraud, omissions, and illegal acts have a reasonable chance of being discovered.

7. Auditor General7 Purpose of Audits and Reports  Published reports: Strive to make fair and balanced presentations of findings Strive to make fair and balanced presentations of findings Agency management responses Agency management responses Recommendations to the Legislature to amend laws Recommendations to the Legislature to amend laws  Report distribution and availability

8. Auditor General8 Types of Audits  Periodic Operational Audits - State Agency State Agency Universities/Colleges Universities/Colleges District School Boards District School Boards  Multi-Agency Operational Audits

9. Auditor General9 Types of Audits  Financial Audits State State Colleges and Universities Colleges and Universities District School Boards District School Boards Lottery Lottery LGSFTF LGSFTF  Federal moneys provided to the State of Florida

10. Auditor General10 Types of Audits  Information Technology  Legislative Auditing Committee and Citizen Petition

11. Auditor General11 Planning Audits  Planning Phase Planning engagement letter Planning engagement letter  Risk Assessment Prior audit findings Prior audit findings New laws, programs, systems, contracts New laws, programs, systems, contracts Appropriations, revenues, and expenditures Appropriations, revenues, and expenditures Legislative interest Legislative interest Internal Audit Staff Internal Audit Staff Allegations Allegations  Engagement letter  Entrance conference

12. Auditor General12 Auditing the Procurement Process  Purchasing Process: Gain understanding of internal controls Gain understanding of internal controls Review policies and proceduresReview policies and procedures Tone at the TopTone at the Top Interview staff and observe operationsInterview staff and observe operations Analyze transactions for unusual patterns Analyze transactions for unusual patterns Test transactions Test transactions Ensure controls are workingEnsure controls are working Purchase was in compliance with laws, rules, and regulationsPurchase was in compliance with laws, rules, and regulations

13. Auditor General13 Auditing the Procurement Process  Contract Management Gain understanding of internal controls Gain understanding of internal controls Review policies and proceduresReview policies and procedures Interview staffInterview staff Review and evaluate business case, cost-benefit analysis, risk analysis Review and evaluate business case, cost-benefit analysis, risk analysis Analyze evaluation criteria Analyze evaluation criteria Assess independence of evaluation and negotiation teams Assess independence of evaluation and negotiation teams Review documentation in contract file Review documentation in contract file Evaluate contract provisions Evaluate contract provisions Analyze contract costs Analyze contract costs Review/test payments to vendors Review/test payments to vendors Evaluate adequacy of monitoring Evaluate adequacy of monitoring

14. Auditor General14 Audit Expectations  Management Representations Made appropriate decisions Made appropriate decisions Complied with applicable laws and rules Complied with applicable laws and rules Implemented effective internal controls and Implemented effective internal controls and Maintained public records to support decisions Maintained public records to support decisions  Professional Skepticism  Who/How/When/What?  WHY?

15. Auditor General15 Audit Interactions  Gathering Audit Evidence Interviews and inquiries Interviews and inquiries Surveys Surveys Observations (Walk-Through) Observations (Walk-Through) Records Requests Records Requests Nonpublic InformationNonpublic Information Memos Memos Request documentsRequest documents Clarify understandingClarify understanding

16. Auditor General16 Audit Interactions  Ethics Policies and Procedures were communicated  Purchase complied with laws, rules, contract terms  Good business practices  Goods and services were received  Procurement P&P were communicated and followed  Management oversight.

17. Auditor General17 Other Audit Issues  Misconceptions Gotcha vs. No Surprises Gotcha vs. No Surprises Auditors audit to the criteria; auditors do not create the criteria Auditors audit to the criteria; auditors do not create the criteria Auditors are not part of the agency’s internal control Auditors are not part of the agency’s internal control

18. Auditor General18 Other Audit Issues  F _ _ _ _  FRAUD Triangle Incentives/Pressures Incentives/Pressures Opportunities Opportunities Rationalization/Attitude Rationalization/Attitude  FRAUD inquiries Assess susceptibility of agency/program to fraud Assess susceptibility of agency/program to fraud Status of internal controls to detect and prevent fraud Status of internal controls to detect and prevent fraud Risk that management could override internal controls Risk that management could override internal controls  FRAUD detection Design procedures to provide reasonable assurance of detecting fraud. Design procedures to provide reasonable assurance of detecting fraud.

19. Auditor General19 Other Audit Issues  Coordination with other audit groups  Other side of the fence  Communication

20. Auditor General20 MFMP Audit Report 2007-076 SSSSystem Performance AAAAgency Utilization MMMMonitoring of Transactions Fees/Exemptions RRRRisk Assessments SSSSecurity of Data and IT Resources AAAApplication systems Change Management DDDData Management AAAAgency Procedural Deficiencies SSSStatistical Sampling of Payments CCCContinuity of Service

21. Auditor General21 Annual Report  Auditor General Annual Reports  http://www.myflorida.com/audgen/

22. Auditor General22 New Auditor General  David Martin was sworn in as the new Auditor General on October 1, 2007

23. Auditor General23 Contact Information Nancy Tucker, Audit Manager State Government Audits nnnn aaaa nnnn cccc yyyy tttt uuuu cccc kkkk eeee rrrr @@@@ aaaa uuuu dddd.... ssss tttt aaaa tttt eeee.... ffff llll.... uuuu ssss(850) 487-4370 Don Hancock, Deputy Auditor General State Government Audits donhancock@aud.state.fl.us (850) 487-4999 Jim Valenzuela, Deputy Auditor General Educational Entities & Local Government jjjj iiii mmmm vvvv aaaa llll eeee nnnn zzzz uuuu eeee llll aaaa @@@@ aaaa uuuu dddd.... ssss tttt aaaa tttt eeee.... ffff llll.... uuuu ssss487-4998 Dorothy Gilbert, Deputy Auditor General Information Technology dorothygilbert@aud.state.fl.us 488-4983