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AASHTO Internal Audit Guide Task Force Changes to the ...

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AASHTO Internal Audit Guide Task ForceChanges to the Internal Audit GuidePresented by the Task Force Co-Chairs
Alice S. Wilson, CPA, Executive Director, Office of Audits Kentucky Transportation CabinetStephen Kirk, CIA, CGAP,Director Office of Internal Audit, ChiefInternal Auditor, Illinois Department of TransportationPresented: August 13, 2014
Internal Audit Guide Task Force Members
Alice Wilson, Kentucky, Co-ChairStephen Kirk, Illinois, Co-ChairSandra Healy, IdahoBenito Ybarra, TexasKristen Burkhart, WyomingWayne Rogers, North CarolinaDavid Bruce, FHWADaryl Splichal, North DakotaJohn Cotter, MichiganBecky Greenway, GeorgiaWayne Cobb, Alabama
Agenda
Task Force CompositionGround RulesWhy Change the Guide?Areas Covered in the new Internal Audit GuidePractice AidsBenefitsContentDevelopment PlanDevelopedIn ProgressPossible ListFeedback and Contact Information
Task Force
We have had a very busy year. We spanned 3 Time Zones, which added to the difficulties in scheduling times for 11 extremely busy people to meet.We have representatives from 10 states and 1 Federal Partner from FHWA.We represent both small and large Internal Audit shops.We represent states with both combined as well as separate Internal and External Audit functions.We represent audit shops that follow GAGAS, IIA Standards or a combination of both.The Co-Chairs would like to thank the members of the Task Force for their extensive time commitment and contributions to this effort over the last year.
Ground Rules
We recognized that audit shops are set up differently at the various State Transportation Departments. Some separate Internal and External Audit work and some utilize the same auditors for both functions.Regardless of who is conducting the Internal Audit function, we decided to focus exclusively on Internal Audit work. External Audit activities are already addressed in a separate guide and are therefore not covered in this guide.
Why Change the Guide?
Many expressed a need to have a reference tool that addressed Internal Auditing for all modes of Transportation. The previous guide focused on Highway Construction. There was also a desire to have more program specific audit information.In order to better address everyone’s needs, the Task Force changed the composition of the Internal Audit Guide. The Guide itself now covers the basic guidance that cuts across all modes of Transportation, rather than a specific program area.Program specific audit guidance will now be addressed in individual Practice Aids that will focus on audits of specific programs and activities. Practice Aids will be added over time as they are developed and each Practice Aid can now be updated separately whenever necessary rather than modifying the entire Internal Audit Guide.
Areas Covered in the New Internal Audit Guide
Chapter 1: Introduction (Revised);Chapter 2: Auditing Standards (Revised);Chapter 3: Types of Engagements (Revised);Chapter 4: Audit Risk Assessment and Audit Plan (Revised and expanded into a separate chapter);Chapter 5:Internal Control (Revised and expanded into a separate chapter);Chapter 6: USDOT Agencies and Descriptions (Added since the original draft last year)Chapter 7: Stewardship, Oversight, Laws and Regulations (Revised and expanded into a separate chapter added Stewardship since the original draft last year);Chapter 8: Innovative Financing and Construction Delivery Methods; (Added since the original draft last year);Chapter 9: General Audit Program (Revised);Glossary (Revised).
Chapter 1: Introduction
Updated the introduction to address the changes to the Guide
Chapter 1: Introduction
SectionsOverviewWhy a Guide? Provide Internal Auditors a reference tool that addresses the following:Internal ControlsRisk AssessmentCompliance with Applicable Laws and RegulationsFederal ProgramsInnovative FinancingEffective Use of ResourcesAuditing StandardsEngagements- Overview of Internal Audit responsibilities.
Chapter 2: Auditing Standards
Added a discussion of GAGAS and IIA requirements and included a comparison between the requirements
Chapter 2: Auditing Standards
SectionsGenerally Accepted Government Auditing Standards (GAGAS)International Standards for the Professional Practice of Internal Auditing, Institute of Internal Auditors (IIA)Comparison of GAGAS and IIA Standards
Chapter 3: Types of Engagements
Updated the languageCovers descriptions of types of engagementsAdded information pertaining to Information Technology related auditsExpanded Non-Audit Services and added Consulting.
Chapter 3: Types of Engagements
SectionsTypes of Engagements OverviewTypes of Engagements- Financial, Performance, Program Effectiveness and Results, Internal Control, Compliance, Information Technology, Follow-UpAttestation Engagements- Examination, Review, Agreed Upon ProceduresNon-Audit or Consulting Services
Chapter 4- Risk Assessment and Development of an Audit Plan
Risk Assessment was made into its own Chapterpreviously part of an Appendix and the content was expanded to cover the whole risk assessment process through the development of a work plan.
Chapter 4- Risk Assessment and Development of an Audit Plan
SectionsAgency Risk Assessment OverviewIdentify Audit Universe or Auditable UnitsBenefits of Auditable UnitsPermanent FilesRisk AssessmentRisk Assessment CriteriaConsideration of Internal Controls and Common ThreatsInternal Control WeaknessesAnalysis of Internal Audit ResourcesDeveloping The Audit Work Plan
Chapter 5: Internal Control
Updated to reflect the 2013 COSO changes and expanded the discussion.Added Information Technology Related Controls with a focus on Control Objectives for Information and Related Technology (COBIT) Standards.
Chapter 5: Internal Control
SectionsInternal Control OverviewCOSO CategoriesFive Components of COSOCOBIT Framework and COBIT DomainsUnderstanding an Auditee’s Internal ControlsDocumenting Internal ControlsInternal Controls Over Financial ReportingEvaluation of Internal ControlsClassifying Internal Control Weaknesses
Chapter 6 USDOT Agencies
SectionsUSDOT Agencies and Descriptions General OverviewOffice of the SecretaryFederal Aviation AdministrationFederal Highway AdministrationFederal Motor Carrier Safety AdministrationFederal Railroad AdministrationFederal Transit AdministrationMaritime AdministrationNational Highway Traffic Safety AdministrationOffice of Inspector GeneralPipeline and Hazardous Materials Safety AdministrationResearch and Innovative Technology AdministrationSaint Lawrence Seaway Development CorporationSurface Transportation Board
Chapter 7: Stewardship, Oversight, Laws and Regulations
Made this a separate chapter.Previouslypart of an “Essentials” chapter.Expanded the chapter and listings.Added Stewardship and Oversight.
Chapter 7: Stewardship, Oversight, Laws and Regulations
Stewardship and Oversight Agreement between the FHWA and State Transportation AgenciesHierarchyFederal Requirements (2 CFR 200)AuditRequirements (Part of 2 CFR 200)Catalog of Federal Domestic Assistance (CFDA)State Law
Chapter 8: Innovative Financing and Construction Delivery Methods
SectionsGrant Anticipation Revenue Vehicle (GARVEE)Transportation Infrastructure Finance Innovation Act (TIFIA)Section 129 Loans (23 U.S.C. 129 (A) (7)Tax Increment Financing (TIF)Private Activity Bonds (PABS)Public-Private Partnerships (P3s)Design- Build (DB)Construction Manager/General Contractor (CMGC)
Chapter 9: General Audit and Attestation Programs
Expanded the previous General Audit Program to include more detailed stepsAdded a General Attestation Audit Program
Chapter 9: General Audit Program
SectionsAudit Program Purpose and ScopePhasesA. Preliminary Survey (Planning) PhaseB. Execution (Fieldwork) PhaseC. Closing (Reporting) PhaseAttestation Program Purpose and Scope
Glossary:
The glossary was expanded to address additional terms.
Benefits of Practice Aids
Only an individual Practice Aid has to be amended rather than the whole Internal Audit Guide if there are changes made to a specific program.When there is a new program, a new Practice Aid addressing that program can be developed without amending the whole Internal Audit Guide.Having separate Practice Aids by subject provides easier use. Each Practice Aid will focus exclusively on one program or activity.Allowed the Task Force to break this project into manageable pieces through various projects rather than take on one huge project at once. Therefore, allowing us to provide usable products to AASHTO members more quickly.To expedite this process, we would like to suggest having members submit audit programs to the Task Force for review and approval to be added to the site.
Practice Aid Content
Program Description;Statutes and Regulations;Catalog of Federal Domestic Assistance (CFDA#) (if applicable);Audit Scope and Objectives;Audit Program.
Practice Aid Development Plan
The Internal Audit Task Force will haveongoingresponsibilities to develop Practice Aids. As you will see from the list we began to develop, there is an extensive number of topics. Therefore, we need your assistance in providing drafts so the project can move forward more effectively. Please take the time to look at the various audits you have conducted. If you have an existing Audit Program for one of the areas or one you think should be included, please provide it for review by the Task Force. Working on this project together we will be able to accomplish more and arrive at a better product.
Completed Practice Aids
Disadvantaged Business Enterprise (DBE) Initial Certification ProcessMetropolitanPlanning Organizations (MPOs)
Practice Aids Currently Under Development
Federal AidBillingProcurement CardsMaterialsHighway Planning and Construction (CFDA 20.205)Professional Services ConsultantsAirport Improvement Program, (CFDA #20.106)Transit GrantsSubrecipientMonitoring
Possible Practice Aids
Disadvantage Business Enterprise (DBE) Labor & Workforce UtilizationMonitoringValue EngineeringLiquidated DamagesRecreational TrailsProgramFerry BoatProgramCongestion Mitigation and Air Quality Program (CMAQ)
Possible Practice Aids Continued
Bridge Inspection ProgramBridge Project Design & ReviewBridge Analysis and Load Capacity DeterminationsBridge Maintenance & RepairOversize Overweight PermitsOutdoor Advertising (Billboards)Motor Pool and Vehicle Fleet OperationsFederal Funding Accountability & Transparency Act (FFATA) Reporting
Possible Practice Aids
Land AcquisitionHighway Construction Project Funds ManagementHighway Construction Project Cost EstimationHighway Construction Project Planning and Preconstruction ActivitiesHighway Construction Public InvolvementHighway Construction Procurement- Bidding & Awarding Construction ContractsHighway Construction Contractor Payments
Proposed Practice Aids Continued
Highway Construction Contractor Change OrdersHighway Construction Site AuditsHighway Construction Contract Administration and CloseoutHighway Construction Consultant SelectionHighway Construction Consultant Contract ModificationsHighway Construction Consultant PaymentsHighway Safety Improvement ProgramHighway Rail Crossing Safety Program
Possible Practice Aids Continued
Operational Safety Inspections of AirportsOperational Safety Inspections of HeliportsAircraft and Pilot RegistrationAircraft Maintenance of State FleetAirport Construction Project Funds ManagementAirport Construction Project Cost EstimationAirport Construction Project Planning and Preconstruction Activities
Possible PracticeAids Continued
Airport Construction Procurement- Bidding & Awarding Construction ContractsAirport Construction Contractor PaymentsAirport Construction Contractor Change OrdersAirport Construction Site AuditsAirport Construction Contract Administration and CloseoutAirport Construction Consultant SelectionAirport Construction Consultant Contract ModificationsAirport Construction Consultant Payments
Proposed Practice Aids Continued
Capital Assistance Program for Elderly Persons with Disabilities (CFDA#20.513)Transit Capital Investment Grants (CFDA#20.500)Transit Formula Grants (CFDA#20.507)Formula Grants for Other than Urbanized Areas, (CFDA#20.509)Transit State Planning & Research (CFDA#20.515)
Possible Practice Aids Continued
Motor Carrier Safety (CFDA#20.218)- Truck and Charter Bus Inspections;Motor Carrier Safety (CFDA#20.218)- Truck and Charter Bus Compliance Reviews of New Entrants;Motor Carrier Safety (CFDA#20.218)- Safety Audits of Trucking and Charter Bus Companies;State Traffic Safety Improvement Grants (CFDA#20.600).National Priority Safety Programs (CFDA#20.616).High-Speed Rail Corridors and Intercity Passenger Rail Service – Capital Assistance Grants (CFDA#20.319)Railroad Agreements;
Feedback- The Task Force Needs Your Input
Provide ideas for Practice AidsSubmit Audit Programs to the Task Force pertaining to the various topics for screening and formatting into Practice Aids by the Task Force
Where do I send my Feedback?
Alice Wilson, CPA- Co-Chair (Kentucky)Alice.Wilson@ky.gov(502) 782-4041Stephen Kirk, CIA, CGAP- Co-Chair (Illinois)Stephen.Kirk@Illinois.gov(217)557-1258

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AASHTO Internal Audit Guide Task Force Changes to the ...