INTERNAL AUDIT PLAN

Transcription

1 INTERNAL AUDIT PLAN Duval County School Board Policy 2.26, 12(B)iv., Board Meeting Protocol and Format, provides in part that the Board as the Audit Committee review and approve the annual plan for the District s Internal Audit Department. Generally Accepted Government Auditing Standards (GAGAS) and the International Standards for the Professional Practice of Internal Auditing (ISPPIA) require a written audit plan be prepared. This plan is intended to: Propose audit objectives for audits that will result in an audit report; Address relevant risk factors outlined in the Internal Auditing Risk Assessment Analysis; Propose an audit scope and methodology for audits that will address the audit objectives; Provide an evaluation of whether evidence, in the form of records and reports examined, will be sufficient and appropriate; and, Provide an overview of staffing resources required to perform the audits within the period outlined in the plan. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. The results of an audit are communicated to management and those charged with governance in a formal, written report, and will include an expression of an opinion on whether the financial statements audited are fairly presented. Because the scope of an audit can cover a broad area of records and reports, there may be a circumstance in which a review will be performed in lieu of an audit. A review is limited in scope, will not result in the expression of an opinion, and will not result in a formal report, but rather a letter summarizing the results of the procedures agreed upon. Because of its limited scope, a review can often be performed in a fraction of the time it takes to perform an audit, but still provide management and those charged with governance valuable information on the areas reviewed. 1

2 Audit/Review Objectives Audit / Review Type School Internal Accounts (Internal Funds) Objectives Determine whether school internal account balances, as well as cash receipts and disbursements, as presented are materially correct (FINANCIAL) Determine the extent of each school s compliance with Federal and State guidelines, State Board of Education Rules, Duval County School Board Policies, & School Internal Accounts Policies and Procedures (OPERATIONAL) Determine whether the underlying records supporting school internal accounts are complete, accurate, and free from material errors or omissions (BOTH FINANCIAL AND OPERATIONAL) FTE Funding Determine whether school s reported FTE for the respective survey periods was materially accurate; Determine extent of each school s compliance with Federal and State guidelines, State Board of Education Rules, Duval County Public Schools Information Management Department Support Training; Determine whether the underlying records supporting the school s reported FTE for the respective survey periods are complete, accurate, and free from material errors or omissions Department Determine the extent to which specific functions Level Functions within a department, as applicable,: o Operate programs effectively, efficiently, and economically; o Maintain effective internal controls; o Comply with applicable Federal and State guidelines, State Board of Education Rules, Duval County School Board Policies, and written policies and procedures; or o Display expected results based on historical trends or anticipated changes. Authority/Basis SBE Rule 6A-1.087(2), F.A.C annual audit of school internal accounts required; DCPS Board Policy 7.60 written response to school internal accounts audit due within 10 days FDOE FTE General Instructions; Sections , Florida Statutes; SBE Rules, Chapter 6A-1, F.A.C.; SBE Rules, Chapter 6A-6, F.A.C. As applicable, Federal regulations Florida Statutes SBE Rules Other rules of Florida Administrative Code DCPS Board Policy Departmental written policies and procedures 2

3 Audit/Review Risk Assessment Internal Auditing has developed written risk assessments for the different audit/review types. The risk assessments document those factors affecting the risk of material misstatement of school internal account balances, the accuracy of FTE reported for Survey Periods 2 and 3, or the applicable risk assessment measure for department functions. The extent to which weaknesses in internal control exists places a school at a higher risk that school internal account balances are materially misstated or FTE is reported incorrectly. Also, the extent to which the various risk assessment objectives for department functions may have higher levels of risk for various risk factors can place that particular function at an overall higher risk of not achieving the specific objective. We have evaluated these risk factors and have incorporated the respective risk assessments in the development of this audit plan to prioritize our audit schedule to direct resources towards the highest risk areas first. We are also proposing shifting the financial component of the school internal accounts audits into a single annual financial audit for all schools, while continuing to perform individual school internal accounts operational audits, to ensure that we meet the requirements under SBE Rule 6A-1.087, Florida Administrative Code, for performance of an annual audit of school internal accounts. Audit/Review Scope and Methodology Audit/Review Type Audit/Review Scope Audit/Review Methodology School Internal Accounts Examine fiscal year end cash balances, along with underlying records of cash receipts and disbursements to evaluate the effectiveness of internal controls FTE Funding Examine reported FTE for Survey Periods 2 and 3, along with underlying records supporting student attendance to evaluate the effectiveness of internal controls Department Functions Inquiries with applicable department personnel Examine written policies and procedures Examine applicable reports and records Identify deviations from internal controls through examination of cash receipts, disbursements, and transfers on a test basis. Identify deviations from internal controls through examination of ESE and ESOL programs with material FEFP funding on a test basis. Identify deviations from applicable objectives through inquiries and examinations 3

4 Audit Evidence The basis for the conclusions reached regarding the accuracy of school internal account balances, and the compliance with laws, rules, regulations, or guidelines for both school internal account and FTE funding audits is heavily reliant on the sufficiency of the underlying records. Records that are complete, accurate, and appear to be free from alteration, errors, or omissions, provide much stronger evidence from which to base audit conclusions for the first two audit objectives for the respective audit types. Missing records provide no assurance to the auditor that the first two audit objectives can be met and lack of accountability, where records are incomplete, provides very little assurance in achieving audit objectives. These deviations in internal controls often result in noncompliance and major concerns, respectively, with regards to each audit type. Since a review is more limited in scope than an audit, it is not intended to gather evidence for the basis of communicating conclusions. Rather, it is intended to report results of the review and it is incumbent upon management to perform additional follow-up to ensure that appropriate adjustments are made for the specific functions to operate consistent with management objectives. 4

5 Audit Staffing Resources Internal Funds: The District currently has 161 schools with Internal Funds (school internal accounts). Internal Auditing currently has 4 Auditors assigned to complete audits of school internal accounts. The following table provides an overview of the average number of days to complete each audit by school type (based on audits completed during the and fiscal years): School Type # of Schools by Type Average # Days To Complete Audit by Type Estimated Total # of Audit Days by School Type Alternative Elementary ,060 Middle High TOTAL 161 1,885 The average number of days to complete each audit type includes the time onsite at the school, the time preparing the audit report, and holding an audit conference with the school principal and/or bookkeeper. The following information is an overview of the current staffing resources: Number of Annual Contract Days per Auditor Annually 261 Less: Estimated Days of Leave & Professional Development Annually (16) Estimated Days Available for Audits per Auditor Annually 245 Total Estimated Audits Days Annually (4 auditors x 245 days) 980 Based upon the above overview of current staffing resources, it takes approximately 2 years (1,885 / 980) to get to each school to perform a school internal accounts audit. Using the information from our risk assessment, the following schedule is proposed for school internal accounts audits during the fiscal year: 5

6 Audit Priority School Internal Accounts Operational: Based upon our preliminary risk assessment, we estimate performing operational school internal accounts on the following schedule: School Type Short-term (during ) Long-term ( ) Total Alternative Elementary Middle High Total Risk factors for school internal accounts included: Employee turnover (bookkeeper) Completeness and accuracy of records Significant or unexplained variance in cash receipts and disbursements Extent of noncompliance or major concern findings from most recent audit Dollar volume of cash receipts and disbursements School type This schedule is subject to change based upon changes in risk factors that may occur during the course of the year or by specific request of management and/or those charged with governance. FTE Funding: The District currently has 161 public schools, 5 District department service programs, and 40 charter schools that receive Florida Education Finance Program (FEFP) funding from the Florida Department of Education (FDOE). This funding is based upon student enrollment and program levels as reported to FDOE as unweighted full-time equivalent (FTE) students during Survey 2 (October) and Survey 3 (February) of each year. There is not an average time for completing an audit of a particular school, whether public or charter, because it is dependent on a combination of student enrollment and program levels for Exceptional Student Education (ESE) and/or English for Speakers of Other Languages (ESOL). However, cost factors are weighted heavier for 6

7 ESE Program Levels 254 and 255, so our risk assessment places a higher priority of schools with significant FTE enrollment in these programs. Additionally, because of their unique nature, District management has placed a high priority on the audit of charter school FTE compliance. Currently, one auditor performs audits and reviews of FTE compliance due to the complexity of the requirements. We anticipate the hiring of an additional auditor; we are also working on ways to cross train school internal accounts auditors on the less complex components of FTE compliance (i.e., verifying student attendance procedures). With this in mind, the following schedules are proposed for audits and reviews of FTE funding compliance. Audit Priority FTE Funding Based upon our preliminary risk assessment, we estimate performing FTE funding compliance audits on the following schedule: School Type Short-term (during ) Long-term ( ) Total Alternative Elementary Middle High Department Charter Total

8 Review Priority FTE Funding Based upon our preliminary risk assessment, we estimate performing FTE funding compliance reviews according to the following schedule: School Type Short-term (during ) Long-term ( ) Performed upon request Alternative Elementary Middle High Department Charter Total Total The audit and review schedules for FTE funding are subject to change based upon changes in risk factors that may occur during the course of the year or by specific request of management and/or those charged with governance. Department Functions: The District currently has 10 divisions, each of which has one or more departments responsible for administering various programs with various functions. The goals and objectives of each function are often dictated by a combination of factors ranging from statutes, rules, regulations, industry standards, Board policy and/or internally developed written policies and procedures. Internal audit may be requested by management and those charged with governance to evaluate one or more functions to provide feedback on whether goals and objectives are being met. Currently, there are no staff specifically assigned to perform audits or reviews of departmental functions. We anticipate the hiring of an additional auditor to provide assistance with departmental audits/reviews, as well as cross-train to provide assistance with school internal accounts audits and/or FTE audits/reviews. As we develop procedures to address this need, we 8

9 anticipate primarily performing reviews of specific functions. We ve identified potential functions for consideration based upon recent external audit reports of other school districts. Review Priority Departmental Functions Based upon our preliminary risk assessment, we anticipate performing reviews of departmental functions according to the following schedule: Department Function Short-term (during ) Long-term ( ) Total Alternative Education Alternative Education Dual Enrollment Program Virtual Instruction Budget Budgets Budget Capital Project Funds Business Business Business Business Business HR Employee Support HR Employee Support HR Employee Support HR Equity and Inclusion HR Labor Relations Facilities Planning Charter School Accounting Financial Reporting Accounts Payable Payroll Treasury Background Screenings Bonuses Employee Compensation Fraud Procedures Employee Health Self-insurance Construction

10 Internal Auditing* Audit Plan & Organizational Structure Maintenance Staffing Purchasing Purchasing Cards Purchasing Related-party Transactions School Choice Charter Schools Technology IT Program Management *The completion and submission of this annual audit plan to the Audit Committee for review and approval is part of the goals and objectives of Internal Auditing as required by DCPS Board policy and auditing standards cited on the first page of this plan. An independent review of this objective could only be performed outside of the Internal Auditing Department (either as part of an external peer review or external audit). We can, however, perform a selfassessment for management and those charged with governance. Risk factors for departmental functions included, as applicable: Size or scope of function Written policies and procedures Monitoring by Management External monitoring by State agency Employee turnover Complexity of requirements (statutory and/or rules) This schedule is subject to change based upon changes in risk factors that may occur during the course of the year or by specific request of management and/or those charged with governance. AUDIT PLAN SUMMARY Internal auditing will prioritize the completion of the audits and reviews scheduled as outlined and required by statute. Any questions or additional information needed in connection with this plan can be directed to Melinda Jones, Supervisor, Internal Auditing at jonesm18@duvalschools.org or (904)