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Audit Buzz Newsletter
June 2021
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In this issue of Audit Buzz, we summarize the status of current engagements, provide background information on what audits are in the Knowledge Hive, and highlight a recognition for the citizen members on the Audit Committee.
Prior editions of Audit Buzz are archived here on OAG's website.
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
- At the June 16 Audit Committee meeting, OAG presented on the following agenda items:
- Audit Committee Citizen Members Recognition
- FY21 Business Process Audits (multiple) - See OAG Audit Reports
- Audit Follow-up Status
- Proposed FY22 Risk Assessment and Audit Plan
- The proposed FY22 Risk Assessment and Audit Plan will be presented to the School Board on June 24 and will be discussed during the School Board Work Session on July 13. See the proposed FY22 Risk Assessment and Audit Plan.
- OAG continues to serve as the project liaison for a comprehensive program review of FCPS’ special education, which American Institutes for Research (AIR) was contracted to perform. The researchers completed the Year 1 data collection activities and are working on identifying emerging themes. The first year report is scheduled to be presented to the School Board on July 13.
Knowledge Hive
Audit is a word that, when heard, can create anxiety, fear, and uncertainty for some individuals. We as auditors, have encountered many different reactions in our careers. Here are a few of the most memorable:
- After years of good audits, an employee would be so nervous about a scheduled audit that the employee became physically ill and would need a few days to recover once the audit had been completed.
- A new employee, that upon arrival for the audit, handed the auditor a folder and said, “this is everything I did wrong this year and I figured I should give it to you now so you wouldn’t have to look hard to find it.” Most of what was in the folder was not even related to the audit, but simple mistakes we all make, that the employee had explained in detail in the documents.
- An employee performed an “audit” of their files immediately before the scheduled audit. Everything that was found was either corrected or notated as to what the circumstances were that caused the problem, the employee then proceeded to “flag” each of these. Upon arrival the employee explained to the auditor what was done and said that this way, I could see the problem, how it was fixed, and know that they were trying their best to get it right.
In each of the above instances, while the audits revealed minor instances of noncompliance, significant control weaknesses were not identified. However, just the thought of being audited resulted in these three individuals finding ways to address their anxiety and uncertainties of the audit process.
This will be the first in a series of three “Knowledge Hive” articles focused on explaining the what, when, why, and how of an audit.
- Part 1: What is an audit?
- Part 2: When will I be audited and why?
- Part 3: How will be the audit be conducted?
Part 1: What is an audit?
The term audit usually refers to a financial audit which is an objective examination and evaluation of the financial statements of an organization. However, the term audit encompasses much, much more. There are three main types of audits: external audits, internal audits, and Internal Revenue Service (IRS) audits.
External audits are performed by outside parties, typically a Certified Public Accounting (CPA) firm. These audits review both financial statements and an organization’s internal controls. External auditors follow a set of standards different from that of the organization hiring them to do the work. Since external auditors are separate, and independent, of the organization they are auditing, the resulting opinion is candid and honest without affecting the daily working relationships within the organization.
Fairfax County Public Schools (FCPS) is subject to an annual external audit performed by Cherry Bekaert LLP. The Comprehensive Annual Financial Report (FY 2020 Report) contains the audited financial statements, external auditor opinion, and FCPS management’s discussion and analysis.
Internal audits serve as a managerial tool to make improvements to process and internal controls of an organization. These audits are performed by individuals who are employed by the organization for whom they are performing an audit. The resulting report is given directly to management and the board of directors, that’s the School Board at FCPS. The results of internal audits are used to make managerial changes and improvements to controls. The purpose of an internal audit is to ensure compliance with laws and regulations and to identify weaknesses in internal controls.
FCPS has an internal audit function, the Office of Auditor General (OAG). All OAG staff are employees of FCPS and must follow the same policies and regulations as other FCPS employees. The mission of OAG is to promote FCPS’ achievement of its strategic goals. OAG’s mission is to independently determine whether the ongoing processes for controlling fiscal and administrative operations and performance throughout the division are adequately designed, functioning in an efficient, effective manner, and fully accountable to the citizens of Fairfax County. The success of OAG rests with the collaborative working relationships, based on integrity, honesty and trust, that the OAG staff build within FCPS.
Lastly, an IRS audit is a review/examination of an organization's or individual's accounts and financial information to ensure information is reported correctly according to the tax laws and to verify the reported amount of tax is correct. Since this is not a typical audit that FCPS may encounter, I won’t waste your time with the intimate details of this process, but if you are interested in more information you can visit www.irs.gov.
Tune into the next issue of Audit Buzz for Part 2: When will I be audited and why?
Did you Know?
Audit Committee Citizen Recognition
 Pictured: Clay Hale (left), Daniel Warco (middle), Esther Ko, Auditor General (right).
We are grateful for Mr. Clay Hale and Mr. Daniel Warco, who have been serving as citizen members to the Audit Committee since 2017. Mr. Hale and Mr. Warco have contributed tremendously to the Audit Committee through sharing best industry leading practices and providing subject matter expertise for various audit, accounting, and contracts related topics. Mr. Hale will be retiring from the Audit Committee after June 2021; while Mr. Warco will continue to serve.
Below are short bio’s for Mr. Hale and Mr. Warco:
Clay Hale is the Chief Financial Officer of the Government Solutions Sector for KBR. He plays a key role in driving the company's business strategies and investments as well as holds the responsibility for overseeing all aspects of financial management, accounting, shared services, and controls. Prior to joining KBR, Clay served as Chief Financial Officer for Siemens Government Technologies, where he was responsible for the finance, accounting, IT, and internal audit functions
Clay is a North Carolina CPA and holds a B.S. in Business Administration from The Citadel and an MBA from Duke University. He is an Army National Guard veteran, served as an armor company commander, and has served on multiple boards.
Dan Warco began his career teaching accounting with the United States Peace Corps before joining the accounting firm Deloitte and Touche. After seven years working as an auditor specializing in not-for-profit entities, he began working with the Elizabeth Glaser Pediatric AIDS Foundation where he currently serves as the Vice President of Finance and Accounting. Dan has accounting and music degrees from Furman University in Greenville, SC and enjoys spending time with his two teenage children.
Dan is a Virginia CPA.
Next Audit Committee Meeting
The next Audit Committee meeting is scheduled for 5:30 PM on July 14.
The agenda will be available on BoardDocs prior to the meeting.
Fraud, Waste, and Abuse Hotline:
(571) 423-1333 (anonymous voicemail)
InternalAudit@fcps.edu (email is not anonymous)
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