Audit Program Area: Sheriffs Office Expenditures

AUDIT PROCEDURES Ref.

DETAILED AUDIT TESTING STEPS

STANDARD AUDIT PROGRAM

A. Report
Objective: to report and discuss audit results.
1 Prepare a section index.
2 Prepare a section conclusion related to the objective.
Prepare a report outline including management point #s & review with audit director
3 prior to drafting report.
Prepare a draft audit report including transmittal to management with scheduling of
closing conference and incorporating sections previously prepared. x-reference the
4 draft to workpapers or management point #s.
5 Edit the draft and make changes.
6 Prepare a report distribution list and keep updated.
7 Issue final draft report to management.
8 Document closing conference.
9 Make any necessary changes to the draft report and issue revisions to management.

B. Management's response
Objective: to obtain, review for adequacy and incorporate management's response
to the audit report.

1 Prepare a section index.

2 Prepare a section conclusion in terms of the objective.
3 Obtain management's written response to the report.
Review the response, obtain any clarifications necessary and document the
4 adequacy of the response.
Incorporate the response into the report, prepare a transmittal letter to the audit
committee and issue the final report with copies to client management; update report
5 distribution list on A-6

C Closing
Objective: to document audit discussion issues, management points, review
workpapers and other audit closing matters.

1 Prepare a section index.

2 Prepare a section conclusion in terms of objective.
Document, on an ongoing basis, a schedule of the discussion issues numbering
them sequentially and including a source workpaper x-reference, brief issue
identification, name and date of discussion with client, and disposition as:
management point, oral discussion or no further action plus the reason and adding a
3 report reference for management points
 Document discussion issues unresolved after review with client as management
points numbered sequentially with a x-reference to the source workpaper and
discussion issue #, descriptive title, criteria, condition, cause, effect and
recommendation. on an ongoing basis and after review with director, share the
management points with the client and document the name, date and reaction of the
4 client
After all audit testing, re-evaluate the preliminary overall conclusion (step g-2) on
internal controls and document the results for identification as a discussion issue,
management point and reportable comment in the opinion on internal controls of the
5 audit report.
On an ongoing basis, submit the workpapers for review and document the review
6 notes and responses.
On an ongoing basis, document communications pertaining to the audit or other
7 audit related material.
Prepare a listing of any audit leads for other audits or suggestions regarding
repeating this audit & give an extra copy of these workpapers to the audit director.
8

D. Planning and preparation

Objective: to properly plan and prepare for the audit by notifications, reviewing
materials and entrance meeting.

1 Prepare a section index.

2 Prepare a section conclusion on the section objective.
Document the audit assignment from the Audit Plan or amendments and any other
3 assignment materials.
4 Document notification of the audit to the client.
Document a review of relevant prior Internal Audit workpapers, especially for any
5 follow up needed.
Document a review of relevant external audit workpapers and coordinate audit
6 efforts to the extent practical.
Research, obtain, document and consider relevant audit work from other
7 governments.
Document a review of relevant Internal Audit Office materials to become familiar with
the area and terminology, to include annual reports, budget documents, publications,
accounting or auditing books or periodicals, relevant published questionnaires,
8 programs or checklists, Office files and related materials.
Document a review of applicable policies, procedures, or regulations from the
Federal, State and Local Government, company policies and procedures, Manager's
9 Memos or other appropriate sources.
Arrange and document an entrance conference with client to discuss the audit
approach, preliminary objectives, timing of audit and client events, management's
10 emphasis and processing of management's points.

E Program and Budget

Objective: To develop audit program and budget.
1 Prepare a section index.
2 Prepare a section conclusion on the section objective.
 At the beginning of the audit, prepare the Standard Audit Program for approval
through the Control Review phase with a preliminary budget and timelines for audit
3 completion. Initial audit program steps as completed.
Based on the results of Planning/preparation, Preliminary Survey and Control
Review/Evaluation, prepare and obtain approval of detailed testing audit program
4 steps to add to the Standard Audit Program starting with Section
5 Document and obtain approval of any changes to the program.
Before beginning the field work testing phase, prepare and obtain approval of a
revised budget and target dates for completion of audit work, keeping in mind the
6 target Audit Plan and preliminary budget and timing.
Document payperiod summaries of actual audit time compared to budget and
explain significant variations including suggested actions to keep the audit within
7 budgeted hours and timelines.

F Preliminary Survey
Objective: To perform a preliminary survey by reviewing topics in the audit area to
determine the most critical issues, processes, and areas resulting in defined audit
testing objectives and report introduction text.

1 Prepare a section index.

Prepare a section summary and conclusion on the section objective with specific
2 objectives for further audit.

Review and document the relevant organizational structure, list key personnel and
their titles, document relevant background and job experience of key personnel, and
3 position descriptions (highlight information on relevant key duties.
Document additional interviews with key personnel to identify any other relevant
activities, procedures, functions, responsibilities, information flow, changes planned
4 and personnel availability during the audit.
Document any goals, objectives or standards applicable to the area including
5 compliance regulations.
Document significant statistics on activity transactions, value, cost, especially data
6 for report introduction presentation.
Document review of operating manuals, procedures, instructions, or other written
7 materials that guide the operations of the activity.
Clearly identify the audit scope planned and any areas to be excluded (with reasons)
8 for the audit report.
9 Consider the need for a follow up audit objective.
Arrange and document a meeting with appropriate IT personnel, if needed, to
10 discuss relevant automated systems.
Draft report text on background, objectives and scope, nature/extent of testing and
11 closing.

G Internal Control
Objective: To study and evaluate the adequacy of internal controls over activities
identified for continued auditing.

1 Prepare a section index.

Determine the overall conclusion and document with a Management Point the
2 adequacy and effectiveness of internal controls in the audit area as related to:
 a.The reliability and integrity of financial and operational information and the
means to process this data.
b.The sufficiency of compliance with significant plans, policies, procedures, laws
and regulations.
c. The adequacy of controls for safeguarding assets (money, people property,
information, and reputation).
Document the system of internal controls in the form of a flowchart, questionnaire or
narrative AND confirm accuracy of understanding of internal control processes by
consulting management, transaction walk-through or other appropriate means.
3
Identify and evaluate the strengths and weaknesses in the systems of internal
4 control as documented in Step G-3.
Document consideration of reasonably possible irregularities; identify significant risks
5 and exposures; and evaluate audit implications for further testing.
Consider, if appropriate, the quality of performance in carrying out assigned
responsibilities as related to economic and efficient use of resources and
6 accomplishment of established objectives and goals

Include a specific audit objective for each section. Initial audit program steps as
H completed.

I SAMPLE SELECTION

OBJECTIVE: Utilize ACL to select sample for testing.

Prepare a section conclusion
Use ACL to select samples for testing
J AGENCY HEAD TRANSACTIONS

OBJECTIVE: Test transactions directly involving Agency Head for propriety

Prepare a section conclusion.
Test all Payment transactions to the Chief of Division of Fire for the audit period
K CAPITAL ASSETS TESTING

OBJECTIVE: To test capital assets for proper classification.

Prepare a section conclusion
Document selected Capital assets sample transactions from “STEP I”
Confirm capital assets
Verify and check for appropriateness of capital assets
L DIRECT PAY TRANSACTIONS

OBJECTIVE: To test selected Direct Pay payments for proper procurement,

classification, documentation, accountability and propriety.
Prepare a section conclusion.
Document selected Direct pay sample transactions from “STEP I”
Perform the following test for each selected Direct Pay transaction:

Verify procurement made in accordance with applicable policies and procedures

 Confirm existence of vendor invoice and other supporting documentation attached to
accounting receiving report
Compare and agree the vendor name and amount listed on the supporting
documentation
Recalculate and agree payment amount
Verify that the Agency selected the correct account code
Ensure that individual receiving goods and services have signed and dated the
vendor invoice and /or packing slip to document receipt and to confirm the accuracy
and completeness of amount billed.
Ensure prompt payment of the vendor invoice defined as the due date or if no due
date then not more than 45 days from the invoice date
Verify the Direct Pay Invoices was authorized by individual designated by the
Agency on the Authorized form
Verify Agency selected the correct payment category.
Evaluate the results. Determine the need to test additional items.
M PURCHASE ORDER TRANSACTIONS

OBJECTIVE: To test selected purchase order payments for proper procurement,

classification, documentation, accountability and propriety
Prepare a section conclusion
Document selected Purchase order sample transactions from “STEP I”
Perform the following test for each selected Purchase order transaction:
Verify procurement made in accordance with applicable policies and procedures.

Confirm existence of vendor invoice or other supporting documentation attached to

accounting receiving report.
Compared and agree the vendor name and amount listed on the supporting
documentation to corresponding purchase order information.
Recalculate and agree payment amount.
Verify that the Agency selected the correct Account code
Verify the Purchase order transaction was authorized by individual designated by the
Agency on the authorized signature form
Ensure prompt payment of the vendor invoice defined as the due date or if no due
date then not more than 45 days from the invoice date
Determine whether the invoice was marked as to indicate review by the Agency
Determined whether the invoice was date stamped
Evaluate the results. Determine the need to test additional items.
N PERSONNEL

OBJECTIVE: To verify that Time Reporting transactions, including overtime hours,

were properly approved, recorded, and calculated in accordance with applicable
personnel rules and regulations.
Prepare a section conclusion
Document selected Personnel sample transactions from “STEP I”
Test each Pay Period for the following:
Verify hours recorded are supported by a properly completed and approved
work/leave request form or timesheet.
For overtime hours, recalculate pay for hours of overtime for proper amount
Determine if the TOT sheet totals agree to aggregate total of corresponding hours as
reported on work/leave request forms or timesheet
 Review TOT sheet maintained in Finance-Payroll office files and confirm
documented approved by an authorized individual.
Review check pick up log maintained by Finance-Payroll office and determine
whether the person picking up the checks is authorized and also is not the time
preparer.
Evaluate the results. Determine the need to test additional items
O VA TRAVEL

OBJECTIVE: To document test VA travel expenditure documents for substantial

compliance with significant elements of County policies and procedures.

Prepare a section conclusion.

Document selected Travel sample transactions from “STEP I”
Test the VA documents for the following:
VA signed by the employee
VA signed by the agency head.
Travel supported by a conference agenda
T-2 processed within allowance guideline (including utilization of contract vendor for
airline tickets) or explained on the travel justification addendum.
T-2 supported by actual receipts when required by the travel policy.
T-3 signed by the employee.
Travel settled with in 14 days of return.
Prepayment agreed to a processed Direct pay Invoice.
Travel advance repayment agreed to a PIV.
Travel appeared to be appropriate. Appropriateness will be determined by reviewing
the purpose of travel section on the T-1. If additional information is needed to make
this determination, an e-mail request will be sent to the agency head requesting
travel justification.
P OTHER TRANSACTIONS

OBJECTIVE: Test the other transaction, test based on what the transactions are.

Prepare a section conclusion.

Document selected CAM, IDT, Internal Charges and other sample transactions from
“STEP H”
Test for proper classification – Subject to change based on sample selection.
Done Time Date Date Checked
By Spent Expected Finished Remarks By:
 Client Name
Internal Control Framework

Date Completed:
Completed By:
Reviewed By:

Question Yes No* Comment

* For a “No” answer, cross-reference to either a compensating control or to audit work which has been performed
Questionnaire
or is to be performed.
Audit Program

Audit Procedure Control Objective

 Workpaper Performed Date
Risk if Objective Not Met Control Technique Reference By Expected
 Date Budget Actual Document
Completed Hours Hours Reference Source Reviewed By
Remarks/Comments
AREA:

Process Control Objective Risk

 Assertion Documentation W/P
Control Considerations E,A,C,V,P Description of control Ref.
 Do controls meet Testing
objective? exceptions
Yes/No Test noted? Resolution / remediation/ comments
W/P Ref Yes/No W/P Ref
 Audit Program Area

Global Audit Procedure Control Objective Risks Control Control KeyControl? Frequency
Ref No, Activity Description
Number
Owner Exceptions Type Document Mapping to
Reference Standards
Finding Ref # Control Testing Finding
Management Response & Treatment