Follow-up Process and Repeat Audit Findings

Transcription

1 Follow-up Process and Repeat Audit Findings Presentation to Maryland General Assembly Joint Audit Committee Laura E. Johnson November 14, 2006

2 History of Repeat Audit Findings OLA issues about 80 audit reports each year, containing over 300 recommendations. Virtually all recommendations are accepted by agencies. As of June 2002, 43% of findings were repeated in the first subsequent audit report. As of June 2006, 40% of findings were repeated after the first subsequent audit, indicating slight improvement since the process was implemented. (See Exhibit) As of June 2006, 18% of findings were repeated after the second subsequent audit. Follow-up Process and Repeat Audit Findings Page 2

3 Goal of Follow-up Process OLA implemented this follow-up process in calendar year By increasing monitoring of agency implementation efforts, our goal was to raise agency awareness and commitment to resolving audit findings. Agency management must set the tone by expecting audit findings to be corrected and to remain corrected. Follow-up Process and Repeat Audit Findings Page 3

4 Follow-up Process Description Each quarter, status reports were requested from selected agencies that had many repeat findings in their most recent audit reports. Based on each agency s representation of the implementation status of the recommendations, the overall level of implementation was assessed as full, substantial, or in process. Subsequent status reports were requested from agencies that had made minimal progress toward implementing the audit recommendations. Follow-up Process and Repeat Audit Findings Page 4

5 Follow-up Results Over the last five years, status reports were received from 67 agencies. 40 agencies reported achieving full or substantial progress. The remaining 27 agencies reported that implementation of the audit recommendations was still in process. Follow-up Process and Repeat Audit Findings Page 5

6 Evaluation of Follow-up Results Subsequent audits have been performed for 43 agencies. The audits of these 43 agencies indicated that 44% of the recommendations were repeated. This result indicates improvement from the preceding audits for these agencies in which 56% of findings were repeated. The result for these 43 agencies is slightly below the overall state agency results, as of June 2006, in which 40% of findings were repeated after the first subsequent audit. Follow-up Process and Repeat Audit Findings Page 6

7 Impact of New Law Chapter 512, Laws of Maryland 2006, addressed the issue of repeat audit findings within the judicial and executive branches. Agencies with five or more repeat audit findings are now required, by law, to provide status reports to OLA on corrective actions taken on all audit findings within nine months of the related audit reports. Updated status reports must be provided quarterly until OLA determines that satisfactory progress has been made on all findings. The law is effective October 1, Follow-up Process and Repeat Audit Findings Page 7

8 Conclusion OLA began implementing the new repeat finding law on October 1, The follow-up process implemented in 2002 has been discontinued and has been replaced with a process that complies with the new law. We will continue to monitor and evaluate the impact this new process has on future audit results. Follow-up Process and Repeat Audit Findings Page 8

9 Exhibit Summary Analysis of Report Items and Repeat Findings Fiscal/Compliance Audits FY Audit Cycle Ended June 30 th Number of Audits Number of Current Audit Report Items % of Prior Report Items Repeated % % % % % % % % % ,027 45% ,026 40% Page 1 of 3

10 Analysis of Fiscal/Compliance Audits Audit Report Items by General Area of Government As of June 30, 2006 General Area of Government Number of Audits Current Report Items Total Items Prior Report Repeats Repeat % Judicial (includes Clerks of Court) % Executive and Administrative Control % Financial and Revenue Administration % Budgetary and Personnel Administration % Retirement & Pension Systems Admin % General Services % Transportation % Natural Resources and Recreation % Agriculture % Health, Hospitals and Mental Hygiene % Human Resources % Labor, Licensing and Regulation % Public Safety and Correctional Services % Public Education % Housing and Community Development % Business and Economic Development % Environment % Juvenile Justice % State Police % Registers of Wills % Totals 204 1, % Notes: - Number of audits is based on agency audit schedule as of July 1, "Audit Report Items" are the fiscal/compliance items contained in latest audit report for all entities subject to audit Page 2 of 3

11 Analysis of Fiscal/Compliance Audits Audit Report Items by Functional Area (Summary) As of June 30, 2006 Audit Report Item Total Items (%) Program Compliance 290 (28.3%) Procurement/Disbursements 207 (20.2%) Information Systems 203 (19.8%) Cash Receipts 79 (7.7%) Property 55 (5.4%) Accounts Receivable 42 (4.1%) Payroll/Personnel 40 (3.9%) Bank Accounts/Working Funds 31 (3.0%) Federal Funds 27 (2.6%) Universities/Colleges 20 (1.9%) Materials and Supplies 12 (1.2%) Other Areas 20 (1.9%) TOTAL 1,026 (100%) Page 3 of 3