Office of Auditor General - Audit Buzz, July 2020 Issue

Audit Buzz graphic


Audit Buzz Newsletter

July 2020         

In this issue of Audit Buzz, we summarize the status of current engagements, detail the new engagements included in the recently approved FY 2021 Audit Plan, debut the Knowledge Hive, where you can learn more about what OAG does or about general audit concepts, and lastly we offer you some information to keep you in the know.

As always, we appreciate the cooperation and courtesies extended to our staff by FCPS management and staff during all past, current, and future audit engagements.

Engagement and Office Updates

Current Engagement Update

  • Due to the COVID-19 pandemic, we experienced delays in completing two FY 2020 performance audits; however, with offices now open OAG is resuming on-site fieldwork. Be on the lookout for further updates regarding in-progress and future audits.
  • During the building closure, while we maintained a line of communication with our audit clients and continued to perform limited testing, we also devoted time to enhancing our own internal processes and systems.
  • We are currently performing the Local School Activity Funds (LSAF) audit for the year ended June 30, 2020. The purpose of this audit is to verify local school financials and year-end cash reporting are not materially misstated and to review selected revenue and expenditure transactions for compliance testing. To address the challenges presented by COVID-19, the LSAF audit will be completed 100% remote this year.
  • OAG has also been serving as the project liaison for a comprehensive program review of FCPS’ special education. We are currently in the process of evaluating proposals to identify the best qualified vendor for the review, which is slated to kick-off in Fall 2020. You can read more about the review in the FY 2021 Audit Plan.

FY 2021 Audit Plan

OAG’s FY 2021 Audit Plan was approved by the Fairfax County School Board on July 23, 2020. In addition to three FY 2020 carry-over audits, the FY 2021 plan includes three performance audits, a comprehensive program review of FCPS’ special education, as well as other tasks. The detailed plan includes the following engagements and other duties:


  1. Construction Contract Management Audit (carryover from FY 2020)
  2. Procurement and Contract Management Audit (carryover from FY 2020)
  3. Local School Activity Funds Audit, June 30, 2020 (carryover from FY 2020)
  4. Comprehensive Program Review of FCPS’ Special Education
  5. Fidelity of Implementation of School Board Actions
  6. Hiring and Onboarding Practices Audit
  7. Business Continuity Plan Audit
  8. Local School Activity Funds Audit, June 30, 2021
  9. Continuous Monitoring

Other OAG Duties

     a. Mid-Year and Annual Audit Reports

     b. Recommendations Follow-Up

     c. Business Process Audits

     d. Continuous Enhancement of Audit Software

     e. FCPS Fraud, Waste and Abuse Inquiries

     f. OAG staff Professional Development

     g. Preparation for FY 2022 Risk Assessment

     h. Outreach Initiatives

You can find preliminary objective and scoping details for each new engagement by viewing OAG’s FY21 Audit Plan Presentation the School Board (full FY21 Audit Plan document here).

Knowledge Hive

Are you interested in learning more about what OAG does or enhancing your knowledge of audit concepts? During FY 2021, be on the lookout for informative pieces which can help you understand a little more about audit. In the inaugural entry into the Knowledge Hive, we provide Part 1 of a very important audit topic – Internal Controls.

Internal Controls – Part 1: What are they?

What are internal controls? According to the Institute of Internal Auditors, internal controls are “any action taken by management, the board, and other parties to manage risk and increase the likelihood that established objectives and goals will be achieved. Management plans, organizes, and directs the performance of sufficient actions to provide reasonable assurance that objectives and goals will be achieved.”

While that may sound complex, internal controls are simply the actions taken by an organization to reduce the risk that its desired outcomes are not met.

They are the organization’s checks and balances.

These checks and balances include processes like limiting purchasing authority and purchasing system access to specific individuals, performing a supervisory review and certification of staff timesheets, or using a safe or other type of physical access control to secure cash, inventory, or items such as procurement cards. Creating a budget and periodically comparing it to actuals is another example of an internal control. A key concept of internal control is segregation of duties, which can be thought of as separating key duties between different employees. Segregation of duties helps to prevent errors, or even fraud, since multiple individuals are involved in different phases or components of a process.

The effectiveness of internal controls depends on factors such as (1) whether risks are appropriately identified, (2) whether controls are documented in policies and through standard operating procedures (and communicated to appropriate personnel), and (3) whether monitoring is performed to ensure that controls are adequately designed and operating effectively. Most importantly though, people are what make internal control work. People at every level of the organization play an important role in the implementation and execution of internal controls.

Maintaining an effective system of internal controls is an ongoing process which must continuously adapt to both existing and emerging risks. The risks an organization such as FCPS faces, and the complexity of the related internal control system, are dependent on many factors, including size, structure, resources, laws and regulations, and organizational goals and objectives, to name a few.

In the next issue of Audit Buzz, we’ll discuss why internal controls are so important in part 2 of the Internal Controls series, but before we end, let’s look at a real life example of how internal controls can help FCPS achieve its results.

Local School Activity Funds (LSAF) are the funds derived from extracurricular school activities, including, but not limited to, entertainment, athletics, share of facilities fees, club dues, vending machine proceeds that are not deposited in the school nutrition program account and from any and all activities of the school involving personnel, students, or property.

While managing these funds is the responsibility of each school principal, with help from the various school staff, including finance technicians and administrative assistants, the FCPS Department of Financial Services is responsible for establishing regulations and procedures (or Internal Controls) for the efficient management and operations of the school activity funds.  As part of its duties, Financial Services also provides training and resources to personnel involved in managing the school activity funds.

FCPS Regulation 5810 establishes division-wide policies and accounting procedures (or Internal Controls) to ensure uniformity in the administration of school activity funds and establish proper management procedures for school activity fund accounts. Examples of internal controls detailed in the regulation include:

  • Assignment of duties and responsibilities, including segregation of duties
  • Standard chart of accounts so that funds are accounted for consistently
  • Specific guidance for the treatment of areas such as budgets, expenditures, revenue collection, contracts, etc.
  • Review of financial management reports to assess available funds and expenditures
  • Compliance reviews performed by Financial Services

These internal controls reduce the risk that errors or irregularities prevent school activity funds from being utilized for their intended purposes.

Annually, OAG also performs an audit of the LSAF funds to verify local school financials and year-end cash reporting are not materially misstated and to review selected revenue and expenditure transactions for compliance testing. During the audit, OAG reviews internal controls, as designed and implemented by management, to determine whether or not they are operating effectively.

Did you Know?

National Whistleblower Day

July 30 is National Whistleblower Day. This day recognizes the whistleblowers whose actions have protected the American people from fraud or malfeasance. OAG manages a Fraud, Waste, and Abuse where anonymous reports may be made. FCPS Policy 1106 makes it a violation to retaliate against any individual who in good faith reports fraud, waste, or abuse or cooperates, gives testimony, or participates in an audit investigation, proceeding, or hearing.

Next Audit Committee Meeting

OAG reports directly to the Fairfax County School Board Audit Committee. There is no Audit Committee meeting scheduled during the month of August.

Audit Committee meetings will resume in September; however, the date is yet to be determined.

During FY 2021, the Audit Committee will be comprised of the following individuals:

  • Karen Keys-Gamarra, Chair, School Board Member-at-Large
  • Rachna Sizemore Heizer, School Board Member-at-Large
  • Megan McLaughlin, School Board Member, Braddock District
  • Elaine Tholen, School Board Member, Dranesville District
  • Clay Hale, Citizen Member
  • Dan Warco, Citizen Member

Fraud, Waste & Abuse Hotline:
(571) 423-1333 (anonymous voicemail) (email is not anonymous)