Richmond VA > Office of the City Auditor > Audit Guide

Last Updated: 2012-08-22

The goal of the City Auditor's Office is to provide professional, independent auditing services to city agencies to promote:

  • Full Financial Accountability
  • Efficiency and Effectiveness of operations and programs
  • Compliance with relevant laws and regulations

Selection of Audit Areas

The City Auditor alone selects programs or and departments to audit. Requests for audits may come from City Council, the Mayor, department heads, employees and citizens.

Entrance Conference

Initially the auditor and department director confer to discuss audit objectives. The auditor inquires about management's objectives and any areas management wishes to have examined. If staff time is available, we include those areas in the audit. If time does not allow, we will make every attempt to schedule a review of those areas at a later date.

Planning

In this phase the auditor gathers background information; obtains an understanding of the organization's mission, structure, goals, policies and procedures; and begins benchmarking other entities practices in the same area(s). The auditor must interview departmental staff regarding written and unwritten procedures followed.

Using this information and the stated goals of the program to be audited, the auditor performs a risk analysis to decide which elements of the program are most important to audit, and, finally, develops audit objectives (questions to be answered) and audit steps to achieve the objectives.

Field Work

Once the objectives and work plan are completed, the auditor(s) collects data, measures performance and analyzes data to accomplish the audit objectives. Often, the auditor will ask the organization's staff to help retrieve documentation from files or computer records and to provide schedules needed in the audit.

What does an auditor look for?

The primary emphasis in our work is to evaluate the internal control system in place. In other words, we identify and test the procedures management has implemented to ensure it reaches its objectives.

Secondly, the auditor looks for ways of promoting efficiency and effectiveness within the department/ program. At times the evaluation of a particular program may be the focus of an entire audit.

Finally, the auditor assesses financial reliability and compliance with applicable laws and regulations.

The audit staff will make every attempt to accommodate departmental schedules and work load.

Audit Report

Even though one auditor may conduct an audit, other staff members assist that auditor. As a result, the Audit Report is not simply the product of one auditor's work. The report consists mainly of recommendations based on the auditor's 'findings'. When the auditor concludes that an action or condition existed that:

  • was contrary to management's orders or city policies; or
  • did not help a program reach it goals; or
  • was not efficient or effective; or
  • was not in compliance with laws and regulations, the auditor prepares an audit comment ("finding").

Our policy is to discuss each comment with the proper departmental staff, as well as with management. There will be no surprises in the final report.

We furnish a draft of the report to various members of the organization's management before publication to solicit written responses and comment. The Internal Auditor invites management to:

  • correct factual errors or misinterpretations of what occurred,
  • provide data showing why the comment is not valid, and
  • create written responses (to be included in the report) to the recommendations, saying
    • what will be done about the comment
    • who is responsible for implementing the recommendation
    • when it will be completed

Top 10 Suggestions for a Smoother Audit

  • Make sure you have up-to-date policies and procedures.
  • Ensure authorization limits are communicated to your department.
  • Ensure all assets are safeguarded at all times.
  • Establish document control.
  • Ensure approval signatures are visible on all required documentation.
  • Make sure data is only accessible by authorized personnel.
  • Understand your department's risks.
  • Ensure adherence to City Code and to Departmental Policies and Procedures.
  • Establish objectives and measures for your department and for major programs.
  • Track performance to evaluate your success!

Audit Myths and Realities

Myth: Audit is a necessary evil.

Reality: Audit plays a critical role in the success of every organization. We provide independent, objective assessments of risk, controls and compliance; allow for transparency of operations and help to deter fraud. Through the audit process we strive to enhance controls, maximize efficiency and effectiveness, provide cost savings and revenue enhancement, increase awareness of internal controls, and strengthen the effectiveness of management's decision making process.

Myth: My department will not get audited because we do not handle money. I'm being audited because I did something wrong. I work very hard, why am I being audited?

Reality: Several factors are considered and analyzed when determining which department or agency to audit. Consideration is given to the inherent risks within the department, known deficiencies, political sensitivities, major changes, magnitude of funding, and requests from City Administration, City Council or management.

Myth: I'm being audited, now I am going to lose my job

Reality: No one is perfect; you will not lose your job because you are being audited or because there are audit findings. Our goal through the audit process is to help management: enhance controls, maximize efficiency and effectiveness within the department, provide cost savings and revenue enhancement, increase awareness of internal controls, deter fraud and strengthen the effectiveness of management's decision making process.

Myth: Auditors always want to find something wrong.

Reality: This is not true, if we perform an audit of a department or agency and there are no findings or recommendations for improvement then GREAT! - we will report that everything is working as intended.

Myth: Audit is always recommending staff reduction to save money.

Reality: As a course of business, we are constantly looking for opportunities to save money. However, we would not recommend staff reductions just as a means to saving money. We may recommend staff reduction if the audit process clearly identifies operational efficiencies with no negative impact by staff reduction and conversely, if the audit process identifies a need for additional staff to optimize departmental effectiveness we would recommend an increase in staffing levels.

Publication

We include Management's comments within the audit report. After publication, the report finds its way to City Council, the city's Audit Committee, city administration and the appropriate department director. City Charter insists that published reports, once issued, become public information. At its quarterly meetings, the Audit Committee reviews each report issued that quarter. Department officials are invited to attend.

Confidentiality

Similar to other professional relationships, confidentiality governs the report prior to issuance; audit results are not disclosed outside city management before issuance of the audit report.

Fraud, Illegal Acts

The Internal Auditor is required to notify the appropriate authorities when uncovering probable fraud or illegal activity.

Although the audit process can be an intrusion in a department's schedule, we believe that both auditor and management ultimately share the same goals:

  • to improve the operations of the city and
  • to make the best use of city resources.

If you have any questions regarding the audit process, please do not hesitate to call us.

Affiliations

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