Details About the Audit Process

Introduction | Constitutional and Statutory Authority | Access to Records and Staff | Shared Commitment | The Audit Process | Follow-Up Engagements | Report Distribution | SGA

Introduction

We will be performing an audit at your organization. As a public official entrusted with handling public resources, you are responsible for using those resources effectively, efficiently, economically, ethically, and equitably. The audit process is an integral part of providing an independent, objective, nonpartisan assessment of your program stewardship and of providing accountability to the citizens of New York.

We are providing this information to familiarize you with the audit process and provide insight into the key stages of audit development, from the earliest stages to the final report. It describes what auditors look for and their professional auditing standards. Our staff will be happy to answer your questions as they arise during the course of the audit.

We request your cooperation during this process to ensure that the essential facts are expeditiously collected and accurately interpreted. Working cooperatively will help make this process easier and less time-consuming for you and produce more meaningful results for your constituency.

Our staff will schedule periodic meetings with the liaison identified by your organization to keep you fully informed of our progress. In addition, you may contact the on-site examiner-in-charge or any member of our management team to request an update on the audit’s progress.

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Constitutional and Statutory Authority

The Office of the State Comptroller has the constitutional authority (Articles V and X) to conduct financial, compliance, and performance audits of all State and New York City agencies, including their associated facilities, institutions, boards, and program activities, as well as virtually all public benefit corporations (authorities). In addition to the Constitution, the legal basis for the Comptroller’s authority is contained in various statutes, including the State Finance Law and New York City’s General Municipal Law. The Comptroller also has the authority to audit the records of private firms and non-profit organizations that are awarded contracts or grants by, or receive funding from, these government entities.

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Access to Records and Staff

During the audit, the Comptroller’s staff require unrestricted access to records, files, and other information to complete the audit effectively. This may include information that various laws define as confidential and/or proprietary. The Comptroller’s right to access this information required for audit purposes is derived from the State Constitution, State Finance Law, and General Municipal Law. Please advise audit staff if information they have requested is confidential, as we have procedures we can use to protect such information. It is also essential that audit staff have access to appropriate auditee officials to answer questions or respond to requests in a timely manner without obstruction. Audit independence is compromised if auditors encounter obstruction while conducting their work. Audit standards require that scope limitations such as obstruction and lack of cooperation be disclosed in the final public audit report.

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Shared Commitment

We understand the audit process involves you and your staff meeting with and otherwise assisting our audit team while still being responsible for your normal workload. However, the end result is improved accountability for your operations to your stakeholders and to your own organization. To that end, we would appreciate your staff providing full and timely cooperation with our auditors during the audit process, along with any feedback on how to improve the overall process.

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The Audit Process

A flywheel that has a number assigned to each section going in a clockwise direction. The caption, The Audit Process, is in the center.

1. Opening Conference

The audit team and auditee officials meet for the first time to discuss the audit; this is an opportunity for auditee officials to share their insights about the subject matter. The Opening Conference discussion will address the following:

  • The initial audit objective(s) that will be addressed by the audit work (subject to change based on the risks identified by the audit team during the course of their work)
  • The initial scope (program areas under review, period of time covered, etc.) of the audit (also subject to change based on the risks identified by the audit team during the course of its work)
  • Specific areas that auditee officials may want examined during the audit
  • Procedures for obtaining information and transmitting preliminary audit findings
  • Establishment of appropriate channels of communication
  • Identification of any known improprieties that have occurred relevant to the audit objective(s)
  • Explanation of the required management representation letter stating that all records and pertinent data were made available to the auditors and that all relevant matters have been disclosed
  • Discussion of office space, equipment, and other logistical arrangements
  • Review of standard reporting procedures for preliminary, draft, and final reports, including the need for responses
  • Auditee emergency preparedness procedures that audit staff need to be informed about

2. Audit Survey

The audit team gains an initial understanding of organizational and program information relevant to their audit objective(s). The aim is to understand the risks associated with the program under audit and the effect of those risks on the planned audit work.

3. Fieldwork Phase

The audit team examines the relevant organizational and program information in more detail and assesses its impact on the audit. This includes identifying potential cost savings and operational improvements. The aim is to obtain sufficient, appropriate evidence to support the audit findings, conclusions, and recommendations. During the Fieldwork Phase, the audit team will discuss the findings and conclusions with appropriate auditee officials when they have completed their work. This will likely be done separately for each area of the audit.

4. Preliminary Audit Findings

The audit team provides the auditee with a written report of preliminary audit findings (preliminary) detailing the tentative findings discussed during the Fieldwork Phase, including auditee feedback. The auditee has 2 weeks to respond to the preliminary.  The audit team evaluates the response to each preliminary to determine whether additional work in this area is needed. Early implementation of audit recommendations is encouraged so that the final report can include recognition of any corrective action already taken by the entity.

5. Closing Conference

After taking into consideration the auditee’s response to the preliminary findings, the audit team meets with auditee officials to discuss the overall audit findings and recommendations, which are the basis for the draft report. Because most of this information has already been shared through the preliminaries, this is primarily a broad summary of audit results, although auditee officials may provide additional comments.

6. Auditee Response

The head of the audited organization is provided with a draft report for formal response. Within 30 days of receiving the draft report, the auditee is requested to respond in writing with its official position concerning the audit findings or, at a minimum, to identify any factual differences with the details included in the report.

 

Why Is Your Response Important? Because we append your response to the final audit report, this Audit Process step also adds balance to the report, as readers will be informed of your perspective on our findings and recommendations.

What Happens After We Receive Your Response? Once we receive your response to the draft report, we will evaluate it to see if it causes us to modify the report. The general content of your response (whether you agree with our findings or not) will be summarized in the audit report, and the entire response letter will be appended to the end of the final report. Note that we will only include the response itself; any voluminous documents that may be attached to it will not be appended. If you have a significant quantity of documents that you feel are critical to our reported findings, you should contact the audit team and discuss the issues with them, including why the information was not previously provided during the course of the audit. Because we include your response in the final audit report, we recommend that you avoid citing any information that is considered confidential or sensitive in nature. Where we deem response content to be confidential or sensitive in nature or voluminous, the document(s) will be maintained on file and we will note this in the report.

What Happens If We Don’t Receive Your Response? If you do not submit a response to the draft report, we will release the final report with a statement indicating that you did not submit a written response within the time required.

7. Auditee Corrective Action

Within 180 days after the final report is issued, the auditee is expected to report back to us on what corrective actions have been taken to implement the recommendations contained in the report, and if the recommendations were not implemented, the reasons why.

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Follow-Up Engagements

About a year following the issuance of a final report, we may schedule a follow-up engagement to assess the extent to which the auditee has implemented the audit recommendations. These focused engagements generally take less time to complete. Our findings are issued as a letter report, usually without a draft report or a formal response required.

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Report Distribution

Draft reports are distributed only to auditee officials, with copies provided to the Director of the Division of the Budget and, for New York City audits, to the Mayor’s Office of Operations.

Final reports and follow-ups are public documents posted to the State Comptroller’s website.

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Division of State Government Accountability

H. Tina Kim
Deputy Comptroller
(518) 473-3596

Kenneth Shulman
Assistant Comptroller
(518) 473-0334

Andrea Inman
Audit Director
(518) 474-6431

Carmen Maldonado
Audit Director
(212) 417-5185

Brian Reilly
Audit Director
(518) 473-7409

Nadine Morrell
Audit Director
(518) 473-8770

Kenrick Sifontes
Audit Director
(212) 417-5439