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Auditing -
Michigan Office of the Auditor General
Thomas H. McTavish, C.P.A.Auditor General
The Game
Objective of Audit Lifecycle Training
• The training focused on 3 key phases of auditing:- Preparation and Planning- Audit Fieldwork- Audit Completion
• It emphasized:- Events and roadblocks that occur on an
audit.- How to handle those roadblocks. - The need for effective communication and monitoring of audit progress.
Why Audit Life Cycle Training?
• The need for staff to conduct: - more effective and efficient
audits- on time- within scope- within budget
Our Training Dilemma• How to present Audit Lifecycle Training in
an interesting and informative way?• How to get the audit staff to understand
and accept the ideas and put them into practice?
Solution – Auditing The Game• Active participation in the training.
- Staff participating in discussions. - Staff sharing their ideas and experiences.
Audit Circle?PREP & PLANNINGDiscuss with ADA and MGR the direction of the audit. Decide areas for which we need to gain an understanding of the auditee and develop questions.Identify and review previous relevant OAG reports.Review prior audit working papers.Meet with internal audit to discuss audits they have completed or concerns they have in the area that we are reviewing.Obtain internal audit reports, external audit reports, or peer reviews.Prepare entrance meeting agenda.Identify individuals that should attend the entrance meeting.Schedule entrance meeting.Prepare and submit to ADA/MGR audit notification letters.Identify dates for referent meeting and MIS milestones.Obtain organizational charts.Review web site of agency to gather information about the program.Identify agency mission and goals (review web site).Obtain and review news articles relevant to the audit.Conduct research of program including
Appropriation actsEnabling legislationSimilar audits by other states or federal agenciesOversight body’s reports on auditee
Review auditee’s policies and procedures.Identify program revenues and expenditures.Prepare trend analysis (expanding or declining program; population served; number of clients; amount spent).Assign preliminary review areas to staff.Meet with audit crew to discuss possible or known risks and to develop audit methodology and budget.Discuss fraud risks. Determine target date for referent group meeting.Prepare referent group meeting documentationWork on master audit budget and release dates and field work completion.Provide ADA/MGR with referent group meeting documents (T2, audit objectives memo, narrative, and risk matrix) for their review.Make any necessary changes to referent group documents.Provide final copy of referent group documents to ADA/MGR for distribution prior to meeting.Meet with audit crew and re-assess direction of preliminary review and develop possible tests for referent group meeting.Notify ADA/MGR to schedule referent group meeting, when appropriate.Update ADA/MGR on progress and direction.Ask staff about planned time off.Set up audit in TeamMate.Work on audit planning document.
FIELDWORKDevelop procedure summaries in TeamMate.Wrap up working papers for prep & planning and preliminary review phases (staff). Start working paper reviews of prep & planning and preliminary review phases (supervisor). Meet regularly with audit crew to obtain updates and provide direction.Have audit crew inform you or prepare document to indicate possible audit conclusions prior to completion of audit phases. Or this could be completed during audit crew updates – this is helpful for thinking about how the report will come together and also help identify areas that may need more or less audit phase work.Take note of what needs to be completed to wrap up audit phases. Determine if budget is adequate. Complete T2 adjustment if changes to release dates, field work completion, or budget are needed. Review working papers of completed phases.Keep ADA/MGR informed of audit progress and conclusions.Draft audit findings.Meet with agency staff to inform them of audit conclusions and make sure the information is factual.Meet with agency management to inform them of audit findings.Prepare the objectives, scope, and methodology section of audit report.Prepare the report glossary and instruct audit crew to update glossary as necessary.
COMPLETIONTake note of what needs to be completed to wrap up and turn in the report. Determine if budget is adequate.Discuss with ADA/MGR the need for a budget increase, if necessary. Identify individuals that need to be invited to the field closeout meeting.Set up field closeout meeting.Share draft audit findings with ADA/MGR.Share draft audit findings with agency and internal audit.Meet with agency management regarding draft audit findings prior to closeout meeting.Complete working paper reviews.Resolve coaching notes. Review QA working paper review checklist to ensure all documents or tasks have been completed.Complete audit review check-in documents or tasks. Prepare audit crew evaluations.
Establish objectives, scope and budget2 3 4 5 6 7 8
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1START HERE
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Audit approved Staff assigned to audit Prep and planning
Pre
limin
ary
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Com
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AD
A/M
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Refe
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FieldworkDraft findings
Com
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AD
A/M
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Communication with agency
Follow up on agency concerns
Draft report
Fie
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com
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Audit conference
Report editsField closeout
38Communication with
ADA/Manager
Communication with ADA/Manager
Communication with ADA/Manager
40 43
9
Entrance meeting
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1
START HERE
The Black Hole
Report released
Auditing“This is not a game.”
Rules
Roll the dice and move along the board. Each space on the board is associated with a page in the like
colored workbooks. Read the directions in the workbook and
take time to discuss the “problem”.
Everyone must stop at space 38 !
(“the black hole”)
At this time you are assigned another audit and must split your
game faces and split your dice roles until the original audit is
finished.
16
24
Audit assigned
to Superviso
r
Monitor budgets
Game Set -Up
• Game Board
• Game Pieces
• Workbooks Prep andPlanning
Fieldwork Completion
Rules of the Game:
• Players take turns rolling the dice and moving along the game board. All players turn to the workbook page corresponding to the space the player landed on.
• All players brainstorm as a team to solve the audit related problem identified on that page of the workbook. Write the answers to the problem in the workbook.
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1START HERE
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Audit approved Staff assigned to audit Prep and planning
Pre
limin
ary
revie
w
Com
mu
nic
ati
on
wit
h
AD
A/M
an
ag
er
Refe
ren
t meetin
g
FieldworkDraft findings
Com
mu
nic
ati
on
wit
h
AD
A/M
an
ag
er
Communication with agency
Follow up on agency concerns
Draft report
Fie
ldw
ork
com
ple
ted
an
d r
ep
ort
su
bm
itte
d
Audit conference
Report editsField closeout
38Communication with
ADA/Manager
Communication with ADA/Manager
Communication with ADA/Manager
40 43
9
Entrance meeting
6
6
1
START HERE
The Black Hole
Report released
Auditing“This is not a game.”
Rules
Roll the dice and move along the board. Each space on the board is associated with a page in the like
colored workbooks. Read the directions in the workbook and
take time to discuss the “problem”.
Everyone must stop at space 38 !
(“the black hole”)
At this time you are assigned another audit and must split your
game faces and split your dice roles until the original audit is
finished.
16
24
Audit assigned
to Superviso
r
Monitor budgets
Establish objectives, scope and budget
38
Everyone MUST stop hereAt this time, you are assigned another audit and must split your game pieces
and your dice rolls until the original audit is finished. For each dice roll, you MUST
move one space toward completion (green section) and the remaining spaces
toward your new audit (blue section).
18As you begin testing, you find that your
understanding of how the agency processes transactions is way off.
Go back 2 spaces.
How can you ensure that you have a good understanding of the agency’s business
processes?
Brainstorm as a team.________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
7Your entrance meeting is still two weeks
away.
What can you do to stay productive while waiting for the meeting?
Brainstorm as a team.
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
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1START HERE
Audit approved Staff assigned to audit Prep and planningP
relim
inary
revie
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Com
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A/M
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Refe
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Communication with ADA/Manager
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Entrance meeting
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START HERE
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Audit assigned
to Superviso
r
Prep and Planning Problems
Space 5 : You are ready for the entrance meeting but it hasn’t been scheduled yet. What could you do to ensure that the entrance meeting is ready when you are?
Space 6: You are assigned one recently hired auditor and one auditor with no experience with the agency. How do you effectively conduct prep and planning given the experience of your team?
Space 9: Nobody at the agency seems to be able to answer your preliminary internal control questions. What could you do to resolve this situation timely?
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1START HERE
Audit approved Staff assigned to audit Prep and planningP
relim
inary
revie
w
Com
mu
nic
ati
on
wit
h
AD
A/M
an
ag
er
Refe
ren
t meetin
g
Communication with ADA/Manager
9
Entrance meeting
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6
1
START HERE
16
Audit assigned
to Superviso
r
Space 2: Your audit has been approved by the Auditor General. Proceed with prep and planning phase. Roll again.
Space 10: You’ve established your preliminary objectives and your ADA concurs with your proposal to increase the budget by 600 hours. Keep up the good work! Take another turn.
Space 14: Referent meeting went very well. The group liked your audit objectives with just a few small changes. What should you do now?
Prep and Planning Successes
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FieldworkDraft findings
Com
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wit
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AD
A/M
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Communication with agency
Follow up on agency concerns
Communication with ADA/Manager
24
Monitor budgets
Fieldwork Problems
Space 20: Agency is not providing you electronic data files on a timely basis. How can you avoid this delay and what should you do if this occurs?
Space 24: You evaluate your budget and actual hours and determine that your audit is going to be significantly over budget. What should you do?
Space 29: Agency disagrees with your audit findings. How could you handle these disagreements while still in fieldwork to ensure timely processing of the audit report?
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FieldworkDraft findings
Com
mu
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wit
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AD
A/M
an
ag
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Communication with agency
Follow up on agency concerns
Communication with ADA/Manager
24
Monitor budgets
Fieldwork Successes
Space 17: You evaluated budget and actual hours, and staff release dates. You are still on track. Roll again.
Space 19: Staff auditor that was delegated responsibility for drafting certain report sections (report letter; table of contents; description; objectives, scope and methodology) does an excellent job! Roll again.
Space 28: Agency agrees with your audit findings. Advance to 32.
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Draft report
Fie
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Audit conference
Report editsField closeout
38Communication with
ADA/Manager
Communication with ADA/Manager
40 43
The Black Hole
Report released
Audit assigned
to Superviso
rCompletion Problems
Space 33: Agency provides new evidence at field closeout meeting. What can an audit team do to avoid this situation?
Space 39: Your report is held up at a report processing step for which you are responsible.What should you do to get the report moving?
Space 41: Agency preliminary response was due 3 weeks ago. What can you do to help expedite this step in the report process?
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Draft report
Fie
ldw
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com
ple
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su
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Audit conference
Report editsField closeout
38Communication with
ADA/Manager
Communication with ADA/Manager
40 43
The Black Hole
Report released
Audit assigned
to Superviso
rCompletion Successes
Space 34: Report writing going well. Good job.
Space 43: Congratulations! Audit conference is a huge success. Advance to 45.
Space 45: Your HIGH IMPACT REPORT was issued TIMELY. You've won the AOPTA! Go out to lunch!
Feedback
• …excellent way to get everyone to participate.
• …much better than listening to a lecture on the topic.
• …very creative – a great group effort in a relaxed atmosphere where people felt comfortable participating.
• …the game was fun.
Feedback
• …it gave me a better overall picture of the organization, my responsibilities, my supervisor’s expectations, what is expected of supervisors, and a whole perspective of the audit from start to finish.
• … informative and included all of the items in the audit process.
Feedback
• …as a staff auditor, it was good to see the entire cycle and understand what is going on besides testing. This helped me to understand what I can do to help the process.
• …provided a good picture of how an audit is administered.
Odds & Ends
• We spent about 3 hours in the 8 hour Audit Lifecycle seminar playing The Game.
• We compiled the answers from the workbooks and posted the questions and answers on our intranet for staff to reference.
• We developed The Game using Power Point. We produced the game board, booklets, and game pieces completely in-house with the assistance of our Office Services staff.
Contact Us
If you are interested in learning more about The Game contact Melissa or Allison at:
Questions? Comments?
