Audit Insights - Summer 2023

Volume 1, Issue 3

What makes a good audit client Have you wondered how to be a superstar among audit clients?

Everyone with whom we interact during our audits impact the success of our work. Click on this link to discover some characteristics of great audit clients.

Annual Audit Plan Each year we prepare a plan for our work based on a risk assessment.

This plan is reviewed and approved by the Audit Advisory Committee and the School Board. The plan for 2023-2024 was approved on June 27 and includes audits of construction projects, firewall security, third-party relationships, student enrollment, school safety and security, and more.

The full plan is available on our website at this link. Internal Audit Plan 2023-2024 Internal Audit Plan 2023-2024

Internal Audit Annual Report Want to know what we have been up to over the past year? All is revealed in our annual report available at link: this Internal Audit Annual Report In the report, you will see how we compare to other large Florida districts’ internal audit departments. You can read summaries of all the work we performed over the last year and learn how many and what types of findings were noted in last year’s school audits. You will also see how our construction project audits, which are outsourced, have recovered almost four times as much money as we spend on them, with refunds from contractors going back into OCPS’ construction program.

IT General Cont

rols – Phase I

ESE Substitutes

Continuity of Operations Plan Program

IDEA Expenditures

Compensation

Services

Reports issued since our last newsletter • IDEA Expenditures • Compensation Services • Continuity of Operations Plan Program • ESE Substitutes • IT General Controls – Phase I All our reports are available for your reading enjoyment on our website at https://www.ocps.net/departments/internal_audit/reports

Internal Audit Mission Internal.Audit@ocps.net

We provide independent, objective assurance that adds value and enhances the district’s performance,accountability, and transparency.

MILESTONES IN AUDIT HISTORY

THE 20TH AND 21ST CENTURY FINANCIAL ERAS MERGED In this issue, we go back for a last time to examine what key events helped shaped the financial world in the late 20th and early 21st first centuries, as one of the most talked-about regulations came into existence. One of these key events was named at that time “the largest bankruptcy reorganization and accounting fraud in U.S. history”.

1992

2002

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) published Internal Control - Integrated Framework, used by businesses in the US to design, implement, and conduct systems of internal control over financial reporting and to assess those systems’ effectiveness.

2001

American energy company Enron declared bankruptcy, and its accounting firm Arthur Andersen (one of the five largest audit and accountancy partnerships in the world at that time) was effectively dissolved.

By the use of accounting loopholes, the misuse of mark-to-market accounting, special purpose entities, and poor financial reporting, they were able to hide billions of dollars in debt from failed deals and projects. Several executives misled Enron’s board of directors and audit committee on high-risk accounting practices and pressured Arthur Andersen not to look at those issues. Enron’s bankruptcy was estimated to be around $63.4 billion.

2002 American telephone company WorldCom was the secondlargest long-distance telephone company at the time. From a period of time, senior executives orchestrated a scheme to inflate earnings in order to maintain the company’s stock price. The fraud was uncovered in June 2002 when WorldCom’s internal audit unit discovered over $3.8 billion of fraudulent balance sheet entries. Eventually, WorldCom was forced to admit that it had overstated its assets by over $11 billion. At the time, it was the largest accounting fraud in American history.

INSIGHTS

The Sarbanes-Oxley Act (commonly called Sarbanes-Oxley or SOX) was enacted as a reaction to a number of major corporate and accounting scandals, (including the ones we highlighted) which brought various accountability provisions for both management and auditors and extended the duties of auditors to include assessing the adequacy of internal controls over financial reporting.

The sections of the bill cover responsibilities of a public corporation’s board of directors, add criminal penalties for certain misconduct, and require the Securities and Exchange Commission to create regulations to define how public corporations are to comply with the law.

2003

The Audit Advisory Committee was established by the OCPS School Board. The purpose of this committee is to assist the School Board through its Internal Audit Department in assuring the department supports the Board in fulfilling its oversight responsibilities for the integrity of the district’s financial statements, the independent auditor’s qualifications and independence, the performance of the district’s internal audit function and independent auditors and the effectiveness of the district’s internal control system and annual risk assessment.

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Meet the Auditor

Linda Lindsey School Board Internal Auditor

Linda is a CPA and has spent her entire career in auditing, except for a five-year stint as the Chief Financial Officer for the Greater Orlando Aviation Authority. A native Floridian, she attended Mollie Ray ES before her family moved to Lakeland. She has an accounting degree from Florida Southern College.

Linda spent 18 years in external auditing with large CPA firms specializing in local governments and colleges and universities. She has been with OCPS since 2000 and she is very involved with the internal auditors’ group of the Council of the Great City Schools.

As part of other audit duties, she also serves as an external peer reviewer for other internal audit departments through the Association of Local Government Auditors.

Some interesting facts about Linda are the following: she serves as vice chair of the City of Winter Park’s Utilities Advisory Board, she’s a Daughter of the American Revolution, plays in the handbell choir at her church and enjoys time in the mountains of western North Carolina.

Internal.Audit@ocps.net

An OCPS Internal Audit Newsletter