1. Jonathan Edwards
Certified Internal Auditor
Senior Internal Auditor
(Audio is recorded from La Crosse County Board
Meeting, July 6, 2015. Manually click to advance
slides to follow PowerPoint with the audio.)
2. Basic Objectives:
◦ Operate effectively & efficiently and safeguard
assets
◦ Provide reliable information to those who need it
◦ Comply with all applicable constraints
Management is primarily responsible for
reasonable assurance these are achieved.
The Board is ultimately responsible.
3. Managers- lack time & expertise
Internal auditor- bridge time & expertise gap
for management
Independent auditor- rely on internal controls
to support their opinion on fair presentation of
financial statements & cannot be directly
involved in design/operation of internal
controls Auditors have reasonable basis for relying on
controls. They perform tests & assess their
adequacy & report deficiencies to the Board.
5. Control Environment
◦ Policies & Procedures reflect management’s philosophy,
integrity, and ethical values
Risk Assessment
◦ Management identifying potential threats, evaluating
threats, & prioritizing actions to combat
Control Activities
◦ Separation of duties, proper authorization, adequate
documentation/records, physical control over
assets/records
Information & Communication
◦ Proper flow of communication from management to staff,
proper channels for staff to communicate & ensure data
information is stored & recorded appropriately
Monitoring
◦ Periodic assessment to determine if controls are working as
intended
6. Department:
• Receives money from customer/client
• Issues receipt (pre-numbered, sequential order)
• Once over $500/weekly take to Treasurer
Treasurer:
• Receives money from dept./ customer
• Issues receipt (pre-numbered, sequential order)
• Daily cash-counts & deposits to Bank, by Sheriff Deputy
• Weekly, send original receipts to Finance
Finance:
• Account clerk- weekly reviews original receipts, looks for voids,
account coding, etc. Gives “OK” to post
• Accountant- Posts transactions into G/L
Internal Audit:
• Periodically, review weekly receipt batches
• Year-end, review all receipts
7. Department:
• Receives invoice from vendor & prepare check requisition
• Supervisor/Dept. Head, review check req. & all required documentation. Signature required.
Finance:
• Sr. Clerk- reviews all check req.- ensures all documentation attached, appropriate, gives “OK” to pay
• Clerk- enters into accounting system
• Sr. Clerk- reviews input reports & runs cash listing report-gives to Treasurer
• Prints checks using password
• Accountant- runs process to post transactions into G/L
Treasurer:
• Transfers cash needed into checking account
Finance:
• Clerk- stuffs envelopes with checks & sends envelopes to mail room.
Internal Audit-
• Periodically , randomly choose weekly batches to ensure policies/procedures followed.
Invoices/ Purchase Orders:
8. Department:
• Requests card for employee
• Employee signs P-card agreement-only to use it for county purposes
Finance:
• Purchasing Mgr- contacts Bank for new card; distributes card to
employee
• Employee name is on card & their dept.
Employee:
• Uses card & keeps all invoices/backup
• Turns invoices into department clerk
Finance:
• Budget Analyst- runs report from
system to wire $ to bank to pay; runs
report for all trans. for month.
• Accountant- posts wire & transactions
to the G/L.
• Sr. Clerk- runs report from system of all
trans. & compares to dept’s statement &
backup; ensures purchases agree with
county policies
Internal Audit-
• Periodically , randomly choose monthly
batches to ensure policies/procedures
followed.
• Quarterly send YTD reporting to Finance
Director & Purchasing MGR for analysis.
Credit Cards:
Cash withdrawals are BLOCKED on cards by Bank
Department:
• Clerk gathers invoices & logs into bank system & records account
coding; reviews for validity of transaction & all needed backup is
attached. Prints statements from website.
• Supervisor/Dept. Head- reviews all statements/purchases – turns into
Finance.
Treasurer:
• Rec’s wire info from Finance & transfers
money to pay
9. Treasurer:
• Deputy- reconciles bank statement; ensuring county records agree with bank records (receipts,
disbursements, wire transfers)
Finance:
• Accountant- reviews Treasurer bank statement & reconciles it with the G/L to ensure all transactions
recorded & reported.
• Accountant- ensures all transactions posted for month & runs detailed financial reports & posted to
CountyView.
Internal Audit:
• Periodically, review bank statements to ensure reconciliations performed
All “cash” duties properly segregated so no
one employee has full control/responsibility
Departments-
• Department head/ clerk- review monthly financial reports and compare with their records
• Review budget-to-actual
• Contact Finance if questions
10. Financial meetings
Dept. heads review payroll ledgers
Remember:
Control costs vs. benefit
CliftonLarsonAllen, LLP reviews & tests county’s
internal control systems & their effectiveness
11. Periodic, surprise cash counts
Periodic review of receipts
Periodic review of check requisitions
Periodic review of procurement card purchases
Periodic review of bank reconciliations
Year-end receipts/disbursements
Review vendor’s audit reports
12. Intentional act to deceive
Committed by any employee
Fraud triangle:
◦ Pressure
◦ Opportunity
◦ Rationalization
Common frauds in governments
17. “Tone at the Top”
Be aware & educated
Raising awareness
“Effective governance processes are the foundation of fraud
risk management. Lack of effective governance seriously
undermines any fraud risk management program.”
18. Cash withdrawals on p-card
Manipulated p-card statements
Paid invoices in multiple checks instead of 1
Missing A/P checks-would write them to
herself
Skimming receipts
Little review of employee’s work
No segregation of duties
Over $400k stolen over 4 years
