Tavares, FL Nov. 22, 2015
Today the Daily Commercial published a front page article about recent actions by the Lake County School Board to restrict the ability of the District Internal Audit Director from reviewing "teaching and learning" processes.
I was an internal auditor for 20 years, and this smacks of steering the audits away from areas that may be poorly managed.
HERE is the video of the Lake County School Board meeting starting at the point where the audit issue was discussed. ( https://youtu.be/q5PdgIisABw?t=4m37s )
What was great is the Daily Commercial reporter, Livi Stanford called Richard Chambers, the CEO of the International Institute of Internal Auditors (IIA) which is based in nearby Altamonte Springs, FL. She said Chambers " had grave concerns with the Board's stance". The IIA issues the Certified Internal Auditor designation and both the District Audit Director, Tom Mock, and myself were CIA's (I stopped paying dues so I am not considered active.)
Board member Bill Mathias, and School District Attorney Steve Johnson, and others cited the Florida Statute 1001.42 authorizing creation of School District internal audit departments as the basis for restricting them to "financial" audits, which are routine audits like performed by the existing external CPA firm for the School District. They audit the District financials and issue the CAFR (Comprehensive Annual Financial Report), which is the annual financial audit report.
Professional internal auditors have different professional directives, with responsibility to audit ANY operational area for financial correctness, efficiency, effectiveness and economy. They usually leave the routine CPA type financial audits to external CPAs. That type of performance auditing is what I did for 20 years as a Certified Internal Auditor ( CIA - issued by the IIA).
The problem is the existing Florida statute 1001.42 quoted by Mathias is not broad enough. Some counties ignore the "financial" only restriction and allow performance audits. However, this District and their Attorney pull it out to PREVENT some non-financial auditing. The the attorney is using a strict interpretation of the statute to PREVENT performance auditing.
Another term for what just happened is "pushing the dirt under the rug" (see the picture) so the auditor can't review it, and avoiding complete transparency on performance effectiveness.
I watched the video of the School Board discussion, and it wasn't real clear why Bill Mathias was trying to restrict the scope of internal audit. It seemed they used the existing statute to specify audits should focus on financial areas only, with performance observations being run by the Superintendent. My experience in ALL my prior employers was we issued the audit with responses from the direct responsible manager, and not the President. They WANTED the performance audit work, and left the routine financial reviews to the Controllers, Accounting and external CPA auditors.
One possible reason for the restriction is that School adminstrators don't want independent reviews of soft areas like "learning and teaching" without them controlling it. A plausible reason is there are now two excellent analysts who do separate program reviews and maybe they need to coordinate with internal audit.
If you watch the video, you will see the Attorney Johnson say that he would review proposed audit scopes for compliance with HIS interpretation of Statute 1001.42, which indicates he will selectively prohibit some proposed audits. That is not a good thing. Since Supt. Moxley is appointed by the Board, and not elected, they could just tell her to allow all performance audits, but they have not done that (yet).
Never forget that government is a monopoly, so extra oversight and transparency is needed to ensure operations are efficient, effective and economical. One way to do that is have an independent internal audit function with full and unfettered access to all employees, vendors, programs, departments and records.
Vance Jochim
Former Certified Internal Auditor
Editor of FiscalRangers.com [email protected]
References:
The Lake County School District Auditor's webpage is HERE.
Board Policy 7.61 - Internal Audit Charter
"1001.42 Powers and duties of district school board.—The district school board, acting as a board, shall exercise all powers and perform all duties listed below:"
Scroll down to paragraph 12:
(12) FINANCE.—Take steps to assure students adequate educational facilities through the financial procedure authorized in chapters 1010 and 1011 and as prescribed below:
Scroll down to sub paragraph L:
"(l) Internal auditor.—May employ an internal auditor to perform ongoing financial verification of the financial records of the school district. The internal auditor shall report directly to the district school board or its designee."
Institute of Internal Auditors - Global HQ - Altamonte Springs, FL - issues Certified Internal Auditor (CIA)
Richard Chambers - IIA President and CEO
