Documenting Internal Controls Over Financial ReportingPresentation Transcript
Documenting Internal Controls Over Financial Reporting Scott Heid, Sharon Salembier, Theresa Lawrence, Heather Pratt
KPMG’s Management Letter Comment in the 2004-2005 CAFR: Internal controls in place at State agencies that report financial information to the Office of the State Comptroller (OSC) are not sufficiently documented nor tested by management
DOB, KPMG, OSC agreed to address comment by…….
Eight audits of State agencies, documentation of internal controls over key financial areas!!!!!!
Agencies and Key Areas
State Education Dept
Tax and Finance
Temporary Disability Assistance
Personal Income Tax
Automated Claiming System
We used OSC’s Standards for Internal Controls in NYS Government (which includes the five COSO elements) to judge the adequacy of documentation of each COSO element for the selected key area
What are the COSO Elements?
Information and Communication
What did we find?
Overall, agencies had good support for internal controls over the areas we looked at
But…here’s what agencies can do better…
Areas We Can Work On
Agencies didn’t always have their risk assessment process in writing
Agencies either didn’t do risk assessments for what they considered low-risk areas, or they did risk assessments but didn’t document them well
Some risk assessments were not current
Not all risk assessments included a section for identifying and evaluating new risks
Areas We Can Work On (cont.)
Survey of control environment – we didn’t see these performed at any agencies. Surveys can help management form a conclusion about whether its control environment supports or detracts from its mission and objectives.
Internal Control Unit
Website/page dedicated to Internal Controls
Highly involved Internal Control Officer (higher level officials)
Internal Control training available to all employees via various media
Commissioner involvement/support of Internal Control efforts
Frequent Risk Assessments based on level of risk (i.e. high-risk issues are evaluated more often)