Office of Inspector General Operations Manual 2014 Revision Prepared by J. Timothy Beirnes, CPA, Inspector General South Florida Water Management District Office of Inspector General INDEX Operating Manual CHAPTER 1 INTRODUCTION CHAPTER 2 PROFESSIONAL CONDUCT CHAPTER 3 ANNUAL WORK PLAN CHAPTER 4 PERFORMANCE AUDITS CHAPTER 5 FINANCIAL AUDITS CHAPTER 6 INFORMATION SYSTEMS AUDITS CHAPTER 7 INVESTIGATIONS CHAPTER 8 INSPECTIONS, EVALUATIONS, and REVIEWS CHAPTER 9 NON-AUDIT SERVICES CHAPTER 10 WORKING PAPERS CHAPTER 11 STAFF DEVELOPMENT CHAPTER 12 QA & REPORT PROCESSING CHAPTER 13 FOLLOW-UP CHAPTER 14 ADMINSTRATIVE ISSUES CHAPTER 15 FORMS South Florida Water Management District Chapter 1 Office of Inspector General Introduction Operating Manual Page 1 of 6 This manual codifies the procedures that staff in the Inspector General’s Office are required to follow in the daily performance of their duties at the District. The Internal Audit Charter (District Policies and Procedures, Sections 101-201 through 101-208) is incorporated by reference. In addition, members of the Office of Inspector General should thoroughly familiarize themselves with the Audit and Finance Committee Charter (District Policies and Procedures, Sections 101-221 through 101-224). Our Mission Our mission is to provide citizens living within the boundaries of the South Florida Water Management District including their Governing Board, elected representatives, and District management with an independent view of operations through objective and professional audits, investigations, reviews, and evaluations of the economy, efficiency or effectiveness of taxpayer-financed programs. Our Vision We strive to be among the best Inspector General organizations in the State, recognized by our customers and our peers for innovation, the integrity of our audit work, and the quality of our reports. We are committed to promoting teamwork in a diverse workforce, and encouraging personal and professional growth. Our Guiding Principles A commitment to quality governs our work. We define quality as work that is: objective and unbiased, accurate, timely and meaningful, and presented in a way that is most useful to our customers. Quality will pervade our work culture, which will be characterized by customer- focused continuous improvement in all that we do. We will strive to routinely meet or exceed customer expectations. To ensure success in achieving our vision, we will: South Florida Water Management District Chapter 1 Office of Inspector General Introduction Operating Manual Page 2 of 6  maintain an absolute, proactive, and long-term commitment to customer- focused, continuous improvement, and  act as role models for the quality values we espouse. Our Goals 1. To enhance District accountability by assessing the performance of programs and functions, and by effectively communicating the results of our work. 2. To search for and to expose illegal, wasteful, or abusive use of public resources. 3. To improve District operations by recommending changes to increase the economy, efficiency, and effectiveness of government run or supported programs and processes. 4. To provide high quality professional services in carrying out the Inspector General's statutory audit responsibilities. 5. To provide a stimulating and rewarding place to work, and to encourage the continuing professional development of our employees. Authority The legal basis for the Inspector General's authority to conduct audits and investigations are contained in Section 20.055, Florida Statutes, Agency Inspector General. Section 373.079(4)(b), Florida Statutes, authorizes the Governing Board to appoint an Inspector General whose scope of work is unrestricted. Our office is independent of District management and cannot be prevented "from initiating, carrying out, or completing any audit or investigation." As such, we also have the authority to audit the records of private firms and nonprofit organizations, which are awarded contracts by the District or receive District funds through South Florida Water Management District Chapter 1 Office of Inspector General Introduction Operating Manual Page 3 of 6 cooperative agreements. We are also responsible for advising on performance measures, standards and procedures, and assessing the reliability and validity of information systems. We also help ensure that there is effective coordination and cooperation with federal and state auditors with a view towards facilitating their work and avoiding duplication. Whistle-Blower Act Sections 112.3187 through 112.31895, Florida Statutes, constitute the “Whistle- blower's Act”. The intent of this act is to prevent retaliatory action against an employee who reports violations of laws or improper use of government office, gross waste of funds, or any other abuse or gross neglect of duty committed by an employee or agent of the District or independent contractor. We are responsible for receiving, investigating, and reporting to the appropriate authorities, at the conclusion of any investigation arising from any disclosure covered under this Act. The Whistle-blower policy outlines the process for disclosing, investigating, and maintaining the confidentiality of information, regarding allegations of violations of the law on the part of an employee or agent of the District, or independent contractor that create a substantial and specific danger to the public's health, safety, or welfare. More information on the Whistle-blower Act is contained in the District’s Whistle-blower Policy (District Policies and Procedures, Sections 101- 101 through 101-113). However, District employees are encouraged to contact our office if they require assistance in interpreting the act and its applicability to their particular circumstances. South Florida Water Management District Chapter 1 Office of Inspector General Introduction Operating Manual Page 4 of 6 Access to Records During an audit, we will require access to records, files, and other information to effectively complete the audit. We have access to any records, data, and other District information per Section 20.055(5)(c), Florida Statutes. We are granted access to all District records and documents; have the ability to request reasonable assistance from appropriate personnel in acquiring requested records and documents; have inspection privileges to all assets owned, leased or borrowed by the District, and have entry privileges to all facilities used by the District. Auditors are expected to maintain the confidentiality of any records that are confidential and are subject to penalties for violating confidentiality. An audit report and related work papers become public record when the audit becomes final. An audit becomes final when it is presented to the Governing Board (Section 119.0713(2)(a), Florida Statutes) Audit Standards The conduct and performance of our audits are guided by professional auditing standards issued by the following standard setting bodies: 1. U.S. General Accounting Office (Government Auditing Standards) (the “Yellow” Book”). 2. Institute of Internal Auditors (International Standards for the Professional Practice of Internal Auditing) (the “Red Book”). Section 20,055(5)(a), Florida Statutes, provides the Inspector General the choice of which standard to follow in conducting audits. Historically, the IG has applied the Yellow Book standards. Types of Audits The U.S. General Accounting Office has issued auditing standards for two basic South Florida Water Management District Chapter 1 Office of Inspector General Introduction Operating Manual Page 5 of 6 types of government audits: PERFORMANCE AUDITS are objective and systematic examinations of evidence for the purpose of providing an independent assessment of the performance of an existing or proposed government organization, program, or activity in order to provide useful information to improve public accountability and decision-making. Performance audits include economy and efficiency and program audits, and are defined as follows. Economy and efficiency audits - include determining (a) whether the entity is acquiring, protecting, and utilizing its resources (such as personnel, property, and space) economically and efficiently, (b) the causes of inefficiencies or uneconomical practices, and (c) whether the entity has complied with laws and regulations concerning matters of economy and efficiency. Program audits - include determining (a) the extent to which the desired results or benefits established by the legislature or other authorizing body are being achieved, (b) the effectiveness of organizations, programs, activities, or functions, and (c) whether the entity has complied with significant laws and regulations applicable to the program. FINANCIAL AUDITS include financial related and financial statement audits, and are defined as follows: Financial related audits - include determining (a) whether financial information is presented in accordance with established or stated criteria, (b) whether the entity has adhered to specific financial compliance requirements, and (c) whether the entity's internal control structure or specific areas of risk over financial reporting are suitably designed and implemented to achieve the control objectives. Financial related audits may include audits of segments of financial statements, contracts and grants, internal control reviews, and financial systems such as payroll or procurement. Financial statement audits - provide reasonable assurance about (a) whether the financial statements of an audited entity present fairly the financial position, South Florida Water Management District Chapter 1 Office of Inspector General Introduction Operating Manual Page 6 of 6 results of financial operations and cash flows, or changes in financial position in accordance with generally accepted accounting principles (i.e., an opinion statement audit), and (b) whether the entity has complied with laws and regulations for those transactions and events that may have a material effect upon the financial statements. Financial Statement audits are typically performed annually by independent certified public accounting firms engaged by the District. The District’s Governing Board selects the accounting firm and the Inspector General manages the contract administrative matters. Responsibilities of District's Management and Staff We operate on the following basic premises, that the District's management and staff:  have a responsibility to apply resources efficiently, effectively, and economically so that taxpayers receive value for their money,  are accountable to the public and to other levels and branches of government, and  are responsible for establishing and maintaining effective internal control systems to ensure:  goals and objectives are met,  district assets and resources are safeguarded,  laws and regulations are followed, and  reliable data are obtained, maintained, and accurately reported. South Florida Water Management District Chapter 2 Office of Inspector General Professional Conduct Operating Manual Page 1 of 2 PROFESSIONAL CONDUCT This section concerning professional conduct constitutes a guide for the professional staff of the Office of Inspector General. Taken as a whole, this section calls attention to the fact that the staff in the Office of Inspector General is held to high standards of trust, independence, objectivity, confidentiality and competence. The Staff must be committed to avoidance of conflicts of interest and to the full disclosure of actual or potential impairments. Staff shall review and comply with HR Policies and procedures, which are incorporated into the District’s Policies and Procedures. Independence - Most products of the Office of Inspector General recommend improvements to existing policies, practices and operational aspects of the District. It is therefore essential that the audit staff be independent and be perceived as such. The independent attitude should indicate to all that the work efforts of the office are unbiased and impartial with respect to the presentation of any finding or recommendation. The opinions and conclusions that staff derives from audits, reviews and investigations must be based on facts, evidence and analysis irrespective of the influence of Department managers. Each staff member shall complete a Statement of Independence at the time of assignment to an audit, review or investigation. After review by the Inspector General, the signed statement will be included in the audit working papers. Conflict of Interest - Staff members should be neither advocates nor adversaries of any special interest party. At no time should they allow their views or personal situations impair their judgment and depth of reporting. Any official, professional, personal or financial relationships that might affect the staff member's objectivity or limit the extent of the analysis or the disclosure of findings should be disclosed to the Inspector General prior to the beginning of an assignment. Integrity and Objectivity - No member of the staff shall knowingly misrepresent the facts in the presentation of findings developed during an audit. To ensure staff integrity, it is expected that work assignments have been adequately planned and relevant data have been sufficiently analyzed on which reasonable conclusions and/or recommendations can be made. Confidentiality – Records shall not be removed from the auditee’s premises without permission. Staff members shall not discuss the status of ongoing South Florida Water Management District Chapter 2 Office of Inspector General Professional Conduct Operating Manual Page 2 of 2 internal audits or investigations with persons that are not a necessary part of the project. Inquiries from the media and public should be referred to the Public Records Coordinator in the Office of Board and Executive Services. Inspector General staff members should also notify the Director of Auditing and the Inspector General of any such requests they receive. No confidential information obtained in the conduct of work assignments that is not available to the general public shall be disclosed to others. This statement does not relieve employees from their obligations under the laws of the State of Florida governing public documents, nor does it restrict the exchange of information with any duly constituted legislative, investigative or disciplinary body. Demeanor - It is expected that at all times during the course of business staff will present themselves in a professionally acceptable fashion. The demeanor of staff while on duty must reflect positively on the image of the Office of Inspector General and the District. Codes of Ethics - Employees of the Office of Inspector General have an obligation to the State of Florida and to the District to maintain high standards of professional conduct. Staff should thoroughly familiarize themselves with the code of ethics of the District (see Employee Ethics pamphlet). The Office has also adopted the Code of Ethics of the Institute of Internal Auditors (See http://www.theiia.org/?doc_id=92 ). All employees of the Office are affiliated with this organization and adherence to this code is required in the daily performance of auditing duties.