Office of Inspector General

FEDERAL MARITIME COMMISSION

Washington, DC 20573

 System Review Report

August 13, 2019 

Inspector General A. Roy Lavik 

U.S. Commodity Futures Trading Commission 

1155 21st Street, NW

Washington, DC 20581 

Dear Mr. Lavik:

We have reviewed the system of quality control for the audit organization of the U.S. 

Commodity Futures Trading Commission (CFTC) Office of Inspector General (OIG) in effect 

for the year ended March 31, 2019. A system of quality control encompasses CFTC OIG’s 

organizational structure and the policies adopted and procedures established to provide it with 

reasonable assurance of conforming with Government Auditing Standards1. The elements of 

quality control are described in Government Auditing Standards. CFTC OIG is responsible for 

establishing and maintaining a system of quality control that is designed to provide CFTC 

OIG with reasonable assurance that the organization and its personnel comply with 

professional standards and applicable legal and regulatory requirements in all material 

respects. Our responsibility is to express an opinion on the design of the system of quality 

control and CFTC OIG’s compliance therewith based on our review.

Our review was conducted in accordance with Government Auditing Standards and the 

Council of the Inspectors General on Integrity and Efficiency (CIGIE) Guide for Conducting 

Peer Reviews of the Audit Organizations of Federal Offices of Inspector General. During our 

review, we interviewed CFTC OIG personnel and obtained an understanding of the nature of 

the CFTC OIG audit organization, and the design of CFTC OIG’s system of quality control 

sufficient to assess the risks implicit in its audit function. Based on our assessments, we 

selected audits and an attestation engagement, collectively referred to as “audits”, and 

administrative files to test for conformity with professional standards and compliance with 

CFTC OIG’s system of quality control. The audits selected represented a reasonable crosssection of the CFTC OIG audit organization. Prior to concluding the peer review, we 

reassessed the adequacy of the scope of the peer review procedures and met with CFTC OIG 

management to discuss the results of our review. We believe that the procedures we 

performed provide a reasonable basis for our opinion. 

1 GAO, Government Auditing Standards, GAO-12-331G (Washington, D.C, December 2011).
In performing our review, we obtained an understanding of the system of quality control for 

the CFTC OIG audit organization. In addition, we tested compliance with CFTC OIG’s 

quality control policies and procedures to the extent we considered appropriate. These tests 

covered the application of CFTC OIG’s policies and procedures on selected audits. Our 

review was based on selected tests; therefore, it would not necessarily detect all weaknesses in 

the system of quality control or all instances of noncompliance with it. 

There are inherent limitations in the effectiveness of any system of quality control, and, 

therefore, noncompliance with the system of quality control may occur and not be detected. 

Projection of any evaluation of a system of quality control to future periods is subject to the 

risk that the system of quality control may become inadequate because of changes in 

conditions, or because the degree of compliance with the policies or procedures may 

deteriorate.

Enclosure 1 to this report identifies the location of the CFTC OIG office that we visited and 

the audits that we reviewed.

In our opinion, the system of quality control for the audit organization of CFTC OIG in effect 

for the year ended March 31, 2019, has been suitably designed and complied with to provide 

CFTC OIG with reasonable assurance of performing and reporting in conformity with 

applicable professional standards in all material respects. Audit organizations can receive a 

rating of pass, pass with deficiencies, or fail. CFTC OIG has received an External Peer 

Review rating of pass. As is customary, we have issued a letter dated August 13, 2019 that 

sets forth a finding that was not considered to be of sufficient significance to affect our 

opinion expressed in this report; Enclosure 2. 

In addition to reviewing its system of quality control to ensure adherence with Government 

Auditing Standards, we applied certain limited procedures in accordance with guidance 

established by the CIGIE related to CFTC OIG’s monitoring of audits performed by 

Independent Public Accountants (IPAs) under contract where the IPA served as the auditor. It 

should be noted that monitoring of audits performed by IPAs is not an audit and, therefore, is 

not subject to the requirements of Government Auditing Standards. The purpose of our 

limited procedures was to determine whether CFTC OIG had controls to ensure IPAs 

performed contracted work in accordance with professional standards. However, our objective 

was not to express an opinion and accordingly, we do not express an opinion, on CFTC OIG’s 

monitoring of work performed by IPAs.

Sincerely,

Jon Hatfield, Inspector General 

Enclosures 

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Enclosure 1 

Scope and Methodology 

We tested compliance with CFTC OIG audit organization’s system of quality control to the 

extent we considered appropriate. These tests included a review of one performance audit 

and one attestation engagement issued during the period April 1, 2016, through March 31, 

2019. 

In addition, we reviewed CFTC OIG’s monitoring of audits performed by IPAs where the 

IPA served as the auditor. CFTC OIG contracted for the audit of its agency’s fiscal year 

2018 financial statements. CFTC OIG also contracted for certain other audits that were to be 

performed in accordance with Government Auditing Standards. 

We visited the CFTC OIG office located in Washington, DC. 

Reviewed Audit and Attestation Performed by CFTC OIG:

Report No. Report Date Report Title

17-AU-03 12/18/2017 Audit of CFTC’s Enterprise Architecture

 Program

17-AU-04 10/17/2017 Compliance with DATA Act of 2014- 

 Reporting Accuracy (FY 2017 Quarter II) 

Reviewed Monitoring Files of CFTC OIG for Contracted Audit: 

Report No. Report Date Report Title

18-AU-03 11/15/2018 CFTC Financial Statements Audit: Fiscal

 Year (FY) 2018 

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Enclosure 2 

Office of Inspector General

 

 

FEDERAL MARITIME COMMISSION

 Washington, DC 20573

August 13, 2019 

Inspector General A. Roy Lavik

U.S. Commodity Futures Trading Commission 

1155 21st Street, NW

Washington, DC 20581 

Dear Mr. Lavik:

We have reviewed the system of quality control for the audit organization of U.S. Commodity 

Futures Trading Commission (CFTC) Office of Inspector General (OIG) in effect for the year 

ended March 31, 2019, and have issued our report thereon dated August 13, 2019, in which 

CFTC OIG received a rating of pass. That report should be read in conjunction with the 

comments in this letter, which were considered in determining our opinion. The finding 

described below was not considered to be of sufficient significance to affect the opinion 

expressed in that report. 

Finding 1. System of Quality Control - Audit Policies and Procedures are in Place but 

Need Improvement

An audit organization’s system of quality control encompasses the audit organization’s 

leadership, emphasis on performing high quality work, and the organization’s policies and 

procedures designed to provide reasonable assurance of complying with professional 

standards and applicable legal and regulatory requirements. The nature, extent, and formality 

of an audit organization’s quality control system will vary based on the audit organization’s 

circumstances, such as the audit organization’s size, number of offices and geographic 

dispersion, knowledge and experience of its personnel, nature and complexity of its audit 

work, and cost-benefit considerations. [GAS 3.83] 

An audit organization should establish policies and procedures in its system of quality control 

that collectively address a. leadership responsibilities for quality within the audit organization; 

b. independence, legal, and ethical requirements; c. initiation, acceptance, and continuance of 

audits; d. human resources; e. audit performance, documentation, and reporting; and f. 

monitoring of quality. [GAS 3.85] 

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The CFTC OIG developed and then approved their Audit Policy and Procedures Manual, 

Revision 1, on March 28, 2016. The manual is intended to demonstrate the CFTC OIG’s 

commitment to a system of quality controls for the office’s Audit Operations. However, there 

are audit subjects that lack clarity, or are silent in the manual. For example, the manual’s 

policies and procedures on quality control needs clarity to ensure the annual self-evaluation of 

all OIG functions is performed. In addition, the audit manual is silent on several audit 

subjects, such as policies and procedures on the performance of attestation engagements 

conducted in accordance with generally accepted government auditing standards. 

Recommendation - The CFTC OIG should enhance the office’s Audit Policy and Procedures 

Manual to provide clarity and content for relevant audit subjects. 

Views of Responsible Official - CFTC OIG agreed with the recommendation. CFTC OIG 

staff plans to update their policy manual by December 31, 2019, to ensure its alignment with 

the current GAGAS 2018 Revisions and to address the recommendation. 

Sincerely,

Jon Hatfield, Inspector General 

5 
800 North Capitol Street, NW, Suite 1054 

Washington, DC 20573 

August 13, 2019 

Dear Mr. Hatfield, 

Thank you for giving my staff the opportunity to comment on the draft System Review Report, 

dated August 6, 2019, on the system of quality control in the Office of Audit within the Office of

Inspector General for the Commodity Fun.ires Trading Commission, for the period ended March 

31, 2019. We are pleased that your independent review concluded that their system of quality 

control was suitably designed and executed, in all material respects, to provide reasonable 

assurance of performance and reporting in conformity with Generally Accepted Government 

Auditing Standards ( GA GAS), and are pleased to receive a pass rating. 

In conjunction with the opinion, you provided a finding and recommendation relating to the 

Office of Audits policy manual, which was not considered to be of sufficient significance to 

affect the opinion expressed. We agree, and therefore my staff plans to update our policy manual 

by December 31, 2019, to ensure its alignment with the current GA GAS 2018 Revisions and to 

address the recommendation. 

We appreciate your efforts in conducting this review. Should you have questions, please contact 

Miguel Castillo, Assistant Inspector General for Audits, at (202) 418-5084. 

(jR~~d 

A. Roy Lavik 

Inspector Genera 

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