Internal Audit Policies & ProceduresONE: ORGANIZATION AND POLICY
1.3 Mission Statement
1.4 Mission Strategy
1.5 Required Access to Records
TWO: METHOD OF OPERATION
2.1 Internal Audit Functions
2.2 Independence, Objectivity and Ethics
2.3 Audit Planning, Conduct and Communication
2.4 Required Continuing Professional Education
THREE: INTERNAL AUDIT SERVICES
3.1 Types of Services
3.2 Requests for Internal Audit Services
3.3 Audit Reports
3.4 Audit Report Distribution
3.5 Follow-up on Audits
3.6 Records Disposition
SECTION 1: ORGANIZATION AND POLICY
This document establishes the official policies and procedures for the Internal Audit Division within the Clerk of the Circuit Court. It explains the purpose, authority and responsibility of the internal audit function and the duties of the Internal Auditor.
By authority of the Constitution of the State of Florida, Article VIII, Section 1(d), the Clerk of the Circuit Court (Clerk) serves as chief financial officer, accountant and auditor for the Marion County Board of County Commissioners (BCC). The Clerk is an elected official and is organizationally independent of the operating activities of the BCC.
Recognizing the importance of government compliance with laws, policies, established procedures and accountability for the use of public funds while exercising its power and performing its duties, the Clerk has established the Internal Audit Division (Division).
The Internal Auditor is an appointed Senior Management position who serves at the discretion of the Clerk. The Internal Auditor receives direction from the Clerk in the accomplishment of the internal audit program objectives and the management of the Division. The Internal Auditor is responsible for auditing and reviewing the functions, activities and programs under the direction of the BCC. The Internal Auditor is organizationally independent and has no direct responsibility for, or authority over, any BCC function, activity, or program subject to audit and review.
The Internal Auditor has the authority and responsibility to conduct audits and reviews of all agencies funded by the BCC and departments under the County Administrator and to issue reports thereon. The Attorney General, in opinion No. 86-38, stated that "Until legislatively or judicially determined otherwise, the clerk of circuit court as ex officio county auditor is not authorized to perform post-audit functions on the records of other constitutional officers." The Clerk would welcome any voluntary requests for internal audit services from other county constitutional officers.
1.3 MISSION STATEMENT:
The mission of the Internal Audit Division is to serve the citizens and taxpayers of Marion County (County) through the performance of independent, objective reviews and evaluations of all relevant activities under the BCC. In performing these duties, the Internal Auditor will endeavor to assist BCC administrators and department managers in achieving the best utilization and administration of taxpayer resources. These efforts are intended to improve County operations and to help ensure that the County is fulfilling its fiduciary responsibilities to its citizens and taxpayers.
1.4 MISSION STRATEGY:
The Internal Auditor will accomplish the Clerk's mission to provide Marion County with an efficient, proactive and comprehensive internal audit program through the conduct of:
(A) Revenue audits on entities obliged to pay revenues to County government to ensure that the County receives in a timely manner all revenues to which it is entitled.
(B) Performance audits to determine that required internal controls are in place and to appraise the economy (cost effectiveness) and efficiency with which resources are employed. Findings and recommendations will be reported as appropriate.
(C) Special reviews requested by BCC officials and department directors and that have been approved by the Clerk. These would include any requests from other county constitutional officers.
(D) Assistance to the Clerk's Finance and Accounting Division and/or the external auditors in the performance of the annual audit of the County's financial statements.
(E) Compliance audits to ensure conformance with the requirements of Federal and Florida laws and/or Federal and Florida grants.
(F) Information systems audits of computer hardware, applications and related controls.
(G) Investigations of reported situations involving possible impropriety in matters pertaining to the business of County government.
1.5 REQUIRED ACCESS TO RECORDS:
The Internal Auditor must have full access to all County records, properties and personnel in order to properly conduct required audit activities. Further, Florida Statutes, Chapter 119, allows a government internal auditor access to otherwise confidential public records. Accordingly, County officials and employees shall furnish any requested information and records within their custody and respond to any questions regarding powers, duties, activities, organization, property, financial transactions and methods of business. In addition, County employees shall provide access to the Internal Auditor for the inspection of all County property, equipment and facilities within their custody and the observation of any operations for which they are responsible.
The confidentiality of the information and documentation gathered during the conduct of internal audit activities, and any resulting audit report, is subject to Chapter 119 of Florida Statutes regarding exemptions from the general State policy on public records.
SECTION 2: METHOD OF OPERATION
2.1 INTERNAL AUDIT FUNCTIONS:
The following describes the functional operation of the Internal Audit Division and the requirements for accomplishing its mission:
(A) Definition and Objective of Internal Auditing
Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve operations of the County as a service to management and elected officials. External entities are also reviewed to determine whether revenues have been properly remitted to the County. The fundamental objective of internal auditing is to assist all members of management to discharge their responsibilities. This objective is met by furnishing management with analyses, appraisals and recommendations concerning the activities reviewed.
(B) Scope of Operations
The Division's scope of operations encompasses every phase and sector of County operations. This requires going beyond the accounting and financial records to obtain a full understanding of the operations under review and involves such activities as, but is not limited to:
(1) The Internal Auditor is directly responsible to the Clerk for the performance of internal audit activities and the administration of the Division.
(2) The Internal Auditor has no direct responsibility for, or authority over, any activity under review.
(3) Where internal control over the County's assets or grants and/or contractual compliance is involved, the Internal Auditor will:
(b) Appraise the existing and proposed procedures and make recommendations and/or comments regarding acceptable standards; and
(c) Review contracts entered into by the County that pertain to revenue-generating activities or expenditures of BCC funds.
2.2 INDEPENDENCE, OBJECTIVITY AND ETHICS:
The Internal Auditor is responsible directly to the Clerk for the performance of internal audit activities and for the reporting of findings and recommendations. The Internal Auditor is therefore considered to be independent of the BCC operations being reviewed.
Objectivity is essential to the audit function. Therefore, the Internal Auditor should not devise or install procedures that will be later reviewed. The Internal Auditor's objectivity will not be compromised by reviewing and recommending controls for new systems. In the installation of new systems, the Internal Auditor can offer suggestions for minimum controls during the course of feasibility studies and program implementation without impairing objectivity.
The Internal Auditor shall maintain high standards of conduct, honor and character so that credibility and integrity are not open to question. The Internal Auditor will subscribe to the Codes of Professional Ethics and Standards as promulgated by the Institute of Internal Auditors and the Florida Institute of CPAs, as applicable, and the Clerk's personnel and ethics policies.
2.3 AUDIT PLANNING, CONDUCT AND COMMUNICATION:
The Internal Auditor shall, on an annual basis, develop a plan of audit activities and operations and submit to the Clerk for approval. The annual audit plan shall include identification of each audit to be conducted in terms of the programs, functions and activities to be audited. The plan may be amended during the year with the approval or at the direction of the Clerk.
Audits shall be conducted in compliance with Generally Accepted Government Audit Standards established by the Comptroller General of the United States. These standards are contained and detailed in the U.S. Comptroller General's Government Auditing Standards (1994 Revision or later).
The Internal Auditor will confer with the Clerk before beginning an audit or review. Thereafter, to the fullest extent practicable, the Internal Auditor will notify the County Administrator and appropriate department management of the nature and purpose of the audit or review. The Internal Auditor will endeavor to minimize any surprises at the audit's conclusion. During the course of the audit, the Internal Auditor will inform the Clerk, County Administrator and department management, to the fullest extent practicable, of any significant findings noted.
2.4 REQUIRED CONTINUING PROFESSIONAL EDUCATION:
Internal auditors must satisfy the continuing education requirements specified in the Government Auditing Standards (1994 Revision or later). Such continuing education ensures that internal auditors remain current on professional techniques and standards. In addition, members of the Institute of Internal Auditors, the American Institute of CPAs and/or the Florida Institute of CPAs must meet the requirements of those organizations.
The Clerk recognizes the benefits to the County of ongoing training and education of its professional employees that impact upon job performance. Therefore, a reasonable amount shall be included in the Division's annual operating budget for continuing professional education and development, to include necessary professional memberships and certifications.
SECTION 3: INTERNAL AUDIT SERVICES
3.1 TYPES OF SERVICES:
The following are general descriptions of the types of services provided by the Internal Audit Division. The annual audit plan can include any combination of these types.
(A) Revenue Audits
These generally are audits of external entities to determine their compliance with County ordinances, contracts and agreements to remit the required revenues due to the County, both timely and in the proper amounts. Revenue audits also include audits of County departments and units responsible for the billing, collection and administration of County revenues.
(B) Performance Audits
These are audits that provide an independent assessment of the performance of a government organization, program, activity, or function in order to provide information to improve public accountability and facilitate decision-making by parties with responsibility to oversee or initiate corrective action. Performance audits include, but are not limited to, reviews of departmental procedures and operations to determine whether:
(1) The duties and responsibilities are being performed in the most efficient and economical (cost effective) manner;
(2) Activities are properly authorized by the BCC and County management;
(3) The management system has the capacity to ensure compliance with applicable laws, regulations, contracts and policies; and
(4) Operations actually conform in all material respects to applicable laws, government regulations and standards, contracts, policies and industry standards.
(C) Special Reviews
These are audit activities that result from requests to the Clerk from the BCC, County management or other entity. Special reviews are carried out in conformance with the specifications and concerns of the requestor. These include reviews and analyses of particular areas of a department's operation to provide an independent appraisal of its effectiveness, efficiency, adequacy of internal control and compliance with appropriate regulations. For example, special reviews might be undertaken to consult with management on specific financial or performance questions.
(D) Information Systems Audits
Audits of information systems and technology may be performed to determine whether existing or new computer applications and hardware function in an accurate and efficient manner, and include adequate internal controls. Audit involvement in a new system may include the review of system development methodology and the effectiveness and efficiency of the system being implemented. These audits could include reviews of general controls which affect all computer applications. Examples include computer security, disaster recovery, program change controls and quality control procedures.
(E) Compliance Audits
These audits generally are performed to ensure compliance with Federal or State laws and/or requirements of Federal or State grants. These can include reviews of management practices and financial data to determine the extent to which a unit complies with applicable Florida Statutes, County Code and policies and procedures.
(F) External Audit Assistance
Assistance may be provided to the external auditors and the Clerk's Finance and Accounting Division during the annual audit of the County's financial statements. The Internal Auditor annually will review the resulting management letter comments to determine if there is any impact upon the annual internal audit plan.
(G) Fraud Investigations
Any suspected criminal act (e.g., theft, robbery, assault, etc.) should be promptly reported to the appropriate County officials and proper law enforcement agency.
Suspicions of fraud, misappropriation of County assets, unethical behavior of County employees or other irregularities may be reported to the Clerk through the Internal Auditor. Callers may remain anonymous if they wish. As directed by the Clerk, an independent investigation may be performed by the proper law enforcement agency, the Internal Audit Division or other appropriate agency.
It is the Division's intent to protect any employee or person who discloses information of suspected violations from retaliatory actions by other individuals, employees, managers, agencies or independent contractors in accordance with Florida Statutes, Section 112.3187 (Whistle-blower's Act) which prohibits adverse personnel actions against an employee for disclosing this information.
3.2 REQUESTS FOR INTERNAL AUDIT SERVICES:
County officials requiring the services of the Internal Audit Division should direct all such requests, preferably in writing, to the Clerk who will determine whether the requested assistance can be provided and when it can be scheduled. The Clerk will accept similar requests from other elected county constitutional officers.
3.3 AUDIT REPORTS:
Upon completion of fieldwork, the Internal Auditor will prepare an original draft of the audit report. The report will communicate to County management, in a clear and concise manner, the results of the audit or review. The format of the report will depend upon the type of audit performed.
(A) The Internal Auditor will review the original draft with the Clerk and make any changes deemed appropriate. The resulting draft normally will be submitted to appropriate County management.
(B) The Clerk, Internal Auditor and County management will hold a conference to discuss the draft report. Changes to the draft report may result from this "exit" conference.
(C) Official written responses to specific audit report recommendations will be requested from County management to be included in the issued report. The responses should include the degree of agreement or acceptance of each recommendation. The preferred responses are:
(1) "We concur." Management is in full agreement with the recommendation;
(2) "We partially concur." Management is in agreement with a portion of the recommendation;
(3) "We concur with reservations." Management is in agreement with the recommendation, but there are circumstances that could affect its implementation which have to be resolved; and
(4) "We do not concur." Management is in total disagreement with the recommendation.
(D) Management is encouraged to provide an explanation in support of the positions taken, if considered necessary. Responses should be accompanied by a target implementation date and the departmental individual or position responsible for implementation.
(E) Two weeks are usually allowed for Management to provide written responses to the recommendations. If Management does not appear to make a good faith effort to provide responses, the report may be issued without responses at the discretion of the Clerk.
3.4 AUDIT REPORT DISTRIBUTION:
The normal report distribution will be to the BCC, County Administrator and senior department management. Any other County agencies and programs or other entities identified in the report may be included in the distribution.
3.5 FOLLOW-UP ON AUDITS:
Within twelve months after the issuance of an audit report, the Internal Auditor shall initiate a follow-up review to determine the extent of actions subsequently taken by County management in response to the findings and recommendations included in the report. The distribution of the follow-up report shall be the same as that of the original report.
3.6 RECORDS DISPOSITION:
The Internal Auditor shall retain for the required number of years a complete file of each audit report and each report of other examinations, investigations, surveys and reviews made under its authority in accordance with the Florida records retention law. The file should include audit work papers and other supportive material directly pertaining to the report