Okaloosa County BOCC — June 3, 2014 — Presentation to BCC Int Audit Policies June 3, 2014 — reading text

Okaloosa County Clerk of Courts Honorable Don Howard Formalizing the Internal Audit Function  Okaloosa County Clerk of Courts Honorable Don Howard CLERK AS AUDITOR Under Article III Section 1(d) of the State Constitution states that the Clerk of Courts serves as the Auditor for the County In fulfilling his duties as Auditor for the County Clerk Howard has hired a Certified Internal Auditor.  Okaloosa County Clerk of Courts Honorable Don Howard Previous auditor performed various analyses of Clerk and Board functions including: • Reviewing collections of tourist development taxes & preparing schedules • Performing inventory counts • Providing other assistance to the County’s external auditors • Performing research or reviews as requested by department heads, Financial Director, County Administrator or Clerk The internal auditor did not issue any formal audit reports but rather the department’s work products consisted primarily of memoranda or e-mail addressed to the external auditor or the employees requesting the reviews.  Okaloosa County Clerk of Courts Honorable Don Howard Changes to the Clerk’s Internal Audit Department To be effective the Internal Audit Department should operate under a written set of policies and procedures and audit assignments should be established through a periodic risk assessment Written policies should address: • The authority and responsibilities of the Internal Audit Department • The professional standards by which internal audits will be performed • The process by which departments, programs and functions of the Clerk and Board are selected for audit • The method and format of reporting Audit Risk Assessment and Annual Work Plan In their report, the Auditor General pointed out that work plans for the internal auditor should be based on documented risk assessments of the various areas of Clerk and Board operations. Such assessments should include the input of Clerk and Board management. The audit work plan should be approved by the Clerk. This would serve to ensure that the Internal Audit Department’s resources are used effectively.  Okaloosa County Clerk of Courts Honorable Don Howard There is additional authoritative guidance provided by the Institute of Internal Auditors. The IIA is the international authority for the professional practice of internal auditing and currently has 175,000 members from 190 countries. 110,000 are certified internal auditors. The IIA has published professional standards. Standard 1000 requires that authority and responsibilities of the internal audit department must be formally defined in internal audit polices and procedures. Standard 2000 addresses managing the internal audit activity and requires that the internal auditor develop a risk-based approach to establishing the work plan for the department.  Okaloosa County Clerk of Courts Honorable Don Howard Effectiveness of the Internal Audit Function Clerk Howard understands that to be effective, the internal auditor must have the cooperation of senior management and the Board. Creating a Policy and Procedures manual for the internal audit department serves no purpose without that cooperation. That is why he is asking the Board’s concurrence and support in adopting policies for the Internal Audit Department. Such policies would address: The scope and authority of the internal auditor. Their responsibilities Independence and Objectivity Reporting Methodology Professional Standards including a Code of Profession Conduct  Okaloosa County Clerk of Courts Honorable Don Howard Moving Forward Work with the County Administrator to develop the Internal Audit Department’s Policy and Procedures Manual Bring back to the Board for adoption by resolution Establishing an Audit Committee (Discussion for another Board meeting)  Okaloosa County Clerk of Courts Honorable Don Howard Questions? Contact Information: Don Howard, Clerk of Courts Okaloosa County 101 E James Lee Blvd. Crestview, FL 32536 Ph: 850-689-5000 Samuel Scallan, CIA, CPA, CFE Director, Internal Audit Department sscallan@clerkofcourts.cc Ph: 850-689-5000 Ext: 3421