HomeMy WebLinkAboutAnnual Audit Plan FY 2019-2020Fiscal Year 2019-2020
Audit Plan
June 26, 2019
Aloha,
County of Hawaii
Office of the Legislative Auditor
Bonnie Nims, CGRP, Legislative Auditor
It is our mission to serve the County Council and citizens of
Hawaii County by promoting accountability, fiscal integrity, and
openness in local government. Through performance and financial
audits of County agencies and programs, we examine the use of
public funds, evaluate operations and activities, and provide
findings and recommendations to elected officials and citizens in
an objective manner. Our work is intended to assist County
government and its management of public resources, delivery of
public services, and stewardship of public trust.
am pleased to present the Office of the Legislative Auditor's
annual audit plan for fiscal year 2019-2020. The purpose of the
audit plan is to identify particular County agencies, departments,
funds, programs, or other matters we have scheduled for audit in
the fiscal year. Our annual audit plan includes four performance
audits and three follow up audits. We also coordinate the financial
statement and federal single audit of the County of Hawaii with a
contracted CPA firm. In addition, we may also consider County-
wide surprise cash counts and ongoing monitoring of County -
issued purchasing cards and travel expenditures.
This audit plan facilitates an efficient allocation of limited audit
resources on a risk -basis; provides a flexible mechanism for
managing competing audit needs; eliminates the potential
overlapping of audits with other audit organizations, and provides a
sound foundation for obtaining sufficient budgetary funds required
to execute our mission.
Respectfully,
Bonnie Nims, CGRP
Legislative Auditor
What is a performance audit?
• Assessment of operations and controls derived from previous external
Audit Plan Risk
A performance audit typically examines the effectiveness, economy, or
accordance with Generally
efficiency of a government program. They can include analyzing the services of
Assessment Criteria
an entire department or activity, identifying possible cost savings, identifying
Standards promulgated by the
the outcomes achieved by a program, or comparing actual department
Using arisk-based audit
practices against the practices called for in law or policy. Types of questions
approach to identify and
we may attempt to answer include:
prioritize potential audit topics
issues
that pose the greatest potential
• Is this program accomplishing its goals and objectives? (Are there
risk and liability to the County,
other ways to achieve this goal?) (Is this goal still relevant?) (How do
The Office of the Legislative
other counties achieve this goal or fulfill this need?)
Auditor considers the following
• How well does the program do what it is intended to do? (How
risk factors:
many are served?) (What does it cost per unit?) (How does the County
of Hawaii compare to other counties in this regard?)
0 Size of Department or
• Is this program complying with all applicable laws and
Operational Area
regulations? (Does the program meet all federal grant requirements?)
0 Compliance and
(Is the program fulfilling any obligations mandated by state or county
Regulations
law?)
• Public Sensitivity
Performance audits have a broader focus on the organization than more
• Complexity of Transactions
traditional financial audits. Financial audits are conducted to provide an opinion
about whether an entity's financial statements are fairly presented and in
0Management
conformity with generally accepted accounting principles. Financial audits do
Accountability
not focus on an entity's performance per se, but rather whether it has taken
0 Quality of Known Internal
appropriate actions to control and safeguard its finances and accurately report
Control System
on its financial conditions.
0 Age of Program or
Operation
Our objective is to improve public services. We do this by recommending
specific actions that will address the issues we raise, and by providing valuable
Audit History
information to the public, program leadership, the Mayor, and the County
0 Public Health and Safety
Council.
0 Critical Infrastructure
Preparing the Annual Audit Plan
0 Emerging Risk Areas
• Inherent Risk Areas
Audits included in the annual audit plan are selected and prioritized using arisk-
Departmental Requests
based approach. Risk assessment is a process used to identify and prioritize
audits based upon specific risk factors related to the quality of internal controls
and the estimated potential liability and level of risk exposure to the County of
Adherence to
Hawaii related to various County departments, programs, activities, and
contracts. The OLA utilizes several techniques to identify and prioritize audits in
Government
the annual plan. These techniques include:
Auditing Standards
Analysis of operations and internal controls derived from previous audits
• Assessment of operations and controls derived from previous external
We conduct all audits in
audits including information in the County's Comprehensive Annual
accordance with Generally
Financial Reports (CAFRs) and Single Audit Reports
Accepted Government Auditing
• Input from elected officials, operational management, peer audit groups,
Standards promulgated by the
and members of the public
United States Comptroller
• Benchmarking against the audit priorities of other governmental entities
General.
• Consideration of current local events, financial conditions, and public policy
issues
MWMELM
County of Hawaii, Office of the Legislative Auditor P a g e 11
Fiscal Year 2019-2020
ned Audit
aw
Audit Department Planned Audit
financial and Single Audit dMER
In accordance with Hawaii County Charter Section 10-13,
Financial audit of
Department of Finance
our Office will monitor the conduct of the external auditor,
the County's
Comprehensive
and other departments
N&K CPA's Inc. (RFP #3544) who will complete the
Annual Financial
as required
following:
Report (CAFR) for
• Single Audit of Federal Financial Assistance Programs
Fiscal Year Ended
for Fiscal Year Ended June 30, 2019.
June 30, 2019
Department of Water
Supply
0Financial Audit of the Department of Water Supply for
Fiscal Year Ended June 30, 2019.
• Report for Landfill Financial Assurance; and
• Financial Assessment Electronic Submission of
Section 8 — Housing Choice Vouchers.
Self -Initiated Performance Audits
Continuation of the
Department of Finance
We will evaluate the County's Real Property Tax collection
in -process audit of
Real Property Tax Division
p y
process over delinquent taxes.
Real Property Tax
(RPTD)
Continuation of the
Department of Parks &
We will evaluate preventative maintenance and repair,
in -process audit of
Recreation (P&R)
identify P&R's approach and strategy for park maintenance,
Facilities
review and evaluate procedures, practices, and controls of
Maintenance
P&R's various divisions on a selective basis.
Grants
County -wide departments
We will evaluate the County's Grant Management process
Management
identified during audit
including assessing whether the County has adequate
planning
internal controls to efficiently and effectively manage
grants. This may include:
• determining if the County efficiently applies for
grants; and/or
• determining if the County has established adequate
internal controls to effectively manage grants
received.
Contract
County -wide departments
We will evaluate the adequacy of the County's monitoring
Administration
identified during audit
procedures and internal controls over contract
planning
administration.
County of Hawaii, Office of the Legislative Auditor Pa g e 12
Follow-up audits
Continuation of in-
Department of Public Works
We will follow up on recommendations made in the 2017
process follow-up
Highway Division
Performance Audit on inventory management.
audit of Inventory
Management
Hiring Practices
Department of Human
We will follow up on recommendations made in the 2017
Resources
Performance Audit on the Department of Human
Resources Hiring Practices.
Cash Handling
Mass Transit Agency
We will follow up on recommendations made in the 2018
Performance Audit on Cash Handling at County of Hawai`i's
Mass Transit Agency.
Non -audit service
We may consider ongoing monitoring of compliance and internal controls
Surprise Cash
County -wide departments
Conduct surprise cash counts of cash and cash equivalents
Counts
identified during audit
to determine if all cash was receipted and deposited timely
planning
and intact; monitor safeguarding of assets to prevent and
detect fraud and misuse.
Purchasing Card
County -wide departments
Review internal controls over pCard use and compliance
(pCard)
identified during audit
with applicable procurement laws and County policies and
planning
procedures.
Travel
County -wide departments
Review travel authorization; compliance with applicable
identified during audit
laws and County policies and procedures.
planning
County of Hawaii, Office of the Legislative Auditor P a g �, 13