Commonwealth of Massachusetts

1. Commonwealth of Massachusetts Internal Control Questionnaire (ICQ) NASACT Managing Internal Control with Compliance Technology January 31, 2007

2. Agenda • Commonwealth of Massachusetts • Internal Control Law • Awareness of Internal Controls • Internal Control Questionnaire (ICQ) • Comments / Questions

3. Commonwealth of Massachusetts • 10th Largest State • Fortune 34 company • 69,000 Employees • $43.4 billion in Total Revenue* • $42.8 billion in Total Expenses* * Source Data is Massachusetts 2005 CAFR

4. Massachusetts State Agencies • Executive Branch • 125 State Agencies • 12 Independent Agencies • Constitutional Offices (4) • Legislative Branch (2) • Judicial Branch • 7 Departments • Other • 22 Authorities and Quasi-Public Agencies

5. Internal Control At A Glance • Internal Control Legislation (1989) • Internal Control Campaign & Awareness of Internal Controls (1990 – present) • Procurement Reform (1996) • Annual Internal Control Questionnaire (debuted in 2000) • Implement New Accounting System (2004) • Office of the Comptroller, Quality Assurance Bureau (2005)

6. Chapter 647 of the Acts of 1989An Act to Improve Internal Controls at State Agencies • Internal Control Standards • Management’s Responsibility • Internal Control Officer is to be equivalent in title to assistant or deputy to the department head and ensure: • Written documentation of internal accounting and administrative control system is on file for review by Office of the State Auditor (OSA), Office of the Comptroller (OSC) and Administration & Finance (ANF) • Internal control structure is evaluated annually or as conditions warrant. • Audit recommendations are promptly evaluated and corrective action is taken by management. • Reporting all unaccounted for variances, losses, and theft of funds or property to the OSA

7. Awareness of Internal Controls • Internal Control Plan Guide • Instructor-lead Training • Hands-on Workshops • Review Internal Control Plans

8. Internal Control Questionnaire • ICQ is a web-based application • ASP script engine / SQL database • Debuted in 2000 / Updated Annually • Answers are Yes, No or Not Applicable • FY2006 – 273 Questions in 12 Sections / Business Areas • Department representations are incorporated into the ICQ • Department Head • Internal Control Officer • Chief Fiscal Officer • Answers are available to the Independent Auditors, OSA’s Auditors and OSC’s Quality Assurance Bureau

9. ICQ Categories • General Information • Internal Control Plan • Accounting & Fiscal Operations • Budget • Cash • Procurement • Monitoring & Reporting General Program Performance • Payroll & Personnel • Fixed Assets • Revenue & Receivables • Investment • Administrative Controls Over Federal Funds • Representations

10. ICQ Application

11. Department Access to ICQ

21. Administrator Access

26. ICQ Responses • Analysis of responses – manual • Follow-up with departments • One of the tools used to evaluate internal controls • Statewide Single Audit • Audits / Quality Assurance Reviews • Risk Assessment • Statewide Statistics • Implementation of new accounting system • Assist agencies in evaluating and modifying Internal Controls

27. ICQ Responses • Does the Department document Internal Controls? • Has the Internal Control Plan been updated in the past year…?

28. Comments / Questions

29. Contact Information Julia P. Burns Director, Quality Assurance Bureau e-Mail: Julia.Burns@osc.state.ma.us OSC: www.mass.gov/osc