What you need to know about Ohio's internal audit bill.
Improving state operations in risk management, internal controls and governance by centralizing the internal audit function of state agencies is the goal of new legislation sponsored by Rep. Carol-Ann Schindel, CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. (R-Mentor) in the House and Sen. Bob Spada (R-North Royalton) in the Senate. The idea for the legislation came from Ohio Society member and State Auditor State auditors are executive officers of U.S. states. The office usually is created by the state constitution.
House Bill 166 and its companion bill Senate Bill 146 are supported by The Ohio Society of CPAs, along with members of the Association of Certified Fraud Examiners Established in 1988 the Association of Certified Fraud Examiners is the professional organization that governs professional fraud examiners. Its activities include producing fraud information, tools and training. and The Institute of Internal Auditors “IIA” redirects here. For IIA in decision theory, see Independence of irrelevant alternatives.
Established in 1941, The Institute of Internal Auditors (IIA) is an international professional association of more than 128,000 members with global headquarters in .
WHAT THE LEGISLATION DOES
Establishes the Office of Internal Auditing within the Office of Budget and Management and the position of Chief Internal Auditor Internal auditor
An employee of a company who analyzes the company's accounting records to that the company is following and complying with all regulations.
The Office of Internal Auditing will coordinate internal auditing plans for 26 agencies in Ohio. The goal is to improve operations in the areas of risk management, internal controls and governance.
Upon request from the Office of Internal Auditing, each state agency must provide access to all records and documents necessary for the performance of an internal audit.
Establishes the State Audit Committee
The State Audit Committee will consist of the Director of Budget and Management, two public members appointed by the House Speaker and two public members appointed by the Senate President. The committee would include:
* One public member who is a financial expert
* One public member who is an active, inactive or retired CPA
* One public member who is familiar with governmental financial accounting
* One public member who is a representative of the public
The definition of "financial expert" parallels the definition in the Sarbanes-Oxley Act See SOX. .
Prescribes the duties and functions of the Office of Internal Auditing, State Audit Committee and Chief Internal Auditor
The State Audit Committee would fulfill the following:
* Ensure that the internal audits conducted by the Office of Internal Auditing conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?"
coordinate - be co-ordinated; "These activities coordinate well" the Institute of Internal Auditors' international standards for the professional practice of internal auditing and to the Institute's code of ethics Code of Ethics can refer to:
* Review the process the Office of Budget and Management uses to prepare its annual budgetary financial report and the state's comprehensive annual financial report
* Review unaudited financial statements submitted to the Auditor of State and communicate with external auditors as required by government auditing standards
* Ensure that the Office of Internal Auditing's annual internal audit plan identifies the internal audits of state agencies or divisions of those agencies scheduled for the next fiscal year
The Chief Internal Auditor must prepare an annual report and submit it to the Governor, the Senate President, the House Speaker and the Auditor of State. The Office of Budget and Management must make the report available to the public by posting it on its Web site before each July 1.
Any preliminary or final report of an internal audit's findings or recommendations produced by the Office of Internal Audit and all work papers Noun 1. work papers - a legal document giving information required for employment of certain people in certain countries
work permit, working papers of the internal audit are subject to the Public Records Act once the final report of the findings and recommendations is submitted to the State Audit Committee, the Governor and the state agency involved.
Requires the Office of Internal Auditing to conduct internal audits according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. an annual plan and to make reports of those audits
Audit plans must include an annual internal audit plan that uses risk management techniques and identifies specific audits to be conducted during the year. The programs also must include periodic audits of each agency's major systems and controls, including the systems and controls pertaining per·tain
intr.v. per·tained, per·tain·ing, per·tains
1. To have reference; relate: evidence that pertains to the accident.
2. to accounting, administration and electronic data processing See EDP.
(application) Electronic Data Processing - (EDP) data processing by electronic machines, i.e. computers. .
Transfers state employees who perform internal audit functions to the Office of Internal Auditing
Authorizes employees in the classified and unclassified un·clas·si·fied
1. Not placed or included in a class or category: unclassified mail.
2. civil service to report employment-related wrongdoing wrong·do·er
One who does wrong, especially morally or ethically.
wrongdo to the Office of Internal Auditing
This item ensures protection for "whistleblowers."
The legislation will benefit Ohio taxpayers most by weeding out fraud, waste and abuse in state agencies at the earliest stage.
Since the committee members are not compensated, there is concern from some corners that it will be difficult to attract and retain skilled individuals. Supporters contend that there are talented individuals willing to donate their time and expertise in the name of public service, citing the number of individuals who have already expressed interest.
The House version of the bill (HB 166) was passed out of the House State Government and Elections Committee on June 21 after having four hearings. Ohio Society member Heinz Ickert, CPA, CFE CFE Conventional Forces in Europe (treaty)
CFE Cash Flow to Equity (finance/accounting)
CFE Comisión Federal de Electricidad (México)
CFE Certified Fraud Examiner , a shareholder from Rea & Associates in Dublin, testified in support of the bill, along with members from the Association of Internal Auditing. The goal is to pass the legislation through either chamber as soon as possible and then focus on moving it through the other chamber. While details are not final, the planned effective date would be July 1, 2009.
SUPPORT FROM OHIO SOCIETY MEMBER
"From my experience in fraud detection and deterrence, confirmed by surveys, conducted by the Association of Certified Fraud Examiners, I can unequivocally state that a strong internal audit function is the greatest single tool in detecting fraud," Ickert said during testimony in support of the legislation. "By centralizing the internal audit function of the state of Ohio, this bill will result in increasing the independence of the internal audit function by reducing the likelihood of bias introduced at the department or agency level."
For more information on internal audit legislation, contact Barb Benton, vice president, governmental affairs, at email@example.com or 800.686.2727, ext. 324. Find related stories at www.ohioscpa.com by searching "internal audit bill." To read a summary of the legislation, go to http://www.legislature.state.oh.us/bills.cfm?ID=127_HB_166.
The Issue Update gives you a snapshot of an issue you need to know about as a CPA. The latest topic? Ohio's new internal audit bill.