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HomeMy WebLinkAboutLate Communication - Audit Ad Hoc Meeting 10-10-2018.pdfAd Hoc Audit Committee -October 10, 2018 -Potential Audit Projects 1) Adherence to the Purchasing Ordinance Recently, OCSD has adopted a new Purchasing Ordinance. During the adoption process, Directors suggested that the adherence to the ordinance be audited to ensure compliance. Staff agrees. However, as the Purchasing Ordinance was only adopted a few months ago, staff recommends waiting for the ordinance to be in effect for a sufficient period to generate sufficient auditable data. Staff recommends an audit one year after the adoption of the ordinance 2) Inventory Control Auditing of inventory acquisition, inventory receiving, and inventory distribution Currently, OCSD has approximately $8 million in inventory While OCSD does cycle counts and review, an independent audit of the process and controls has not been completed. Staff believes that this would be a good area for audit for the reasons above. Summary There is a series of risk factors which can affect inventories, such as: -Volume of transactions regarding acquisitions, production and sales are in general increased, contributing in this manner to the increase of the risk of account errors occurrence; -Sometimes special procedures are necessary for the determination of the quantity or value of inventories, such as the appreciation of inventories assessment, performed by other experts; -Very often, the inventories are stored in different locations, generating in this manner difficulties both in the performance of their control for the prevention of theft or physical degradation, as well as in the accounting of the inventories which are in transit; -Inventories are vulnerable to the modification of the economic circumstances which can generate the reduction of demands, sales and, consequently, application of different treatments in such cases for their assessment; -Inventories can be subject to certain returns (for example, packaging materials). Sample Tasks A) Obtaining information regarding the organization and authority levels B) Collection of information regarding the existent controls C) Testing/Sampling D} Recommendations