Association of Local Government Auditors 1 Best Practices for Effective Internal Controls - Citywide Presentation to: California Society of Municipal Finance.

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Association of Local Government Auditors

Best Practices for Effective Internal Controls - Citywide

Presentation to:California Society of Municipal Finance

OfficersFebruary 20, 2009

Ann-Marie Hogan, CIA, CGAPCity Auditor, Berkeley, [email protected]

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Association of Local Government Auditors

1. Review the unique internal control challenges of cities

2. Explain the challenges for finance directors in impacting “tone at the top” of the organization and operating departments

3. Best practices and bright ideas

Objectives

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Association of Local Government Auditors

• Control Environment (tone at the top: elected and appointed managers)

• Risk Assessment (absent the profit motive, how thoroughly is risk assessed?)

Internal Control: COSO and Cities...

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Association of Local Government Auditors

• Control Activities (invisible activities and problems)

• Information and Communications (frank communication in a fishbowl)

• Monitoring (and airing dirty laundry)

Internal Control: COSO and Cities...

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Association of Local Government Auditors

Leadership Challenges

“Tone at the Top” - Leading the way

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Association of Local Government Auditors

• City Manager

• Human Resources Director• Information Technology• Police Chief

Leadership… Building Alliances

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Association of Local Government Auditors

• Consistent message

• Good delivery • Timing is all

Leadership…

Persistence and Opportunism

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Association of Local Government Auditors

• Change in leadership

• Negative press

Opportunity Knocks

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Association of Local Government Auditors

Leadership: Walking the Walk

You can start in your own department

• Internal Controls Training

• Testing and Certification

• Policies: Ethics, Internal Controls

• Who should you tell?

• Defining workforce skills needs

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Association of Local Government Auditors

Best practices: Does your city have…

• Agreement on what responsibilities are centralized where?

• Clear expectations for the role of the Finance Department?

Best Practices and Bright Ideas

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Association of Local Government Auditors

Best practices: Does your city have…

• An Ethics Policy• An Audit Committee• Performance Measures• A Whistle Blower Hot Line (or

equivalent)

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Association of Local Government Auditors

An independent performance auditor?

California Government Code section 1237: “All state and local agencies with an aggregate

spending of fifty million dollars ($50,000,000) or more annually shall consider establishing an ongoing audit function.”

Best practices: does your city have…

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Association of Local Government Auditors

Getting the message out:

On site training – PowerPoint• City of Berkeley Finance Department: Cash

Handling• City of Riverside Internal Controls

On line training – videos • Maricopa County Auditor

Bright Ideas

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Association of Local Government Auditors

Berkeley Finance Department Training

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Association of Local Government Auditors Inserting Videos in PowerPoint

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Association of Local Government Auditors

Finance Directors can…Create a PowerPoint (City of Riverside)

What Is Risk?

Anything that could negatively impact the City’s ability to meet it’s operational objectives.

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Association of Local Government Auditors

Finance Directors can…Create a Video

• Maricopa County, Arizona posts several on the Auditor’s web site

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Association of Local Government Auditors

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Association of Local Government Auditors

Finance Directors Can…

Educate Management

• One page bulletins on Internal Control for managers from the Maricopa County auditor’s web site

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Association of Local Government Auditors

Maricopa County Control Bulletins

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Association of Local Government Auditors

ALGA Resources

These resources and more are on websites for Maricopa County, City of Riverside and the City

of Berkeley: see “ALGA Members – Member Web Sites” on the ALGA website.

www.governmentauditors.org

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Association of Local Government Auditors

Considering a performance audit function or audit committee??

• The Role of Auditing in Public Sector Governance and Practice Advisory 1110-2: CAE Reporting Lines www.theiia.org

• Model Legislation Guidelines for Local Government Auditors and A Government Official’s Guide to Establishing a Performance Audit Function www.governmentauditors.org

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Association of Local Government Auditors

THANK YOU

FOR ADDITIONAL INFORMATION, CONTACT:ASSOCIATION OF LOCAL GOVERNMENT AUDITORS (ALGA)

MEMBER SERVICES

449 LEWIS HARGETT CIRCLE, SUITE 290

LEXINGTON, KY 40503

[email protected]

or

[email protected]

or visit the ALGA website at:http://www.governmentauditors.org