Guide to State Audits Tennessee Comptroller of the Treasury Deborah V. Loveless, CPA Director, Division of State Audit

Why Make a Guide?  The Issue New Executive Branch agency heads  Unfamiliar with state government  Uninterested in audit process  The Opportunity New Commissioner of Finance and new Chief Operating Officer in Governor’s Office  The Solutions Presentation to Cabinet Guide to State Audits! 2

Preparing for Your Audit  Just like your agency, we have a job to do Financial and compliance audits Performance audits Attestation engagements Information systems audits Special studies “Section (a)(2), Tennessee Code Annotated, requires a post audit of government entities with the full cooperation of government officials.” 3

Preparing for Your Audit (cont.)  Steps for preparing for the audit Conduct an annual risk assessment Revise and update policies and procedures Anticipate audit scope from applicable sources Review previous audit reports Please review your previous audit reports. These can be found at: 4

The Stages of an Audit  Preliminary research and planning  Entrance conference  Fieldwork  Preliminary results meetings, if necessary  Field exit conference  Draft report and management’s comments  Formal exit conference, if requested by the agency  Report release  Public hearing (for Sunset reports only)  Audit follow-up, if required 5

Auditors’ Expectations  Expectations of the agency: Employees should be open and cooperative Staff should respond timely to auditors’ requests Management should initiate corrective action to address deficiencies Management should communicate their expectations during initial and subsequent meetings with auditors “An auditor’s primary expectation is to find honesty and integrity within your agency.” 6

Meeting With Auditors  Entrance conference Should include employees familiar with purchasing, human resources, risk management, and mission- critical programs  Periodic preliminary results meetings and various interviews Gives the agency the opportunity to ask questions, receive updates, and learn about areas of concern  Exit meeting  Formal exit conference, if requested by the agency 7

How to Use Audit Results  Accept responsibility for problems  Correct weaknesses as quickly as possible  Develop any necessary new procedures to strengthen controls  Consider revising your risk assessment “Our audit findings are presented to correct errors, strengthen controls, and reduce risk. Please accept your audit with an attitude that matches the spirit in which it is offered.” 8

Tips for a Successful Audit  Be responsive to auditors’ requests  Notify staff that we’ve started an audit  Prepare an adequate work area for auditors  Provide auditors access to IT systems  Maintain open communication between staff, auditors, and management  Ask for more information if necessary  Complete an action plan to remedy any findings  Be truthful and forthcoming 9

“The mission of the Comptroller’s Office is to improve the quality of life for all Tennesseans by making government work better. Our core values include honesty and integrity, accuracy and reliability, and accountability. About Our Office  Comptroller of the Treasury A two-year constitutional officer Duties prescribed by state law  Division of State Audit Conducts audits in accordance with Government Auditing Standards 10

Distribution and Results  Distributed Guide to all agency heads  Discuss Guide at every entrance conference  Continue regular meetings with Finance Commissioner and Chief Operating Officer  Noticed improvement in Agency head participation during audits Audit and non-audit related communication 11

Guide to State Audits Tennessee Comptroller of the Treasury Deborah V. Loveless, CPA Director, Division of State Audit