1 office of the city auditor city and county of honolulu audits efficiently: tools and techniques to...

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Office of the City AuditorCity and County of Honolulu

Audits Efficiently:Tools and Techniques to Improve Performance Audit Productivity

AGA Training Audio ConferenceNovember 14, 2007

Leslie I. Tanaka, CPA City Auditor, City and County of Honolulu

Conducting Performance

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Session Objectives

1. Describe a framework for improving audit efficiency in your organization

2. Provide some office management techniques to increase audit efficiency

3. Explain the use of specific audit procedures and tools to help increase audit efficiency

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Framework for Audit Efficiency (Presentation Roadmap)

Governance Structure

(1st Gear)

Office Management

Strategies(2nd Gear)

Audit Process, Procedures and

Tools(3rd Gear)

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Governance Structure(1st Gear)

Provide some background about Hawaii’s geographic and economic challenges

Hawaii’s government structure

Office of the City Auditor

Performance auditing in Hawaii

Definition of audit efficiency

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Hawaii’s Government Structure

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Hawaii’s Government Structure

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Active Volcano

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Snow During Winter

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Office of the City AuditorCity and County of Honolulu

Office created by a charter amendment in 2002 and structured around N.A.L.G.A.’s Guidelines and Model Legislation for Local Government Auditors

Appointed by the City Council on July 1, 2003 to a six-year term

Independent powers to audit both the executive and legislative branch agencies

Required to follow GAGAS

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Office of the City AuditorOrganizational Chart

Office of the City AuditorOrganizational Chart

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Performance Auditing in Hawaii

Long history of performance auditing in Hawaii

Office of the Legislative Auditor (State) was established in the mid-1960s

Office name changed to the Office of the State Auditor (Ms. Marion Higa current State Auditor of Hawaii)

I and five of my six audit staff have worked for the Hawaii State Auditor and collectively we have a combined total of over 60 years of experience in performance auditing

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Performance Auditing in Hawaii

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Definition of Audit Efficiency

We define audit efficiency as follows: completion of a comprehensive audit by a single audit staff within six to eight months—

Two months for planning,

Three months for fieldwork, and Three months for report development

and report issue

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Office Management Strategies(2nd Gear)

Some overarching principles— Be flexible in the management of your human

capital Leadership is about how we respect and

treat people—value individual strengths Build teamwork through trust, effective

communication, and shared values Use technology to increase work efficiency Implement a telecommuting program for staff

to increase work efficiency

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Office Management Strategies(Tone from the Top)

Tips to improve the management of your office and work environment Build trust with staff through communication and

sharing of information View mistakes as learning opportunities

Understand generation differences to help shape your office and work policies

Empower staff through a Results Only Work Environment with self-monitoring possibilities

Use technology and telecommuting options to create an “office without walls”

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Use of Technology

How to increase work efficiency through the use of technology— Laptops with wireless network cards and

docking stations Wireless routers for home telecommuting Virtual private network (VPN) access to the

city’s intranet/servers Wireless mobile broadband air cards Use of email and electronic forms to

communicate and transfer files between staff

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Mobile Laptops With Docking Stations

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Wireless Router for Telecommuting

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Mobile Broadband Wireless Network Card

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Telecommunication/Network

Office of the City Auditor

Staff in the Field

City Servers/Intranet

City Auditor in Washington D.C.

Staff Telecommuting

WiFi Connection

Wireless Router

Cable Modem Provider

Cell Phone Provider

Wireless Broadband Card

VPN Via the Internet

VPN Via the Internet

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City’s Intranet

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City Auditor’s Intranet

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City Auditor’s Intranet

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Use Electronic eforms

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Why Telecommute?

Kapolei

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OCA Office in Kapolei

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Telecommuting Policies and Strategies

Scheduled telecommuting policy As-needed telecommuting policy Must bring added work efficiency to the individual

staff’s work responsibilities Affords staff the flexibility and efficiency to handle

and manage personal commitments and responsibilities within the work day

Has resulted in a 24/7 type work approach Saves on gasoline, time sitting in traffic, reduces

pollution and traffic

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Audit Process, Procedures and Tools(3rd Gear)

Some overarching efficiency tips—

Develop a prescriptive audit manual P&P should follow your audit process Learn from other audit shops Participate in a peer review program Use audit tools/templates to streamline your

audit process

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Audit Tools and Techniques

Three audit tools to increase efficiency— Audit planning and scoping process (planning

phase) Audit standards review form and process

(planning/fieldwork/report development) Preliminary findings, recommendations and

report outline program (report development)

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Audit Planning and Scoping Statement

1. Reasons for the audit

2. Issues to be addressed—the audit question

3. The real question—what are we really trying to answer

4. Sub-questions help to answer the real questions—what work you’ll do (forms the beginning of some audit objectives)

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5. Identify key functions, processes, or factors being reviewed

6. Identify those areas where “what should be” criteria will have to be developed

7. Identify major work tasks

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8. For each real question above:a. Draft a framework that answers the

questionb. Identify the types of analyses you

really think you’ll doc. Identify likely sources of informationd. Identify any barriers you think you

might run into

9. Estimated time to complete—issue report

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Audit Standards Review Process and Form

Used on every audit to ensure compliance with our office audit procedures and GAGAS

Form adopted from the Office of the City Auditor, City of San Jose, CA

Functions as an audit checklist reminder, serves as an internal peer review of the audit, and documents supervisory review of working papers

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Audit Standards Review Process

General Standard on Independence

OCA’s Controls to Ensure Compliance

Workpaper Reference

1. Audit organizations are responsible for establishing an internal quality control system to assure compliance with the independence standard.

Audit Manual (AM) procedure (Section II-4) requires that prior to assignment, auditors should complete and sign the Project Statement of Independence form which requires them to identify any potential impairment. It also alerts staff that they are to notify the city auditor of any impairment that may arise during the assignment.

Project Statement of Independence form(s):

W/P # _______________

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Audit Standards Review Process

Reviewer In-charge Signature

Date Supervisor Signature

Date

FIRST AUDIT STANDARDS REVIEW

(Generally performed upon completion of the planning phase to ascertain that audit staff have complied with the applicable general and planning standards as described in the OCA Audit Manual policies and procedures)

SECOND AUDIT STANDARDS REVIEW

(Generally performed upon completion of fieldwork to ascertain that the audit staff have complied with the applicable general and fieldwork standards as described in the OCA Audit Manual policies and procedures)

FINAL AUDIT STANDARDS REVIEW(Performed upon completion of the audit report and prior or soon after the official release to ascertain that audit staff have complied with the applicable general and reporting standards as described in the OCA Audit Manual policies and procedures)

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Preliminary Findings, Recommendations and Report Outline Program

PF&R and RO—performed after the completion of fieldwork and prior to the report drafting

Purpose of the PF&R—to break down all of the audit findings in the elements of a finding (Condition, Cause, Effect, Criteria, and Recommendations)

Purpose of the Report Outline—to frame the structure and organization of the audit report

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Preliminary Findings, Recommendations and Report Outline

Finding 1:The department lacks sufficient authority to effectively implement and monitor a citywide IT security management system

Condition:Current administrative guidance divides the policymaking responsibility from the monitoring and enforcement responsibility

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Cause:The mayor’s directive 99-1 is inadequate to ensure effective management of the city’s IT security

Effect:The department does not know if its security policy is effective

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Criteria:Federal information systems controls audit manual

Recommendation:The IT department should resolve issues related to enforcement, oversight, planning and management of the city’s security program

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Report OutlineAudit of Selected City IT Controls

Chapter 1Introduction<L1>Background<L1>Audit Objectives<L1>Scope and Methodology

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Chapter 2Report theme statement<L1>Summary of findings<L1>Finding 1

<L2>Detail support of finding<L3>Sub-detail support

<L1>Conclusion<L1>Recommendations

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Summary

Audit efficiency can be achieved by following an integrated process that puts all of the pieces together—

from issues and policies related to your office governance,

to how you manage your staff and work environment,

to the use of technology and telecommuting,

to the streamlining of your audit policies and procedures, and

finally through the use of specific audit tools and techniques.

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Does It Work?

Zero staff turnover since the creation of the office

Won the 2005 Silver Knighton Award from N.A.L.G.A. for our road maintenance audit

Passed our first GAGAS peer review in 2006 with a “clean” opinion with no GAGAS related written comments, no informal comments, and no verbal comments

Issued 16 performance audits since July 2003 Over the past year and a half, shared our audit

manual with about 17 national and international governmental audit type agencies

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Any Questions?

Mr. Leslie Tanaka, CPA

City Auditor

City and County of Honolulu

www.honolulu.gov/council/auditor

1 office of the city auditor city and county of honolulu audits efficiently: tools and techniques to...

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