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2019 CAJPA Spring Workshop21st Century Internal Audit: How to leverage internal audit to achieve your business goals

April 25, 2019

Presenters

PUNEET BEHL, CPA, ARMCSAC EIAChief Financial Officer

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MARK STERANKAMoss Adams LLPPartner, National Practice Leader

COLLEEN ROZILLIS, PMPMoss Adams LLPSenior Manager

• Different perspective than financial audit

• Goes beyond the finance dept.

• Govt. Code requirement to evaluate the need

• Best Practices

• Alignment with strategic goals

Why Internal Audit?

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• A more holistic approach to internal audit from both auditee and auditor perspectives.

• Objective and independent are not mutually exclusive of collaborative and constructive.

• Top opportunities for reducing risks, strengthening controls, and enhancing performance.

Learning Objectives

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Overview

I. Components of a Holistic Internal Audit Program

II. Proven Approaches

III. Keys to Success

IV. Questions

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I. Components of a Holistic Internal Audit Program

Tracking & ReportingCOpportunitiesBProgram InputsA

Enterprise Risk, Controls, & Performance AssessmentsEthics HotlinePerformance Metrics

RisksControlsCompliancePerformance

Findings & RecommendationsCorrective ActionsImplementation Validation

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Imp

rove

Per

form

ance

thro

ugh

Inte

rnal

Au

dit

s

A. Program Inputs

Key Sources of Input

ANNUAL AUDIT PROGRAM

ETHICS HOTLINE

PERFORMANCE METRICSENTERPRISE

ASSESSMENTS

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Enterprise Assessments

Enterprise Risk Assessment Enterprise Internal Controls Review

Asset Management and Capital Program Payroll

Operations/Service Delivery Monthly Account Reconciliation and Closing

Risk Management and Internal Controls Budgeting

Governance, Management, and Organization Cash Receipts and Cash Handling

Funding and Economics Revenues and Billings

Human Resources Accounts Receivables and Write-offs

Technology Grants Management and Compliance

Safety and Security Information Technology Access

Accounting, Financial Reporting, and Procurement Accounts Payable

Fraud, Waste, and Abuse Overall Control Environment

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• Tie to strategic plan

• Reflect community and stakeholder commitments

• Focus on outcomes

• Incorporate efficiency and effectiveness measures

Performance Metrics

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• Anonymous and confidential

• Employees and general public

• Third-party system

• Internal auditor administration

Ethics Hotline

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B. Improvement Opportunities

1.Succession

2.Asset management

3.Deferred maintenance

4.Technology

5.Governance and Management

Top Risk Opportunities

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1.Cash handling

2.Accounts receivable

3.Grants management

4.Purchasing

5.Technology

Top Controls and Compliance Opportunities

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1.Community outcomes

2.Service efficiency

3.Policies and procedures

4.Financial transparency

5.Employee engagement

Top Performance Opportunities

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C. Tracking & Reporting

Tracking & Reporting Framework

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Tracking & Reporting Framework

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II. Proven Approaches

Identifying Opportunities – Risks

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Identifying Opportunities – Risks

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Identifying Opportunities – Risks

Risk Factors Description

Risk Level Level of uncertainty

Likelihood Probability of a negative event occurring

Impact Level of significance should a negative event occur

Preparedness Level of preparedness to manage risks and minimize losses

Trajectory Direction of where risk is headed in the future

Condition Causes and impacts of identified risk

Risk Mitigation Actions and projects

Potential Residual Risk (if risks are mitigated) Level of uncertainty

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• Discrete tasks that are easily implemented

• Implementation that will take time to develop and implement

• Require policies and procedures

• Require training

• Address through internal audit work plans

Identifying Opportunities – Controls

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Identifying Opportunities – Performance

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• Outcomes

‒ Public Safety: Serious Crime Rate (UCR Part 1), Juvenile Crime Rate

‒ Fiscal Sustainability: Bond rating, Reserve Balance

‒ Economic Development: Unemployment Rate, Retail/Office Vacancy Rate

‒ Infrastructure: Pavement Condition Rating, Water Quality Rating

‒ Effective Government: Employee Turnover Rate, Workforce Diversity

• Efficiency and Effectiveness

‒ Functional Cost per FTE (support services)

‒ Functional Cost per Capita (direct services)

Identifying Opportunities – Performance

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• Program development

• Training at all levels

• Follow up and follow through

• Confidentiality protection

• Protection from retaliation

Identifying Opportunities –Ethics Hotline

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III. Keys to Success

• Objective

• Collaborative

• Constructive

• Comprehensive

Philosophy and Approach

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IV. Questions

Presenter Contract Information

PUNEET BEHL, CPA, ARMpbehl@csac-eia.org(916) 850-7300

MARK STERANKAmark.steranka@mossadams.com(206) 890-3627

COLLEEN ROZILLIS, PMPcolleen.rozillis@mossadams.com(206) 694-9760

The material appearing in this presentation is for informational purposes only and should not be construed as advice of any kind, including, without limitation,

legal, accounting, or investment advice. This information is not intended to create, and receipt does not constitute, a legal relationship, including, but not

limited to, an accountant-client relationship. Although this information may have been prepared by professionals, it should not be used as a substitute for

professional services. If legal, accounting, investment, or other professional advice is required, the services of a professional should be sought.

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