Source: https://www.scribd.com/doc/47960066/Audit-Process-How-to
Timestamp: 2017-05-25 23:01:58
Document Index: 754637897

Matched Legal Cases: ['ART 1', 'ART 1', 'art 1', 'art 2', 'art 2', 'art 9', 'art 3', 'art1']

Audit Process - How to | Audit | Risk
ScribdExploreEXPLORE BY INTERESTSCareer & MoneyBusiness Biography & HistoryEntrepreneurshipLeadership & MentoringMoney ManagementTime ManagementPersonal GrowthHappinessPsychologyRelationships & ParentingReligion & SpiritualitySelf-ImprovementPolitics & Current AffairsPoliticsSocietyScience & TechScienceTechHealth & FitnessFitnessNutritionSportsWellnessLifestyleArts & LanguagesFashion & BeautyFood & WineHome & GardenTravelEntertainmentCelebrity Biography & MemoirPop CultureBiographies & HistoryBiography & MemoirHistoryFictionChildren’s & YAClassic LiteratureContemporary FictionHistorical FictionLGBTQ FictionMystery, Thriller & CrimeRomanceScience Fiction & FantasyBROWSE BY CONTENT TYPEBooksAudiobooksNews & MagazinesSheet MusicUploadSign inJoinOptionsJoinSign InUploadAudit Process - How toUploaded by kingrudra2AuditRiskSurvey MethodologyChief Financial OfficerRisk Management0.0 (0)DownloadEmbedView MoreCopyright: Attribution Non-Commercial (BY-NC)List price: $0.00Download as PDF, TXT or read online from ScribdFlag for inappropriate contentTHE AUDIT PROCESSDepartment of Health & Human Services Office of Inspector General Office of Audit Services
A compendium of standard working paper (SWP) forms for documenting audit work as required by Government Auditing Standards and the OAS Audit Policies and Procedures Manual. Attributes and Phases of the Audit Process -
Discusses the three principles of systematic auditing: teamwork. These forms are optional. unless required by agency policy. but may not necessarily include the attributes normally expected in audit findings. an aid for staying focused on the objectives of the audit. a focal point for discussion among team members on the progress of the work. This part also introduces the primary tool that runs through the audit. The process of preparing the handbook was a
.. The handbook has three parts:
PART 1: Audit Teams. and an aid for the independent report review function. etc. Audit results may affect the audit opinion. clear objectives and attributes of a finding. The OARS is a worksheet that is intended to be used in each phase of the audit. The OARS should serve as a tool for organizing thoughts. The committee took a fresh look at how we have been doing our audits and the characteristics of some of the more successful audits. They are provided as an aid for the auditor to meet the documentation requirements of the standards.
Assures that the audit is performed in compliance with the Government Auditing Standards and the OAS Audit Policies and Procedures Manual and provides guidance on documenting the audit. Objectives.
This handbook was prepared by a committee whose members have extensive experience in the auditing profession and in the Department of Health and Human Services (HHS). All of these forms are available in WordPerfect format. the OARS. an outline for findings. the report on internal controls or compliance.the audit is on risk analysis and on determining whether agency operations are accurately reflected in the financial statements. in the context of the six phases of an audit.
Human and Financial Resources James R. Mr. Dille. Roslewicz Deputy Inspector General for Audit Services
. Duncan developed a menu-driven package of automated working papers with all of the bells and whistles that even the novice computer user will find easy to use. Region VI The committee was ably assisted by Dana Duncan of the Region IV ATS staff.
Thomas D. Justice. Region IX John W. incorporated and expanded on that concept in this handbook. suggestions and support were invaluable. Region II Robert F. in fact. the process of the audit. Little. The committee members are: Donald L. Dr. Hargrove. Dr. Region IV David J. Region VI (Chair) Craig T. Briggs. Ms. The committee. with Dr. James. The result is this comprehensive discussion of the audit process. Knoll’s active participation. Knoll provided the initial thought that development of the audit report is. Kromenaker. Region V Thomas P. Health Care Financing Audits James P. Dr. I would like to acknowledge the assistance that the committee received from Ms. Audit Policy and Oversight Thomas E. Region VI Helen M. Fisher. Martha Heath of the Region VI desktop publishing staff.group effort that resulted in a product intended for use by those at all levels of involvement in our audits. Edert. Throughout the work of the committee. Wayne Knoll deserves special recognition. Knoll’s insight. Lenahan. Heath’s creativity and innovativeness are very evident in the professional appearance of this product. In addition.
. . . . . . . . . . . . . . 1-24
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-8 Concept . . . . . . . Phase 2 . . . . . . . . . . . ATTRIBUTES AND PHASES OF THE AUDIT PROCESS
AUDIT TEAMS . . . . . . . . . . . . . . . . . . . 1-5 1-6 1-6 1-6 1-7 1-8
THE OARS .Preliminary Planning . . . . . . . . . . . . . . . . . . . 1-17 . . . . . . . . . . . . 1-12 . . . . . . . . . . . . . . 1-10 SIX PHASES OF THE AUDIT PROCESS . . . . . . . . . . . . . 1-1 Team Meetings . . . . . . . . . . . . . . . . . . . . Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Survey . . . . . . . . . 1-21 . . . . . . OBJECTIVES. . . . . Phase 6 . . . . . . . . .Pre-Survey . . . . . Phase 3 . . . .Postaudit Evaluation . . . 1-12 . . . . . . . . . . . . . . . . . . 1-14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Reporting . . . . . . . Effect . . . 1-8 Content of the OARS . . . . . . . . . . . .TABLE OF CONTENTS
PART 1 AUDIT TEAMS. . . . . . . . .Data Collection and Analysis Phase 5 . . . Phase 1 . 1-2 OBJECTIVES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-20 . . . . . . . . . . . . . . . Recommendations . . . . . . . . . . . Phase 4 . . . . . . . . . . . . 1-1 Quality Communication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-3 ATTRIBUTES OF AN AUDIT FINDING Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . Physical . . . . . . . . . . . . 1-23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Analytical . . .TABLE OF CONTENTS
ILLUSTRATIONS Figure 1-1 Figure 1-2 Figure 1-3 Figure 1-4 Figure 1-5 Figure 1-6 Figure 1-7 The OARS . . . . . . . . . . . . . . . . . . . . . 1-18 . . . . . . Pre-Survey . . . . . . . . . . . . . . . . . . . . . . Data Collection and Analysis Reporting . 2-3 2-3 2-4 2-4 2-4
. . . . . . . . . . . . . . . . . . . . . . . . . . Documentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-12 . . Preliminary Planning . . . . 1-11 . . . . . . . . . . . . . . . . . . 1-25
INTRODUCTION . . . . Testimonial . . . . . . . . . . . . 1-14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1 TYPES OF EVIDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . Postaudit Evaluation . . . . 1-21 . . . Survey . . . . . . . . . . . .
. . . . . . . . . . . . 2-4 2-5 2-5 2-6
COMPUTER-PROCESSED DATA . . . . . . . . . . . . . . . 2-20
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-7 AUDIT PROGRAMS . . . . . . . . . . . . . . . . . . . . . 2-19 . . . . . . 2-11 . 2-16
TYPES OF FILES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-8 SUBSTANDARD RECORDS . . . . . . . . . . . . . . . . . Competency . . . . . . . . . . . . . . . . . . . . . . . . . . 2-18 . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Content of Working Papers . . . . . . . . . . . . . . . . . . . . . 2-7 ACCESS TO RECORDS . . . . . . . . . . . . . . . . . The OARS . . . . . . . . . . . . Sufficiency . . . . . . . . . . . . . . . . . . . . . . 2-19 . . . . . . . . . . . . Electronic Working Papers . . . . . 2-17 Current Working Paper File . 2-12 . . . . . . . . . . . . . . . . . . . . . . . . 2-6 WRITTEN REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . 2-18 ORGANIZING CURRENT WORKING PAPER FILES Organization by Objective . . . . . . . . . . . . . . . . . . . . . . .TABLE OF CONTENTS
TESTS OF EVIDENCE Relevancy . . . . . . . . . . . . . . . . Supporting Working Papers . . 2-17 Permanent File . . . . . . . . . . . . . . . . . . . 2-8 BASIC PRINCIPLES OF WORKING PAPER PREPARATION Folder Cover . . . . . . . . . . . . . . .
Figure 2-3 Master Index to Working Paper Folders Figure 2-4 Index to Audit Working Papers . . . 2-9 . . . . . . . . . . . . . . . . . 2-24 REVIEW OF WORKING PAPERS . . . . . . . . . . . . . . 2-28 ACCESS TO WORKING PAPERS . . .
. . . . . . . . . 2-28 STORAGE AND RETENTION . 2-27 SAFEGUARDING WORKING PAPERS . 2-26 INDEPENDENT REPORT REVIEW . . . . . . . . . . . . . . 2-20 Indexing . . . . . . . . . . . . . 2-13 . . . . APPENDIX Working Paper Organization/Indexing
. . . . . 2-25
. . . . . . . . . . . . . . . . . 2-23 . . . . . . . . . . . . . . . . . . . 2-22 . . . . . . . . . . . . . . . . . . . .TABLE OF CONTENTS
INDEXING AND CROSS-REFERENCING . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 2-29 ILLUSTRATIONS Figure 2-1 Sample Letter Citing OAS’s Authority to Review Records . . . . . . . . . . . . . . Figure 2-2 Tick Mark Examples . . . . . .
. . . . . . . . . . . . . . . . . . . . . Figure 2-5 Index System Example . . . .
. . 2-20 Cross-Referencing . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2 SWP-9: Auditee/Program Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2 SWP-8: Audit Planning Reference List . . . . . . . . . . . . . . . . . . . . . . . . 3-3 SWP-13: Relying on the Work of Others . . . . . . . . 3-4
. . . . . . . . . . . . . . . 3-3 SWP-15: Reviewer’s Notes . . . . . . . . . . . . . . 3-3 SWP-14: Follow-up on Prior Audit Findings and Recommendations . . . . . . . . . . . . . . . 3-2 SWP-7: Supervisory Involvement in Preliminary Planning . . . . . . . . . . 3-3 SWP-16: Open Item List . . . . . . . . . .TABLE OF CONTENTS
SWP-1: Folder Cover . . . . . . . . . . . . . . . . . . 3-2 SWP-5: Type Of Review and GAGAS Certifications . . . . . . . . . . . . . . . . . . . . . 3-1 SWP-2: Master Index to Audit Folders . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3 SWP-17: Time Log . . . . . . . . . . . . . 3-1 SWP-4: Objective Attributes Recap Sheet . . . . 3-2 SWP-11: Internal Control Assessment . . . . . . . . . 3-3 SWP-12: Compliance with Legal and Regulatory Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1 SWP-3: Index to Audit Working Papers . . . . . . . . 3-2 SWP-10: Risk Analysis Worksheet . . . . . . . .
. .Reporting Checklist . . . . . . . . . 3-6 SWP-32: Independent Reviewer’s Notes . . . . . . . . . . . . . . . . . . . . . . . 3-4 SWP-20: Record of Contact . . . . . . . . . . . . . . . . . . . . 3-4 SWP-21: Contact Log . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Working Paper Checklist . . . . . . 3-5 SWP-31: Justification for Use of GS-12 or Lower-grade Auditor . . . . . . . . . . . . . . . . . 3-4 SWP-24: Sample Planning Document . . . . . . . . . . . . 3-5 SWP-28: Working Paper Checklist . . . . . . . . . . . . . . . . 3-5 SWP-26: Sampling and Estimation . . . . . . . . . 3-5 SWP-25: Estimate Planning Document . . . . . . . . . . . . . . . . 3-5 SWP-27: Sampling and Estimation . . . . . . . . . . . . . . . . . 3-5 SWP-29: Audit Report Checklist . 3-6 SWP-33: Independent Report Review Certification . . 3-6
SWP-18: Entrance Conference Record . . . . . . . . . . . . . . . . . . . . . . 3-4 SWP-19: Exit Conference Record . . . . . . . . . . . . . . . 3-5 SWP-30: Independent Report Review Processing Control Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4 SWP-23: Need For Advanced Audit Techniques Assistance . . 3-4 SWP-22: Contract/Grant Brief . . . . . . . . . .
SWP-34: Postaudit Evaluation . . . . . . . . . . . . . . . . . . 3-6 APPENDIX WordPerfect Macro Instructions ATTACHMENTS SWP Forms 1-34
there are differences between team members that are important to understand if the team is to function productively. Everyone who will participate in the project is part of the team. senior auditors. an activity with a start and finish. ATTRIBUTES AND PHASES
Audits are most effective when performed by qualified professionals who work together and are focused on clear objectives. However. and managers at both the regional and headquarters levels. This includes staff auditors. support staff. the professional characteristics of the OAS staff and the advanced communication technology available to auditors make it possible for teams to function effectively. A team is formed to accomplish the project. Some members may have more hands-on experience." Part 1
AUDIT TEAMS. Nothing else is more critical. They know how to perform audits and they understand the governmental environment. Team members need to recognize these differences and capitalize on the strengths and talents that each member brings to the team. OBJECTIVES. supervisors. and others may be stronger in organizational skills. Everyone on the team needs to know what is going on and needs to participate in a give-and-take discussion as decisions are made. This is the best way the
. Each audit can be viewed as a project.
The key to effective teamwork is communication. while others may be more skilled in communicating. The project nature of audits. Team members are valued for their knowledge.
They are during preliminary planning phase. Individual team members should not hold back information. a team member’s inability to participate with the team. However. APO staff (AIGAS.
During each phase of an audit. The flowchart of the audit process identifies several points where team meetings may occur. There are three critical points during the process when all team members must fully understand and agree on the audit objectives and finding attributes. The level of staff participation in team meetings will depend on the objectives of the meeting. they should agree on the refined objectives and plan to proceed with the review. meetings of team members are needed. Objectives. or agree to conclude the review. the team should review and agree on the attributes of developed findings and the manner of reporting these findings. and cognizant RIGAS and staff must agree on the preliminary expectations for the project during the preliminary planning phase. For example. At the beginning of the reporting phase. cognizant Division Director and staff. Team interaction occurs spontaneously in some cases and more formally in other cases. the DIGAS. The auditors should share their findings and observations regarding the audit environment. Meetings should also occur between auditors while they do their day-to-day work. statistics and workplan specialists). plan the best audit approach and reach consensus. General Counsel. Full participation by all team members is a significant factor in the success of the audit. This is particularly important on reviews for the Inspector General’s signature.Page 1-2
Audit Teams. should not slow the work of the team. during any part of the audit. Meetings should be scheduled at major decision points in the process. Team members need to interact for the team to be effective. on such a review. At the end of the survey phase. Meetings with supervisors and managers should occur when any member of a team believes that one is needed. Attributes and Phases of the Audit Process
team can achieve understanding. and policy.
. at the end of the survey phase and at the beginning of the reporting phase. The interaction needs to be timely. ideas or any thoughts on the work of the team.
Team members should review each other’s work and serve as sounding boards to work out difficult and complex issues. Each team member should be well informed regarding the workings and results of the audit. Auditors working cooperatively can help assure the quality of each other’s work. specific objectives use less audit resources and are completed in less time. Attributes and Phases of the Audit Process
The purposes of the meetings are to exchange information and improve the quality of the audit. Two methods frequently used in attempting to phrase objectives are: (1) as questions or (2) "to determine" statements. and that those objectives determine the type of audit to be conducted and the audit standards to be followed. Each team member should understand what the review is expected to accomplish. Audits that have clear. Once the objectives are established. Establishing clear objectives provides a structure and discipline that helps the audit team focus on the expected results and avoid confusion.Audit Teams. Objectives. Government Auditing Standards provide that all audits begin with objectives. Clear objectives also help ensure that the audit work will be conducted timely and efficiently.
Setting clear. The standards further provide that the objectives of an audit extend throughout each phase of the audit. For example: Does XYZ Laboratory bill Medicare the same amount for laboratory procedures that it bills physicians? To determine if ABC University removed all unallowable costs from its cost pools in preparing its indirect cost proposal. delays and poor quality reports. specific objectives:
NOTE: Objectives should be stated in such a way that a response can be given in specific positive terms. and the timing and nature of reports. from the selection of the scope of work and staff. specific objectives is the key to efficient government auditing. the scope and methodology of the field work can be planned.
. to the conduct of the audit.
Time invested in determining an audit’s objectives is time well spent because an audit with clear objectives is less likely to result in wasted resources. and that the work will produce the desired results. There are many advantages in auditing to clear.
(For example. including sharing their work with each other and reviewing each other’s working papers. Control Risk and Detection Risk. addresses the attributes. (For example. Specific objectives provide the focus for identifying the attributes of a finding and organizing the report. (For example. specific objectives present a challenge for the team.Page 1-4
Audit Teams. Audit risk is minimized by focusing on the objectives of the audit when conducting the field work. The audit team can begin writing by addressing each objective. Team members should work cooperatively to accomplish the audit objectives. the audit team has a clearer understanding of the extent of its responsibilities. Accordingly. remains focused. the team can design specific audit tests to fulfill those responsibilities.) . This cooperative approach provides assurance that the audit team accomplishes the objectives.Detection Risk: The chance that the auditor will not detect a material problem. provides documentation of the audit work and meets auditing standards.
.) . making reviews of the field work based on the objectives and developing the report from the information obtained in the course of accomplishing the objectives.Control Risk: A misstatement that could occur in an assertion or conclusion because of a failure of the internal control structure.)
When the objectives of the audit are precisely stated. Attributes and Phases of the Audit Process
Clear. poorly designed audit procedures may not detect a material overstatement of assets on the balance sheet.
.Inherent Risk: The susceptibility of an assertion or conclusion to be misstated because of a factor other than a failure of the internal control structure. pension liabilities are by their nature more complex than accounts payable. Objectives. Meaningful challenges are the catalyst that pulls a team together and motivates it to perform.
NOTE: Audit risk is made up of three components: Inherent Risk. an undetected major defalcation is more probable under a weak internal control structure than under a well-designed one.
an Efficient and Effective Audit: Aids in Writing the Report: Specific objectives provide a blueprint for writing the report.
Setting clear and specific objectives minimizes audit risk.
The audit team then performs the steps necessary to obtain evidence to support a conclusion on the objective. Effect The difference and significance between what is and what should be
2. focuses and refocuses the audit team throughout the audit process. if the integrity of the audit attributes is maintained. the reader of the audit report can be led through the evidence.
While the elements needed for an audit finding depend on the objectives of the audit. Condition What is 3. Objectives. During the audit. reviewing or reading the audit report. Recommendation Actions needed to correct the cause 4. the audit team should determine which attribute each piece of relevant evidence supports. On the other hand. Attributes and Phases of the Audit Process
Before field work begins. an OARS [SWP-4] is started for each objective.Audit Teams. properly planned and tailored to a particular objective. Criteria What should be
5. developed and adequately documented. In audits where the attributes are not identified or are unclear. An OARS. clearly establishing the credibility of the audit team’s position. a well-developed audit finding generally contains five attributes:
1. each item in the working papers can be
. As these decisions are made. Cause Why the condition happened
Development of the attributes guides the audit team in organizing and analyzing relevant evidence and helps ensure that all necessary information for a finding is identified. the result can be a collection of facts that provides little or no direction for writing.
A complete discussion of the condition could include background information about the auditee’s systems and procedures and a description of how the systems and procedures are put into practice.
The condition is a factual statement describing the results of the audit. A description of each attribute follows. procedures and practices established by management. with one underlying cause.
NOTE: More than one source of criteria may be used in an audit finding. By citing both the Federal regulation and the State plan. Other information. a Federal regulation may be adopted by a State agency and become part of the State plan. Attributes and Phases of the Audit Process
placed in a natural attribute sequence and included on an OARS relating to the appropriate audit objective. can be included with the criteria to help understand the issues. including Federal laws and regulations. Legislative intent may also be used as persuasive authority to support the criteria and enhance the conclusion of the audit team. State plans. that involves management and management decisions. The condition describes what the auditee did or is doing compared to the standard established by the criteria. The audit team needs to have a clear understanding of the cause when developing recommendations that will correct the problem and be accepted by management. Each condition may have more than one cause. such as prior events and historical practices. the audit team can pull together the information needed for each section of the report. For example. Such a practice is especially beneficial when one criterion strengthens and supports another. the audit team reinforces the basis for the position presented in the finding. Then. Objectives. Criteria can come in many forms. the underlying or root cause of the condition should be directed at the policies. when drafting the report.
Knowing why or how a condition occurred is essential to developing meaningful recommendations. It tells what was found during the audit.Page 1-6
Audit Teams. contract provisions and program guidelines.
Criteria are the standards against which the audit team measures the activity or performance of the auditee. It answers each objective either positively or negatively. The
• Functional level at which no action or improper
The reasons for incorrect actions also need to be clearly understood.Audit Teams. activity or function being audited.
conditions. Knowing these reasons establishes the tone and direction for the recommendations. Such considerations will enable the reader of the audit report to grasp the relevance of the incorrect actions and understand the need for implementing the recommendations. if applicable.
• Missing or weak internal controls. The discussion of the effect should include:
impact. Attributes and Phases of the Audit Process
cause should be developed to the point where it is clear that correcting the condition will remedy or prevent recurrence of the condition. if possible. Objectives.
. The discussion of cause should identify:
• Specific actions or inactions by officials.
is ongoing or represents a one-time occurrence.
Having identified a difference between what is (condition) and what should be (criteria). the audit team needs to determine the impact of this difference on the program.
.Page 1-8
Focuses the audit team on the audit objective during the audit process. They should be addressed to the parties that can implement them. Attributes and Phases of the Audit Process
A recommendation is a clear statement of the action that must be taken to correct the problem identified by the audit. The OARS serves several fundamental and interrelated purposes.
An OARS. Assists the audit team in performing a timely and critical analysis of the evidence obtained. Integrates report preparation throughout the audit process. Recommendations should address the underlying or root cause and be specific. It provides a logical and documented progression through the phases of the audit. Objectives. Facilitates meaningful supervisory and management review. feasible and cost effective. focuses and refocuses the audit team throughout the audit process. Replaces working paper summaries. properly planned and tailored to a particular audit objective.
An OARS also helps supervisors and managers. Attributes and Phases of the Audit Process
.Audit Teams. Objectives.
. organizing and documenting the audit process. PRELIMINARY PLANNING PRE-SURVEY SURVEY DATA COLLECTION AND ANALYSIS REPORTING POSTAUDIT EVALUATION
Throughout these six phases. but also simultaneously creates a key portion of the report during the audit. states in his seminar and workshop entitled Managing the Audit and Developing the Audit Report: The key to developing the report draft during the audit is to systematize the entire audit.
The purpose of the audit work. method used to select the sample and the number and percent of discrepancies noted. effect and recommendation. the OARS becomes the key to developing the audit report during the field work. The name. Objectives.
NOTE: When it is difficult to briefly identify on the OARS either the audit objective or attributes.D. Thus each step of the audit not only leads logically to the next. 3. Ph. it may be an indication that the objective is too general. 2. The audit universe. 4. Attributes and Phases of the Audit Process
Audits are normally performed in six phases: 1. cause. As Wayne Knoll.
The condition. an explanation of why it is undertaken and what the audit team is trying to accomplish. sample size.. 5. (Also included is the date of the discussion and the name of the auditor. criteria. 6. title and department of the auditee personnel with whom the finding was discussed. The audit objective may need to be divided into subobjectives and additional OARS created. the OARS should be used in planning.Page 1-10
Audit Teams. 3. Attributes and Phases of the Audit Process
Auditee Personnel With Whom Discussed: Name 1. 2. Comments by Auditee Personnel: Title Date
including Congress.Page 1-12
Audit Teams. the audit team is formed and the team gains an understanding of the reasons for the audit and identifies the objectives.
.An issue or concern with audit potential can be identified through a variety of sources. Attributes and Phases of the Audit Process
Phase 1 . the audit team is formed. These issues and concerns are incorporated into the OIG/OAS work plan. Scope. The audit team then begins planning the audit. Methodology
Identify an Issue or Concern . Objectives. other Office of Inspector General (OIG) components and research performed by OAS. HHS operating divisions. In this phase.Preliminary Planning
The preliminary planning phase (Figure 1-2) is the initial step of the audit process.
Preliminary Decisions on Objectives. Identify Staff -
When a decision is made to proceed with a project. Everyone assigned to the team should be notified that they are part of the team.
Final decisions about these items.The audit requirements. Also during this phase. consideration is given to the number and experience of team members assigned to the audit.
The first step of this process is to clearly and precisely identify the objectives of the audit. however. also need to be considered in this phase.Audit Teams. preliminary expectations relative to the contents of the report are developed. Risk factors of the audit are considered in making these determinations. These requirements include establishing a Common Identification Number. SUPERVISORY INVOLVEMENT IN PLANNING [SWP-7] and the PLANNING REFERENCE LIST [SWP-8]. The audit team should discuss the scope and methodology of the review. in terms of objectives. These discussions should be documented. The RECORD OF CONTACT [SWP-20] could be used. The team should identify the OAS requirements that need to be accomplished. a separate OARS should be prepared for each objective. The scope and methodology of the review will be refined after review and analysis takes place in the survey phase of the audit. a Basic Audit Record for the Audit Information Management System and an audit start notice. For requested audits. will not be made until the survey (Phase 3). Preliminary planning may be documented on the forms. In determining staffing and time requirements. At this point. The OAS Audit Policies and Procedures Manual has specific requirements for sampling plans and nationwide audits which should be consulted. scope and methodology. Attributes and Phases of the Audit Process
The audit team establishes audit and time requirements and makes appropriate staff assignments. It is important that the audit team targets in the beginning what will be delivered at the end.
Identify Audit Requirements .
. the team should discuss with the requestor what is expected and the level of importance or significance of the request. Objectives. Staff days and timeframes should be budgeted.
Program officials can be helpful in alerting the audit team to risk factors that could affect its approach to the audit. information may be provided on significant or sensitive issues that could affect materiality thresholds. timing and extent of detailed audit work.
. The team should then assess the relative control risk for each control.Survey
The audit survey phase (Figure 1-4) includes steps necessary to assemble information that will enable the audit team to make decisions concerning the nature. Attributes and Phases of the Audit Process
addition to funding levels. it may be appropriate to consider the need for a legal opinion or interpretation from the Office of General Counsel. Objectives. Regardless of the method followed. The audit team should target its resources in areas with the most risk. Survey work may be more extensive for first time reviews than for previously performed audits. the team should identify the controls that are relevant to the objectives of the audit.Audit Teams. These factors include materiality.
Phase 3 . This requires that the audit team gain an understanding of the internal control structure.
The purpose of the audit survey is to identify areas of potential audit risk and design audit work to minimize that risk. the quality of its accounting records and its emphasis on maximizing Federal reimbursement. Focusing the objectives is a function of the internal control assessment and risk analysis which can be done systematically through the process of the survey. the team must consider all factors relevant to the audit objective. At this stage of the audit process. Finally. Information may be provided on the auditee’s management operating style. With this understanding. There are several approaches to making a risk analysis and internal control assessment. information obtained from program officials can be used to clarify audit objectives on the OARS. The survey includes a timely gathering and analysis of information so that potential audit areas can be identified and plans made to review and test management controls over these areas.
and the visibility and nature of the government programs.
Subobjectives are the specific steps that have to be accomplished to achieve the overall objective. Objectives. These subobjectives can be related to specific criteria. Through a careful process of analyzing risk and assessing internal controls. During the assessment of the control environment and the risk analysis the audit team may have identified three aspects of criteria that it considers to have a high potential for error.Page 1-18
Audit Teams. amount of payments and timeliness of payments. conditions or causes and may be developed throughout the audit process. Attributes and Phases of the Audit Process
FOR EXAMPLE: On an audit with the overall objective to determine if a State agency is properly paying medical bills for Medicaid recipients. The team would refine the overall objective by focusing on three subobjectives: Is the State agency ensuring that medical bills are paid for individuals who are eligible according to Federal and State criteria? Is the State agency ensuring that payments made for medical claims are limited to the amount allowable as determined by Federal and State criteria? Is the State agency making payments timely and in accordance with Federal and State criteria?
significance of legal and regulatory requirements. the team must ensure that the audit objectives cover the areas of highest risk consistent with resource limitations. the audit team would be expected to refine this broad objective. These may relate to recipient eligibility. The team should refine the overall objective(s) established in the preliminary planning phase and establish subobjectives when necessary.
the more focused the survey work will be. then the audit team should identify the potential effect of the difference between "what should be" and "what is.
After preliminary review and analysis. the team should identify the objective. the audit team should meet.
The audit team should determine the extent of reliance on the work of others. If the condition noted is a negative situation. such as State auditors. The team will review the OARS and discuss the results of the survey. internal auditors and other Federal auditors. If there is no adverse condition. If there are both positive and adverse conditions to report. audit manager. The survey involves analytical and transaction testing of the controls.Audit Teams. the team should close out the audit. On the OARS. external auditors. The OARS should help the audit team quickly focus on the condition. criteria and condition. usually in the report summary. it may be documented using the form. Objectives. As the condition is identified. A survey report may be prepared as a result of the team meeting. advanced techniques staff. The more specific the objectives and subobjectives. Attributes and Phases of the Audit Process
A survey plan can be readily developed based on the objectives and subobjectives. The audit team should test enough transactions to be satisfied that the controls actually function as intended. the positive conditions should be reported. As the survey proceeds." The potential cause of an adverse condition should also be determined. RELYING ON THE WORK OF OTHERS [SWP-13].
. If the work of others is relied on. Both the potential cause and effect should be discussed with the auditee. Regional Inspector General for Audit Services and headquarters staff. The meeting may include the staff auditors. the OARS should be updated. the audit team should continue to update the OARS for each objective or subobjective. The condition should be expressed in positive terms.
Issues outside the scope of the audit objectives should be identified and discussed at the team meeting. Working papers prepared and analyzed during this phase may include: Excerpts of auditee policies. If a decision is made to continue the review. In the data collection and analysis phase.Page 1-20
Audit Teams. Attributes and Phases of the Audit Process
During the survey phase. the audit team focuses on collecting and analyzing the evidence needed to develop and support the findings.Data Collection and Analysis
The data collection and analysis phase (Figure 1-5) focuses on analyzing the evidence to determine cause and quantifying the effect of the condition identified in the survey.
Phase 4 . the audit program should be cross-referenced to the working papers supporting the audit steps. a "go/no-go" decision is made and documented in the working papers. the audit program and the OARS become the audit team’s primary mechanisms for assessing the day-to-day progress of the review. Thus. In subsequent phases of the review. At this time OARS should be updated to include cause. inquiries and interviews Spreadsheets and schedules Computer printouts
. Recommendations are also developed to address the identified causes.The results of the team meeting and the information contained on the OARS becomes the basis for the audit program. The audit program may also identify target dates for completion of detailed audit work and preparation of the final report. conclusions and recommendations. Data collection and analysis steps are developed for each objective and subobjective.
Audit Program . effect and recommendation. Objectives. procedures and documents
Write-ups of meetings. the team will develop an audit program.
The audit team should begin anticipating and visualizing the report as early as the preliminary planning phase. an approach to organizing working papers based on the OARS. accuracy. relevance and overall quality of the evidence. Normally the report is assembled and crafted into a cohesive and
.Effect -.Reporting
Auditing and report writing are not separate activities but represent a single integrated process.Audit Teams.Cause -. Objectives.Recommendation
Working Papers -. clarity. Sections of the report should be written as the attributes are developed. Identify: -. Part 2 . Attributes and Phases of the Audit Process
Collect and Analyze Information Pertaining to Objectives and Subobjectives. in detail.
Phase 5 .interviews -.Audit Evidence and Working Papers discusses.schedules -.observations
The OARS provides structure to the working papers which assists the audit team in assessing on a day-to-day basis the completeness.
" the team may determine that auditee management had elected not to institute a training program. it is not the root. or underlying." however. it became apparent that four of the five conditions are the result of one root cause. For example. the audit team may find that while this may be the immediate cause of the condition. The OARS summarizes the work performed and contains the attributes of the findings. Attributes and Phases of the Audit Process
comprehensive document after the data collection and analysis phase is completed (Figure 1-6)." For example. A record of the team’s decisions is included in the working papers and circulated to team participants. The draft report organizes the audit results into a logical and coherent document.
Normally. By asking "why. In this example.
The audit team outlines the report by organizing and consolidating the OARS into one or more findings through pattern analysis. pattern analysis showed two reportable findings rather than five separate findings. the team might find that the employee’s incorrect action was because of inadequate training. will vary depending on the type of
. Thus. however. the audit team can determine if the multiple conditions identified are the result of one root cause. it might be apparent that an employee’s incorrect action led to the condition. Assembling the draft report begins with a meeting of the audit team. The specific contents of any report. Pattern analysis is an analytical process whereby the audit team identifies common attributes to organize the findings. Positive findings should be reported. The OARS serves as the focal point for the team’s discussion and is used in preparing the draft report.
NOTE: In searching for the root cause. findings containing well-developed attributes. a decision by management not to provide training was the root cause that led to the condition. Objectives. The report should be organized in sections designed to clearly identify the entity reviewed. that is. since recommendations address root cause. again asking "why. the audit team repeatedly probes the issue by asking "why.Page 1-22
Audit Teams. This record should also document any decisions not to report a tentative finding along with the team’s reasoning. When comparing these five conditions and causes. Probing further. the pursuit of cause should stop when the audit team can recommend corrective action that realistically can be implemented and can be expected to correct the condition. five OARS showed five adverse conditions and causes. cause. Using pattern analysis. the methods used. auditee comments and OIG response and attachments. Therefore.
Independent Report Review (IRR) . may serve as an outline for the finding. Objectives. as summarized on the OARS. the opening or summary paragraph of a finding consists of the attributes. some rewording may be needed to give the opening paragraph polish. Obviously. In its simplest form. adequately supported and logical. The formats for different types of reports are discussed in the OAS Audit Policies and Procedures Manual. Attributes and Phases of the Audit Process
review performed. The OARS should be completed at the conclusion of the documentation and analysis phase and. The results and conclusions sections of the working papers will provide the basis for writing the findings.The IRR is an internal quality control procedure that helps to ensure the report is accurate.
. reformatted into a paragraph. The subsequent sections of the finding can be organized by attribute and should follow the organization of the opening paragraph.Audit Teams. depending on the complexity of the audit objectives and issues.
If the auditee disagrees with the findings and recommendations of the report. If the report will be issued by the region.
. the audit team may decide to change or delete a portion of the report or prepare a rebuttal to the comments. the draft report is then signed by the DIGAS or the IG and sent to the auditee for comments. Attributes and Phases of the Audit Process
Once the draft report is completed. If the report is to be signed by the Deputy Inspector General for Audit Services (DIGAS) or the Inspector General (IG).Page 1-24
Audit Teams. Depending on the addressee. the final report is submitted to the RIGAS and/or AIGAS for review and approval. Changes made to the report should be submitted for IRR.Postaudit Evaluation
After the final report is issued.
Phase 6 .
Processing the Final Report . the RIGAS will usually transmit the draft report to the auditee for comment.
The APO performs an independent quality control review to ensure that the report complies with Government Auditing Standards and the OAS Audit Policies and Procedures Manual. the audit team will review and assess them. The team reviews and discusses the audit from the preliminary planning stage through the issuance of the final report. Based on the auditee’s comments. It is important that each member of the audit team be given an opportunity not only to identify problem areas. Objectives. the audit team should perform a postaudit evaluation (Figure 1-7) to discuss the strengths and weaknesses of the audit and to suggest ways to improve the quality of future audit efforts. and submitted to Audit Policy and Oversight (APO). the report is reviewed by the Regional Inspector General for Audit Services (RIGAS) and/or the Assistant Inspector General for Audit Services (AIGAS). This may require additional work to verify information provided by the auditee or to resolve questions raised by the auditee. the team will meet promptly after the final report is issued. it is reviewed and approved by the AIGAS. the audit team will attempt to resolve the disagreement.When the auditee’s comments are received.
After the auditee’s comments have been incorporated and any additional IRR takes place. Ideally.
Objectives.Pre-Survey -. why? Was the number of assigned staff sufficient? Was the staff adequately trained to complete their assignments? What additional training.Preliminary Planning -.Survey -. if any. Specific areas to evaluate may include:
What were the strengths and weaknesses during each phase of the audit? What additional steps could be included to improve the efficiency of the audit? Were the original target dates and staff days budgeted reasonable? If not. Attributes and Phases of the Audit Process
Discuss Strengths and Weaknesses -.Audit Teams. is needed? Were the OARS used effectively to document and facilitate the audit? Was auditee cooperation adequate?
.Data Collection/Analysis -.Reporting Staff Development Develop Suggestions for Improvement Audit Quality and Timeliness Changes in OAS and Regional Policies and Procedures
but to recognize audit techniques or approaches that were successful.
Attributes and Phases of the Audit Process
Another area to consider is audit leads identified during the audit process. If warranted.Page 1-26
Audit Teams. The results should be documented in the working papers.
. Audit leads can be discussed during this final team meeting. a prospective OARS may be prepared and a workplan proposal drafted. At the conclusion of the postaudit evaluation. the audit team should prepare a postaudit evaluation working paper. The POSTAUDIT EVALUATION [SWP-34] may be used to document the results of the evaluation. Objectives.
Methodology Start OARS for Each Objective
.APPENDIX Page 1 of 6
Phase 1 .Preliminary Planning
Develop Preliminary Expectations Definition of Staff Roles and Responsibilities Preliminary Decisions on Objectives. Scope.
Regulations -.Laws -.Guidelines Responsibility Authority Compliance Requirements
.Pre-Survey
Review Pertinent: -.THE AUDIT PROCESS
.APPENDIX Page 3 of 6
Cause -.Data Collection and Analysis
Collect and Analyze Information Pertaining to Objectives and Subobjectives.schedules .THE AUDIT PROCESS
Phase 4 .Recommendation
Workpapers . Identify: -.Effect -.interviews .observations Analysis of Evidence
Phase 5 .Reporting
Survey -.Reporting
.THE AUDIT PROCESS
Phase 6 .Preliminary Planning -.Data Collection/Analysis -.Postaudit Evaluation
Discuss Strengths and Weaknesses -.Pre-Survey -.
Documentation of the evidence collected and used to support findings. which build toward this final product. opinions.
Government Auditing Standards state that a record of the auditor’s work shall be retained in the form of working papers. Working papers provide two forms of documentation:
Documentation of the audit activities (the what. why. They include the collection of evidence.
Working papers document conformance with Government Auditing Standards and compliance with OAS Audit Policies and Procedures. how. prepared or obtained by the auditor during the audit. A determination that certain standards or OAS Audit Policies and Procedures do not apply to the audit should also be documented in the
. While the audit report is the end product of the audit team’s work. conclusions and judgments. conclusions and recommendations presented in OAS reports. are also an important measure of the audit team’s performance. Working papers are defined as the documents containing the evidence to support the auditor’s findings. the supporting evidence and working papers." Part 2
The quality of OAS work is measured by the substance of the audit report and the degree to which the reported findings are supported by the evidence and working papers. when and by whom) performed in fulfilling the assignment objectives.
they are the link between the field work and the audit report. working papers are subject to review throughout the audit process and may be used by other auditors during subsequent audits.Page 2-2
NOTE: WORKING PAPERS refer to all records -. Government Auditing Standards require audit organizations to establish policies and procedures for the preparation and maintenance of working papers. Working papers serve as a record of the results of the examination and the basis of the auditor’s findings and recommendations and. may be granted access to OAS working papers. as well as auditors from independent public accounting firms. is to be retained in the form of working papers. computer tapes. pictures.manual or automated -. other government auditors (Federal. either before semi-judicial bodies or in court proceedings. program.
. including the evidence gathered during the audit. Government Auditing Standards prescribe standards for audit evidence and working papers. State and local). Working papers serve as a record of the results of the audit and the basis of the auditors’ opinions. they may include films.obtained or developed in connection with an audit assignment. competent and relevant evidence is to be obtained to afford a reasonable basis for the auditors’ judgments and conclusions regarding the organization. The OAS Audit Policies and Procedures Manual adopts Government Auditing Standards and provides supplemental policies and procedures relating to evidence and the preparation and maintenance of working papers. as such. A record of the auditors’ work.
working papers. This requirement pertains to the standards set forth in Government Auditing Standards. The standards are discussed below:
Sufficient. activity or function under audit. diskettes or other media. In addition. the supplemental guidance set forth in this handbook and any additional material issued by headquarters or the regional offices. Within the OAS. the OAS Audit Policies and Procedures Manual. Also. They may be used as evidence in disputes between the Department and its contractors or grantees.
Physical evidence is obtained by direct inspection or observation of activities of people. maps or other types of physical evidence.Audit Evidence and Working Papers
Working papers also provide the principal support for the auditors’ representation regarding observance of the standards. property or events. audit evidence differs from legal evidence which is circumscribed by rigid rules. In this respect. When possible. Such evidence may be documented in the form of memoranda summarizing the matters inspected or observed. important inspections or observations should be made by two team members. examining and evaluating evidential matter. charts. Evidence may be categorized as follows. photographs.
Evidence may be defined as the data and information which auditors obtain during a review to document findings and support opinions and conclusions. The measure of the validity of evidence for audit purposes lies in the nature of the evidence and the judgment of the audit team. A considerable amount of the audit team’s work consists of obtaining. Evidence gives the audit team a rational basis for forming judgments. including that the audit was properly planned. arrangements should be made for agency or contractor
. It is that which tends to prove or disprove any matter in question or to influence the auditor’s opinion. In some cases. supervised and reported.
Testimonial evidence consists of statements received in response to inquiries or through interviews.
Analytical evidence is obtained through analysis or verification of information. Also.Page 2-4
representatives to accompany the audit team to corroborate observations. Statements important to the audit should be corroborated when possible with additional evidence.
Documentary evidence consists of created information such as accounting records. The evidence
. Analytical evidence can consist of:
Prescribed standards Past operations Other operations. documentary or
The working papers should contain the details of the evidence and disclose how it was obtained. letters. testimonial evidence needs to be evaluated from the standpoint of whether the individual may be biased or only has partial knowledge about the matter under audit. Uncorroborated testimonial evidence is the weakest form of evidence. transactions or performances Laws or regulations Legal decisions
• Evaluations of physical. invoices. contracts and management information on performance.
Sufficiency Presence of Enough Evidence to Support Findings. this requirement does not rule out making appropriate notes or observations relative to other potential problem areas. audit teams should obtain the "best" evidence possible relative to the review objectives. effect or cause? Does the evidence make an asserted finding. As reviews are planned and carried out. The information used to prove or disprove an issue is relevant if it has a logical. Questions that test the relevancy of evidence include the following:
Is the evidence related to such factors as background. criteria. Information that is irrelevant should not be included as evidence or made part of the working papers.
. conclusion or recommendation more believable?
Competency refers to whether evidence is reliable and the best attainable through reasonable methods. In collecting working paper support. condition. The following presumptions are useful in judging the competency of evidence. Conclusions and Recommendations
Relevancy refers to the relationship of evidence to its use. However. competency and sufficiency.Audit Evidence and Working Papers
should be presented following the rules of relevancy. the soundness and credibility of the evidence should be assessed on an ongoing basis. sensible relationship to that issue.
Evidence obtained through physical examination. Sometimes. conclusions and recommendations. computation and inspection is more reliable than evidence obtained indirectly. the audit team may either:
. Determining the sufficiency of evidence requires judgment. When appropriate. where the persons may be intimidated).
When computer-processed data is an important or integral part of the audit and the data’s reliability is crucial to accomplishing the audit objective.Page 2-6
Evidence obtained from an independent source is more reliable than that secured from the audited organization. the audit team needs to determine that the data is reliable and relevant. Original documents are more reliable than copies. unsatisfactory or nonexistent. To determine the reliability of the data. Testimonial evidence obtained under conditions where persons may speak freely is more credible than testimonial evidence obtained under compromising conditions (e. statistical methods should be used to establish sufficiency.
Sufficiency is the presence of enough factual and convincing evidence to support the audit team’s findings. This is important regardless of whether the data is provided to the audit team or the audit team independently extracts it. two sources of evidence may conflict.. observation. the evidence must be impartially judged for significance and completeness. To determine which is more precise. Evidence developed under a good system of internal control is more reliable than that obtained where such control is weak.g.
Government Auditing Standards require that auditors obtain management representation letters. The audit program also includes or refers to background information
Audit assignments must be planned to meet the requirements of Government Auditing Standards. The requirement that auditors obtain certain written representation from management is set forth in AICPA Professional Standards. in the OAS Audit Policies and Procedures Manual. or If the general and application controls are not reviewed or are determined to be unreliable.Audit Evidence and Working Papers
Conduct a review of the general and application controls in the computer-based systems. Planning Audit Assignments. management representation letters could be obtained if deemed useful and appropriate.ADP. Written audit programs are essential for planning and conducting audits efficiently and effectively. Internal Controls . including tests as are warranted. audit instructions and audit policy guides. An audit program serves to document pertinent planning information and establishes a set of procedures or steps for the auditors to follow. in the OAS Audit Policies and Procedures Manual.
For financial statement audits. The OAS policies and procedures for planning individual audits are set forth in Chapter 05. For financial related audits and performance audits. conduct other tests and procedures such as an internal risk analysis to test for physical security exposures and application controls exposures. Client Representations (AU 333).
Reviews of general and application controls should be conducted in accordance with the policies and procedures set forth in Chapter 13. It identifies audit objectives and contains cross-references to applicable sections of the audit work plan.
. This process should be coordinated through the cognizant Assistant Inspector General for Audit Services (AIGAS).Page 2-8
intended for inclusion in the audit report. Enabling legislation of specific programs may also include access language. The basis for a summary record of the work done. it should be disclosed in the Scope section of the report along with the known effect it had on the results of the audit.
When an auditee’s records considered essential to complete an audit are inadequate or unauditable. the staff auditors should consult with their supervisors before taking further action. A systematic basis for assigning work to members of the audit team. Whether to pursue alternative auditing techniques should be based on reasonable economic limits (i. the rational relationship
. If a subpoena is needed. the Department’s Office of General Counsel. Inspector General Division must be contacted to request preparation of the subpoena. If difficulty is encountered in gaining access to records. A sample letter citing the OAS’s authority to review records is shown in Figure 2-1. the audit team should consider pursuing alternative auditing techniques as a means of accomplishing the audit objectives. In addition.e. Failure to obtain information necessary to conduct an audit in accordance with Government Auditing Standards should be documented in the working papers.
The legal citation for our primary right of access to records is set forth in the Office of Inspector General (OIG) enabling legislation (5 USC Appendix 3). the audit program documents and provides:
A description of the methodology and suggested audit steps and procedures to be conducted to accomplish the audit objectives. When properly constructed.
of the OAS Audit Policies and Procedures Manual and AICPA Professional Standards.
The following basic principles apply to working papers. Guidance can be found in Chapter 14. The working papers should be:
.Audit Evidence and Working Papers
between the cost of obtaining evidence and the usefulness of the information). The decision to pursue or not to pursue such procedures should be documented in the working papers. Evidence and Working Papers. Analytical Procedures (AU 329). Section 20-14-40-05.
However. Narrative comments in working papers should normally be double-spaced so that legible insertions and revisions can be made. including the analysis and interpretation of the audit data. clarity and completeness should not be sacrificed to save time or paper. Information should be clear and complete.Page 2-10
NOTE: Working papers should be legible. Well prepared working papers also permit another auditor to pick up the examination at a certain point (for example. Knowledgeable individuals using the working papers should be able to readily determine their purpose. Pencil is preferred for noncomputer-generated schedules containing figures which may be changed. neat. sufficient thought should be given to the content of the working paper before beginning the audit step. Further.generated. only one side of the paper should normally be used. should be documented in the working papers. Information contained in working papers should not be crowded. complete. yet concise. To prevent crowding. the following should be clearly determined:
. the nature and scope of the audit work and the preparer’s conclusions. Working papers may be handwritten or computer. Legible and neatly prepared.
Understandable without the need for detailed supplementary oral explanations. readily understandable and designed to fit the circumstances and needs of the audit team for the particular review objective.
The procedures followed by the audit team. Before the audit team develops a working paper analysis. exhibit or schedule. Restricted to matters that are materially important and relevant to the objectives of the assignment. Working papers should be restricted to matters that are significant and relevant to the objectives of the review. Each working paper should be limited to only one subject. at the completion of the survey phase) and carry it to its conclusion.
During the audit. etc. working papers should be maintained in a binder to facilitate their efficient use and ensure against loss or damage.) should be considered for inclusion in a working paper appendix. the preferred method is to copy onto 8 1/2" x 11" paper only the relevant excerpts from these large documents.g. they should not be included in the working paper file..
Each working paper binder should include a cover sheet as the first page. When making copies of auditee documents. pressboard data binders or other filing media. For example. Information shown on the cover page may include:
. 11" x 15" computer printouts.Audit Evidence and Working Papers
condition(s) or conclusion(s). However. Working papers are generally prepared on letter-sized (8 1/2" x 11") paper. in some instances oversize documents may need to be retained (e. copies of booklets furnished by the auditee (financial reports. and other documents longer than 11"). Unnecessary or irrelevant working papers should not be prepared. brochures. Oversize documents may be folded to fit the letter-sized format or they may be retained as appendices to the working paper file and bound in accordion files. If such working papers are inadvertently prepared.
in many cases. quantity and type of working papers will be based on the auditors’ professional judgment. Factors entering into the judgment include:
• Objective • Scope • Degree of reliance on internal controls • Extent of reliance on the work of others • Condition of the auditee’s records • Nature of the financial statements. schedules or
Self-adhesive computer-generated labels or a rubber stamp can.
The content. Each working paper should generally contain a concise. provide time-saving alternatives for applying headings to working papers.
. descriptive title of the information contained in the working paper.Page 2-12
NOTE: If colors are used to code documents. The team member performing the tracing function should mark the items traced and date and show his or her identity on each working paper. pink or gold since they generally do not copy well. check marks. This is essential in the event the Departmental Appeals Board. All notes and symbols should be graphically unique. courts or other quasi-judicial bodies subsequently need copies of the working papers for resolution of the report findings.Audit Evidence and Working Papers
Both should be included on each working paper.
. Any tick marks used should be explained in the working papers. In order to reduce the possibility of errors. Standardized tick marks are not prescribed for OAS work. Generally. letters. stars. the audit team should consider independently tracing key data to the source. We then prepare schedules where certain data may be extracted from the copied files. The need and use of tick marks should be determined by the audit team. avoid using light colors such as as yellow. Examples of tick marks are as follows:
-Traced to Source -Referencing -Math Verification. then either the date the working paper was started or the date it was completed is acceptable. team members can trace each other’s working papers. If the date is not critical to the purpose of the working paper.
Whenever notes or symbols are used (numbers. we copy data such as payment information from case files and other records based on sampling techniques. Including Footing and Cross-footing
In many reviews. then the date that the information is actually entered on the working paper should be used. if the date is critical. analyzed and summarized. However. they should be explained in the working papers. even if color coded.).
whenever applicable: Attribute . how does this working paper relate to the audit program and to the audit objective)?
NOTE: The purpose and source are required to be documented on most working papers. include a specific scope element. it may be necessary to include a conclusion on a working paper if such is not readily apparent. but is necessary as background information.Evidence of review should be documented in the working papers. For the purposes of this handbook.Each working paper should identify the attribute(s) of a finding that the working paper addresses. What is the reason for this working paper (e. if the working paper title or the purpose for preparing the working paper does not satisfactorily address the scope. Therefore. When applicable. results and conclusion on individual working papers. indicate the date the computations were verified. effect and recommendation should be considered as attributes. and telephone number of the individual providing the
.g. the team member performing the verification should identify the computations verified. REVIEWER’S NOTES [SWP-15] may be used for this purpose. the auditor should state under the attribute classification that this working paper pertains to background. they should be independently verified by someone other than the preparer of the working paper. Other information is also essential to understand individual working papers. team members can verify each other’s working papers. Where appropriate. criteria. title or position. it may be necessary to include scope. If the working paper is not related to an attribute.The index (letter/number) should be included on each working paper. Review . include the name. cause. in many instances. and identify himself or herself as the verifier.. Generally. Similarly. For example. condition. or series of working papers. On each working paper.Page 2-14
Computations of key data can be of critical importance in a review. Index . The following information should be included on each working paper.
Where did the auditors obtain the information for the working paper? This applies to schedules prepared by the auditee and furnished to the audit team as well as to data compiled by audit team members.
purpose and source are required on most working papers. tracing and review. etc. For example:
Of the 100 travel vouchers we reviewed to determine if the voucher was approved by the employee’s supervisor. reports and other documents prepared by the auditee.
. the number examined. analyses. When the analysis is based on a sample of transactions.
Conclusion .Audit Evidence and Working Papers
information. What did the auditors’ examination include? This is particularly important when determining the volume of the transactions involved.A conclusion is the auditor’s opinion drawn from analysis and interpretation of the facts contained in a working paper. audit programs and Audit Inspections Management System records (AIMS) will not require any or all of the foregoing citations. such as time logs. and the period covered by the auditors’ review.
While maximum use should be made of schedules. why these transactions were selected. When the conclusions recorded on one working paper are based in part on information in other working papers.
NOTE: Scope may include a comparison of data between different periods. what the examination consisted of. and it should not be based on the audit as a whole. the factors should be explained in the working papers. this fact should be noted and appropriately cross-referenced. results and conclusion are required only when necessary. The conclusion should bear a relationship to the purpose or objective for which the working paper was prepared.
NOTE: The attribute. information should be included to describe the sampling plan. It does not contain the auditors’ opinion. the working papers must clearly state the conclusions that are drawn from the auditee’s documents. Some of the standard administrative working papers. Source citations should be definitive enough to ensure easy reference for the purpose of independent verification. scope. we found 7 cases where the required approval was not obtained. When external factors restrict the audit or interfere with the auditors’ ability to form objective opinions and conclusions.
The results section of the working paper summarizes in objective terms what the auditors found. what part of the total volume the audit test represents. matching data to standards.
attribute.Page 2-16
Whenever an analysis or test involves repetitive working papers having the same attribute. the detailed citations need be stated only on the first or last working paper in the series. source. Determine how the data processing procedures were utilized. Where analyses and assumptions supporting data within a file are not apparent.
Documentation requirements for manually prepared records should equally apply for computerized records. Files stored on the diskettes should be identified.
Working papers developed on microcomputers generally should be printed and. this information should be disclosed for the benefit of both the reviewer and reader. results and conclusion. purpose. title. purpose. Each electronic file should contain a CIN. source of information. procedures and logic were proper. This information can be made part of the
. retained in the working paper files. along with any relevant diskettes. scope. results and conclusion (if pertinent) as well as the identity of the preparer and reviewer and related dates. The logic used in each application should be documented and retained. Ascertain that the data processing steps. scope. Automated working papers should be sufficiently documented to permit a reviewer to:
Identify the data processing procedures used. The following aspects should be considered:
Diskettes should have external labels which state the CIN and name of the assignment.
organizational charts and functional manuals.Audit Evidence and Working Papers
file. including references to pertinent directives.permanent and current. Microcomputers. included as a separate file or documented in the working paper. refer to Chapter 07. Description of important policies. General data obtained during the audit survey phase should also be included in this file.
Permanent files may be appropriate for recurring audits of organizations. working papers should be segregated into two categories -. Also. programs.
For further guidance on electronic working papers and automated data files. Working papers pertaining only to the current audit comprise the current file. Working papers that may be useful in planning and performing subsequent audits could be retained in a permanent file.
In some audits.
. procedures and controls. Materials contained in permanent files should generally pertain to the entity rather than to a particular audit and be of a continuing nature considered for possible use in future audits.
Formulas used in performing electronic worksheet computations should be printed and retained in the working papers. activities or functions. spreadsheet verification routines used in reviewing electronic working papers should be documented. The permanent file could include the following items:
Description of the auditee. including type of organization and mission. in the OAS Audit Policies and Procedures Manual. physical and financial size and description of pertinent records. location.
Each team member should be familiar with the file structure. date and period of audit. Items for follow-up or review in subsequent audits should be noted. The first five sections in a set of working papers should consist of the following:
. The overall plan for each audit should include a working paper file structure. The arrangement of current files is covered more fully in this handbook under the heading "Organizing Current Working Paper Files.Page 2-18
Names. If this information is not included on organizational charts. Information collected during a review is of little value unless it is logically organized and retrievable. Materials contained in current files should be arranged in a logical sequence in accordance with the planned file structure developed as part of the overall audit plan.
A current file should be established for each audit and should contain the working papers developed during that audit. including nature."
Well-planned and organized working papers are necessary to achieve a professional quality audit. This section provides an overview on how working papers should be organized. it should be referenced to the organizational segments shown on the charts. Audit history which consists of a brief reference to each audit performed.
A permanent file should be updated throughout the audit process. and comments on important results. titles and areas of responsibility of key personnel.
For each audit objective identified in the audit program. Therefore. 2. 4. supporting working papers should be organized by attributes. 5. an OARS becomes the focal point in the working papers for a particular work segment and provides a ready point of reference for preparing the draft report. the number of working paper sections will be dependent on the number of objectives in the audit program (see Appendix). Enables timely development of the first draft of the audit report.
The first working paper in a section should be an OARS. within each objective. The OARS ties together groups of working papers relating to a particular objective.
The subsequent working paper sections are organized by audit objectives.Audit Evidence and Working Papers
1. They provide an orderly and logical flow to the working papers and help in the reviews of particular work segments.
Grouping the working papers by objective provides structure and organization to working paper files. 3. Further. When appropriately indexed and cross-referenced. This type of structured organization:
Promotes an effective audit process. a working paper section should be created.
These working papers should include. the next working papers should contain the background and criteria.
Generally. Additional information that should be included relates to the scope of the review and other pertinent information that is needed to clarify the auditee’s role or relationship to the audited program. Background working papers may include.
Condition. schedules and all other pertinent information. and schedules identifying the nature and purpose of the audited program or entity. documents. including the OARS.
Criteria should include.
An indexing system should be established for each audit as part of the overall audit plan. Cause and Effect -
Following the working papers for background and criteria are those working papers identifying the attributes of the finding (condition. the final working papers should document any discussions with the auditee about the findings and recommendations. and to the report. pertinent sections of laws. interviews.
. the indexing system permits ready reference to any working paper. write-ups of conferences and interviews. cause and effect). It should be simple and capable of expansion as well as tailored to the overall focus of the audit. regulations and guidelines that are used to measure the auditee’s performance. By following the audit plan. but not be limited to. but not be limited to. documents. financial status and/or compliance.
The primary purpose of indexing is to facilitate the cross-referencing of working papers to each other.Page 2-20
Following the OARS. memoranda. but not be limited to. A secondary purpose is to indicate the relationship of the working papers to the particular areas or segments of the audit.
review sheets and certification statements. etc. follow-up on prior audit findings. interpretation and summarization of the results of the audit and facilitate review. transmittals. appendices. independent reviewer’s (INR) notes and the auditor responses. Because of the diversity of OAS audits. Appropriate groupings will not only contribute to ease of reference but will assist the auditors’ analysis. distribution schedules. all-encompassing system of indexing can be prescribed. Establishing an indexing system early in the audit process will make this task easier. no specific. Accordingly. The standardized subject letters are as follows: (A) Reporting: Contains final and draft versions of the report. the indexing system on each OAS audit should be as follows:
should be used for all audits.Audit Evidence and Working Papers
The indexing system should show the logical grouping of interrelated working papers. usually because they apply to more than one section or the audit as a whole. uniform rules and guidelines facilitate a common understanding of an overall system. etc. etc. copies of the reports used for the independent report review and all correspondence related to the report. However. (C) Administrative: Contains administrative documents such as the assignment sheet. This could include an entrance conference write-up. Working papers should be indexed as soon as possible after preparation. (D) General Audit: Contains documents relevant to the audit but not fitting in any of the other sections. time log. (B) Review and Checklists: Contains checklists. as well as facilitate review by providing the reviewer an understanding of what to expect in each set of working papers.
. A computer diskette should be included and contain files such as the issued draft and final reports.
. . number the pages. . ...
In a typical review.. . ..
If an analysis requires more than one page. the following items should be cross-referenced:
Working papers to each other.. ... . .. Travel
Each separate analysis within the major segment should be numbered consecutively.. . ..
* Such additional alphabetical levels should only be used for unanticipated working papers and should not be included in the original design of the working paper indexing plan. . . ... For example:
J-1/2.. . . .. . Supplies L .. ... .. . . .. . .. . . Direct Labor K.. ... For example:
Provides for additional information concerning the material previously recorded on working paper J-1*.. . . . when appropriate Audit program to the working papers The OARS to the working papers
. . ... For example:
. Indicates that this is page 2 of working paper J-1
Additional alphabetical designations can be used for adding working papers resulting from reviewer’s notes or an oversight on the part of the auditor. ... . ......Audit Evidence and Working Papers
WORKING PAPER SERIES J through L J .. . . .
Additional guidance relative to the review of working papers is contained in Chapter 14. The OARS plays a key role in the review process. Reviews by on-site team members should be accomplished frequently during the audit and are expected to be more detailed than those made by higher-level. assures quality products and seasoned judgment to the work performed by less experienced staff. It provides a quick summary of where the auditor is going. Section 20-14-130. Accordingly. how far the auditor has progressed in getting there and what information has been gathered along the way. it typically serves as the primary communication and review document in an audit. reviews at all levels should be performed on an ongoing basis and documented in the working papers.Page 2-26
The most effective way to ensure the quality and expedite the progress of an audit is for audit team members to review and comment on the working papers of the audit from the start of planning to the completion of audit work and reporting.
. Evidence and Working Papers. The depth of the working paper reviews will vary. Participation by all team members in the review of working papers adds fresh insight. all working papers should be included in the overall review process. of the OAS Audit Policies and Procedures Manual. REVIEWER’S NOTES [SWP-15] may be used to document the identity of the reviewer and his or her comments and the identify of the auditor and his or her response to the reviewer’s comments as well as actions taken. However. off-site audit team members. Although the OARS facilitates and expedites the review process.
Guidelines for selecting the individual who will perform the IRR. the RIGAS/AIGAS. The INDEPENDENT REPORT REVIEW PROCESSING CONTROL SHEET [SWP-30] may be used to document various stages of IRR completion. conducting and resolving the IRR process. The audit team is responsible for assuring that the written product has been cross-referenced to supporting working papers. Adequate and easy-to-follow cross-referencing is essential to the performance of the IRR. before the written product can be issued. If any items cannot be resolved between the INR and the audit manager. referred to as the INR.Audit Evidence and Working Papers
The independent report review (IRR) process is a part of the OAS internal quality control system. Independent Report Review. or designee. All questions. are set forth in Chapter 30. The OARS is not a supporting working paper but may be used to assist the team in indexing the report. The chapter also describes the responsibilities of the audit team and INR when preparing for. notes or recommendations made by the INR must be answered by the audit manager or designee. Other specialized forms which may be used include:
. to the satisfaction of the INR. of the OAS Audit Policies and Procedures Manual. is to be consulted.
dry environment. free of magnets or magnetic fields.
. together with the FOLDER COVER [SWP-1] with identifying information. personnel matters. Magnetic tapes and diskettes require special storage provisions. This will minimize the amount of storage space needed and allow the binders to be reused. Audits involving information which may not be releasable under the Freedom of Information Act (FOIA) should be protected by affixing a red "WARNING . Privacy Act information and other sensitive material. plans for future operations (such as planned procurement actions) and information obtained to support fraud investigations or special congressional requests. The working papers. damage or loss at all times. This includes proprietary data. the working papers should be removed from the binder.Page 2-28
Audit team members are responsible for safeguarding working papers in their custody. Special security measures should be used for storing and safeguarding classified information. Files with the foregoing type of data should be appropriately labeled on the front cover to provide a reminder of the need for special security measures. Working papers should also be protected from theft. should be securely fastened with rings or other fasteners. working papers and data should not be left open to the view of others who may not have a right to examine it. Working papers frequently contain information about auditee operations that are of a confidential nature.
After the conclusion of an audit. Particular care should be taken to ensure that magnetic tapes and diskettes are stored in a cool.CAUTION REQUIRED" label to the binder cover pages and the front of the folders. desk drawers or briefcases with secure locks. To protect auditee information that may be confidential. This may require the use of file cabinets. including during work breaks and overnight or weekend absences of the auditor.
The Director. Microcomputers. Documentation on Computer Generated Files. Evidence and Audit Working Papers.Audit Evidence and Working Papers
Additional information pertaining to the storage and retention of working papers. Section 20-07-60. the Director is responsible for providing guidance when questions arise regarding access to OAS working paper files. The senior auditor. in the OIG Administrative Manual. In some reviews. Section 20-14-60-05. see Part 9-40. In this role. in consultation with the audit manager. either during or after completing a review. should decide when such action is prudent and necessary. and Section 20-14-160. Security. can be found in Chapter 07. including magnetic tapes and diskettes. Freedom of Information Act Requests. and Section 20-07-100. of the OAS Audit Policies and Procedures Manual. Retention. will be decided by OAS management on a case-by-case basis.
Working papers are considered to be the property of the OAS. Electronic Working Papers. All other requests for access to working papers should be directed to the RIGAS/AIGAS. (For more information. and Chapter 14.)
. Human and Financial Resources. serves as the FOIA Liaison Officer for the OAS. it may be necessary to make copies of working papers available to auditee or program officials in order for them to respond to findings or to take corrective actions. Access to OAS working papers by other parties.
they should facilitate review by providing the reviewer with a structured understanding of what to expect in each set of working papers. organizing and documenting the audit. The standardized working papers are described below. Instructions for installing and running the automated forms are included in the Appendix. some are required by the OAS Audit Policies and Procedures Manual." Part 3 STANDARD WORKING PAPER FORMS
Working papers that are generally used on OAS audits are presented in this handbook in a standard format. Also.
. All of the forms have been automated into a WordPerfect menu system.
MASTER INDEX TO AUDIT FOLDERS Table of contents or index for the working paper file. While most of the forms are optional. Because the nature of OAS work is so diverse. there will be reviews for which some of the standard working papers or some aspects of the standard working papers cannot be applied. They are intended to assist in planning. Standard working papers are not intended to supersede professional judgment. The required forms are marked with a notation in the margin. Copies of the automated WordPerfect files can be obtained from your local ATS staff or supervisory auditor.
FOLDER COVER Cover page for each working paper folder. These standard working papers pertain to the administrative requirements of an audit as well as audit work.
AUDIT PLANNING REFERENCE LIST Documents and cross-references audit planning. The auditors’ determination that certain standards do not apply should be documented in the working papers. titles.
.Page 3-2
AUDITEE/PROGRAM OFFICIALS Identifies names. Government Auditing Standards place responsibility on the auditor and the audit organization to follow all applicable standards in conducting government audits.
TYPE OF REVIEW AND GAGAS CERTIFICATIONS Certifies compliance with generally accepted Government auditing standards (GAGAS) requirements. addresses and telephone numbers of key auditee and program officials.
FOLLOW-UP ON PRIOR AUDIT FINDINGS AND RECOMMENDATIONS Documents follow-up on audit findings and recommendations in prior reports.Standard Working Paper Forms
INTERNAL CONTROL ASSESSMENT Documents whether the audit objectives require an internal control study and. identifies the working papers containing the study.
REVIEWER’S NOTES Documents reviews of working papers and reports pertaining to the audit. if so.
RECORD OF CONTACT Records meetings. statistical sampling or other assistance with advanced audit techniques. conversations or meetings (including those with other auditors.
.Page 3-4
CONTACT LOG Records brief conferences. audit manager. such as the senior auditor.
NEED FOR ADVANCED AUDIT TECHNIQUES ASSISTANCE Documents the decision whether the audit will require headquarters or regional involvement in the form of computer expertise. RIGAS.
CONTRACT/GRANT BRIEF Summarizes terms and conditions of the contract or grant. headquarters or lead-region staff).
ENTRANCE CONFERENCE RECORD and EXIT CONFERENCE RECORD Records the entrance and exit conferences. conversations and telephone contacts.
WORKING PAPER CHECKLIST Used by the audit team in reviewing the working papers.Standard Working Paper Forms
should generally be completed by a GS-13 or higher-grade auditor.Page 3-6
. explanations and recommendations.
INDEPENDENT REVIEWER’S NOTES Documents the independent report reviewer’s notes.
INDEPENDENT REPORT REVIEW CERTIFICATION Documents the final review of the audit report. Auditor’s responses are also recorded on this form.
it can be called into action by holding down the ALT key and pressing the letter "L." The macro displays a forms menu and guides the user through the available options." The forms menu as shown on the following page should display:
3.) Activate the macro at a WordPerfect blank screen by holding down the ALT key and pressing the letter "L. Choose 6 (Location of Files) Look at item 2 . The user will be able to fill in automated forms.APPENDIX Page 1 of 2
All of the standard working paper forms are available using the WordPerfect macro feature. Make a subdirectory named C:\PAPERS. view forms on-screen. 4.Keyboard/Macro files Write down the name of the subdirectory _____________________ ESC out of menu Copy the files from the WP51 subdirectory on the diskette into the subdirectory named above. 2.
5. After the macro is properly installed. (NOTE: This subdirectory must be on the C:\ drive in order for the macro to work properly. INSTALLATION The macro should be installed as follows: 1. Copy all of the files from the PAPERS subdirectory on the diskette into your C:\PAPERS subdirectory. Start WordPerfect Find the name of the subdirectory containing your macro files: Choose Shift F1 (Setup). or print blank forms for handwritten information. Contact your local ATS staff or supervisory auditor for copies of the macro and installation assistance.
These forms have a minimum number of graphics and should print properly on draft quality printers. First. or ""F7" to exit. These forms are suitable for printout on laser printers and should look the same as the forms illustrated in this manual." Answering "Y" will print the form. then is given the options of either "F" to fill in the form or "P" to print/view the form. along with the message "Press <F7> To Continue. Choosing "P" will bring up an additional prompt of "Print this form? (Y/N). saved or printed as a regular WordPerfect document. "Page Down" to display second page of menu.
. the user is prompted to enter a form number. Additional instructions will display if "Enter" is selected. the document can be edited.APPENDIX Page 2 of 2
USING THE MACRO The macro commands are shown in the upper right-hand corner of the screen. Various prompts. Users may choose "Enter" to select a form." will guide the user through the data input fields. answering "N" will bring the form into WordPerfect as a regular WordPerfect file. When the messages no longer appear. Choosing "F" will display the selected form and the cursor will automatically stop at designated locations for data input.
S.U. DEPARTMENT OF HEALTH AND HUMAN SERVICES OFFICE OF INSPECTOR GENERAL OFFICE OF AUDIT SERVICES
. 3.OBJECTIVE ATTRIBUTES RECAP SHEET
TESTS MADE: Audit Universe: Method Used to Select Sample: Discrepancies Noted: Number Auditee Personnel With Whom Discussed: Name 1. 2.
except as discussed on the following working paper:
.TYPE OF REVIEW AND GAGAS CERTIFICATIONS 
This review has been conducted in conformance with all applicable Government Auditing Standards and OAS Audit Policies and Procedures.
Reporting requirements (targets. of the audit program:
4.SUPERVISORY INVOLVEMENT IN PLANNING
Individual staff member roles. including advanced techniques:
Development and revision. Staffing requirements:
2. responsibilities and assigned audit tasks:
3. report format and any other special requirements):
12. 13. 10. 8.PLANNING REFERENCE LIST
1. 11. 3. 9.
Auditee information Contract/grant brief Audit objectives. including reason for the audit Audit scheduling Audit staffing Review/relying on the work of others Follow-up of prior audit findings Audit survey Risk analysis Internal control assessment Review of legal/regulatory requirements and applicable compliance criteria Sampling plan Type of report Audit program
ADDRESS AND TELEPHONE NUMBER OF OTHER KEY OFFICIALS:
NAME AND TITLE OF OFFICIAL TO WHOM REPORT SHOULD BE DIRECTED (auditee executive. TITLE.
5.AUDITEE/PROGRAM OFFICIALS
NAME. HHS management official or requesting HHS official):
3. TITLE AND TELEPHONE NUMBER OF AUDITEE LIAISON OFFICIAL:
COMMENTS OR DESCRIPTION FACTOR RISK INDICATOR INTERNAL CONTROL STRUCTURE (Low = Adequate) (High = Poor) MANAGEMENT OPERATING STYLE (Low = Group Oversight) (High = Single Person) PERSONNEL TURNOVER. If a particular factor does not apply to this audit. If other conditions or circumstances seem important. Assessing the audit risk factors requires substantial professional judgment. an appropriate level of professional skepticism.RISK ANALYSIS WORK SHEET
This working paper documents the overall level of risk in the audit. add them at "Other" on page 2. The particular matters to be considered and the significance of each should be determined based on the circumstances of the audit. indicate by "N/A. adequate audit manager involvement in planning and performing the audit. Successful audits are a result of a number of factors including integrity of auditee." If the conditions or circumstances in this audit indicate higher or lower risk than normal. INCLUDING SENIOR MANAGEMENT EMPHASIS ON MAXIMIZING FEDERAL REIMBURSEMENT REPUTATION IN AUDITEE COMMUNITY (Low = Nominal) (High = High)
. and allocating sufficient audit resources to high-risk areas. describe them in the column on the right.
THE FOLLOWING MODIFICATIONS ARE DEEMED APPROPRIATE: NO MODIFICATIONS DEEMED NECESSARY ASSIGNING MORE EXPERIENCED PERSONNEL OR INCREASING LEVEL OF SUPERVISION CHANGING NATURE.RISK ANALYSIS WORK SHEET
CONSIDERING THE RISK FACTORS IDENTIFIED ABOVE. TIMING OR EXTENT OF PLANNED AUDIT PROCEDURES EXERCISING A HIGHER DEGREE OF PROFESSIONAL SKEPTICISM OTHER (Explain)
Check the applicable box and identify the working paper (W/P) that provides details and justification for the decision. complete Section I.
Section I. For audits containing the elements of Financial and Performance Audits.
.INTERNAL CONTROL ASSESSMENT
For Financial Audits.
A review of selected aspects of the internal control structure needs to be performed. The existing internal control structure contains so many weaknesses that the only option is to expand substantive testing. complete both sections.
An assessment of applicable internal controls is deemed necessary to satisfy audit objectives. complete Section II. An adequate internal control structure does not exist for reliance thereon because of the small size of the auditee. for Performance Audits. The objectives of this financial related audit did not require an understanding or an assessment of the internal control structure. A review of internal controls is not considered necessary to satisfy audit objectives. It is more efficient to expand substantive audit tests than place reliance on the internal control structure.
timing and extent of testing required. products and services (if doing an economy/efficiency audit). The pertinent laws and regulations are copied/briefed on W/P(s):
Based on the results of the risk analysis and internal control assessment. the risk of noncompliance. for each material requirement. The results of the risk analysis and internal control assessment are filed on W/P(s):
3.COMPLIANCE WITH LEGAL AND REGULATORY REQUIREMENTS
BACKGROUND: The second supplemental planning field work standard for government financial audits and the third field work standard for performance audits both require auditors to assess compliance with applicable laws and regulations. The Government Auditing Standardscontain guidance in Chapters 4 and 6 for determining which laws and regulations apply to an audited entity. The steps and procedures for testing compliance should be designed to provide reasonable assurance of detecting both unintentional and intentional instances of noncompliance which could have a material effect on audit results.
Assess. design steps and procedures to test compliance with the pertinent laws and regulations. or the manner in which the entity carries out its program objectives (if doing a program audit). The review should include both risk analysis and an internal control assessment. AUDIT ACTIONS: 1. In addition. or the entity's resources. it directs the auditor to assess the risk of management's noncompliance with the laws and regulations to determine the nature. The steps and procedures are set forth in the audit program on W/P(s):
. Identify the pertinent laws and regulations which could have a material effect on the entity's financial status (if doing a financial audit).
Has the organization. program. such as Medicare provider auditors?
. such as: (a) State/legislative auditors?
(c) Other outside auditors. Guidance for determining the extent of reliance to place on the work of others. which is to be the subject of this audit. activity or function."
DETERMINATION OF OTHER AUDIT COVERAGE: 1. been audited or reviewed by any other internal or external auditors or program officials.RELYING ON THE WORK OF OTHERS
BACKGROUND: Government Auditing Standardsprovide that auditors may rely on the work of others to avoid duplication of audit efforts. as well as steps to follow in documenting and reporting on the source(s) of reliance are set forth in Chapter 3 of Government Auditing Standardsunder the third general standard entitled "Due Professional
we may not be able to use the work of the other auditors. etc. we will build on the work of the other auditors wherever possible. such as when our objectives are outside the scope of coverage of the other audits. The contents of those working papers may be listed for cross-referencing in the space below. information regarding the qualifications and independence of the other auditors. explain the reason(s).
In order to place reliance on the work of other auditors/ reviewers. The Government Auditing Standards should be consulted to determine the extent of testing and other review procedures to be followed. independent testing of audit results.
Did the audit(s)/review(s) provide coverage of some or all of the specific topics or functions which are directly related to the audit objectives of the current audit? If "yes. other audits noted above." name the entity(s) which performed the audit(s)/review(s) and identify the period covered.) should be reduced to working paper format and filed following this work sheet. The results of that review (working paper briefs. the audit team needs themselves of the quality of the other's work through testing and/or other appropriate methods.
3.RELYING ON THE WORK OF OTHERS
In the case of single audits and.
. where applicable. In some cases. If we are unable to build on the other auditors' work.
To determine whether reportable conditions exist. Prior Report Title: Summarize Prior Findings:
. Due professional care includes follow-up on known findings and recommendations from prior audits related to the current audit objectives to determine whether prompt and appropriate corrective actions were taken by auditee officials.FOLLOW-UP ON PRIOR AUDIT FINDINGS & RECOMMENDATIONS
BACKGROUND: The third general standard for government auditing is that due professional care should be used in conducting audits and preparing reports in accordance with generally accepted government auditing standards. The standard requires the audit report to disclose the status of known but uncorrected significant or material findings and recommendations from prior audits. the auditor should make a determination whether adequate corrective action has been taken on all prior audit findings.
L. efficiency and effectiveness. The office has a statutory responsibility to protect the integrity of HHS programs and operations. B. abuse and mismanagement. 95-452.
. is responsible for developing and maintaining a comprehensive audit program for the Department and its five Operating Divisions. waste.
Opening comments: A. 94-505 and currently operates under the authority of the Inspector General Act of 1987. under the direction of the Deputy Inspector General for Audit Services. The OAS. Office of Audit Services (OAS): The OAS is one of three major offices within the OIG for the Department of Health and Human Services (HHS).L. and to promote economy. waste. Office of Inspector General (OIG): The OIG was created in 1976 under P. as amended. It functions as an independent and objective unit carrying out comprehensive audits.
II. Audits are performed to provide independent evaluations of HHS programs and operations in order to reduce fraud. abuse and mismanagement. inspections and program evaluations to reduce fraud. and to promote economy and efficiency throughout the Department.ENTRANCE CONFERENCE RECORD
Location/time: I. P. investigations.
C. Audit will be done in accordance with generally accepted government auditing standards.
Scope: 1. Audit period: Survey/audit guide to be used (optional):
Other specifics regarding the scope. Purpose:
Audit information: A.
D. 2. such as restrictions or special emphasis:
.ENTRANCE CONFERENCE RECORD
Staffing and facility needs: 1.
Time frames: 1.
F. Workspace requirements for auditors as follows:
2.ENTRANCE CONFERENCE RECORD
. Draft report Formal exit conference. 5. B.ENTRANCE CONFERENCE RECORD
IV. 2. C. Key contacts: 1. if considered necessary Final report
OIG/OAS reporting procedures: A. Questions and answers:
C. B. 4. 3.
Other matters: A.
continuing on page 2 of 3 if necessary):
II.EXIT CONFERENCE RECORD
Discussion of audit findings and recommendations (list individual findings with auditee comments separately.
Discussion of OIG/OAS reporting procedures.
. as applicable. if necessary (refer to discussion of procedures during entrance conference):
Acknowledgment and thanks for auditee's cooperation and assistance.
. and Organization)
Telephone No. Title.RECORD OF CONTACT
PARTICIPANTS: (Name.
.SUMMARY CONTRACT/GRANT BRIEF
5. Effective Date Type
a) Fund Limitations W/P Ref.SUMMARY CONTRACT/GRANT BRIEF
. Date Description Award Amount
Total Basic and Amendments 7. Special Provisions: Contract/ Grant Ref.
Change Orders/Amendments No.
d) Overhead Contract or Grant Document Specifying. Limiting or Incorporating O/H Rates Rate Period
c) Other Limits (travel.
and provide a cross-reference to the working papers which document the assistance. it has been determined that this review does not require headquarters or regional involvement in the form of computer expertise and/or assistance with statistical sampling.NEED FOR ADVANCED AUDIT TECHNIQUES ASSISTANCE
After evaluation of the audit objectives. (Briefly explain basis of decision. it has been determined that this review does require headquarters or regional involvement in the form of computer expertise and/or assistance with statistical sampling. include the proposed headquarters and/or regional role.)
After evaluation of the audit objectives. regression analysis or other advanced audit techniques. regression analysis or other advanced audit techniques. (Briefly explain this determination.
PQC* 1. Review Objective:
3.SAMPLE PLANNING DOCUMENT
APPROVALS Auditor-In-Charge Senior Auditor Audit Manager Statistical Specialist AIGAS* Director.
.SAMPLE PLANNING DOCUMENT
12. or. or. The plan is for a nationwide review involving more than one region.
. or. Estimated savings or cost avoidance related to a recommendation are expected to exceed $25 million.
14. Policy and Quality Control (PQC).
15. The review will result in a report for the IG's signature.
Approval must be obtained from the responsible office (AIGAS) and from the Director. whenever: Monetary recoveries are expected to exceed $5 million.
PQC* 1.
.ESTIMATE PLANNING DOCUMENT
APPROVALS Auditor-In-Charge Senior Auditor Audit Manager AIGAS* DIRECTOR.
3. Review Objectives:
6.ESTIMATE PLANNING DOCUMENT
4. þ Estimated savings or cost avoidance related to a recommendation are expected to exceed $25 million. þ The plan is for a nationwide review involving more than one region.
Approval must be obtained from the responsible office (AIGAS) and from the Director. þ The review will result in a report for the IG's signature.whenever: þ Monetary recoveries are expected to exceed $5 million. or. or. Policy and Quality Control (PQC).
The Specialist? The responsible office? PQC? Yes Yes Yes No No No Yes No
2. Was the regional Specialist involved in sampling plan development? Was the sampling plan approved by: a.
5. (Key the explanations to the appropriate question number.SAMPLING AND ESTIMATION WORKING PAPER CHECKLIST
MARK ANSWER YES OR NO* 1. b.
* An explanation is required for every "NO" answer. Use the space provided below to provide the explanatory comments.
6. c. c. were the modifications approved by: a.
If modifications were made to the sampling plan.)
. b. The Specialist? The responsible office? PQC? Yes Yes Yes No No No
does the report provide: a. A description of target population. the time periods of the field work. An explanation for any qualifications? An identification of organizations and geographic locations at which review work was conducted.SAMPLING AND ESTIMATION REPORTING CHECKLIST
MARK ANSWER YES OR NO* 1. Line)
c. For statistical or nonstatistical sampling. d. and the time periods of the transactions reviewed? Estimation methodology? Point estimates for the variables being reported? Yes No
REPORT REFERENCE (Page. sampling frame and sample unit? (Is there an explanation of the relationship between the target population and what was reviewed?) A description of characteristics measured? Sample size? Population and sample information? (Does it include frequency of occurrence of errors relative to the number of cases or transactions tested and the relationship of the findings to entity's operations?)
. c. Does the report provide: a. b. d.
For nonstatistical sampling.
4. multi-stage or another type of sample design? A description of the sample design and selection? Precision for the variables (both attribute and variable estimates) being reported or the confidence intervals? For monetary adjustments. the lower bound of the 90 percent two-sided confidence interval for the recommended recovery?
REPORT REFERENCE (Page. b.SAMPLING AND ESTIMATION REPORTING CHECKLIST
MARK ANSWER YES OR NO* 3. does the report provide: a. Does the report include sufficient supporting data to make a convincing presentation of the findings?
. A description of the sample design and sample selection? A description of the selection of any additional items. stratified.
c. Whether the sample design was a simple random. For statistical sampling. site or time periods surveyed? Yes No
5. does the report provide: a. Line)
MARK ANSWER YES OR NO* 6.
e.Working Paper Checklist and Sampling and Estimation .)
. if not included in the report or plan? Specialist comments on the estimates and reporting of results? Completed Sampling and Estimation . Use the space below and/or additional pages to provide the explanatory notes. b.
An explanation is required for every "NO" answer. (Key the notes to the checklist item numbers. Approved sampling or estimation plan? Approved modification to plan? For statistical samples. Was the following supplementary documentation copied for submission with the report to the responsible office and PQC: a. c.Reporting Checklist? Yes Yes No No
d. appraisal results from OAS Statistical Software program and copies of data files processed? Explanation of the estimation methodology.
WORKING PAPER FILES Do they contain: 1. on a series of working papers)? Show source. location.
3. (where appropriate)? Contain indexing and cross-referencing to and from other applicable working papers? Answer the audit program step and address the audit objective?
2. program audited and title of working paper? Contain legends of tick marks and other unique symbols? Show date of preparation and the auditor's signature? Show reviewer's signature on individual working papers (or. program audited. Contain the Common Identification Number (CIN)? Contain the name of the auditee.WORKING PAPER CHECKLIST
VERIFIED BY NAME DATE WORKING PAPERS Do they: 1. folder number and total number in the series on the front of each folder?
7. CIN. scope and conclusion. The name of the auditee.
8. location. if appropriate.
neat and uniform arrangement of the working papers? A write-up of the entrance and exit conferences? A write-up of other meetings.
5. if applicable? An AIMS Basic Audit Record Sheet? Reviewer's notes that have been answered and necessary revisions made to the working papers and/or draft report? Copies of draft and final reports: a. etc. 3. An Index to Audit Working Papers? A logical. 7. b.
6. where appropriate (HHS Operating Division staff.
8. 9.)? Copies of pertinent correspondence? Evidence of coordination with State or other independent auditors.
. including transmittal letter?
4. Initial draft(s)? Draft issued to auditee? Final report.WORKING PAPER CHECKLIST
VERIFIED BY NAME DATE 2. auditee officials.
Independent Report Review.JUSTIFICATION FOR USE OF GS-12 OR LOWER GRADE AUDITOR
This working paper is to be used in conjunction with Independent Report Reviews (IRR) performed by auditors below grade GS-13. experienced auditors below grade GS-13 may be used for some reviews. If the auditor is a grade GS-12 or below.
. Chapter 30. justification regarding qualifications must be given." requires that IRRs generally be done by GS-13 auditors. However. The OAS Audit Policies and Procedures Manual.
Document No. (Page.INDEPENDENT REVIEWER'S NOTES
Ref. Line)
Date Submitted to Reviewer: Audit Manager: Senior Auditor: Auditor-In-Charge: Independent Reviewer (INR) and Grade: MARK ANSWER YES OR NO* 1." report should be returned to audit team for appropriate action before proceeding further. NOTE: INR INITIALS/ DATE REVIEWED
All exceptions to the above verification items and other recommendations are to be listed on a separate working paper. (If "No. Reported factual information in the draft report agrees with information recorded in the supporting working papers. Computer generated data and/or statistical projections have been independently verified by the regional office advanced techniques specialist or designee and documented accordingly in the working papers. Evidence of supervisory review is documented in the working papers. 4. The reported findings are adequately supported by the working papers and the conclusions/recommendations flow logically from that support.
. statistic or similar figure in the draft report agrees with data in supporting working papers.) 2. 3. The draft report is adequately cross-referenced on a line-by-line basis to the supporting working papers. percentage. 5. Every total.
TARGET DATES/BUDGET: Were the original target dates and time budget reasonable? If not. these items should be considered in planning future reviews.
USE OF OARS: Identify ways that the OARS could have been used more effectively during the review.POST AUDIT EVALUATION
Based on the work just completed.
what aspects of future reviews should be emphasized or de-emphasized?
ACTION ITEMS: 1. OAS/regional policies and procedures changes. 2. 3.POST AUDIT EVALUATION
COOPERATION OF PERSONNEL: Was auditee cooperation adequate (e.g. Other
. Additional areas for audit. availability of staff. access to records)?
AREAS TO BE EMPHASIZED/DE-EMPHASIZED: Based on this review.
Documents Similar To Audit ProcessSkip carouselStudy TYBCom Accountancy Auditing-IIRisk-based Auditing 2015Principles of AuditingProcess Audit Check ListAudit ChecklistManual on Internal AuditAudit Practice Manual (1)Audit ProcedureAdvanced Auditing and AssuranceAuditingAudit ManualInternal Audit PlanProcess AuditauditingSample - Layered Process AuditSAP Audit GuidelinesAudit planningAudit and AssuranceAuditing and AssuranceCh01 - Auditing, Attestation, And AssuranceAudit and Assurance Question and Answers BankPurchases Audit ProgramPart1_ComputerSystemAuditInterviewingAudit_Checklist(5).pdfAudit of Enviromental Management SystemThe Audit ProcessQuality Disruption Process AuditAudit Risk Management for the Small FirmDocuments About AuditSkip carouselAuditing Your Organization's StrategyACCA Exam Tips June 2010 OpenTuition.comOIOS Audit of Ng & South South News, OIOS Cut Out Ban Photo Op with Ng at UNCA BallITS_auditNYRA Interim Report - TakeoutU.S. Fund for UNICEF Annual Report 2011SEC Inspector General's Report to CongressHB 211-2001 Occupational Health and Safety Management Systems - A Guide to as 4801 for Small BusinessAuditACCA F8 SlidesAnnex 6 - Certification and Accreditation ProceduresCity of Detroit 2015 CAFR FINALBest Buy - Final Report 5-14-121ACCA F8 December 2015 NotesOyster Bay 2014 Audited FinancialsAs NZS 4801-2001 Occupational Health and Safety Management Systems - Specification With Guidance for UseGoogle QuickBase Case StudyTennessee Board of DentistryNevada Piglet Book 2014VCUQ Operating Agreement with Qatar FoundationPEFC ST 2003-2012 - CB Requirements (Chain of Custody)CCSS Draft ProposalAudit of mining sectorAudit of Drake State Community and Technical Collegea02m0012[3]REXAHN PHARMACEUTICALS, INC. 8-K (Events or Changes Between Quarterly Reports) 2009-02-23CREWAs NZS 4804-2001 Occupational Health and Safety Management Systems - General Guidelines on Principles SystemsAcca f8 Notes j15DOJ Letter to Congress on IRS Scandal - No Criminal ChargesMore From SAYEDSkip carouselElement A1 Principles of Health and Safety Management7 Stupid Reasons7 Stupid Reasonsالسلامة والصحة المهنيةNebosh Oil &amp; GasBSA - Construction Equiptment Blindspots 001A Guide to Selecting Appropriate Tools to Improve HSE Culture7 Stupid ReasonsCable Fault Location in Power Cables GuideProfile Final25 May 2011 Workshop Program_Final EnglishRadiation Safety Manualالرافعات03 Scaffolding OSHAOff JobSafetyBookletmobile crane safety manualWorld Cup 2010PostersTrans Oceanقائمة المتدربينقائمة اعضاء هيئة التدريسLogoModern Fire Carمدخل الى السلامة والصحة المهنيةدليل المدرب في تدريب المدربين9 إصابات الرأس والعمود الفقرى7 الحروق‫وزارة النقل‬ ‫هيئة سكك حديد مصر‬السلامة من الإشعاعاتRisk Assessment