Fostering Relationships in an Audit Readiness Environment Eric Lampkin Director, AMCOM Internal Review and Compliance
Overview Auditors-Who are They? Why Audit? Why Audit Readiness? Suggestions for Auditors Suggestions for Customers Role and Importance of Internal Review Summary
Auditors Who are they?
Defined Auditor One that hears or listens. One authorized to examine and verify accounts. From Latin auditus which means the act of hearing
Stereotypes Green Eye-Shaded Bean Counters Poorly Dressed Math Geeks Lonely & Without Lives Out of Touch with Reality Not Team Players On Battlefield Shooting the Wounded I'm on an Audit
Natural Fears Nobody likes to be audited Fear of criticism from adverse audit findings Punitive actions by supervisors prompted by reported deficiencies. Lucy Candy Factory Fear of changes in day-to-day work habits because of audit recommendations The Good Old Days Insensitive audit practices Hostile audit environment
Why Audit? twenty five
WE WANT OUR FAIR SHARE... AND WE LL DETERMINE WHAT S FAIR!
Would you invest your money in an enterprise that wasn t audited? Neither should the Stakeholders United States Army Department of Defense Congress American Taxpayer
Public Demands Accountability Accountability for public resources is key in our nation s governing processes. Legislators and the public want to know whether (1) Government resources are managed properly and used in compliance with laws and regulations. (2) Government programs are achieving their objectives and desired outcomes. (3) Government services are being provided efficiently, economically, and effectively.
Why Audit? Protect Stakeholders Ensure Compliance with Laws and Regulations Strengthen Management Controls Identify where Efficiencies may be realized Uncover Fraud, Waste, Abuse, and Mismanagement
Auditor Role Conflicts Secure support from leadership Gain confidence and cooperation of operating managers Be on the organizations payroll Record and report deficiencies up the chain of command Be alert to fraud, waste, and abuse and root it out if found
What is the auditor s main product?
Audit Statutory & Regulatory Requirements Accounting and Auditing Act of 1950 Inspector General Act of 1978 Financial Managers Integrity Act of 1982 Chief Financial Officer Act of 1990 Government Performance and Results Act of 1993 Government Management Reform Act of 1994 OMB Circular A-123, Management Accountability and Control DoD Instruction 5010. 38 - Management Control Program Sarbanes Oxley Act of 2002
Why Audit Readiness? Since passage of CFO Act of 1990, DoD has expressed its intentions to achieve auditable financial statements Twenty one of 24 government agencies covered by the CFO Act received Unqualified ( clean ) Audit Opinions for FY 2011 DoD is the only government agency still with a Disclaimer Audit Opinion Congress became impatient and mandated a 30 September 2017 deadline for DoD s financial statements to be validated as ready for audit National Defense Authorization Act (NDAA) for FY 2010 (Public Law 111-84), Section 1003, describes the mandated requirements Secretary of Defense directive on 13 October 2011
Benefits of Audit Readiness Provides timely, accurate, and relevant information for better management of resources. Improves operational effectiveness to better support Soldiers. Better justifies Congressional funding requests. Increases accountability to taxpayers.
Building Audit Relationships Challenges Increased requirements Sequestration Furloughs Manpower Reductions Budget cuts
Suggestions for Auditors: Establish audit purpose and scope Be positive, sincere, genuine Become a team player Relate audit benefits to strategic goals Build trust by staying objective Maintain an open mind No hidden agendas Power to impact someone s life Ask So What? Catch em doing something right! Professional Products Marketing material, presentations, audit reports
Suggestions for Customers: View audit readiness as opportunity to: Ascertain status of organization s financial health. Pass on best practices. Improve where needed. Be proactive and fully understand data before auditor s arrive If it does not make sense to you it wont make sense to your auditors. Anticipating questions up front can avoid difficult questions later. Focus on the quality and timeliness of data. Meeting deadlines is critical. Communicate with auditors frequently. Address prior audit recommendations or they will come back!
What should Both do? Above all Stay Positive! Cooperate, communicate, and participate Do the right things Results in real improvements and cost savings If All were Honest shell game The more you resist the more they persist 100 bottles of Beer on the Wall
Fraud Cases MWR 660 Beer Kegs, Gym, TDY Bingo Funds Medical Billing Utility Cooperative Overtime/Credit Hours Training Imprest Funds GPC Kickbacks GTC Purchases Museum Parts Contract Warrantees Contract Kickbacks DOD Schools
Role and Importance of Internal Review Entity Federal Government Department of Defense Internal Auditor Government Accountability Office Inspector General Army Commands Army Audit Agency Internal Review Internal Review plays a critical role helping the Army achieve and sustain audit readiness. Commanders can and should use IR to assess business controls, conduct organizational health checks, and provide assurance that their business is auditable.
Summary Auditors-Who are They? Why Audit? Why Audit Readiness? Suggestions for Auditors Suggestions for Customers Role and Importance of Internal Review
Questions?
Cost Savings Installation Telephone System Facility Management Air National Guard Manpower Execution Cell Phones DOL Manpower Utilization BRAC Environmental Liabilities