Audit Buzz Newsletter February 2024

Engagement and Office Updates

In this issue of the Audit Buzz, we highlight the key take-aways at the February Audit Committee meeting; explain about “Audit Integrity - Ensuring Audit Independence” in the Knowledge Hive; and offer a training opportunity to Fairfax County Public Schools (FCPS) employees.

Prior editions of Audit Buzz are archived here on Office of Auditor General's (OAG) 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.

Current Engagement Update

At the February 26 Audit Committee meeting, we presented the following agenda items:

• Auditor General Updates
  • Status of Fiscal Year (FY) 2024 internal audit engagements - All approved audits are completed / on-going as scheduled.
  • Status of FY24 internal inquiries - From July 2023 to February 2024, OAG received 48 inquiries of fraud, waste, and abuse potential concerns.
• FY24 Facilities Maintenance Audit Report - As a result of this audit, OAG identified one high risk finding related to control deficiencies in the work order process. OAG also identified four moderate risk findings related to (1) deferred preventative maintenance work orders; (2) benchmarking and key performance indicators; (3) improvements to existing information system; and processes to ensure compliance with Federal, State and Local requirements. One observation was noted as an opportunity to improve on inventory and assets physical count. Management concurred with the findings and recommendations. 
• FY24 Business Process Audit (BPA) Summary and BPA Reports for Herndon Elementary, Holmes Middle, Jackson Middle, Lorton Station Elementary, Office of Special Education Procedural Support and West Potomac High - These six audits identified 13 low risk findings and one moderate risk finding. These findings related to bank reconciliation, non-bank reconciliation, the purchasing process, sufficient documentation, and timely payment.
• Audit Follow-Up Status - OAG provided the status of audit follow-up as of October 31, 2023, for open audit recommendations. OAG will continue to follow up on a quarterly basis.

Knowledge Hive

Audit Integrity - Ensuring Audit Independence

The word independence is often used in conjunction with the services auditors provide to their auditees. But what does “independence” mean when internal auditors provide these services?

Audit independence refers to the impartiality and objectivity of auditors when performing audits. It ensures that auditors can provide unbiased and accurate assessments of an organization’s statements without any conflict of interest. Maintaining independence is crucial for the credibility and integrity of the audit process as stakeholders rely on auditors to provide accurate and unbiased assessments of the organization’s health. This article delves into the significance of audit independence, its two key components, and the challenges auditors, personnel and management may face in upholding this essential principle.

Key Components:

1. Independence of Mind - state of mind that permits the conduct of an engagement without being impacted by influences that compromise professional judgement, thereby allowing an individual to act with integrity and exercise objectivity and professional skepticism. This means auditors will evaluate evidence, exercise professional judgment, and form their conclusions based on the merits of the information at hand, without being influenced by personal interest, relationships or pressures from managements or other parties.
2. Independence in Appearance - the avoidance of circumstances that would cause a reasonable and informed third party to reasonably conclude that the integrity, objectivity or professional skepticism of an audit organization or member of the engagement team has been compromised. This means auditors will avoid any relationships or activities that could reasonably be perceived as impairing their impartiality.

Auditors often face various threats to their independence, one of the most common being the familiarity threat. This threat arises when auditors develop long standing relationships between auditors and auditees. Auditors often interact closely with personnel at various levels of the organization to gather information and assess internal controls. While these relationships are necessary for conducting thorough audits, clear boundaries and professional detachment are essential to preserve the integrity of the audit process. The challenge lies in striking a balance between building rapport with clients and preserving the necessary level of independence to conduct rigorous audits.

To safeguard audit independence and mitigate the familiarity threat, OAG has implemented robust controls and procedures.

Our key strategies:

• Rotating Audit Personnel - OAG has regularly rotating audit team members assigned to client engagements which helps mitigate the familiarity threat by introducing fresh perspectives and reducing the risk of undue influence or bias.
• Signing Independence Statements - For each audit engagement, the auditor signs an independence statement affirming adherence to policies and guidelines that emphasize the significance of maintaining independence and objectivity.
• Collaborative Improvement - OAG cultivates an environment where open communication between auditors and auditees is promoted. Encouraging open dialogue and transparent communication within the audit team and its auditees facilitates the early detection and resolution of familiarity threats.

In conclusion, ensuring audit independence is paramount for upholding the integrity, credibility, and trustworthiness of an audit engagement. By implementing robust controls, policies, and procedures to mitigate threats such as familiarity, auditors can maintain the objectivity and impartiality necessary to fulfill their professional responsibilities effectively.

Did you Know?

OAG Outreach and Education - Continuing Professional Education (CPE) Opportunity

OAG is registered with the National Association of State Boards of Accountancy (NASBA) and serves as the sponsor for the FCPS Continuing Professional Education (CPE) programs, dedicated to support FCPS employees with complimentary CPE credits required by various certification agencies.  OAG is pleased to offer a new NASBA training opportunity for FCPS employees to earn up to 3 CPE credits:

Course: See Something, Say Something - How You Could Help with Fighting Fraud, Waste and Abuse at FCPS

Date: March 8, 2024

Time: 9:00 AM - 12:00 PM

This training is designed for all FCPS employees on fraud, waste, and abuse according to FCPS Policy 1107 and Regulation 1410.  FCPS employees may sign-up for the training on MyPDE.

Upcoming Events 

Next Audit Committee Meeting

The next Audit Committee meeting is scheduled for April 30, 2024 at 3:00 PM. Please refer to BoardDocs for meeting information once it becomes available.

Fraud, Waste, and Abuse Hotline:
(571) 423-1333 (anonymous voicemail)
InternalAudit@fcps.edu (email is not anonymous)

Online Submission Form

Office of Auditor General Website | Audit Buzz Archive