What is Internal Auditing?
Internal auditing is an independent appraisal activity that evaluates whether management has effectively and efficiently carried out its responsibilities. Those responsibilities include adopting and following a system of internal controls, compliance with laws, rules, regulations, and contractual agreements, and responding to the needs of the citizens of Brevard County. Through this evaluation activity, recommendations are made to improve operations.

What is the Clerk’s Authority to Audit?
By authority of the Constitution of the State of Florida, Article VIII, Section 1(d), the Clerk of the Circuit Court serves as auditor and custodian of all county funds for the Brevard County Board of County Commissioners. These powers are preserved by Section 4.2.1 of the Brevard County Home Rule Charter.

Why does Brevard County Need an Internal Audit Function?
The federal government and the state of Florida have implemented laws and regulations affecting Brevard County. In addition, the Board of County Commissioners has established policies and procedures for county management to follow in serving the citizens of Brevard County. Further, the Board has entered into contracts and agreements and expended public funds to provide these services. Additionally taxpayer funds have been expended to purchase assets.

Because of the importance of these activities, an independent evaluation function--internal auditing--is needed to assess whether management has met its responsibilities in complying with laws, regulations, policies, procedures, contracts, and agreements and in implementing a system of internal controls. This audit function, in addition to evaluating these areas, results in recommendations for improvement. The internal auditing process can identify areas where economy and efficiency could be improved thereby reducing cost and/or liability to the county. It can also show how losses of assets and taxpayer funds can be prevented and where improvements in the system of internal controls can be made. It can even make recommendations which result in better utilization of human resources.

The goal of the Clerk’s Internal Audit Department is to improve County Government’s service to the Citizens of Brevard County through independent limited scope audits.

Why and how is Internal Audit independent?
Independence is paramount in performing the internal audit function since it provides for an atmosphere for objective and uninhibited appraisal. The Clerk of the Circuit Court, as an elected official, is independent of the Board of County Commissioners. The Internal Audit Department is organized under the Clerk of the Circuit Court. The Internal Audit Department Director, with the Internal Audit Department, reports directly to the Clerk of the Circuit Court.

What does Internal Audit do?
For activities under the Board of County Commissioners and the Clerk of the Circuit Court, Internal Audit conducts independent limited scope audits that may include:
• Determining the activity's efficiency and effectiveness.
• Determining the activity's compliance with laws, regulations, policies, procedures, contracts, grants, and agreements.
• Evaluates the adequacy and effectiveness of the activity's internal controls.
• Review matters related to fraud, waste, abuse, thefts, or other irregularities detected during the internal audit examinations or reported from, citizens, vendors, employees, etc.

How is an area selected for an audit?
Audits are selected by the Clerk of the Circuit Court based on observations of actions by the Board of County Commissioners, news reports, tips from citizens, and requests from the Clerk’s staff, the Board of County Commissioners, or employees of the Board of County Commissioners. Audit priorities are set by the Clerk of the Circuit Court.

What takes place in an internal audit?
The internal audit process consists of planning, data gathering, testing, summarizing, evaluating, and reporting. As part of planning, an audit engagement letter is issued by the Clerk to the management (Auditee) of the area to be audited. The engagement letter identifies the process or processes to be audited and notifies the Auditee who will be conducting the audit and that the auditor will contact the Auditee to schedule a pre-audit meeting. The County Manager and appropriate Assistant County Manager receive copies of the letter. A pre-audit conference is scheduled and written confirmation of the meeting date is sent to the Auditee with a list of known documents and records to be reviewed. The pre-audit conference is held with the Auditee during which the auditor details further what records will be examined and what period or event is being audited. The Auditee confirms with the auditor who the key contacts are within the area being audited.

Audit fieldwork, the process of identifying, analyzing, evaluating, and recording sufficient information to achieve the audit’s objectives, is conducted. Additional records will likely be requested during this process. An end-of-fieldwork meeting is conducted with the Auditee, unless evidence of criminal activity is detected. During the end-of-fieldwork meeting, preliminary audit findings are discussed and the Auditee is asked if there are additional records that can be provided to address the preliminary audit findings.

After the audit fieldwork the auditor drafts an audit report which includes the audit's purpose, scope, background, overall evaluation, findings if any, and recommendations. Recommendations are made to lessen future findings of noncompliance with laws and regulations, internal control weaknesses, and areas where economy and efficiency can be improved. The findings are supported by the auditor’s working papers.

After the draft report is completed, an internal quality review is performed to ensure that work was performed as planned and is properly documented. The draft report is reviewed to ensure that conclusions and findings are supported by evidence obtained through inquiry, observation, and third-parties. In addition to the lead auditor's review of the assigned staff's work, the Internal Audit Department Director performs a review of the report draft. After the Internal Audit Director performs his review of the draft report, a final review and approval for release to the Auditee is done by Clerk of the Circuit Court.

The auditor sends the draft report to the Auditee for advance review and schedules an exit conference. During the Exit Conference the auditor reviews each audit report finding, answers any questions the Auditee has about the audit report, and sets a reasonable time for receipt of the Auditee’s response (typically 15 working days after the exit conference, as covered in County Administrative Order AO-61, “Internal Audit”).

Once the response is received, the auditor reviews it for adequacy and possible rebuttal (a rebuttal is the auditor’s comments on Management’s response). Management's response for each finding is incorporated in the body of the report after each recommendation. If rebuttals are necessary, they are added to the draft report after the applicable management response. The completed audit report is submitted to the Clerk of the Circuit Court for review and approval for release either back to the Auditee (if responses are rebutted), or to the public (if responses are not rebutted).

If any responses are rebutted, the auditor will meet with the Auditee to go over the responses and rebuttals. The auditor will offer the Auditee the opportunity to modify their formal audit reply to alleviate the need for rebuttals. If the Auditee agrees to modify the reply, the wording is worked-out during the same meeting and the auditor will set a reasonable time for receipt of the Auditee’s revised response.

If the responses were originally rebutted, the auditor makes any agreed upon changes to the audit report and submits the revised audit report to the Clerk of the Circuit Court for review and approval for release to the public.

The final audit report is issued to the Board of County Commissioners, County Staff, the independent auditors of the Board of County Commissioners’ annual financial statements, and the public as determined by the Clerk of the Circuit Court.

The final audit report is usually presented to the Board of County Commissioners at their next regular meeting as a New Business agenda item.