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OVERVIEWOVERVIEW

• BackgroundBackground• Why an Annual Plan?Why an Annual Plan?• Development MethodologyDevelopment Methodology• Results - Key ProjectsResults - Key Projects• Anti-Fraud Action PlanAnti-Fraud Action Plan• Brief Summary of FY 2007 ActivityBrief Summary of FY 2007 Activity• RecommendationRecommendation• QuestionsQuestions

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BackgroundBackground

• Government Accounting Office & IIA Government Accounting Office & IIA Standards require approval of an Standards require approval of an annual planannual plan

• House Bill 1 (79House Bill 1 (79thth Legislature) requires Legislature) requires the internal auditor to report to the the internal auditor to report to the Board of Trustees and obtain approval Board of Trustees and obtain approval for planned projectsfor planned projects

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Why an Annual Plan?Why an Annual Plan?

• StandardsStandards

• Allows Board to direct/approve audit Allows Board to direct/approve audit resourcesresources

• Provides framework for assessing audit Provides framework for assessing audit contributionscontributions

• Gives senior leadership opportunity to Gives senior leadership opportunity to request assistance/oversightrequest assistance/oversight

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Development MethodologyDevelopment Methodology

• Obtain suggested topics from managementObtain suggested topics from management• Risk Risk assessmentassessment

– Nine risk factors Nine risk factors – Considers materiality, potential for fraud, change in Considers materiality, potential for fraud, change in

resources, change in programsresources, change in programs– Attachment 1 to Annual PlanAttachment 1 to Annual Plan

• PrioritizePrioritize workload based on risks workload based on risks• Internal Audit Director may override some priorities Internal Audit Director may override some priorities

based on media/leadership interestsbased on media/leadership interests• Prepare Annual Audit Prepare Annual Audit PlanPlan (in packet) for Board (in packet) for Board

approvalapproval

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Risk AssessmentRisk Assessment

• Weighted FactorsWeighted Factors– Requested by Supt.Requested by Supt.– Fraud potentialFraud potential– MaterialityMateriality– Assoc. Supt. requestAssoc. Supt. request– Mandated by lawMandated by law– Public scrutinyPublic scrutiny– Mgmt. controlsMgmt. controls– Prior coveragePrior coverage– Change in resourcesChange in resources

• Priority topicsPriority topics– Composite total Composite total

score is rankedscore is ranked– Highest scores earn Highest scores earn

spot on To Do listspot on To Do list– Changes in priorities Changes in priorities

will be submitted to will be submitted to Board for approvalBoard for approval

– Fraud or Fraud or malfeasance may malfeasance may alter plan prioritiesalter plan priorities

Risk

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Results – Key ProjectsResults – Key Projects

• Special projectsSpecial projects– Supt. or Board requested reviewsSupt. or Board requested reviews– Quick turn-around analyses/studiesQuick turn-around analyses/studies– Open records data verification workOpen records data verification work– Concerns received via the HotlineConcerns received via the Hotline– Spontaneous issues requiring quick Spontaneous issues requiring quick

response (e.g., missing funds or response (e.g., missing funds or equipment)equipment)

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Key Projects (continued)Key Projects (continued)

• Review of Supt. contract & expensesReview of Supt. contract & expenses

• Community Education (operational Community Education (operational audit)audit)

• Construction contract monitoringConstruction contract monitoring

• Audit work for external auditors (CAFR)Audit work for external auditors (CAFR)– Cash, payables, inventoriesCash, payables, inventories

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Key Projects (continued)Key Projects (continued)

• Campus AuditsCampus Audits– Unannounced visits (cash and inventory Unannounced visits (cash and inventory

verification)verification)– Full campus audits (one high school & one Full campus audits (one high school & one

middle school)middle school)– Compressed campus auditsCompressed campus audits

• Condensed scope; when principals and Condensed scope; when principals and bookkeepers changebookkeepers change

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Key Projects (continued)Key Projects (continued)

• Annual Review of HEB card programAnnual Review of HEB card program

• Annual Review of Conflict of Interest Annual Review of Conflict of Interest disclosure reports from budget disclosure reports from budget managersmanagers

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Anti-Fraud Action PlanAnti-Fraud Action Plan• Attachment 3 to the Annual Audit Plan Attachment 3 to the Annual Audit Plan

Prepared to provide direction on Prepared to provide direction on detecting, reporting and disposition of detecting, reporting and disposition of potentially fraudulent situationspotentially fraudulent situations– Part I…measures to prevent, deter & detect Part I…measures to prevent, deter & detect

fraudfraud– Part II…procedures to follow in response to Part II…procedures to follow in response to

fraud detectionfraud detection

• The fraud plan complements CAA(Local)The fraud plan complements CAA(Local)CAALOCAL.htmCAALOCAL.htm

Fraud

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Recap of FY 2007 ActivityRecap of FY 2007 Activity

• Operational AuditsOperational Audits– Supplemental PaySupplemental Pay– Textbook Inventory ManagementTextbook Inventory Management– Selected Aspects of Police Department Selected Aspects of Police Department

OperationsOperations– Vehicle use & ReplacementVehicle use & Replacement– CRMSCRMS

• Unannounced Campus Audits (23)Unannounced Campus Audits (23)

Recap

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Recap of FY 2007 ActivityRecap of FY 2007 Activity

• Special ProjectsSpecial Projects– Wage rate update for new construction Wage rate update for new construction

contractscontracts– 5 campus advisory services5 campus advisory services– Accounting for ISA field tripsAccounting for ISA field trips– District wide review of credit card usageDistrict wide review of credit card usage

• Campus Audits (1-MS; 1-ES)Campus Audits (1-MS; 1-ES)• Hotline follow-up (13 concerns)Hotline follow-up (13 concerns)

Recap

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RecommendationRecommendation

• Approve the 2007 – 2008 Annual Audit Approve the 2007 – 2008 Annual Audit Plan, including the Anti-Fraud Action Plan, including the Anti-Fraud Action planplan

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Questions?Questions?

EFFICIENCY is our focus

QUALITY is our goal