Columbus City Schools Office of Internal Audit

Transcription

1 Follow-up Review Budgeting Audit Audit Report Report Date: October 27, 2016

2 Table of Contents Title Page Executive Summary 3 Summary of Observations 6 2

3 Executive Summary Background The Columbus City Schools (CCS) Fiscal Year 2015 Work Plan included outsourcing the internal audit of the Budgeting Department. Schneider Downs & Co., Inc. was engaged to complete this audit. On April 23, 2015, Schneider Downs issued the Budgeting Audit Report as part of an evaluation of the District s overall system of internal controls. Individual department audits assist in determining whether key financial internal controls and compliance functions are being performed and whether departments have clear guidance and adequate resources to perform their functions. This follow-up audit was completed to assess the status of corrective actions taken by management concerning the six (6) observations included in the original Budgeting Audit Report. Roles and Responsibilities District management is responsible for follow-up and corrective action to address audit observations. To fulfill this responsibility, the has a process in place to track the status of audit observation corrective action plans and ensure that audit issues are adequately resolved. Objectives The original objectives of the Budgeting Audit were the following: Budgets are established consistent with CCS strategic plan, fiscal strategy and financial forecasts; Suitable budgetary control framework is in place; Management reports enable management to effectively monitor CCS financial position; Suitable timetable for budget setting is in place and is adhered to by all senior management involved in budget setting; Budgets are based on the resources needed to achieve the operational plan rather than historic budget figures; Budgets are linked to organizational objectives and targets outlined in the strategic plan; Budget documents provide an appropriate level of detailed information to properly inform stakeholders of CCS activities; Where appropriate, public feedback is taken into account during budget formulation; Plans from individual budget holders in the organization (departments, units, buildings, etc.) are supported by an objective analysis of costs, by expenditure category, (e.g. staff expenditure, materials, transport and capital costs, etc.); 3

4 Staff expenditure is appropriately supported by the number of full-time equivalent staff, average wages and expected total staff costs; Suitable assumptions made when developing the budget are clearly identified. Capital budgeting is fully integrated in the budget process; Development of departmental budgets, and the final approval of those budgets, appropriately involves the managers who will be controlling the budgets; Variances between budget and actual are analyzed on a periodic basis and unusual variances are investigated as to the cause; Management periodically revisits forecasts to adjust to recent performance, using suitable expenditure reports and other analyses. Scope The Budgeting Audit follow-up work was completed in July and September 2016 and included a review of information from various points in Fiscal Year Approach and Methodology To complete this follow-up audit we performed the following procedures: Reviewed the prior Budgeting Audit Report and the corrective action plan that were approved by the Audit & Accountability Committee at the April 23, 2015 meeting; Interviewed Budgeting Department and other relevant District staff to gain an understanding of the corrective actions taken and determine the status of the corrective actions according to management; Analyzed available information to validate information obtained during staff interviews; Tested available documentation to determine if corrective actions have been fully implemented, are operating as management intended, and addressed all issues included in the Budgeting Audit Report. Results The initial Budgeting Audit Report dated April 23, 2015, can be found within the documents tab on the Internal Auditor s web page located on the District s website. We consider an issue resolved if management implemented their corrective action plan or took other appropriate action to resolve the identified issues. The found that management took sufficient corrective action for 100% (5 out of 5) of the observations that were still valid from the original Budgeting Audit Report. One (1) observation involved a policy that was in effect during the audit, but was not part of the new policies adopted by the CCS Board of Education in August of This observation was classified as Not Applicable and the other five (5) observations were classified as Implemented. This audit report was reviewed with management and they agreed with the conclusions. 4

5 The classified each observation into one of the following categories based on the work that we performed regarding the corrective action plan prepared by management and approved by the Audit & Accountability Committee at the April 23, 2015 meeting: Implemented Action described in the corrective action plan prepared by management has been fully implemented and testing performed by OIA staff validated that the actions are working as management intends. Not Implemented There was insufficient evidence that the corrective action plan prepared by management was fully implemented. Management Accepted the Risk Risk concerning this issue was accepted by Management and therefore no corrective action was taken. Not Applicable There was a significant change to the internal control environment regarding this recommendation which made testing this issue no longer applicable. Not tested The corrective action plan was not ready to be tested by the Office of Internal Audit. 5

6 SUMMARY OF OBSERVATIONS FOLLOW-UP Based upon the procedures performed, a number of observations having varying degrees of risk were noted. The following table outlines the observations, the risk ratings assigned to each and the follow-up status. The definition of each rating s significance is noted below the table. Observations High 1 Moderate 2 Low 3 Follow-up status 1. Lack of Updated Board Policies X Implemented 2. Oversight of Budgeting Project Plan and Timetable X Implemented 3. Lack of a Budget Handbook X Not Applicable 4. Lack of Budgeting Department Scorecard and Metrics X Implemented 5. Budgeting Process Training Not in Place X Implemented 6. Oversight of the Allocations Committee X Implemented NOTE: 1-high/unacceptable risk requiring immediate corrective action; 2-moderate/undesirable risk requiring future corrective action; and 3-low/minor risks that management should assess for potential corrective action. 6