HomeMy WebLinkAbout03.b. Receive introduction to internal audit process and audit plan for 2019 and 2020 Page 1 of 7
Item 3.b.
CENTRAL SAN
Y-109-ITMEN ME
June 18, 2019
TO: ADMINISTRATION COMMITTEE
FROM: ERICA BROOKS PETERS, SENIOR INTERNALAUDITOR
REVIEWED BY: PHILIP LEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION
ROGER S. BAILEY, GENERAL MANAGER
SUBJECT: RECEIVE INTRODUCTION TO INTERNALAUDIT PROCESS AND AUDIT
PLAN FOR 2019 AND 2020
Attached is the presentation for the above item.
Strategic Plan Tie-In
GOAL ONE: Provide Exceptional Customer Service
Strategy 3- Maintain a strong reputation in the community
GOAL THREE: Be a Fiscally Sound and Effective Water Sector Utility
Strategy 2- Manage costs
ATTACHMENTS:
1. Presentation
June 18, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 24 of 67
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01
INTRODUCING THE
INTERNAL AUDIT PROCESS
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Internal Audit Methodology and Phases
2019 Audit Plan
Internal Audit Plan Maturity Model
Annual Audit Plan Framework
2020 Audit Plan Key Dates
Q& A
Page 3 of 7
Internal Audit Methodology
Risk Based Internal Audits
Audit
Planning
Internal
Audit
Report
Control
Testing
Audit Planning Phase
Identify and confirm objectives, risks, scope and project timeline.
Gathering Preliminary Information
• Information gathering
• Internal controls questionnaire
• Identify preliminary risks
•Scope and objectives
Controls Risk Assessment
• Understand the process
• Results in business process flow/narrative
• Map risks to controls
• Determine key controls to test
• Identify preliminary internal control opportunities
• Determine testing strategy
June 18, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 26 of 67 2
•
A sample of Sample questions
Test identified transactions will be will be discussed Testing results will
controls. selected from a with the auditee as be shared with the
report of testing is auditee.
population data. performed.
Auditee will be kept
informed of potential Auditee will be able to The final audit report will
control opportunities in review the draft of the be shared with Executive
advance of the draft audit audit report and respond. Management and the
Board.
report.
Page 5 of 7
What to Expect During an Audit
• Interviews and observations
• Data (i.e. system reports or supporting documents)
Audit
Requests • Confirmation of processes and controls
OL �4
14 111111, A F
• Project scheduling
Audit Timing • Ongoing coordination
L-,,A
2019 Calendar Year Internal Audits"
Audit Timeline
Revenue Controls Part I In progress
Contract Management Summer 2019
Revenue Controls Part 11 Fall 2019
IIIIIIIIIIIIIIIIIL
**The Internal Audit Plan is flexible and subject to change based on events or issues brought to
Internal Audit's attention.The contract(s)to be included in the Contract Management audit will be
determined at a later date.Please note that the Audit Plan represents approximately 60%of the total
project work for 2019.Beginning in the summer of 2019,other projects will include consulting on the
ERP implementation to assist Management with the approach on redesigning the control framework
and completion of the 2020 Audit Plan.Audits may be performed by Internal Audit,Central San staff
supervised by Internal Audit and/or external consultants.
June 18, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 28 of 67 4
Page 6 of 7
The Annual Audit Plan Maturity Model
/� Manage and Optimize(FY21
+Future Years)
- The annual audit planning
Mature the Function(FY19& process is mature with a
FY20) consistently improving
Develop the Audit Universe and framework.
Build the Base (through the Audit Plan Framework. -Internal Audit is fully
FY18/19) Build arisk-based Audit Plan for aligned with Management
Strategies and ERM at
-Establish the Internal Audit 2020. Central San.
(IA)Function through -Improve the annual audit
completion of the Board Policy planning process and align the -IA is compliant with
and administrative procedure, Audit Plan with Central San's fiscal "Institute of Internal
i.e.IA Charter. Auditors'(IIA)standards
year.
-Develop the Audit Plan based with a Quality Assurance
on known processes and program in place.
management requests.
-Introduce the framework and
methodology of the Internal
Audit Function to
Management.
Annual Audit Plan Framework
ControlInternal
• ERM Strategic Risk Assessment • Identify Auditable
• Operational Level RiskEntities
F- Executive . Map Potential Audits
Management Surveys to Risk and Rank
• Operational
Management
Central San's Interviews
Management Risk Audit Universe
Assessment
June 18, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 29 of 67 5
Page 7 of 7
2020 Audit Plan - Target Key Dates
Final Audit Plan Presentations
Executive
Management 11/2019
Managers 12/2019
Board 01/2020
June 18, 2019 Regular ADMIN Committee Meeting Agenda Packet- Page 30 of 67 6