Audit Facts and Frequently Asked Questions
Services/responsibilities of the City
Auditor
The City Auditor performs an independent, objective assurance
and service within the City of Clearwater government
to examine and evaluate its activities as a service to our City.
We primarily conduct program and revenue audits and serve as
consultants to all departments and residents on a variety of
areas and topics ranging from payroll processes, sales tax
requirements, and proper controls to reduce the possibility of
fraud, abuse, or waste.
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What is an audit?
An audit is a detailed examination or evaluation for accuracy
of an entire City department, a division within a department,
contract,
lease,
agreement, item,
function or activity to provide reasonable assurance
that objectives and goals will be met efficiently and economically.
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Types of Audits
The City Auditor performs program (operational, performance),
compliance, and revenue audits to independently determine that:
- Activities and programs being implemented have
been properly authorized.
- Activities and programs are being conducted
in a manner contemplated to accomplish the objectives intended
by the Council and/or City Manager.
- Activities or programs are performed in an efficient
and effective manner.
- Tasks and functions are performed in compliance
with applicable laws, policies, and procedures.
- Revenues are being properly collected, deposited,
and accounted for.
- Resources, including funds, property, and personnel
are adequately safeguarded, controlled, and used in a faithful,
effective, and efficient manner.
- Any suspicious or questionable indications of
fraud, abuse, or illegl acts that may have taken place during
the process of an audit.
- Operating and administrative
procedures and practices, systems, or accounting internal control
systems and administrative controls have been established
by management, and are being utilized adequately.
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Revenue audits
The City of Clearwater, like most Florida cities, funds the
majority of its operations from revenue obtained through numerous
sources, namely the various types of taxes (property, communications,
etc.,), user fees (payment for municipal services such as recreation,
parking meters, utility services, etc.), fines, and licenses.
Based on the importance of revenue to the City of Clearwater,
the City Auditor conducts examinations of other government agencies
and companies required to collect and remit revenues to ensure
that the City is receiving all revenue lawfully entitled.
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Independence and Objectivity
Pursuant to standards proclaimed by the Institute of Internal
Auditors (IIA), the City Auditor Department is independent when
it can carry out its work freely and objectively. Independence
permits
auditors to render the impartial and unbiased judgments essential
to the proper conduct of audits. It is achieved through organizational
status and objectivity. Objectivity is an independent mental
attitude that auditors must maintain in performing audits.
Auditors are not to subordinate their judgment on audit matters
to that of others. Objectivity requires auditors to perform in
such a manner that they have an honest belief in their work product
and that no significant quality compromises are made.
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Internal Controls
Per the Institute of Internal Auditor (IIA) standards, an internal
control is a process within an organization designed to provide
reasonable assurance regarding the achievement of the following
primary objectives:
- The reliability and integrity of information
- Compliance with policies, plan, procedures,
laws, and regulations
- The safeguarding of assets
- The economical and efficient use of resources
- The accomplishment of established objectives
and goals for operations or programs
Controls may be preventive (to deter undesirable events from
occurring), detective (to detect and correct undesirable events
that have occurred), or directive (to cause or encourage a desirable
event to occur).
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How do we determine what to audit?
The following methodology is used to select items, functions,
or programs to audit:
- Potential risk associated with fraud, internal
controls, departmental management, employees, outside governmental
agencies (HUD, EPA, DEP, etc.)
- Largest revenue sources with a high probability
that the City is not receiving its fair share of revenue
- Departments with the largest expenditures/appropriations,
and/or where the City Council, City Manager, and the Public
have indicated are important programs and/or services (outlined
in "Vision"). Items, functions, programs, etc., selected for
audit are compiled into an audit calendar submitted every September
to the City Manager
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Audit calendar
The audit calendar is an audit work plan for the entire fiscal
year (October 1 to September 30) that lists the audits scheduled,
tentative start and completion dates, and estimated budget hours
for each audit. Any calendar amendments are made on a quarterly
basis.
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To whom are audit results reported?
All audit work completed is summarized into a written report
with an introduction, scope, background, observations, recommendations,
and a conclusion. The written report is forwarded to the management
and director of the City department audited, the management of
the applicable (non-city) company audited, and the City Manager's
Office.
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Professional standards and conduct
governing the auditing profession
The City Auditor adheres to generally accepted governmental
auditing standards (GAGAS) where appropriate and maintains independence
and objectivity in the performance of all audit work. Moreover,
the Department complies with the standards for the Professional
Practice of Internal Auditing as promulgated by the Institute
of Internal Auditors (IIA) as well as standards issued by other
professional organizations (AICPA, FICPA, GFOA).
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What is the difference between City/Municipal
auditing and external auditing performed by outside auditing
and/or accounting firms?
An external auditing firm performs primarily a financial audit
of the City's general purpose financial statements. They render
an opinion as to whether or not the City's Comprehensive
Annual Financial Report fairly presents the financial position
of the City at the end of a fiscal year, and also whether or
not the results of City operations and the cash flows of the
City's proprietary and similar trust fund types for the year
then ended are in conformity
with generally accepted accounting principles (GAAP). Their audit
work is done in accordance with generally accepted auditing standards
(GAAS) and Governmental Auditing Standards issued by the Comptroller
General of the United States. The City Auditor performs a continuous
program of independent audits during the year of items, functions,
and departments on a flexible schedule, thus enabling prompt
attention to and correction of any problem areas. The City's
external auditing firm uses some of the work and reports completed
by the City Auditor. The City Auditor can effect needed changes
through its reports and conferences with management and is available
to examine specific areas about which management wishes objective
reports.
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