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Internal Audit Department Fiscal Year End ReportINTERNAL
AUDIT DEPARTMENT FY 2007 AUDIT AGENDA The FY 2007 Audit Agenda was comprised of three main types of audit engagements:
Work Plan and Work AccomplishedThe Fiscal Year 2007 audit agenda planned 26 audits that were listed in Audit Department’s long-range audit plan for the year. Additionally, thirteen audits in progress from the prior fiscal year (Exhibit I) were integrated into the FY07 audit coverage. A total of 39 audits, 26 from the Strategic Five-Year Plan, plus work-in-progress made up the FY07 audit agenda (Exhibit I). Hours were also reserved for special requests from the Mayor and the operating departments. We honored requests for several special projects in addition to the scheduled agenda. The major special project/consulting work was for TPD, on the Citywide Operations Review for the future Efficiency and Effectiveness Task Force, the Water Department, and ACL software implementation. Three email reviews were completed. A total of 680 hours of staff time was dedicated to the special request projects. Overall, we finished a total of 15 audits (Information Technology (IT) and performance) during the fiscal year. Thirteen performance audits were completed and released (Exhibit II), ten were work-in-progress from the previous year and the remaining three were on the current year audit agenda. Published reports were issued for all of the completed and released audit projects. At fiscal year end, there were 10 audits in progress (Exhibit III). Three of the audits in progress at year-end were complete and reports were issued; however, they had not been released. Another audit was complete, a draft report issued, but responses had not been received. Five audits planned for FY07 were moved to the upcoming fiscal year schedule (Exhibit III). The two information technology audits (one a special request) were started in the prior fiscal year. One of the audits awaiting release mentioned above was performed by the IT auditor. Also, a substantial number of hours were used working on three consulting projects. Post audit reviews (PAR) are scheduled six months after
audits have been completed. The purpose of a post audit review is to determine
if the auditee had implemented audit recommendations. Follow-up work on
partially implemented or not implemented recommendations commenced this year.
This gives assurance to the Mayor that progress is being made on the operational
level to correct items brought to her attention through the audit process.
During the fiscal year, 16 PARs were completed (Exhibit II). The Internal Audit Department emphasizes professional development to improve our skills, effectiveness, and efficiency. To achieve this goal, we provide continuing professional education and fully support staff involvement in professional auditing and accounting organizations. The department follows government auditing standards. These standards require that each member of staff obtain at least 80 hours of professional education every 2 years. All of the staff met or exceeded the professional training benchmark. We try to use training that is provided by local chapters of professional organizations as much as possible. These include organizations such as the Institute of Internal Auditors, the Association of Certified Fraud Examiners, Information Systems Audit and Control Association, Florida Government Finance Officers Association, and the Florida Audit Forum. Training from these groups is lower in cost, and effective. Several staff members are active in auditing and accounting organizations. These include, on the local level, the Institute of Internal Auditors (IIA), the Association of Certified Fraud Examiners, the Information Systems Audit and Control Association, the Florida Audit Forum, and the Florida Government Finance Officers Association. Two auditors hold positions in the local chapter of the Association of Certified Fraud Examiners. One of the staff is on the Board of Governors for both the Florida Audit Forum and the Florida Westcoast Chapter of the Institute of Internal Auditors. Another staff member is the past Treasurer of the local IIA chapter and remains active planning and scheduling chapter training events. Also, the webmaster for the Florida Audit Forum is a member of the Internal Audit team. At the national level, one staff member sat on the Communications Committee of the Association of Local Government Auditors (ALGA) and was recently named to their Peer Review Committee. A staff member was on the team representing the Association of Local Government Auditor’s for the peer review at the City of Lynchburg, Virginia. Staff Credentials Each staff member has a college degree in one or more of the following fields: accounting, finance, or business administration. Two of our personnel have a master's degree in business administration. All of the audit team have one or more professional certifications, these include: Certified Public Accountant, Certified Internal Auditor, Certified Government Auditing Professional, Certified Fraud Examiner, and Certified Information Systems Auditor. Three auditors are preparing for certification as a Certified Internal Auditor. All had previous auditing and/or management experience in the public and private sectors and two have military management backgrounds. Implementation of Audit Recommendations Primary benefits of the work performed by Internal Audit include reduced costs, increased revenues, improved services, and accountability. We do not directly produce these benefits; they only come from implementation of our recommendations. It is Internal Audit’s responsibility to present accurate and convincing information that clearly support our recommendations. It is management’s responsibility to implement the recommendations. The Mayor and the Administrators are responsible for ensuring the agreed upon recommended changes and improvements occur. Recommendations cannot be effective without management’s support. The percentage of fully implemented recommendations, 70% in FY07, was remarkably higher than the previous year. Full implementation was 19% higher than prior year and 11% higher than the historical average (Exhibit V). The percentage of recommendations not implemented and the percentage of partially implemented recommendations for the year, 11% and 19% respectively, were significantly lower (Exhibits IV and V) when compared to past years. Cost Savings/Revenue Enhancements Identified/Efficiencies The City of Tampa Internal Audit Department conducts performance audits. A performance audit systematically examines evidence to independently assess the performance and management of a program against objective criteria. Performance audits provide information to improve program operations and assist decision making by the organization with responsibility to administer or implement corrective action. Most of the audit reports result in recommendations that will improve resource utilization, reduce risk of loss of assets, increase productivity, or correct wasteful practices. Our recommendations can improve services to the community by making programs more effective and efficient. Moreover, they may identify revenue recoveries or discover how to increase future revenue flows. However, much of our work identifies significant potential economic impact that we could not quantify. The quantifiable realized savings and/or increased revenue, $191,029, was sizeable in FY07. Most of these increases will reoccur annually. The savings/revenue enhancements are shown below:
We estimate that the potential savings over the next five year period could be over $1 million in these four areas. Staff Direct Hours Direct hours is defined as the time spent directly performing audits. Our goal, although aggressive, is that annually each auditor charge 1,500 hours directly to audits. The team’s average was 1,189 hours, which was 152 hours lower than the previous year’s. However, increased use of leave (annual, sick, and exempt), increased non-audit services requested by management, and increased training (both technical and developmental) during the year contributed to the decrease in direct audit hours. The department does not have an administrative aide and auditors used 648 hours performing their assigned administrative duties, which is equivalent to about one third of an FTE. Performance Indicators The Association of Local Government Auditors conducts a biannual Benchmarking and Best Practice Survey. The survey results were compiled using 2004 data. The Internal Audit Department was one of the 81 local government organizations that took part in the survey. One of the performance indicators is the measurement of direct time to available time and total time. Audit organizations participating in the survey averaged 74 percent in the measurement of direct time to available time and 63 percent in the direct time to total time. The Internal Audit Department had a direct to available time ratio of 72 percent and a direct to total time ratio of 58 percent (see Exhibits VI and VII). Both time ratios were slightly lower this year when compared to last year. However, increased time focused on cost savings has yielded excellent returns on this investment. The survey listed 15 audit activities as topic areas for “Best Practice” evaluation. In the nine areas that we participated, our performance was considered to be at the top rating, “highly successful.”(Exhibits Omitted) The complete 2007 Fiscal Year-End Report is available in .pdf format. If your browser does not support this format, Adobe Acrobat Reader can be downloaded from the Internet. It is available free of charge.
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