3700-Administrative Internal Control Reviews

 

Objective

The objective of all administrative internal control review audits is to determine if the department is conducting its financial and business processes under an adequate system of internal control.

 

Scope

The scope of administrative reviews consists of those key business activities, which take place at the departmental level. The key business activities consist of: payroll and benefits recording and reporting; expenditure control and authorization; revenue and receivables recording and reporting; control of inventories of supplies and equipment; and cash handling, accounting and reporting.

 

Audit Process

The Administrative Internal Control Review process consists of the following audit steps:

 

1.      Introductory Letter. The auditor sends an introductory letter (letter of intent) to the Department Head with a copy of the General Audit Program.

2.      Opening Conference/Preliminary Survey.  The auditor should meet with the person responsible for the department’s operations to discuss the objectives of the audit.

3.      Surprise Cash Count. If the department has petty cash or change funds, the auditor conducts a surprise cash count of the funds, at the completion of the Opening Conference.

4.      Auditor’s Review. The auditor should perform a cursory review of the departmental operations to determine informational inconsistencies, any lack of knowledge, any internal control weaknesses and any weaknesses needing additional coverage in determining the scope of the detailed audit programs or future audit programs.

5.      Applicable mini-audit programs subject to the results of step 4 above:

a.       Management Budgeting and Accounting           

b.      Purchasing Contracting and Leasing     

c.   Expenditure Control                             

d.   Personnel and Payroll                          

e.   Moveable Equip                                              

f.    Inventories                                           

g.   Revenue                                                          

h.   Accounts Receivables                          

i.    Cash Receipts                                     

j.    Departmental Bank Accounts               

k.   Grants and Contracts Administration    

l.    Electronic Data Processing                   

6.      Audit Procedures. The auditor tests internal control by observation, inquiry and/or agreeing to support documentation.

7.      Reporting and Follow-up. The audit report format for Administrative Reviews is standard.

 

 

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