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Office of the Legislative Auditor General

Performance Audits and Evaluation. Office of the Legislative Auditor General. Who We Are.

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Office of the Legislative Auditor General

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  1. Performance Audits and Evaluation Office of theLegislative Auditor General Utah Legislative Auditor General

  2. Who We Are The Office of the Legislative Auditor General (OLAG) is constitutionally created by Article VI Section 33 of the Utah Constitution. The Legislative Auditor General has broad authority to conduct audits of any funds, functions, and accounts in any branch, department, agency or political subdivision of this state. The Legislative Auditor General is appointed by the Legislature for six year terms. The Auditor General reports directly to the bipartisan Audit Subcommittee of the Legislative Management Committee. Utah Legislative Auditor General

  3. What We Do • It is the mission of the Office of the Legislative Auditor General to serve the citizens of Utah and the Legislature by providing objective information, in-depth analyses, and useful recommendations that help Legislators and other decision makers. • The Office of the Legislative Auditor General accomplishes its mission by: • Improving Programs • Reducing Costs • Promoting Accountability Utah Legislative Auditor General

  4. Completing The Puzzle Resolving Issues Identified By Legislators Constituent Concerns Lobbyist & Business Involvement LEGISLATOR Agency & Public Contacts Committee Assignments Audit Request Legislative Auditor Utah Legislative Auditor General

  5. What Some People Say We Do “The Washington State initiative sent ripples through the nation's public-sector auditing community, and for a very simple reason: Performance auditing is an evolving and somewhat controversial practice.” October 2009 “They continue to insist that the exercise focuses more on catching governments in the act than on proactively working to improve key government operations.” October 2009 Utah Legislative Auditor General

  6. What Some People Say We Do Utah Legislative Auditor General

  7. What Some People Say We Do Utah Legislative Auditor General

  8. How We Cope used with permission Utah Legislative Auditor General

  9. Utah Legislative Auditor General

  10. Effectiveness (Program) Degree Of Difficulty Efficiency (Operational) Compliance Financial Time & Dollars Expended Audit Complexity Utah Legislative Auditor General

  11. What Is Performance Auditing Performance audit refers to an examination of a program, function, operation or the management systems and procedures of a governmental or non-profit entity to assess whether the entity is achieving economy, efficiency and effectiveness in the employment of available resources. The examination is objective and systematic, generally using structured and professionally adopted methodologies. Utah Legislative Auditor General

  12. Examples of Performance Audits Completing of the Puzzle Via Legislative Audit Requests • * Identify reasons why a heightened number of jail escapes and other inappropriate activities where happening in county jails. • * Identify instances of fraud, waste, and abuse in Utah’s Medicaid program. • * Review efficiency and effectiveness in Utah’s Medicaid managed care. • * Examine the use of O&M funding for institutions of higher education. • * Are criminal background check procedures in public education effective. • * Are discrimination complaints being processed effectively and equitably. Utah Legislative Auditor General

  13. Statute – Mission -- Objectives inputs activities outputs • people • facilities • equipment • supplies • financial ability • ACTUAL— • service(s) • product(s) EFFICIENCY OLAG Methodology THE MANNER IN WHICH AN AUDITEE USES ITS RESOURCES TO GENERATE SERVICES OR PRODUCTS Utah Legislative Auditor General

  14. Efficiency Audits Compare How Well Inputs Are Used to Achieve OutputsAre they performing economically and timely? Utah Legislative Auditor General

  15. Smaller Buses Should Be Considered Utah Legislative Auditor General

  16. Statute – Mission -- Objectives inputs activities outputs • ACTUAL— • service(s) • product(s) EFFECTIVENESS OLAG Methodology THE EXTENT TO WHICH AN AUDITEE ACCOMPLISHES ITS OBJECTIVES, AND ULTIMATELY, ITS GOALS • INTENDED— • service(s) • product(s) Utah Legislative Auditor General

  17. Effectiveness Audit Compares Intended Output to Actual OutputAre they performing well? Utah Legislative Auditor General

  18. Effectiveness Audit Compares Intended Output to Actual OutputAre they performing well? Jail Contracting: Conducted annual reviews of county jails. They were performed for the most part efficient – but they were not effective? • Audit Found: • Management did not listen to the jail reviews • Action Taken: • New management took action instituted standards and consequences for not meeting standards Utah Legislative Auditor General

  19. Audit Phases Survey Phase - Assess for risk Fieldwork Phase – Audit tests Report – Fieldwork areas developed into chapters Presentation – Audit is made public Utah Legislative Auditor General

  20. Operating Methodology: “Attributes of a Finding” • Condition – What is happening? • Criteria – What should be happening? • Effect – What is the impact of the condition? • Cause – What created the condition? • Recommendation – What should be done? (corrective or preventative action) Utah Legislative Auditor General

  21. Operating Methodology: Condition • What is really happening? • What is working well? • What is defective or deficient? • Is the problem isolated or widespread? Utah Legislative Auditor General

  22. Operating Methodology: Tests For Condition • Significant Resources • Impact Upon the Public • Management Controls • Performance Measures • Understanding of Mission and Goals • Compliance with Statute and Rules Utah Legislative Auditor General

  23. Medicaid Fraud, Waste, Abuse: Condition • 25 Year Old Analytical Tool (since last update) • Unclear Recovery Methodology • Employee Productivity • Employee A = 47,384 • Employee B = 476,265 • Inadequate Performance Measures Utah Legislative Auditor General

  24. S t r o n g e s t — W e a k e s t Operating Methodology: Criteria Question Which one can you use? • Examples: • Laws, policies or rules • Accepted industry standards • Goals and objectives • Practices in other states or private sector • Expert opinion or auditor opinion • Generally accepted practices Utah Legislative Auditor General

  25. Medicaid Fraud, Waste, Abuse: Criteria • Other state Medicaid programs (for general guidance on all areas) • Federal laws and rules (for analytical tools) • Accepted business practices (for employee productivity) Utah Legislative Auditor General

  26. Operating Methodology: Effect • What is the impact or consequence? • What is the extent of difference between criteria and condition? • Is the difference significant in terms of cost, performance, etc.? Utah Legislative Auditor General

  27. Medicaid Fraud, Waste, Abuse: Effect • Only 5% of Medicaid dollars were being reviewed for F,W,A • National Statistics = $20.2 million Utah Legislative Auditor General

  28. Operating Methodology: Criteria & Effect Relationship Strongest Criteria Weakest Effect • Laws or Mission Statements • Industry or Professional Standards • Historical Data or Goals & Objectives • Expert Opinion • Prudent Business Practices • Auditor Opinion • No Significant Impact • Implied Savings • Small Dollar Impact • Improved Services • Large Dollar Impact • Loss of Life or Public Danger Weakest Criteria Strongest Effect Utah Legislative Auditor General

  29. Operating Methodology: Finding the Underlying Cause • Ask why? • Need documentation • Lends strength to the recommendation Utah Legislative Auditor General

  30. Medicaid Fraud, Waste, Abuse: Cause • Management • Budget Constraints • Lack of Adequate Training Utah Legislative Auditor General

  31. Operating Methodology: Recommendations • What Should Be Done to Correct the Problem or Issue: • A direct relationship between the cause and the recommendation. • Work with organization to get agreement. • Change is the overall goal. Utah Legislative Auditor General

  32. Operating Methodology: Recommendations Utah Legislative Auditor General

  33. Principles For A Successful Audit Function • Resist Intimidation • Understanding the source • Anticipating the act Utah Legislative Auditor General

  34. Principles For A Successful Audit Function • Exit for Understanding • How: Reveal findings often • Benefit: Strengthens audit findings • Obtain Participation • Recommendations can be joint effort • Implementation is the key to success Utah Legislative Auditor General

  35. Kade R. Minchey Office of the Legislative Auditor General Utah State Capitol Complex 315 House Building Salt Lake City, Utah 84114 (801) 538-1033 Office Website: www.le.utah.gov/audit/olag.htm Contact Information Utah Legislative Auditor General

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