| Written by Tom Surpitski,
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In preparation of our first-ever peer review, the District of Columbia Office of Inspector General, Audit Division requested ALGA members to share with us their Management Letters from peer reviews past. With great delight and appreciation we received 39 reports from 25 local, county, and state member organizations. The purpose of this exercise was to determine the nature and frequency of “suggestions for improvement” made by the Peer Review Teams. The results of our analysis of the kudos, suggested improvements, and responses were considered in strengthening our policies and procedures to preclude being cited for the same condition. We then compiled and distributed to our audit staff the “Top 10 ALGA Peer Review Findings.” This action resulted in the staff’s awareness of ALGA’s expectations.
In preparation of our first-ever peer review, the District of Columbia Office of Inspector General, Audit Division requested ALGA members to share with us their Management Letters from peer reviews past. With great delight and appreciation we received 39 reports from 25 local, county, and state member organizations. The purpose of this exercise was to determine the nature and frequency of “suggestions for improvement” made by the Peer Review Teams. The results of our analysis of the kudos, suggested improvements, and responses were considered in strengthening our policies and procedures to preclude being cited for the same condition. We then compiled and distributed to our audit staff the “Top 10 ALGA Peer Review Findings.” This action resulted in the staff’s awareness of ALGA’s expectations.
The effort paid off with an unqualified opinion that the Government of the District of Columbia, Office of the Inspector General, Audit Division was in compliance with government auditing standards during the review period. Additionally, the Peer Review Team commended us on our policies and procedures handbook.
We wish to share with you the TOP TEN ALGA PEER REVIEW FINDINGS.
1. Auditor Independence Not Assured
• Need to have auditors sign statement of independence for each audit engagement assigned.
Note: A peer review team may find such a statement helpful in determining whether the audit organization adequately considered the potential personal impairments of its auditors.
2. Inadequate Cross-Referencing
• Survey and audit programs to work papers.
• Conclusions to work papers.
• Summary work papers to work papers.
• Reports (draft and final) to work papers.
• Report schedules to work papers.
• Finding sheets to work papers.
• Audit guide to work papers.
3. Audit Programs
• Survey and audit programs not approved prior to fieldwork.
• Inadequate detail to determine work to be performed.
• Audit objective not supported by evidence collected.
• Objective change not documented.
4. Work Papers
• Missing final report and/or client’s response.
• Missing exit conference.
• Missing summary work papers.
• Basis for sampling not documented; judgmental sampling only, use statistical
sampling.
• Work papers contain documents with no cross-referencing or any reason why they exist (use it or lose it, but account for it if removed, and listed on the table of contents).
5. Supervision
• Adequacy and timeliness of review needs improvement.
• Deviation from audit program not approved.
• Partial work paper review.
• Supervisory review completed after final report issue.
• No evidence in work papers supporting supervisory review.
• Audit staff meetings not documented.
• Supervisory check-lists attesting to completion of work papers missing.
• Work papers missing elements (objectives, scope, and methodology,
sampling criteria).
6. Reliability of Data from Computer-Based Systems
• A lack of evidence or documentation supporting verification of the reliability of computerized data used during the audit.
• No evidence in work papers that steps taken to determine validity and reliability of the computer-processed data used in auditor’s findings.
• Work papers did not identify computer-processed data that may be significant to the audit.
• Reliance on computer-generated information was not always documented.
7. Management Controls
• Limited reviews of internal controls performed.
• Separately identifying and analyzing the management controls significant to the audit objectives could improve audits.
• When deficiencies were noted auditors failed to examine management controls to determine if that was the cause.
8. Required Report Language
• The statement required by GAS or qualified statement missing from report, such as: “The audit was made in accordance with generally accepted government auditing standards.”
9. Noteworthy Accomplishments
• Reports did not mention management accomplishments and therefore failed to give the report balance and the appearance of objective assessment.
10. Continuing Professional Education
• CPE requirements not met (80 hours every 2 years; at least 20 hours in any one of the 2 years; 24- hour government related training).
Amendment No. 3 (January 2002) to Government Auditing Standards (1994 Revision) established the new independence standard. The new standard is effective for all audits beginning on or after January 1, 2003.
Thomas J. Surpitski is a Senior Auditor for the Audit Division, Office of the Inspector General for the Government of the District of Columbia.
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Peer Review