1. 1 Office of the City Auditor City and County of Honolulu Audits Efficiently: Tools and Techniques to Improve Performance Audit Productivity AGA Training Audio Conference November 14, 2007 Leslie I. Tanaka, CPA City Auditor, City and County of Honolulu Conducting Performance

2. 2 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

3. 3 Framework for Audit Efficiency (Presentation Roadmap) Governance Structure (1 st Gear) Office Management Strategies (2 nd Gear) Audit Process, Procedures and Tools (3 rd Gear)

4. 4 Governance Structure (1 st 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

5. 5 Hawaii’s Government Structure

6. 6

7. 7 Active Volcano

8. 8 Snow During Winter

9. 9 Office of the City Auditor City 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

10. 10 Office of the City Auditor Organizational Chart

11. 11 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

12. 12 Performance Auditing in Hawaii

13. 13 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

14. 14 Office Management Strategies (2 nd 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

15. 15 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”

16. 16 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

17. 17 Mobile Laptops With Docking Stations

18. 18 Wireless Router for Telecommuting

19. 19 Mobile Broadband Wireless Network Card

20. 20 Telecommunication/Network

21. 21 City’s Intranet

22. 22 City Auditor’s Intranet

23. 23 City Auditor’s Intranet

24. 24 Use Electronic eforms

25. 25 Why Telecommute? Kapolei

26. 26 OCA Office in Kapolei

27. 27 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

28. 28 Audit Process, Procedures and Tools (3 rd 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

29. 29 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)

30. 30 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)

31. 31 Audit Planning and Scoping Statement 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

32. 32 Audit Planning and Scoping Statement 8.For each real question above: a. Draft a framework that answers the question b. Identify the types of analyses you really think you’ll do c. Identify likely sources of information d. Identify any barriers you think you might run into 9.Estimated time to complete—issue report

33. 33 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

34. 34 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 # _______________

35. 35 Audit Standards Review Process Reviewer In-charge Signature DateSupervisor 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)

36. 36 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

37. 37 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

38. 38 Preliminary Findings, Recommendations and Report Outline 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

39. 39 Preliminary Findings, Recommendations and Report Outline 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

40. 40 Preliminary Findings, Recommendations and Report Outline Report Outline Audit of Selected City IT Controls Chapter 1 Introduction Background Audit Objectives Scope and Methodology

41. 41 Preliminary Findings, Recommendations and Report Outline Chapter 2 Report theme statement Summary of findings Finding 1 Detail support of finding Sub-detail support Conclusion Recommendations

42. 42 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.

43. 43 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

44. 44 Any Questions? Mr. Leslie Tanaka, CPA City Auditor City and County of Honolulu www.honolulu.gov/council/auditor