The URL can be used to link to this page

Home My WebLink AboutCOM 1067.000 2006-2008 ~V Phone: (808) 326-5421 BRENDA J FORD" Fax: (808) 329- 4786 Council Member E-Mail: bford@co.hawaii.hi.us District 7 - Central Kona HAWAII COUNTY COUNCIL County of Hawai `i °o -n Kailua Trade Center co 75-5706 Hanama Place, Suite 109 Kailua-Kona, Hawaii 96740 W DATE: February 28, 2008 TO: Pete Hoffmann, Chair ~ and Members of the Hawaii County Council FROM: Brenda J. Ford, Council Member w ~ur RE: Proposed Ordinance To Initiate A Charter Amendment To Article III, Legislative Branch, County Council, Of The Hawaii County Charter (2000), To Reorganize The Office Of The County Clerk And County Council By Establishing An Independent Audit Function Within The Legislative Branch Through The Office Of The Legislative Auditor Attached for your consideration is an ordinance to initiate a charter amendment to the Hawaii County Charter (2000), Article III, Legislative Branch, County Council to establish an independent auditing function within the Legislative Branch to provide for more accountability to taxpayers, voters and the public. Also attached are selected pages from the "Government Auditing Standards (July 2007 Revision) to be distributed to the County Council. BJF/dkr Enclosures ~a~ aea~ Comm. No. Ref. To: _ ! L Ref. Dare FEB 8 7nn3 02/28/2008 08:20 3265697 KCO PAGE 02 United States Government Acconntabili Offiee GAO By the Comptroller General of the United States July 2007 f Government Auditing Standards f CO t77' r: co July 2007 Revision 1 1 1 M G A O Ae"unublNty • Imm9rlty . Rollabllity GAO-07-731G 02/28/2008 08:20 3265697 KCO PAGE 03 Chapter 3 General Standards Competence 3.40 The staff assigned to perform the audit or attestation engagement must collectively possess adequate professional competence for the tasks required. 3.41 The audit organization's management should assess skill needs to consider whether its workforce has the essential skills that match those necessary to fulfill a particular audit mandate or scope of audits to be performed. Accordingly, audit organizations should have a process for recruitment, hiring, continuous development, assignment, and evaluation of staff to maintain a competent workforce. The nature, extent, and formality of the process will depend on various factors such as the size of the audit organization, its structure, and its work. 3.48 Competence is derived from a blending o -education and experience. Competencies are not necessarily measured by years of auditing experience because such a quantitative measurement may not accurately reflect the kinds of experiences gained by an auditor in any given time period. Maintaining competence through a commitment to learning and development throughout an auditor's professional life is an important element for auditors. Com etence enables an auditor to make sound professional judgments. _ Technical Knowledge 3.43 The staff assigned to conduct an audit or and, Competence attestation engagement, under r A('.Al; Must collectively . possess the technical knowledge skills and experience necessary to be competent for the type of work being performed before beginning work on that assignment . The staff assigned to a GAGAS audit or attestation engagement should collectively possess ' a. knowledge of RAGAS applicable to the type uf.ky 'Qrk they are assigned and the education, skills, and 4 Page 51 GAO-07-731G Government AnditingStandards 02/28/2008 06:20 3265697 KCO PAGE 04 Chapter 8 General Standards experience to apply this knowledge to the work being performed; b. general knowledge of the environment in which the audited entity operates and the subject matter under review; e. skills to communicate clearly and effectively, both orally and in writing; and d. skills appropriate for the work being performed. For exwttyle, staff or specialist 3kilin in I (1) statistical sampling if the work invnlvac uae of statistical sampling; (2) information technology if the work involves review of information systems; (3) engineering if the work involves review of complex I engineering data; I (4) specialized audit methodologies or analytical techniques, such as the use of complex survey instruments, actuarial-based estimates, or btatistical analysis tests, as applicable; or 1 (5) specialized knowledge in subject matters, such as scientific, medical, environmental, educational, or any other specialized subject matter, if the work calls for sneh expertise. Additional 3.44 Auditors performing financial audits should be Qualifications for knowledge able in enerall acre ted accountin Financial Audits and principles (GAA L the a can inmLkute of Certified Attestation Public Accountants (AICPA) generally accepted auditing Engagements standards for field work and reporting and the related Staterritnts on Auditing Standards (SAS), and the page 52 GAO.07-73IG Government Auditing Standards 02/28/2008 08:20 3265697 KCO PAGE 05 f I chapter3 General Standards I application of these standards. Also, if auditors use GAGAS in conjunction with any other standards, they should be knowledgeable and competent in applying i those standards. Auditors engaged to perform financial audits or attestation engagements should be licensed certified public accountants or persons working for a licensed certified public accounting firm or a government auditing organization.aa 3.46 Similarly Mr attestation engagements, GAGAS incorporate the AICPA attestation standards. Auditors should be knowledgeable in the AICPA general attestation standard related to criteria, the AICPA attestation standards for field work and reporting, and the related Statements on Standards for Attestation Engagements (SSAE), and they should be competent in applying these standards and SSAE to the task assigned. Also, if auditors use GAGAS in conjunction with any other standards, they should be knowledgeable and competent in applying those standards. I Continuing 3.46 Auditors performing work under GALAS, including Professional planning, directing, performing field work, or reporting Education on an audit or attestation engagement under GAGAS, should maintain their professional competence through continwng professional education (CPE). Therefore, each auditor performing wor under GAUAS should complete, every 2 years, at least 24 hours of CPE that directly relates to government auditing, the government environment, or the specific or unique environment in which the anditpd entity operates. For auditors who are involved in any amount of planning, directing, or reporting on GAGAS assignments and those auditors who are not involved in those activities but charge 20 "'Public accountants licensed on or before December 31, 1970, or I person working (or a public accounting firm liec> d on. or before December 31, 1970, are also considered qualified under this standard. I Page 53 GAO-07.731G Government Auditing Standards 02/28/2008 08:20 3265697 KCO PAGE 06 f Chapter 8 ` Reporting Standards for Performance Audits R I Introduction 8.01 This chapter establishes reporting standards and ' provides guidance for performance audits conducted in accordance with generally accepted government auditing standards (GAGAS). The reporting standards for performance audits relate to the form of the report, the report contents, and report issuance and distribution. 8.02 For perlvnriance audits performed in accordance with GAGAS, chapters 1 through 3 and 7 and 8 apply. Reporting 8.03 Auditors mist issue audit reports communicating the results of each completed performance audit. i ¦ 8.04 Auditors should use a form of the audit report that Ij is appropriate for its intended use and is in writing or in some other retrievable form. (See paragraph 8.42 for situations when audit organizations are subject to public records laws.) For example, auditors may present audit reports using electronic media that are retrievable by report usei-~ and the audit organization. The users' needs will influence the form of the audit report. Different t forms of audit reports include written reports, letters, briefing slides, or other presentation materials. 8.05 The purposes of audit reports are to (1) communicate the results of audits to those charged with governance, the appropriate officials of the audited entity, and the appropriate oversight officials; (2) make the results less susceptible to misunderstanding; (3) make the results available to the public, as applicable (see paragraph 8.39 for additional guidance on classified or limited use reports and paragraph 8.43b for distribution of reports for internal anditnrs); and (4) facilitate follow-up to determine whether appropriate corrective actions have been taken. Page 160 GAO-07-731G Government Auditing Standards 02/26/2008 08:20 3265697 KCO PAGE 07 Chapter 8 Reporting Standards for Performance Audits they are addressed to parties that have the authority to act and when the recommended actions are specific, practical, cost effective, and measurable. Reporting Auditors' 8.30 When auditors comply with all applicable GAGAS Compliance with requirements, they should use the following language, GAGAS wldcli represents an unmodified GALAS compliance statement, in the audit report to indicate that they performed the audit in accordance with GACAq. (See paragraphs 1.12 and 1. 13.) i We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. 8.31 When auditors do nit romply with all applicable GAGAS requirements, they should include a modified GAGAS compliance statement in the audit report For . performance audits, auditors should use a statement that includes either (1) the language in 8.30, modified to indicate the standards that were not followed or ' (2) language that the auditor did not follow GAGAS. . (See paragraphs 1.12 and 1.13 for additional standards on citing compliance with GAGAS.) ~Reporting Views of 8.32 Providing a draftxenort. with findings or review I Responsible 0111cials and comment by responsible officials of the audited entity and others helps the auditors develop a report that is fair, complete, and obiective. Including the views . of resoonsible_officials results in a report that presents not only the auditors' findings, conclusions, and I recommendations, but also the perspectives of the . Page 169 GAO.6.731G Government Auditing Standards 02/28/2008 08:20 3265697 KCO PAGE 08 I Chapter 8 RepuWag Stmidards for Performance Audits i zesponsible officials of the audited entl and the corrective actions they plan to take. Obtaining the comments in writing is preferred, but oral comm¢nta are acceptable. ' 8.33 When auditors receive written comments from the responsible officials, they should include in their report a copyof the officials' written comments, or a summary ' of the comments received. When the responsible officials provide oral comments only, auditors should ' prepare a summary of the oral comments and provide a copy of the summary to the responsible officials to verify that the comments are accurately stated. 8.34 Auditors should also include in the report an evaluation of the comments, as appropriate- In cases in I which the audited entity provides technical comments in addition rn its written or oral comments on the report, auditors may disclose in the report that such comments were received. 8.36 Obtaining oral comments may be appropriate when, for example, there is a reporting date critical to meeting a user's needs; auditors have worked closely I with the responsible officials throughout the conduct of the work and the parties are familiar with the findings and issues addressed in the draft report; or the auditors ' do not expect major disagreements with the findings, conclusions, and recommendations in the draft report, or m.ajor controversies with regard to the issues ' discussed in the draft report. ' 8.36 When the audited entity's comments are inconsistent or in conflict with the findings, conclusions, or recommendations in the draft report, or when planned corrective actions do not adequately address the auditors' recommendations, the auditors should evaluate LLe valitlit.y of the audited entity's comments. If 1 the auditors disagree with the comments, they should Page 170 GAO-07-731G Government Auditing Standards 02/28/2008 08:20 3265697 KCO PAGE 09 Chapter 8 Reportlag standards for Performance Audits explain in the report their reasons for disagreement. Conversely, the auditors should modify their report as necessary if they find the comments valid and supported with sufficient, appropriate evidence. 8.37 If the audited entity refuses to provide comments or is unable to provide comments within a reasonable period of time, the auditors may issue the report without receiving comments from the audited entity. In such cases, the auditors should indicate in the report that the audited entity did not provide comments. Reporting 8.88 If certain pertinent information is prohibited from Confidential or public disclosure or is excluded from a. report due to the Sensitive Information confidential or sensitive nature of the information, auditors should disclose in the report that certain information has been omitted and the reason or other circumstances that nukes the omission necessary. 8.30 Certain information may be clwsificd or may be otherwise prohibited from general disclosure by federal, state, or local laws or regulations, In such circumstances, auditors may issue a separate, classified or limited use report containing such information and distribute the report only to persons authorized by law or regulation to receive lt. 8.40 Additional circumstances associated with public safety and security concerns could also justify the exclusion of certain information from a publicly available or widely distributed report. ror example, detailed information related to computer security for a particular program may be excluded from pnhlirly available reports because of the potential damage that could be caused by the misuse of this information. In such circumstances, auditors may issue a limited use report containing such information and distribute the report only to those parties responsible for acting on the ' Page 171 GAO-07.731G Government Auditing standards r