Transcript INTRODUCTION - Association Of Government Accountants

Robert Gray, cgfm
USDA-OIG regional Inspector General (ret)
[email protected]
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AGENDA
• Introduction.
• Why Internal Controls are often not Effective.
• Basic for this AGA Audience but means Success or
Failure for Participating Organizations.
• The Child and Adult Care Food Program.
• Roles of the Auditors and Those Being Audited.
• Summary.
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USDA – A Profile of America or I’ll bet that
you’ve participated in a USDA Program.
USDA programs include everything from
farming, forest service, business loans,
housing loans, to all of the USDA feeding
programs – food stamps, feeding infants and
the elderly to the school lunch program.
Even if you lived in Beverly Hills and went to
Beverly Hills High School (90210), if you ate in
the school cafeteria, you participated in USDA.
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Let me tell you about one USDA program.
Child and Adult Care Food Program (CACFP)
• $2.5 billion program.
• Feeding 3+ million children and adults daily.
• In over 200,000 day care homes and centers.
• One of my last national audits.
Results were significant.
• Complete breakdown in Internal Controls.
• Program could have been terminated.
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Post-Retirement
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Deer in the Headlights.
Instead of Gotcha - A Better Way to Help.
It’s all about Internal Controls.
Back to the Basics.
Do Federal Regulations Help?
Is there a Need?
Response has been Amazing.
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MY CLIENTS NOW INCLUDE
• INDIVIDUAL BUSINESSES.
• STATEWIDE ORGANIZATIONS IN WASHINGTON, OREGON,
WISCONSIN, UTAH, CALIFORNIA, LOUISIANA.
• NATIONAL ORGANIZATIONS THAT REPRESENT BUSINESSES
THAT PARTICIPATE IN USDA AND OTHER FEDERAL/STATE
PROGRAMS.
• SOFTWARE COMPANY THAT PARTICIPATES IN USDA
PROGRAMS.
• NATIONAL LOBBY FIRM.
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ARE AGENCIES TAKING CONTROLS FOR GRANTED?
DEAR MR. GRAY,
OUR ANNUAL CONFERENCE OF DAY CARE PROVIDERS WILL BE HELD
ON MAY 21-23, 2009.
WE WOULD BE HONORED TO HAVE YOU SPEAK ABOUT THE
IMPORTANCE OF ESTABLISHING INTERNAL CONTROLS DURING OUR
CONFERENCE.
SINCERELY,
(STATE) OFFICE OF EDUCATION
CHILD NUTRITION PROGRAMS
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Role of Federal Auditors:
• Are we fulfilling our mission?
• What does this mean: “Work with
management teams in activities that promote
economy, efficiency, and effectiveness or that
prevent and detect fraud and abuse….”
• What do the Gov. Auditing Standards say
about Internal Controls?
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How do we convince Agencies of the Importance
of Internal Controls?
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How about the Gov. Audit Standards?
Look to the real world – so many examples.
My grandson’s tatoos.
Root of all problems.
Preparation for an audit – from two weeks to
two days.
• Why wouldn’t an agency want controls?
• Not hard to convince.
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Example - Do Regulations Help?
7 CFR 226 States: Each or renewing institution must submit
information sufficient to document that it has internal
controls in effect to ensure accountability.
Internal Controls are defined as: The policies, procedures, and
organizational structure designed to reasonable assure that:
1. Program achieves its intended results.
2. Program resources are used in a manner that protects
against fraud, waste, and mismanagement.
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“Work With Management Teams to … Prevent
and Detect Fraud and Abuse.”
A Better Way to “Work With” - Reach Out,
Teach, and Then Audit.
Auditors are the Experts (role of AGA?):
1. Define Internal Controls.
2. Teach the Audit Process.
3. Help Agencies to Understand the Yellow
Book, Develop Internal Control Handbooks,
and to Conduct Self-Assessments.
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Speak to the Basics
Doesn’t have to be complicated:
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Separation of Duties.
Second Party Reviews.
Adequate Documentation.
Training.
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What are not internal controls:
• Trust is NOT an internal control.
• Expertise and Experience are NOT internal
controls.
• Friendship is NOT an internal control.
• Having a relative working for you is NOT an
internal control.
• Being intelligent is NOT an internal control.
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Walk through the Audit Process:
• Stay involved. Appoint a “go-to” person.
• Know your rights and responsibilities according to
audit standards.
• Understand audit evidence.
• Frequent Meetings – Not Just Entrance and Exit
Conferences. The “drop-by” meeting.
• Resolve Issues as soon as possible.
• Vital to understand Internal Controls – Impact on
Audit Process.
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Summary - 1
Auditors – “We are Here to Help.”
• Auditors and Accountants are the Internal
Control Experts.
• Work with Managers to Prevent Fraud, Waste
and Abuse.
• Use Preventive Audit Approaches.
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Summary - 2
Auditees - “We are glad to see you.”
• Understand the Audit Process – Your Rights and
Responsibilities, Audit Evidence, Stay Involved.
• Government Audit Standards.
• Internal Controls are the First Line of Defense.
• Create an Internal Control Handbook.
• Conduct a Self-Assessment.
• Document Everything.
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