03o9a91.1b
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COMMISSIONERS' COURT AGENDA REQUEST
MADE BY
Jeannie Hargis
OFFICE: Auditor's Office
MEETING DATE
March 9, ?009
TIME PREFERRED: None
SUBJECT: Consider, Discuss and Take Appropriate Action on the Audit Schedule for
2009 for Kerr County with an Information Packet on the Powers, Duties &
Responsibilities of a County Auditor. This information is being submitted to
Commissioners Court as well as all Department Heads/Elected Officials.
EXECUTIVE SESSION REQUESTED: (PLEASE STATE REASON)
NAME OF PERSON ADDRESSING THE COURT: Jeannie Hargis
ESTIMATED LENGTH OF PRESENTATION: One minute
IF PERSONNEL MATTER -NAME OF EMPLOYEE:
Time for submitting this request for Court to assure that the matter is posted in
accordance with Title 5, Chapter 551 and 552, Government Code, is as follows:
Meeting scheduled for Mondays
THIS REQUEST RECEIVED BY:
THIS RQUEST RECEIVED ON:
5:00 PM previous Tuesday
.M.
All Agenda Requests will be screened by the County Judge's Office to determine if adequate
information has been prepared for the Court's formal consideration and action at time of Court
Meetings. Your cooperation will be appreciated and contribute towards your request being
addressed at the earliest opportunity. See Agenda Request Rules Adopted by Commissioners'
Court.
Ta:
From:
CC:
Date:
Re:
1
Elected Officials and Department Head
Jeannie Hargis, Kerr County Auditor
Judge Prohl and Judge ~Nilliams
March 3, 2009
Audit Schedule of Kerr Gounty Departments
In order to better clarify the role of the County Auditor, I am attaching an outline and narrative
description of the Powers, Duties and Responsibilities of the County Auditor. This material
was provided to me when I attended a conference called "On the Road Training for County
Auditors" in January. This vri!I be placed on the March 9, 2009 Commissioners Court
Agenda for information purposes.
The material outlines what a County Auditor is responsible for, when they should audit, how
often, and the Statue of the Local Government Code requiring these duties be performed. I
hope that you will find this helpful and give you a better understanding of the scope of ourjob.
Last year, my goal was simply to learn about the cash collection system in each office as well
as the internal controls that were in place in each office with regard to tine collection and
safeguarding of the cash. We were able to audit most every department last year and made
recommendations at the completion of each audit.
I have attached an audit calendar for 2009. Our goal for this year is to again audit cash
procedures which you will see is required each year as well as to review procedures ar~d
reports required by each department. Every department is different and complex. It is
impossible for us to thoroughly audit every aspect each year, but the goal is to audit all
procedures cf each department within three years. Once we have audited all aspects of
each department, we will be able to have an audit program to cover all procedures of each
department so should be able to perform one audit for internal control and risk assessment at
least every 18 months.
We will request a meeting with each elected official/department head before we begin each
audit to explain what procedures we will be testing and request in advance a list of items that
we would like to review. We will need to have a work space in each department for a certain
portion of the field work; however, we will work diligently not to interfere with the daily
operations of the department.
I hope that this will help you identify our role and responsibilities. I am always available to
help any of you with any problems that you may have with regard to your budget, the
financials or internal control procedures that you may want to improve on or develop so we
can provide a better more efficient system to our tax payers.
Thank you very much for doing such a great job for Kerr County
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ON THE ROAD TRAINING FOR COUNTY AUDITORS
Powers, Duties and Responsibilities of the
County Auditor
Presented by Bob Raef, CPA
ASSISTANT COUNTY AUDITOR BEXAR COUNTY
						
						
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
Powers, Duties and
the County Auditor
Overview
Responsibilities of
History and Authority of the County Auditor's Office
Prior to the establishment of the office of the county auditor in Texas, a county's
financial duties were split primarily between the county clerk and the county treasurer.
This is still the case in counties that do not have county auditors.
The office of county auditor was created by statute in 1905. Counties of 10,000
population or more are required to have an auditor, but two or more counties with a
population under 25,000 each may jointly employ a county auditor. A county's district
judge(s) appoint the auditor for two-year terms. Appointment by the district judge
rather than the commissioners court helps establish the auditor's independent authority
over the county's finances. The auditor is an independent official whose duties are
regulated by state law. Courts have ruled that the county auditor is not an employee of
the district judge(s) or of the county, even though the district judge(s) set the auditor's
office's budget and the county appropriates money for it.
County auditors must be competent accountants with at least two years of experience
in auditing and accounting, though there is no requirement that they be certified public
accountants. They must also have "unquestionably good moral character and
intelligence."
The auditor is essentially the chief financial officer of the county as well as the internal
auditor; he audits the county's financial transactions and has some financial
accounting and record keeping responsibilities. If the county has a population of more
than 225,000, the county auditor also acts as the budget officer unless the
commissioners court has appointed someone else to be the budget officer, as is the
case in Galveston County.
The auditor has broad responsibility to strictly enforce the law governing county
finances including authority over the books and records of the county, district and state
officers who collect county revenue. The auditor prescribes the form of all financial
reports submitted to the commissioners court and the systems of accounting in
counties with a population of 190,000 or more. In addition, the auditor must review
and approve all vouchers for payment, sign all warrants, and audit all county, district
and precinct officers. In short, the auditor is the expert on all county financial matters.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
The Audit Section Should Not Perform Non-Audit Duties.
In the past more emphasis has been given to the bookkeeping responsibility with
auditing taking a back seat. A careful review of the laws dealing with county auditors
shows that should not be the case. This presentation focuses solely upon the audit
duties of the county auditor.
The auditing responsibility is at least as important as the bookkeeping responsibility.
From a standpoint of risk, or what's at stake, it could be argued that the auditing
responsibility is more important. Failure to comply with audit responsibilities could
result in the auditor's removal from office.
The county auditor's basic responsibilities are to maintain the county's general ledger,
approve vouchers for payment, audit the books and reports, and provide guidance and
rules of accounting for all county offices. These duties do not include responsibility for
bookkeeping or data entry for other county officers.
It is never good practice for auditors to audit their o«~n bookkeeping, because errors
and fraud are less likely to be caught and corrected.
If auditors prepare documents for other county offices, it is more difficult to hold those
offices accountable for their records. There is no incentive for county staff to account
correctly and completely for revenues, expenditures or equipment in their department
if someone else performs the duty for them. The auditor will beheld accountable by
other officers because the auditor produced the documents.
Even within the auditor's office there needs to be a clear separation of duties. The
audit staff should strictly perform audits since they will be reviewing the other non-
audit duties of the auditor's office, such as voucher approval, accounting and financial
reporting. Another reason auditors should stop performing non-audit duties is that they
need to spend more time auditing in order to meet all of their statutory audit
requirements.
Who Has Audit Responsibilities
County auditors obviously have audit responsibilities. But they're not the only ones.
Commissioners courts have some audit responsibilities, and in counties without county
auditors, county treasurers have to do some auditing as well.
Where all three -auditor, treasurer, and commissioners court, are working together and
fulfilling their responsibilities, there's no doubt that the county's financial management
will be strengthened.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
The audit responsibilities given the county auditor are much broader than those given
the county treasurer and commissioners court.
Primary Audit Responsibility is Assigned by Law to the County Auditor.
The overriding responsibility and authority of the county auditor is derived from Local
Government Code, Section 112.006.
(a) the county auditor has general oversight of the books and records of a
county, district, or state officer authorized or required by law to receive or
collect money or other property that is intended for the use of the county
or that belongs to the county.
(b) the county auditor shall see to the strict enforcement of the law
governing county finances.
There is one audit responsibility in the above law - seeing to the strict enforcement of
the law governing county finances.
The responsibility is broad. It includes just about everything related to county
finances.
For example, it would include the following:
• Are purchases being based on approved requisitions?
• Are the bidding/proposal statutes being complied with?
• Is money collected by officials being remitted to the county treasurer in
accordance with the Rapid Deposit Law?
• Is all money held by county officials, deposited in depository bank(s) only?
• Are restricted revenues being expended only for authorized purposes?
• Is the county staying within their budget?
• Are the provisions of the Fair Labor Standards Act being complied with?
• Is machinery and equipment being used only for county purposes?
• Are reports by officials being done as required by law?
• Is the depository bank(s) collateral in a sufficient amount and of an authorized
type?
LGC, SEC. 112.006 does not say who has to be audited or how frequently the audits
have to be done but a continuous audit function is implied. There are other more
specific audit responsibilities and authorities that are discussed later.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
Audit Objectives
Internal audit responsibilities and duties are not optional. They are specifically
required by Texas law and Texas law gives the auditor authority to fulfill those
responsibilities. h1 addition there are perceived responsibilities that derive from the
expectations of the public and other officials. These can be just as important and
sometimes more important than the legal responsibilities. Both will be discussed here.
Statutorily Derived Objectives
Sometimes the law is not clear as to "why" it requires certain duties to be performed:
However, as you read the section on Statutory Audit Responsibilities and Authority try
to read between the lines to see the "intent" of the statutes.
The general objective of internal auditing is to help ensure the integrity of the county's
financial operations.
There are four statutorily derived objectives:
To have reasonable assurance that:
1. All money due is being collected?
2. Money collected is being properly remitted?
3. All money and other property is properly managed?
4. Money and other property is properly expended, recorded and reported?
1. The official has collected all the money or other property due.
This would include:
a. Actually checking the money/property in their possession.
b. Making sure the proper amounts were actually received, not just
accepting what's shown. In other words, are amounts in line with
statutes, court orders, contracts, etc. Does supporting documentation
verify or back it up.
c. Periodically confirming with payors amounts paid.
Did John Doe actually pay $85.00 as the records show?
d. Ensuring that diligent efforts have been made to collect amounts owed.
Do records indicate phone calls/letters to collect overdue fines?
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
2. The money collected was remitted to the appropriate party.
This would include:
a. Making sure the right amounts are sent to:
- County treasurer
- State (Comptroller, Parks & Wildlife)
- Refund claimants
- Other
b. Making sure remittances are timely.
- Statute
- Rapid deposit law
- Contract
c. Making sure refunds or other amounts due individuals/organizations are
paid even though they may not be aware of it.
d. Confirming some dismissed cases.
Was the case actually dismissed with no money received?
3. All money and other property is properly managed.
This would include:
a. Making sure all money and other property is adequately safeguarded.
- Basic Internal Control
- Physical Security
- Insurance
- Bonding
b. Making sure investments are legal.
c. Compliance with depository laws and contracts.
d. Making sure machinery/equipment used only for legal purposes.
e. Compliance with grant and contract provisions.
4. All money and other property is properly expended, recorded and
reported.
This would include:
a. Making sure money received and disbursed out of appropriate fund.
b. Making sure money expended in accordance with statute or contract
(e.g. road and bridge expenditures).
c. Ensuring money expended in accordance with budget.
d. Ensuring budget amendments are made when necessary.
e. Making sure all amounts expended are legally owed, in the right
amount, and to the appropriate party.
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POWERS, DUTIES AND RESPONSIBII,ITIES OF THE COUNTY AUDITOR
f. Ensuring compliance with the Prompt Payment Act.
g. Making sure bookkeeping/accounting system is according to statute or
contract and reflects what actually happened.
h. Ensuring that all reports are accurate and include all relevant facts.
Non-Statutory Based Objectives.
Provide assurance that:
Operations conform to prescribed procedures/policies.
This would include:
a. Commissioners court or county-wide policies/procedures.
b. Procedures prescribed by the count~~ auditor.
c. Bond %ovenants or Grant Requirements
d. Policies/procedures of individual officials.
The policies/procedures could relate to:
- Bookkeeping
Handling money
Operations in general
Operations are being conducted in the most effective and efficient manner.
These are commonly called perforniance reviews and would include:
a. Looking for better uses of time and money.
b. Seeing where money can be saved.
c. Looking for better ways to serve the public.
Common methods for evaluation are benchmarking with accepted standards
and activity based costing (ABC).
3. Public Confidence in the County's Financial Integrity.
Perceived responsibilities can be just as important as legal responsibilities.
When financial problems or scandals arise, the auditor cannot solely stand on
the ground that legal responsibilities were fulfilled. The auditor will need to
restore the public's confidence in the financial integrity of the county. This is
in keeping with the statutory mandates that the auditor maintain general
oversight of the books and records of all officials and strictly enforce the laws
governing county finances.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
Auditing relating to non-statutory based objectives should be done only if auditing
relating to statutory derived objectives is kept up to date. If the auditor believes anon-
statutory objective outweighs a statutorily required audit, he or she should have clearly
determined so through the use of a formal risk assessment.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
Statutory Audit Responsibilities and Authority
Specifically, audit anyone necessary, and as frequently as needed to provide reasonable
assurance that county finances are in compliance with state law.
On,t; oink Duties and Responsibilities
The auditor has broad responsibility for the correctness of the:
a) books, accounts, reports, vouchers and other records of any officer;
b) orders of the commissioners court relating to county finances; and
c) common school district vouchers. (LGC 115.001)
1) Has the auditor accepted oversight of each of these areas?
Identify offices and officers that the auditor considers to be outside of the scope of
oversight and compare with the statutes in this document. All offices require some
degree of oversight by the county auditor.
2) How is this oversight evidenced?
• Are audits planned and performed?
• Are all offices included in the risk assessment, etc? If not, then document
your exceptions.
Monthly and Quarterh~ Duties
I) Audit the books and reports of all county officers
(a) The county auditor shall carefully examine and report on all reports that are
about the collection of money for the county and that are required to be made to the
commissioners court.
(b) At least once each quarter, the county auditor shall check the books and shall
examine in detail the reports of the county tax assessor-collector, the county
treasurer, and all other officers. The auditor shall verb the footings and the
correctness of those books and reports. The auditor shall either stamp the books and
reports approved or shall note any differences, errors, or discrepancies.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
(c) The auditor shall carefully examine the report made under Section 114.026 by
the county treasurer, together with the canceled warrants that have been paid. The
auditor shall ver~ those waf°rants with the register of warrants issued as shown on
the auditor's books. (LGC 11 S. 002)
a) Technically, this responsibility is only for reports to the commissioners court
about "collections." However, it should be expanded to all financial reports.
i) How does the auditor fulfill his or her responsibility for oversight of
financial reports made to the commissioners?
ii) Which reports are "carefully examined" and which are not?
iii) Are these reports included in the risk assessment?
iv) Documentation
(1) Is there documentation to prove the reviews were done?
(2) Was there a report issued? Only if there were findings?
b) Each quarter, the auditor should "audit" the books and reports of all "officers."
i) Which officers are not "audited" quarterly?
ii) If the auditor cannot audit each office quarterly, he or she should include all
financial functions of all offices within the risk assessment and audit the
less risky offices/functions on a less frequent schedule. (no less than
annually).
(1) If certain officers or functions are not audited quarterly, are they
included in the risk assessment and found to be the lowest risk?
iii) Do the documentation (workpapers and other files) and reports meet the
performance standards outlined elsewhere in this program?
c) The Treasurer's report is usually made monthly; however, some counties may
consider the "regular" term of the commissioners court to be quarterly.
i) Review LGC § 81.005 concerning the terms of commissioners courts.
ii) Determine when the court's "regular term" is by examining:
(1) The agenda and orders from the last regular meeting of the county's
prior fiscal year.
(2) Any orders during the year establishing a different time for the
treasurers' report.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
(3) If the treasurer's report is filed less than monthly, there must be
documentation that the court has established a quarterly regular teen.
iii) Has the auditor determined that the report complies with §114.026? (The
report prepared by the Bell Co. Treasurer is a good one to use as an
example.)
iv) Does the auditor examine the cancelled warrants? (This should be just a
sample test of cancelled checks.)
2) Does the auditor perform surprise cash audits of the Treasurer?
(a) At least once each quarter, or more often if the county auditor desires, the
auditor shall, without advance notice, fully examine the condition of, or shall
~C<<.~ Jn ,, ~aJ1~,
iilS17e'i;t aiid %iJiiiii, the= %aSli livid l7y tii% COk17 y ii"eu^.i%il'eJ' Or l" J'; ~' J' JJ?
which the treasurer has placed the cash for safekeeping.
(b) The auditor shall make sure that all balaJ~ces to the credit of the various
funds are actually on hand in cash and that none of the funds are invested in
any manner except as authorized by law. (LGC 115.003)
a) This is strictly a surprise cash audit. It is limited in scope and therefore the
auditor should be able to complete this four times a year. These could be
combined with the quarterly audits mentioned above; only if the treasurer
consents to having a more extensive quarterly audit on a surprise basis.
i) Count cash on hand and in depository
iil ~Ierifv that the amrnint r~rn~ntrvd aara.ec with the hnnkc
1 > ._b_
iii) Verify that the funds are legally invested (See Public Funds Investment Act
in the Govt. Code Chapter 2156 or the investment officer review program)
Examine receipt books for criminal cases
statute: Code of Criminal Procedure (CCP) 103.011
Art. 103.OI1. Audit
An officer shall deliver the receipt book or a copy of any receipt records contained in
a computer database to the county auditor at the end of each month's business or at
the end of each month shall allow the county auditor elect~•onic access to receipt
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
records contained in the computer database. The county auditor shall examine the
receipt book or computer records and determine whether the money collected has
been properly disposed of. If each receipt in a receipt book has been used, the county
auditor shall keep the book. If any receipt in the book has not been used, the auditor
shall return the book to the officer. The county auditor may keep a copy of computer
generated receipt records delivered to the county auditor. Any person may inspect a
receipt book or a computer generated receipt record kept by the county auditor.
objectives and scope of audit: To examine the receipt books of officials collecting
fines and fees in criminal cases for the county to determine whether the money
collected has been properly remitted.
comment: The objective is not further defined. We recommend that the audit
determine (1) if the reports are correct, that is, do they reflect what actually happened;
and (2) if the money was properly handled and remitted.
Also, note that the statutory requirement covers only money collected by the officer,
not money owed to the county, such as fines and fees assessed but not yet paid.
frequency of audit: Monthly.
disposition of findings: Not stated.
supporting authority: An official with a receipt book for criminal cases "shall deliver
his receipt book to the county auditor at the close of each month's business."
Also, CCP 103.012: Any official or official's deputy violating 103.011, or 103.010
dealing with how to keep the receipt book, commits a Class C misdemeanor and may
be removed from office on the petition of the county or district attorney.
comment: CCP 103.011 provides that if the receipt book is used up, the county auditor
retains it. If there are unused receipts in it, the county auditor returns it to the official.
Computerized receipts. Receive a monthly report and reconcile to the receipt copies in
the official's office or directly with the computer system if you have remote access.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
Annual Duties
1) Does the auditor conduct annual surprise audits of "all public funds" of all
county, district and precinct officials? (LGC l 15.0035)
,§ 115.0035. Examination of Funds Collected by County Entity or the District
Attorney
(a) For purposes of this section, "accounts" means all public funds that are subject
to the control of any precinct, county or district official, including the accounts of
law enforcement agencies and the attorney for the state composed of money and
proceeds ofproperty seized and forfeited to those officials.
(b) At least once each county fiscal year, or more often if the county auditor desires,
the auditor shall, without advance notice, fully examine the accounts of all precinct,
county and district officials.
(c) The auditor shall verify the correctness o~the accounts and report the,fndings of
the examination to the commissioners court of the county at its next germ beginning
after the date the audit is completed.
(d) This section does not apply to funds received by the attorney for the state from
the comptroller of public accounts pursuant to the General Appropriations Act, of° to
,federal or state grant-in-aid funds received by precinct, county or district officials.
This surprise audit could also fulfill one of the quarterly audits required by (LGC
11 S. 002) and the surprise cash audit of the treasurer required by (LGC 11 S. 003).
It could also fulfill the annual requirement of X11 S. 004 below if expanded to
include "all funds "and not just public funds.
a) This includes all officials including the:
~ i_ i, i rrr - - ---
1) JllVeIllle anQ aQLilt prO~atlOil oll1GCI~S,
11) ~istTict Attorney,
iii) JPs, and others
b) This includes all "public" funds not just county money. It includes:
i) property seized and forfeited to law enforcement officials and probably,
Code of Criminal Procedure Art. 59.06. Disposition of Forfeited
Property
(~ All law enforcement agencies and attorneys representing the state who
receive proceeds or property under this chapter shall account for the
seizure, forfeiture, receipt, and specific expenditure of all such proceeds
and property in an audit, which is to be performed annually by the
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
commissioners court or govef-ning body of a municipality, as
appropriate....
Usually the commissioners court ask the auditor to perform this task.
Copies of the audit are submitted to the Attorney General and the
Comptroller on special forms.
ii) abandoned funds held by the treasurer and other officials. Abandoned
funds and property are governed by Chapters 72-76 of the Texas Property
Code.
c) It doesn't apply to:
i) Property held for 3rd parties such as:
(1) inmate trust funds held by the sheriff,
(2) registry funds held by county and district clerks, and
(3) restitution held by the JPs, Dist. Attys, or County Attorneys.
ii) State appropriations received by the DA, or
iii) State and federal grant funds. (LGC 115.0035)
d) Does the auditor prepare reports of these surprise audits to the commissioners?
2) Does the auditor conduct annual audits of "all funds" of all county, district and
precinct officials?
This seems superfluous to the requirements of x'115.0035 except that it addresses
all fu~ids held by an officer and not just public funds. Therefore the funds
excluded f•om the audit above would be included here. Once again, this annual
audit would not be needed if the surprise audit above is expanded to include "all
funds" and in counties less than 190, 000 the report is sent to the grand jury or
district court as well as the commissioners court.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
a) Counties with population of 190,000 or More (LGC 115.004)
§ 115.004. Audit in County With Population of 190,000 or More
(b) At the end of the fiscal year or the accounting period fixed by law, the county
auditor shall audit, adjust, and settle the accounts of the district attorney, the
district clerk, and each county or precinct officer.
(c) If the county auditor is unable to obtain proper reports or an adequate
accounting from any of those persons, either during or after the person's term of
office, the auditor may require an accounting and may proceed at the county's
expense as the auditor considers necessary to protect the interest of the county or
of the person entitled to any funds.
b) Counties with a popuiation of 190,Ov0 or iess.
§ 114.041. Statement of Fees, Commissions, and Other Money Received by
Officers
(a) 1n a county with a population of 190,000 or less, a district, county, or
precinct officer shall keep, as part of a record provided for the purpose, a
statement of the fees earned by the officer and of the money received by the officer
as deposits for costs trust fund deposits in the re istry of a court fees of office
and conunissions. The officer must make an entry in the record when the fees or
commissions are earned or the deposits are made and when the money is received.
The county auditor or, if the county does not have a county auditor, the
l:U1111111sJIVIICrJ l:Vllrt J11all aIIriiiaiiy ~xauiii-c the rcwrd~ and a%wuntS of each
officer and report the findings of the examination to the next grand jury or
district court.
3) Special Audits maybe called by the commissioners court, grand jury, or voter
petition. (LGC 115.031-033)
a) Auditor must verify that the audit was properly called.
b) Auditor should determine why the audit was requested to determine whether it
could have been included in regular audit routine
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
Miscellaneous Audit Responsibilities
Most of the following legal cites contain audit requirements. These must be studied
carefully to see if they apply. Most counties will need to perform those duties listed
under headings for the District Attorney, Juvenile and Adult Probation, Jail
Commissary, County Roads, and Registry Funds. The remaining duties fall primarily
under Special Districts, which may or may not apply. Once again, the auditor should
attempt to audit efficiently by combining all requirements into as few audits as
possible and still comply with the law.
Local Government Code ~ 140.003. Purchasing and Financial Accounting for
District Attorneys, Tuvenile Boards, and Probation Departments
(a) In this section, "specialized local entity" means:
(1) a district or crinsinal district attorney;
(2) a juvenile board, juvenile probation off ce, or juvenile department established for
one or more counties; or
(3) an adult probation office or department established for a judicial district.
(b) A specialized local entity shall purchase items in accordance with the same
procedures and subject to the same requirements applicable to a county under
Subchapter C, Chapter 262. For the purposes of this section, a specialized local entity
is treated as if it were a county. A specialized local entity may make a contract with a
county under which the county peg forms purchasing functions for the entity.
(~ Each specialized local entity shall deposit in the county treasury of the county in
which the entity has jurisdiction the funds the entity receives. The county shall hold,
deposit, disburse, invest, and othef-wise care for the funds on behalf of the specialized
local entity as the entity directs. If a specialized local entity has jurisdiction in more
than one county, the district judges having jurisdiction in those counties, by a majority
vote, shall designate from among those counties the county responsible for managing
the entity's funds.
(~ The county auditor, if any, of the county that manages a specialized local entity's
funds has the same authority to audit the funds of the entity that the auditor has
with regard to county funds.
District Attorney and Criminal District Attorney (LGC 140.003)
1. Financial Management
• Does the auditor audit all funds of the attorney? Only state appropriations are
exempt. (LGC §115.0035).
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• Does the attorney follow the same purchasing laws applicable to the county in
Chapter 262 of the LGC?
• Does the attorney deposit all of its funds in the designated county treasury?
• If the attorney has jurisdiction in more than one county, have the district judges
having jurisdiction in those counties, by a majority vote, designated from among
those counties the county responsible for managing the attorney's funds?
• Does the county treasurer "hold, deposit, disburse, invest, and otherwise care for
the funds" on behalf of the attorney as the attorney directs?
2. Budget
• Has the attomey prepared a budget and filed it with the commissioners court?
• Was the budget filed within 30 days of the beginning of the attorney's fiscal
year or within lU days after it was adopted!
3. Financial Statement
• Does the attorney prepare an annual financial statement?
• Does the statement contain information required by the commissioners court of
each county in which the board has jurisdiction?
• Was the statement filed with the commissioners court (s) 30 days after the
beginning of the attorney's fiscal year?
Juvenile and Adult Supervision
1, Financial Management (140.003 T_,GCI
• Does the auditor audit the juvenile and adult supervision departments or boards?
• Do the departments follow the same purchasing laws applicable to the county in
Chapter 262 of the LGC?
• Do the departments deposit all of their funds in the designated county treasury?
• If the departments have jurisdiction in more than one county, have the district
judges having jurisdiction in those counties, by a majority vote, designated from
among those counties the county responsible for managing the entity's funds?
• Does the county treasurer "hold, deposit, disburse, invest, and otherwise care for
the funds" on behalf of the entities as the entities direct?
2. Budget (140.004 LGC)
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• Have the departments adopted a budget at 45 days prior to the start of the
county's fiscal year?
• Did the departments file a copy of the proposed budget and a statement
containing the date of the board's meeting to finalize its budget with the
commissioners court at least 14 days prior to that meeting?
• Verify that the budget does not include an automobile allowance for a member
of the governing body of the board or department if the member holds another
state, county, or municipal office. The budget may include reimbursement of
actual travel expenses, including mileage for automobile travel, incurred while
the member is engaged in the official business of the board or department.
Financial Statement (140.004 LGC)
• Does the department prepare an annual financial statement?
• Does the statement contain information required by the commissioners court of
each county in which the department has jurisdiction?
• Was the statement filed with the commissioners court (s) by the later of 90 days
after the end of the department's fiscal year or the date of the auditor's annual
report to the court.
4. Juvenile Boards. If the county is one of those listed below, read the applicable
statute & devise a simple review for each
Example
Human Resources Code (HRC) § 152.0213. Collection and Disbursement of
Support Payments in Bexar County
"The county auditor shall inspect and examine the records and audit the accounts
quarterly. The auditor shall report the results of the audit to the juvenile board
and include any recommendations the auditor may have."
1. Does the auditor perform quarterly audits?
2. Does the auditor report his/her findings along with recommendations to the
juvenile board in written form?
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
~ 152.0231. Borden County
152.0263. Brazoria County Child Support Office
§ 152.0264. Brazoria Count~~ Child Support Service Fee
~ 152.0291. Briscoe County
§ 152.0373. Collection and Disbursement of Support Payments in Cameron
County
§ 152.0461. Cochl-an County
§ 152.0634. Collection of Support Payments in Dallas County
§ 152.0635. Child Support and Other Fees in Dallas County
§ 152.0773. Collection and Disbursement of Support Payments in El Paso
County
~ 152.0852. Fort Bend County Child Support Office
§ 152.083. Fort Bend County Child Suppuri Service Fee
§ 152.0903. Collection and Disbursement of Support Payments in Galveston
County
§ 152.1041. Hansford County
§ 152.1074. Harris County Child Support Department
§ 152.1161. Hockley County
§ 152.1293. Collection and Disbursement of Support Payments in Jefferson
County
§ 152.1583. Collection and Disbursement of Support Payments in Lubbock
county
§ 152.1673. Matagorda County Child Support Office
~ i c~ i ~~n r,r~+~,,,,,-,a., r~,,,,,,+.> ~t,;ia ~,,,-,,,,,,-f co,..,;,.o moo
~ t /~.. i v i ~. lviu~u~vi uu ~.vuii~y `.uiiu vuYYvi ~ ~,~i v i~~. i ~.~.
§ 152.1843. Collection and Disbursement of Support PaSmlents in Nueces
County
§ 152.1872. Orange County Child Support Office and Support Fee
§ 152.2182. Smith County Child Support Office
§ 152.2183. Smith County Child Support Service Fee
§ 152.2263. Collection and Disbursement of Support Payments in Tarrant
County
§ 152.2332. Collection and Disbursement of Support Payments in Travis County
§ 152.2473. Wharton County Child Support Office
§ 152.2474. Wharton County Child Support Service Fee
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POWERS, DUTTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
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POWERS, DUTIES AND RESPONSLBILITIES OF THE COUNTY AUDITOR
Jail Commissary
1. Does the auditor have access to and does the auditor audit the commissary
records quarterly and annually, even if they are maintained by a vendor?
2. Annual audit
a. Was it conducted as a surprise audit?
b. Was it comprehensive?
c. Did the auditor report the findings to the commissioners court?
d. Was the report filed with:
L The commissioners at the next term of the court after the
report was complete?
2. The Jail Commission within 10 days of completing the audit?
3. Quarterly audits?
a. Wcre there reports prepared?
b. Were the reports filed with the Jail Commission within 10 days of
completion?
AG Opinion No. DM-67 December 11, 1991
SUMMARY
.. The county auditor is authorized to review commissary accounts even if the
accounts are maintained by the operator of the commissar
Av Opiiiivii Nv. D1`.'1-7.Q7. ~~vuiaty iniiiateij
January 10, 1994
SUMMARY
....The sheriff of a county may decide where to keep inmates' money for
safekeeping. The sheriff s discretion is limited, however, by the county auditor,
who may regulate the keeping of inmate ....
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
§ 351.0415. Commissary Operation by Sheriff
(d) At least once each county fiscal year, or more often if the commissioners
court desires, the auditor shall, without advance notice, fully examine the jail
commissary accounts. The auditor shall verify the correctness of the accounts and
report the findings of the examination to the commissioners court of the county at its
next term beginning after the date the audit is completed.
§ 511.016. Audits
(a) Each county auditor shall provide the commission with a copy of the auditor's
quarterly audit of the county jail's commissary operations and a copy of the annual
financial audit of general operations of the county jail. The county auditor shall
provide a copy of an audit not later than the 10th day after completing the audit.
Jail Commission RULE §291.3 Inmate Commissary Plan
Each facility shall have and implement a written plan, approved by the commission,
governing the availability and use of an inmate commissary which allows for the
purchase of hygiene items and sundries. The plan shall:
...4) provide for yearly audits by the county auditor in accordance with the Local
Government Code, §351.0415. The audits shall be submitted to the commission not later
than ten days following completion....
Coun Roads
Transportation Code § 252.312. Competitive Bidding
Transportation Code § 256.009. Report to Comptroller
V.T.C.S. TITLE 116-ROADS, BRIDGES, AND FERRIES
Vernon's Ann. Civ. St. art. 6812b-1. Counties of 160,000 to 185,000; county
engineer; duties
• Inventory and Appraisal of Equipment; Disposal and Purchase
• Work Records; Daily Time Sheet
Vernon's Ann. Civ. St. art. 6812b. Counties of 198,000 to 400,000 population
• Inventory and Appraisal of Equipment; Disposal and Purchase
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
Daily Time Sheet
• Payment of Employees.
Registry Funds
~ 114.041. Statement of Fees, Com»zissions, and Other Money Received by Offr.cers
(a) In a county with a population of 190, 000 or less, a district, coujaty, or precinct
offtcer shall keep, as part of a record provided for the purpose, a statement of the fees
earned by the o~cer a~zd of the money received by the officer as deposits or costs,
trust. and deposits in the registry of a court, fees o~off ce, and commissions. The
officer must make an entry in the record when the fees or commissions are earned o~°
the deposits are made and when the moray is rerni>>ed. Tlae cni~ntl~ oliditnr nr, if the
count~~ does not have a count} auditor, the conitnissioners court shall manually
examine the records and accounts of each officer and report the findings of the
e_xaminati~on to the next grand jur~~ or district court.
~ 112.002. Accounting System in County with CountJ~ Auditor mzd Population of
190,000 or More
(a) In a county with a population of 190, 000 0~° more, the county auditor shall
prescribe the system of accounting for the county.
(b) The county auditor may adopt mzd enforce regulations, not inconsistent with
laly or with a rule adopted under Section 112.003, that the auditor considers
necessary for the speedy and proper collecting, checking, and accounting of the
revenues and other funds and fees that belong to the county or to a person for whonz a
district clerk, district attorney, county officer, or precinct offtcer has made a
collection or for whose use or benefit the officer holds or has received funds.
~ II7.058. Accounting for and Disbursing Registry Funds in Counties with
Population of 190,000 or More
(a) This section applies to a county with a population of 190, 000 or more.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
(b) If the commissioners court of a county provides a depository for the registry funds
of the county clerk or the dish~ict clerk, those officers shall make reports under oath to
the county auditor to properly reflect all registry funds received and disbursed by the
o~cer, including all money remaining on hand at the time of the report. The county
auditor shall prescribe the form and frequency of the report.
(c) Each check issued for the disbursement of the funds must be issued in accordance
with the laws providing for registry fund depositories. Eaeh cheek must be signed
according to procedure established by the county auditor before delivery or
payment.
§ 117.121. Disbursement of Funds
§ 117.122. Interest
§ 117.123. Audit
Health Facilities Development Corporations
§ 221.036. Examination of Books and Records of a Health Facilities Development
Corporation
A representative of the sponsoring entity may examine all books and records of the
development corporation at any time. (A county may be a sponsoring entity and the
county auditor is the most logical choice for the county to conduct an examination.)
County Park Boards (5,000 or more)
~ 320.043. Depositories and Disbursements; Audits
§ 320.047. Financial Statement; Budget
County Building Authorities
§ 293.003. Counties Subject to Chapter
§ 293.025. Comptroller
Historical Cemeteries
H&S Codes § 715.006. Service of Citation (Historical Cemeteries)
§ 715.011. Powers and Duties of Nonprofit Corporation; Trust Fund
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
EMS districts
H&S Code § 775.082. Audit of District Located Wholly in One County
Rural Fire Prevention Districts
H&S Code § 794.082. Audit of District Located Wholly in One County
Drainage Districts
~'~'ater Code § 56.137. Purchases of anal Contracts for More Than $50 But Less
Than $500 by Districts in Certain Counties
Navigation Districts
Water Code
§ 60.204. Management and Control of Promotion and Development Fund
bi.174. ~Iiipivyu%~; CGui'it~~ r~IiCiiiOl', i~IIlICS c`Iilu COIiIpCnSatIOn
~ 63.224. Accounts and Records; Audit
Vernon's Ann. Civ. St.
Art. 1676a. Auditors in certain counties: duties, powers, reports
Art. 1676b. Auditors in counties of 83,000 to 83,350 having navigation districts
and other districts
Matagorda County Seawall Commission
~ 421.0221. Oath; Bond; Compensation
~ 421.024. Tax Assessment and Collection; Audit
Comal County Park and Recreation District
324.097 Comal County only
County School Districts
Vernon's Ann. Civ. St. art. 2700d-~4. Automobiles for use of county
superintendents in counties of 500,000 or more
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
SUMMARY
Commissioners courts, county auditors, and in counties without county auditors,
county treasurers all have internal audit responsibilities. The responsibilities given the
county auditor are much broader and detailed.
County auditors audit responsibilities can be summarized as follows:
• See to the strict enforcement of the law governing county finances.
• Examine and approve all claims against the county.
• Ensure common school district vouchers are correct.
• Audit commissioners courts orders relating to county finances.
• Audit books, accounts, reports, vouchers, and records of all offices.
• Audit all reports about the collection of money made to the commissioners court.
• Audit the books and reports of each office quarterly.
• Audit treasurers monthly report to the commissioners court and cancelled warrants
(checks).
• Quarterly surprise audit of the treasurers balances, funds, and investments.
• If county population 190, 000 or more, audit annually accounts of district, county,
and precinct officers.
• Audit receipt books in criminal cases monthly.
• Audit specialized local entities annually.
• Audit on a "surprise" basis all officials annually.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
STATUTORY AUTHORITY AND HOW TO USE IT
INTRODUCTION
The law confers upon county auditors broad statutory authority. The authority
conferred is certainly broad enough for a county auditor to adequately do his/her job.
However, just having the "authority" is not the same as applying it, or using it. And if
it's not used when it needs to be, an auditor might as well not have it.
By the same token, improper use, or abuse of statutory authority by a county auditor
can have disastrous long-term results.
As a result, "statutory authority" and "how to use it" will be looked at separately.
STATUTORY AUTHORITY
It is often difficult to determine where "authority" stops and "responsibility" starts. To
get a good handle on what we'll be covering, and what we mean by "statutory
authority" the following definition will be used:
Statutory authority: legal rights that make it possible or enhance fulfilling
statutory responsibilities.
For example, to do a proper audit of an official's office (statutory responsibility) would
not be possible without access to documents and records (statutory authority).
Generally, there are four types of statutory authority conferred upon county auditors:
1. Oversight authority,
2. Access authority,
3. Prescriptive authority, and
4. Verification authority.
These types of authority overlap with each other in the statutes.
1. Oversight authority.
This was mentioned in the overview section. Local Government Code, section
112.006 gives the auditor "general oversight" of county, district and even state
officers who receive money or property intended for use by the county. In the
previous section we saw other statutes that give the auditor authority and
oversight over non-county funds.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
"Oversi;;ht" generally means: watchful and responsible care for.
Watchful and responsible care for implies not only access to the books and
records, but also the authority to help ensure that those books and records are
properly maintained.
2. Access authority.
Local Government Code, section 115.001 gives the county auditor "continual
access" to "the books, accounts, reports, vouchers, and other records of any
officer;" and "the orders of the commissioners court relating to county
finances...."
"Access" generally means: the liberty to enter, look at, or review.
In other words, as county auditor you have a right to enter an office, look at,
and review those items for which you have the responsibility of auditing.
This includes the "specialized local entities" in LGC 140.003 and other special
districts over which you may have audit authority.
LOCAL GOVERNMENT CODE. SECTION 140.003
(g) the county auditor, if any, of the county that manages a specialized local
entity's funds has the same authority to audit the funds of the entity that the
auditor has with regard to county funds.
This section obviously gives you the access authority to the offices concerned
here.
3. Prescriptive authority.
This type of authority allows, and in some cases requires, county auditors to
prescribe:
• Accounting rules and regulations,
• Accounting/bookkeeping systems and
• Frequency and format/content of reports made to them.
"Prescribe" generally means: to require or dictate.
LOCAL GOVERNMENT CODE, SECTION 112.001
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
In a county with a population of less than 190,000, the county auditor may
adopt and enforce regulations, not inconsistent with law or with a rule adopted
under section 112.003, that the auditor considers necessary for the speedy and
proper collecting, checking, and accounting of the revenues anal other funds
and fees drat belong to the county.
LOCAL GOVERNMENT CODE, SECTION 112.002
(a) In a county with a population of 190,000 or more, the county
auditor shall prescribe the system of accounting for the county.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
LOCAL GOVERNMENT CODE, SECTION 114.002
The county auditor shall determine:
(1) the time and manner for making reports to the auditor, and
(2) the manner for making an annual report of:
(a) office fees collected and disbursed; and
(b) the amount of office fees refunded to the county in excess of
those that the officer is permitted by law to keep.
4. Verification authority.
This type of authority relates to the claims approval process and allows
auditors to obtain sworn statements or testimony relating to the validity of
claims, bills, or accounts.
LOCAL GOVERNMENT CODE, SECTION 113.064
(a) In a county that has the office of county auditor, each claim, bill, and
account against the county must be filed in sufficient time for the auditor to
examine and approve it before the meeting of the commissioners court. A
claim, bill, or account may not be allowed or paid until it has been examined
and approved by the auditor.
(b) The auditor shall stamp each approved claim, bill, or account. If the
auditor considers it necessary, the auditor may require that a claim, bill, or
account be verified by an affidavit indicating its correctness.
(c) The auditor may administer oaths for the purposes of this section.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
HOW TO USE IT
Three types of authority -access, oversight, and prescriptive, relate more to auditing in
general, and for the most part must be used in conjunction with each other to be
effective.
Another way of looking at it is:
• Access gets you in,
• Prescriptive allows you to say how, and
• Oversight helps you ensure it's done right.
Authority is a lot like knowledge - in and of itself, it has little or no value. To be
worth something it has to be used.
For the most part, you and you alone will determine how much your authority is worth.
In most cases you have a choice:
1. You can use your authority simply because the law confers it to you, OR
2. You can use it as a result of the respect you acquire from others and the
confidence in you others develop.
Undoubtedly, there will be instances where using authority based on respect and
confidence won't be possible, and you'll have to rely on authority based solely on the
fact that the law confers it. But those instances should be rare and should be used only
when:
• There is an immediate risk to the county by not acting, or
• Illegal activities are involved.
Following the steps below should help you gain the respect and confidence from
others that will help you use your authority in the most effective way:
1. Thoroughl l~your own duties and responsibilities.
Don't let anyone know more about your job than you do.
You have to have your own house in order before you can effectively help
someone else.
2. Get your foot in the other offices.
• Study up on the office.
• Set up a meeting with the official/department head.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
• Explain you can't do your job well without their help.
• Admit they know more about their office/department than you do.
• Explain your responsibilities giving copies of statutes, etc.
• Explain what you'll be doing in relation to their office and why.
3. Learn about their office.
• Be willing to learn.
• Take the time to learn.
• Show an interest in what they do.
• Visit periodically, not just when you're auditing.
• Obtain and review copies of procedures, manuals, laws, etc.
• Attend some meetings of their association if possible.
4. Keep the bis? picture in mind.
• Your purposes/goals are the same as theirs - to serve the public effectively
and efficiently.
• Think about how that purpose can best be achieved.
- Don't nitpick.
- Have an attitude of working together.
5. Pat them on the back - dive them credit.
• Find positives about their office and operations.
• Tell them the positives -give compliments.
• When asuccess/improvement is achieved, let them take the credit.
6. Be helpful.
• Give of your time.
• Don't just bring to light a problem or deficiency.
• Offer a solution.
• Where possible, help them implement a solution.
• Give follow-up assistance, not just one-time instructions.
7. Take one step at a time.
• Don't expect/require too many changes/improvements at a time.
• Remember Rome wasn't built in a day.
• Others will be more willing to change in small bites.
• Doing too much at once will confuse and decrease cooperation.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
• Small successes lead to overall victory.
8. B e practi cal.
• Ask relevant questions.
• Find out the real reasons why.
• Offer practical, workable solutions.
• Don't assume or imply that your time is more valuable than theirs.
• Don't prescribe procedures solely because it will save you audit time (it
could double theirs).
• Don't require standardization for the sake of standardization -each office is
unique.
9. Show them how to audit their own office.
• Give them audit programs.
• Show them how to perform the steps.
• Show them how to document findings.
• It will help them be "audit prepared".
• It will help them be better managers.
• It will improve your audit results.
10. Maintain your presence in the office.
• Keep your visits up when everything is going well.
• Periodically review all types of records, documents, etc., even when you may
not really need to.
• This "presence" will make it easier to audit/inspect some things when there
really is a need.
There may be times when an official tries to prevent you from exercising your
authority. This should obviously be the exception and not the rule.
If such a situation does occur, use your professional judgment. Consider
advising/consulting with one or more of the following:
• County attorney
• Commissioners court
• District judge(s)
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
Risk Assessment
Overview
The auditor must balance various legal requirements with less-defined responsibilities
that may be even more important.
For example, state law requires the auditor to audit each office quarterly and annually
and to perform surprise audits. However, many times other officers call upon the
auditor to perform special fmancial analyses. Sometimes these analyses are more
important in dollar terms than the audits preempted or put on hold. For example, the
review of a major computer system purchase or a construction contract could save
more money than would be collected by an entire office.
The auditor must use professional judgment to prioritize duties. The auditor is
independent of other officials and should prepare the audit plan for the year without
influence from any other official; whether it is the county judge, commissioners or
district judges. Although the district judges appoint the auditor for atwo-year term, the
judges may not direct the audit schedule.
The challenge for the auditor is to identify all of the responsibilities and risks, both
legal and perceived, and to allocate the resources of the department to properly match
those responsibilities and risks. This should be accomplished through a risk
assessment policy. Risk assessment is a structured process to quantify and rank
potential areas of risk. Since most audit shops do not have enough resources to audit
all areas of potential risk, the auditor should allocate audit resources to those areas that
pose the greatest audit risk.
Audit Risk
Audit risk is the probability that an undesirable event will be undetected by the
auditor. Undesirable events maybe defined differently depending on the type of audit
being conducted. Though it can never be completely eliminated, audit risk should be
quantified and minimized. The cost of implementing procedures to reduce risk must be
measured against the incremental value attained. Every organization and individual
must determine what level of risk is acceptable.
Risk assessment is a process by which the county auditor can identify, quantify and
rank risk factors. The purpose of this process is to allocate scarce audit resources first
to those areas that present the greatest risk.
Quantifying risk is difficult except when using mathematical tools such as statistical
sampling. However, there are tools auditors can use when evaluating risk factors to
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
determine the best allocation of scarce audit resources. By ranking risk factors for each
potential audit engagement, the auditor may produce a ranking of engagements with
the highest to the lowest level of risk.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
Risk Factors
Some common risk factors to consider are:
• Amount of money processed or held;
• Type of receipts (cash, checks, wire transfers, etc.);
• Type of property the officeholder is responsible for (for example road or computer
equipment);
• Degree of public sensitivity for areas such as child support and trust funds of
minors;
• Degree of interest by commissioners;
• Degree of regulation by law, court orders or other requirements such as grant
restrictions or bond covenants; and
• Degree of reliance on internal controls, including separation of incompatible
duties, management oversight, and frequency and quality of auditing.
Benefits of a Formal Risk Assessment
Most audit shops will not be able to audit all the areas that could or even need to be
audited in the course of a year. This makes a formal risk assessment essential. This
assessment helps the audit manager:
1. ascertain the riskiest areas,
2. use audit resources more effectively and efficiently,
3. document the proposed level of audit coverage during budget negotiations with
the district judges and commissioners court, Commissioners may fund more
audit resources, if they consider audit coverage insufficient.
4. deflect or postpone the assignment of lower risk special projects,
5. provide a record that he or she has exercised professional diligence in
assigning resources and
6. communicate to others why certain audits rank ahead of others.
When an audit manager objectively evaluates all risk criteria, the results may be
different from what was expected.
How to Prepare a Formal Risk Assessment
The auditor should prepare a formal risk assessment plan as part of the budget process
each year. The auditor should
1. determine the risk factors to be evaluated,
2. create risk assessment forms,
3. perform a preliminary desk analysis of risk factors,
4. complete the forms and rank each audit area,
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
5. test internal controls using sampling methods,
6. adjust the risk assessment documents based on test results,
7. prepare an audit schedule,
8. submit the schedule to the commissioners court as part of the budget request,
~. complete the final audit schedule based on the approved budget and
10. reevaluate throughout the year as new events unfold.
The auditor should:
create audit programs for testing internal controls,
design statistical sampling plans to test compliance with those controls and
include all potential assigmnents, including
a. audits of all county offices and special districts,
b. other non-audit analyses required by statute,
c. special projects and request by other officials, and
d. other areas required by the professional judgment of the auditor.
Deter»1i~iin~ Risk Factors
In determining the risk factors or criteria to be assessed, the auditor must answer the
following questions:
• Are the criteria relevant and valid?,
• Do criteria measure the right things?;
• Is the measured criterion really a risk? The auditor should not waste time
evaluating non-relevant criteria;
• Has the auditor included every relevant criterion?; and
• Does the auditor take into account mitigating factors such as the frequency and
extent to which the auditor can rely on the work of other auditors (external
independent CPAs and state and federal auditors)! Another mitigating factor is
the frequency and extent to which the officeholder has submitted to outside
performance or peer reviews.
Documentation
Documentation must be prepared. The best form is a table or matrix where every
audit area is listed down the page and criteria are listed as column headings across
the top (these could be reversed). The reviewer should assign a risk ranking to
each criterion within each area such as 1-5 or 1-10. Then the results could be
tabulated for each audit area. Those with the highest score should be assigned
priority in the audit schedule for the upcoming year. See the sample forms
provided in this workbook for an example.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
In addition to the matrix the auditor must prepare a narrative explanation of the
process used, his or her conclusions and the impact of this information on audit
plans. This narrative should be written in easily understood language. Both the
narrative and the matrix should be presented to the commissioners court and the
district judges at the auditor's budget hearings prior to the start of each year.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
Audit Schedules, Time Budgets, Timekeeping and Audit
Control
Overview
The ideal situation is one where the auditor has enough resources to devote ample time
to each specific responsibility. Many county auditors fall within this category without
realizing it. Proper planning coupled with the use of "sampling" techniques can help
auditors fulfill their responsibilities.
In those situations where adequate resources truly don't exist, the auditor should make
it known to the district judge(s) and commissioners court in an effort to obtain those
resources. Failure to fulfill statutory responsibilities could be the basis for an auditor's
removal from office.
Therefore, audit schedules must be completed only after a thoughtful risk assessment
has been completed. Audit schedules are the blueprint to implement the audit plan. For
instance, if the county auditor has determined that a certain percentage of offices or
budgeted dollars must be audited each year the audit schedule must reflect that plan.
The audit manager can use this schedule to explain to the. auditor the effect of adding
special projects. Thus audit schedules are a tool to hold accountable those who have
the authority to create or amend workloads as well as a tool for ensuring the
accountability of the audit team.
To be useful, audit schedules should be compared to the actual audit performance. To
do so requires the auditor to have a timekeeping system and to periodically report on
the status of audits.
An internal auditor should plan his/her audit year in advance. This will help ensure
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L114 L.
• Statutory and non-statutory audit objectives are met.
• The audit work and staff is appropriately allocated between offices that must be
audited.
• No procedures are overlooked.
• Audits are completed in an effective and efficient manner.
Audit Planning and Control is a Four-Step Process
1. Developing an audit schedule and calendar.
2. Allocating resources and establishing time budgets.
3. Timekeeping.
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4. Controlling Time Budgets and Reporting.
Developing a Basic Audit Schedule and Calendar
The basic audit calendar is simply a general guide, showing by month, the projected
start and completion dates for the highest risk audits and projects.
The next step is the development of the detailed audit schedule. It's a plan of:
- What needs to be done,
- When it's going to be done, and
- Who's going to do it.
The "when" and "who" cannot be answered until the auditor determines a time budget
and allocates resources. Once those are complete, the information should be added to
the detailed audit schedule.
Audit schedules should include all areas that were evaluated as part of the risk
assessment. They should include all county offices; cross-departmental areas (e.g.
purchasing); and other areas of potential financial management risk, such as fixed
assets, computer security, consumable supplies, grants and contracts whether they will
be audited in the current period or not.
Audit schedules should be detailed, showing the offices and areas to be audited, date
the last audit was completed, when the next audit is to be performed, who is to
perform the audit and the date the audit report is to be released.
It's possible to plan out an entire year at a time, but planning in three month blocks is
more effective and efficient.
A three month period is more manageable than a year, and changing conditions and
circumstances won't result in you having to update parts of a plan you never get to.
Also, most of your audit responsibilities fall within three month cycles.
No magic format or formula exists for the plan. Use what works best for you.
Allocating Resources and Establishing Time Budgets
The county auditor, using professional judgment has to determine how to allocate
resources to cover each specific audit and special project on the schedule.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
When hiring new employees anywhere in the auditor's office, the auditor should hire
personnel who can perform both audit work and other work when the schedule
requires it. Also, the auditor should consider the use of temporary or seasonal staff to
fill in for non-audit employees when they are needed for audits. Another possibility is
trading or sharing non-audit employees with other officials during peak audit needs.
It is the auditor's job to determine how resources will be allocated among various
duties.
Establish Realistic Time Budgets for each Activity
Time budgets for each audit are the building blocks of audit schedules. A realistic time
budget should factor in time lost due to illness, vacation, holidays, family leave,
training and administrative time. The manager should compute this as a percentage of
direct audit time and include it in each time budget. Some items such as training,
holidays and vacations may be budgeted directly if they can be pinpointed to particular
days. A time budget is useless if it is not realistic, because it won't be enforced. Only a
realistic time budget can and should be used to evaluate those subject to it.
Combine audits to achieve com~~liance 1a~ith siatuto~.v reguirerne~zts.
Compliance «Tith statutory audit requirements is mandatory. Using the same audit
procedures to meet the monthly, quarterly and annual requirements is a must.
In order to better understand and plan county auditing, it helps to think of the statutory
audit requirements as a series of building blocks:
• The required monthly examinations of reports and receipt books are the basic
building blocks in the audit process;
• The results of the monthly examinations, along with additional procedures that
hrnarlPn the ~~.nnP hP.cnme the mnre extended rnlarterly examinations of the
.,_......._-- ~--- -----r-~ -------- ---- ------ ---------- r -
books and reports of each office;
• The quarterly examinations in turn are the basis for comprehensive annual
audits of each office; and
• The finishing touches are other audit procedures that must be done at some
time during the year, including payroll, property, the purchasing system,
commissioners court orders regarding county finances and any other matters
relating to county finance that the county auditor thinks need investigating.
Timekeeping
Timekeeping is the basis for audit time budgets. Time budgets are not reliable without
the ability to classify, record and approve time spent by each auditor. Timekeeping
systems may be manual or automated. A general rule is to require the least amount of
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
detail needed to report and control time spent. Some managers prefer to account for
time in increments of 15 minutes while hours and possibly days will suffice for others.
The level of detail for classifying time spent on audits and special projects should also
be kept to a minimum. For example, if the audit manager budgets time only by project
or audit, he would not need to know how much time was spent on fieldwork versus
report writing. However, if he wanted to find ways to increase the efficiency of report
writing, he would need to provide a code for that in the timekeeping system.
Regardless, the time increments and classifications must mirror the budgets.
Implement a timekeeping system that integrates with the audit schedule.
The auditor should create or purchase an automated timekeeping system that will
account for every hour of an auditor's work. Time. entered to this system should be the
same that is used for payroll. The categories of time should tie to the audit schedule.
Ideally, the timekeeping system and the audit schedule should be integrated so that
time will automatically post to the audit schedule for each employee.
The audit manager should enter audit time budgets for each audit and special project.
Then he can easily run reports on the status of each project or view them on-line.
If the auditor uses a system of spreadsheets, he should streamline the sheets so that
each auditor enters his or her own time each pay period. That way, the burden of data
entry won't fall on the first assistant.
Timekeeping should not cost more than its benefits. For example, the time needed to
maintain timekeeping systems or the time and effort needed to extract information
should not exceed the value of the resulting information.
In order for timekeeping to be useful it must also be reliable. Project timekeeping
should be tied to payroll timekeeping. All hours (usually 40 per week) must be
accounted for in the project timekeeping system and reconciled to the payroll
timekeeping system if it is not fully integrated.
Controlling Time Budgets and Reportin,~
The audit schedule and related reports should be automated and fully integrated to
account for time spent on each audit or special project.
Knowing where and why actual performance differs from planned performance makes
it easier to develop new plans. Comparisons of plans and actual performance may also
be used to evaluate the performance of the audit division and the individual staff
auditors.
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if you use Eacel spreadsheets to track and control audits and special projects, design
them so that entries to one spreadsheet automatically post to others. Otherwise, they
will require too much time and create opportunities for error and probably won't even
be kept up to date.
Every audit division should account for both the total time spent on an audit as a
division as well as the time spent per individual.
Periodically compare the audit schedule to actual peg formance.
The audit schedule time budgets should be compared at least monthly to actual
performance for each special project and audit. The comparison should include the
projects that were actually performed, the staff that performed the audits, the length of
time spent and the date the report was released. Reasons for non-compliance with the
schedule should be identified and adjustments made to the schedule, audit procedures..
auditor training and other factors as appropriate.
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POWERS, DUTIES AND RESPONSIBILITIES OF THE COUNTY AUDITOR
Audit Procedures and Documentation.
One of the most important tools for any office or department to have in order to
operate efficiently and effectively is a procedures manual. A procedures manual should
include both the administrative processes within an office and the duties actually
performed by the employees. This is especially important for new employees so they
can quickly pick up and follow the proper internal administrative processes, as well as
learn how to perform their duties the way their supervisors prefer.
In an audit office, the most important procedures address proper development of audit
programs, workpapers and audit reports. There should be a central library of audit
programs, covering each office, such as the sheriff and county clerk and each cross-
departmental audit area, such as purchasing, payroll and fixed assets. Audit programs
can be developed internally but they should all follow a standard format. This standard
format provides a template for the preparer when revising old programs or developing
new ones. The procedures manual should explain how and when to update programs
for events such as changes in state law at the end of each legislative session.
Procedures should explain how workpapers are organized, indexed and filed. They
should give the auditor guidance on when to use a workpaper. A central library for
filing workpaper forms and reports forms should be maintained for use by all auditors.
Report formats should be consistent and contain standard language for each type of
audit, review or project where appropriate. This standardization promotes efficiency in
documenting audit procedures and writing the results. It also serves as a checklist to
the auditor to ensure completion of each step. Sometimes an audit checklist is helpful
in addition to the audit programs.
As in other disciplines, automation can greatly increase efficiency and reduce errors in
the audit process. The ideal audit software would provide a means to write programs
and an ability to index workpapers with each step in the program. If needed, the results
of one workpaper could be transferred to another and cross-referenced electronically.
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