U.S. COMMODITY FUTURES TRADING COMMISSION

OFFICE OF INSPECTOR GENERAL

Three Lafayette Centre

1155 21st Street, NW, Washington, DC 20581

Telephone: (202) 418-5110

System Review Report

August 21, 2019

Ronald Stith 

Inspector General 

National Endowments for the Arts 

400 7th Street, NW

Washington, DC 20506

Dear Mr. Stith, 

We (Office of Audits) have reviewed the system of quality control for the audit organization 

of the National Endowments for the Arts (NEA) Office of the Inspector General (OIG) in 

effect for the three years ended March 31, 2019. A system of quality control encompasses 

NEA OIG’s organizational structure and the policies adopted and procedures established to 

provide it with reasonable assurance of conforming to Generally Accepted Government 

Auditing Standards1 (GAGAS). The elements of quality control are described in GAGAS. 

Therefore, NEA OIG is responsible for establishing and maintaining a system of quality 

control that is designed to provide 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 NEA OIG’s compliance therewith based on our 

review.

Our review was conducted in accordance with GAGAS and the Council of the Inspectors 

General on Integrity and Efficiency (CIGIE) Guide for Conducting Peer Review of the Audit 

Organizations of Federal Offices of Inspector General. During our review, we met and 

interviewed NEA OIG personnel and obtained an understanding of the nature of the audit 

organization, and the design of its system of quality control sufficient to assess the risks 

implicit in its audit function. Based on our assessments, we selected reports from the scope 

period, collectively referred to as "audits and reviews", and administrative files to test for 

conformity with professional standards and compliance with NEA OIG’s system of quality 

control. The audits and reviews selected represented a reasonable cross-section of NEA

 

1 GAO, Government Auditing Standards, GAO-12—331G (Washington, DC, December 2011)
2 

OIG’s audit organization. Prior to concluding the peer review, we reassessed the adequacy 

of the scope of the peer review procedures and met with NEA OIG management to discuss 

the interim results of our review. We believe that the procedures we performed provide a 

reasonable basis for our final opinion.

In performing our review, we obtained an understanding of the system of quality control 

for the NEA OIG audit organization. In addition, we tested compliance with NEA OIG's 

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

tests covered the application of NEA OIG's policies and procedures on selected audits and 

reviews. 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.

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. 

APPENDIX A to this report identifies scope and methodology, location of the NEA OIG office 

we visited, and a list of NEA OIG audits and reviews we reviewed.

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

for the three years ending March 31, 2019 has been suitably designed and provides NEA

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. NEA OIG has received an External Peer Review rating of 

pass. 

APPENDIX B to this report identifies NEA OIG response to the peer review. In addition to 

reviewing its system of quality control to ensure adherence with GAGAS, we applied certain 

limited procedures in accordance with guidance established by CIGIE related to NEA OIG's 

monitoring of audits performed by independent public accountants (IPAs) under contract 

where the IPAs 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

GAGAS. The purpose of our review procedures was to determine whether NEA 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 

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3 

not express an opinion, on NEA OIG's monitoring of work performed by IPAs. We also note 

NEA OIG audit organization utilizes performance reviews to address NEA headquarters 

management issues such as implementation of applicable regulations and other 

engagements.

Sincerely, 

A. Roy Lavik, Inspector General
4 

APPENDIX A

Scope and Methodology

We tested compliance with the NEA OIG audit organization's system of quality control to 

the extent we considered appropriate. NEA OIG did not perform any non-audits or 

attestation engagements but rather only audits and reviews. NEA OIG management 

contracted independent public accountants (IPAs) to conduct financial statements audits, 

attestation engagements, Federal Information Systems Management Act (FISMA) 

Compliance and other GAGAS engagements. Therefore, we did not test compliance with 

certain NEA OIG's system of quality controls, but note NEA OIG audit organization utilizes 

performance reviews to address NEA headquarters management issues such as grant 

funding. 

We reviewed the NEA OIG's monitoring of audits performed by IPAs where the IPA served 

as the principal auditor during the period October 1, 2015 through March 31, 2019. During 

the period, NEA OIG management contracted for the audit of its agency's Fiscal Year 2017 

financial statements (NEA Financial Statements Audit) and FISMA Compliance (2018 FISMA) 

NEA OIG monitored the IPA's work. NEA OIG also contracted for certain other types of 

engagements that were to be performed in accordance with GAGAS. 

Our work was conducted at NEA OIG headquarters office in Washington, DC.

NEA OIG Audits and Reviews Peer Reviewed

NEA OIG did not perform any non-audits or attestation engagements. Thus, we tested 

compliance with relevant aspects of NEA OIG's system of quality controls. 

Audits and Reviews Selected

OIG Report Report Title Date Issued

LS-17-01 South Arts 03/22/2019

Not Applicable 2018 FISMA 11/07/2018

Not Applicable 2017 NEA Financial Statements Audit 

(Including DATA Act Review)

11/14/2017

R-17-01 2016 FISMA and Cybersecurity 01/10/2017
5 

APPENDIX B

NEA OIG Management Response to Peer Review

NATIONAL -EARTS ENDOWMENT -E 

============ arts.gov 

August 21, 2019 

A. Roy Lavik 

Inspector General 

U.S. Commodity Futures Trading Commission 

1155 2151 Street, NW 

Washington, DC 20581 

Dear Mr. Lavik, 

I have reviewed the report on the system of quality control for the audit organization of the National 

Endowment for the Arts (NEA) Office of Inspector General (OIG) for the three years ended March 31, 

2019. We are pleased that it was detennined tl1at our system of quality control wa~ suitably designed and 

that our adherence to this system provided reasonable assurance that the audit organization perfonned 

work and reported results in accordance with professional standards. 

TI1ank you for providing the report on the Peer Review of"NEA OIG. We would also like to thank you 

and your staff for the time and effort in conducting our Peer Review. If you have any questions, please 

feel free to contact me at (202)682-5774. 

Sincerely, 

~ Ron Stith 

Inspector General 

400 7" Street, SW • Washington, 0C 20506