fjw~ EdW. J~an Inspector General ~L~"F!oriaa! Dr. Eric J. Smith 325 West Gaines Street, Suite 1514 Tallahassee, Florida

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1 FLORIDA DEPARTMENT OF EDUCATION Dr. Eric J. Smith Commissioner of Education DR. AKSHA ROBERTO Y DESAI MARTiNEZ ~JustKead, ~L~"F!oriaa! b~ KATHLEEN SHANAHAN LINDA K. TAYLOR Dr. Eric J. Smith Commissioner of Education 325 West Gaines Street, Suite 1514 Tallahassee, Florida In accordance with Section , Florida Statutes, I present for your approval our audit work plan for Fiscal Year plus a long-term plan for future audit areas. The plan is based on a risk assessment that, I believe, represents the best use of resources available to the Office of Inspector General. Additional assignments and tasks not anticipated by this plan are probable. The priority given each of the unanticipated issues will be determined as they arise. Florida Statutes require copies of this audit work plan be provided to the Governor's Chief Inspector General and the Auditor General. In addition, I would like to share this plan with your senior staff so they are informed of the intended direction of this office and to address their comments about perceived risk to the Department. Thank you for your support. coming year. I look forward to continuing our work for education in Florida during the Respectfully submitted, fjw~ EdW. J~an Inspector General c: Chief Inspector General Auditor General

2 INTRODUCTION The Department of Education (DOE) provides leadership, technical assistance, and support to the local educational entities and institutions comprising Florida's public education system. The state educational system consists of publicly supported schools, institutions of higher education, and other educational institutions and services as authorized by the constitution and state laws. The Department also provides services to Florida citizens through programs run by the Divisions of Blind Services and Vocational Rehabilitation, and the Office of Workforce Education. The internal audit function in the Office of Inspector General (DIG) assists the Commissioner and the Department by providing independent and objective analysis, assurance, and consultation in order to add value and improve operations. Internal auditing helps the Department accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. International Standards for the Professional Practice of Internal Auditing published by the Institute of Internal Auditors, Inc., or, where appropriate, Government Auditing Standards published by the Comptroller General of the United States provide the professional framework for all audits performed by the DIG. The OIG is required by , Florida Statutes (F.S.) to perform all audits in accordance with these standards. Although these standards primarily relate to the internal audit function, where feasiqle, they are applied to all functions of the DIG. This plan responds to these standards and the requirements in , F. S., that require an annual audit work plan. According to , F. S., "the inspector general shall develop long-term and annual audit plans based on the findings of periodic risk assessments. The plan, where appropriate, should include postaudit samplings of payments and accounts. The plan shall show the individual audits to be conducted during each year and related resources to be devoted to the respective audits.... For state agencies under the Governor, the audit plans shall be submitted to the Governor's Chief Inspector General. The plan shall be submitted to the agency head for approval. A copy of the approved plan shall be submitted to the Auditor General." GOALS The goals of the DIG internal audit function are to: Perform audits and management reviews of Department activities and/or programs funded by the Department; Coordinate audits and other reviews of Department activities with external agencies including the Office of the Auditor General, Office of Program Policy Analysis and Government Accountability, Department of Financial Services, and the U.S. Department of Education;

3 Assess the reliability and validity of information provided by the Department on performance measures and standards, and other data accumulated by the Department for other requirements including the Sunset Review process; Monitor the implementation of corrective actions and report progress of the Department in response to audits by state and federal audit agencies; Serve as liaison with state and federal agencies and other governing bodies, represent the Department at audit conferences, and coordinate Department responses and corrective actions to external audits; Provide assurance and consulting services that will contribute to the Department achieving its goals and meeting its strategic imperatives; Promote accountability, efficiency and effectiveness, and conduct prevention and detection activities relating to possible fraud, waste and abuse in Department operations and programs; and Perform periodic macro risk assessments of the Department and develop long-term and annual audit work plans using the results of these assessments. AVAILABLE RESOURCES The OIG has three professional staff auditors supervised by an audit director, and is responsible to accomplish all of the above goals. The audits and reviews listed below are intended to satisfy some of these goals and to fulfill the auditing duties and responsibilities required by , F. S. Continuous and ad hoc efforts by the audit and administrative staff of the OIG will achieve the other goals. In summary, these resources will be devoted to: internal and external audits and management reviews; management advisory services; risk assessment; external compliance requirements; validation of performance and other measures; general oversight and administration; and professional development of staff in accordance with auditing standards. RESUL TS OF THE RISK ASSESSMENT Each year the OIG assesses the operations of the Department with the objective of identifying areas with the highest level of risk (probability of adverse events occurring). We performed this risk assessment to: provide a basis for allocation of our resources; facilitate proactive responses by management; and comply with professional auditing standards which we are required by law to follow. We interviewed members of senior management to solicit their views

4 FLORIDADEPARTMENTOF EDUCATION OFFICEOF INSPECTORGENERAL AUDIT WORK PLAN, FISCALYEAR on risks facing the Department and activities where audits could add value. We also solicited input from members of the internal audit and investigation staff in the OIG, and considered the results of audits and investigations performed during the current and prior years to identify areas of potential weakness in the Department's operations. Using the results from these efforts and our professional judgment, we developed the audit work plans presented below. A long range audit plan is shown following the plan; it includes those audit areas identified in the risk assessment processes described above that we decided not to include in the current year's plan. The following list identifies priority areas or topics for audit and review. For each area or topic, we will perform preliminary survey procedures that will include a focused risk assessment to identify the greatest risk and vulnerability. The objectives of the audit or review project will be developed from the preliminary survey and will guide our detailed work AUDIT PLAN 1. American Recovery and Reinvestment Act (ARRA) - DOE is expected to receive approximately $4 billion in ARRA funds over the next several years. With these federal funds come increased reporting, oversight and accountability requirements. The majority of these funds will be passed to the school districts which have required annual audits. Some of the funds will be contracted through the Divisions of Vocational Rehabilitation and Blind Services. We Elxpect to maintain a significant presence in regard to validating data reporting and risk assessment. 2. Agency Sunset Review - A two year process culminating in hearings by the legislative Sunset Committee to determine whether the DOE should be reauthorized in its present form, reorganized, or not authorized. An agency report containing detailed information related to program funding and activities, performance measures, and other issues is due by July 1, The OIG is required to certify the validity of information contained in the report. 3. DOE Procedures - Effective operating procedures describe how to perform routine operations. They should provide a general framework enabling the efficient implementation and performance of functions and activities in a reliable and consistent manner. They can also serve as a valuable training tool. This management review will determine the existence and sufficiency of procedures for selected programs, functions, and activities and evaluate their effectiveness. 4. Division of Blind Services - Operational audit which may include such areas as travel authorization and expenditures, use of written policies and procedures, security of personnel files, construction management, vehicle use, and cash handling procedures. 5. Division of Blind Services - Contract audits of two to four providers for contract compliance and effectiveness review. Audits will focus on compliance with contracts, proper expenditures, reporting accuracy/completeness, effectiveness at placing clients in employment opportunities and internal control structure.

5 6. Grant to Florida. State University - Florida Center for Reading Research, research projects. Federal ($2.68 million) and state ($3.7 million) funding is provided through DOE for the research projects. Objectives include assessment of grant oversight by the DOE, completion of contract deliverables and testing of expenditure documentation maintained by the University. 7. Information Security Policy/Awareness - Information security is always a critically important consideration when assessing and limiting organizational risk exposure. Objectives of this review include identifying current practices regarding IT security in other state agencies, examining disaster preparedness plans, and related issues. We may also analyze the effect of budget cuts on staffing and the ability to buy and maintain IT equipment. 8. Division of Vocational Rehabilitation - Contract audits (carryover and new) - Complete the contracted employment placement services providers currently being audited and select four to six additional providers. Audits focus on compliance with the contract, proper expenditures, reporting accuracy/completeness, effectiveness at placing clients in employment opportunities and internal control structure. 9. Division of Public Schools - Audit of Supplemental Education Services providers (carry over and new) - Finish current providers being audited and select four to six additional providers for audit. Audits focus on DOE approval of providers, compliance with the contract between the LEA and provider, service delivery, proper invoicing, reporting accuracy/completeness, and internal control structure. Contract audits Emergency Management Planning Office of Student Financial Assistance Florida Virtual Schools Federal Grant Application Review Process Professional Practices Services Unit Accountability for Cash Receipts and Warrants