Memorandum

City of Lawrence

City Auditor

TO:	Members of the City Commission
FROM:	Michael Eglinski, City Auditor
CC:	David L. Corliss, City Manager
Date:	April 10, 2008
RE:	City Auditor Update

I began work on February 25, 2008. Since that time, I’ve been focusing on learning about the City of Lawrence; identifying potential audit topics; and developing internal audit policies and procedures.

I anticipate being ready to present the first audit work program by the end of April and having completed writing audit policies and procedures by the end of May.

Most of the work involved in learning about the organization and identifying audit topics has been:

• Meeting all of the city department heads and other staff;
• Reviewing financial documents such as the budget and comprehensive annual financial report;
• Reviewing other documents including consultant reports and the City Code;
• Reviewing resident and employee surveys;

Learning about the organization and identifying audit topics will be a continual process.

Auditing standards

I’m developing an audit process and writing policies and procedures based on the Government Auditing Standards (July 2007 revision). The U.S. Comptroller General issues the standards and they are widely used by government auditors including, for example, the Kansas Legislative Post Auditor and the Johnson County Internal Auditor.

The general requirements under Government Auditing Standards address:

• Independence
• Professional judgment
• Competence
• Quality control and assurance

Specific performance audit standards address how the work is planned, completed, and reported.

I have written draft audit policies and procedures. I need to add some detail and then I plan to share the draft with some of my colleagues from other cities for feedback before finalizing the policies and procedures.

Performance auditing process

The performance auditing process can be described as four steps: planning, conducting fieldwork, writing and reviewing, and reporting. I want to highlight the formal points of contact for the City Commission and the City Manager throughout the process.

City Commission:

• Input to the annual audit work program;
• Receive a one-page “scope statement” at the end of the planning stage that summarizes the issues and approach;
• Receive the final audit report including management’s response to any recommendations;
• Receive a 6-month follow-up on the status of management’s efforts to address audit issues;

City Manager:

• Input to the annual audit work program;
• Input at the beginning of each audit;
• Receive update at the end of planning stage;
• Receive update at the end of the fieldwork but before a report is drafted;
• Receive draft report for review and response;
• Receive final report;
• Provide a 6-month follow-up on the status of efforts to address audit issues;

Issues for the City Commission to consider

• How does the Commission want to provide input to the annual audit program?
• How – and when – does the Commission want to receive the annual audit program?
• How does the Commission want the interaction between the City Auditor and the elected body to work?

I’ve talked with auditors from some other jurisdictions about how other jurisdictions address these issues. In general, auditors develop an annual plan and share it with the governing body. In developing the plans, the auditors seek input from a range of sources, including individual elected officials. In some places the governing body accepts the plan; in others the governing body approves it. Annual plans are generally presented around the beginning of each fiscal year. Some, but not all, governing bodies assign an elected official to act as a liaison, often based on a specific position such as a committee chair.

Action

Direct the City Auditor as appropriate.