Types of Audits

The internal auditing program will be accomplished by scheduling and conducting basic types of audits:

Compliance audits determine the adequacy of a unit’s system(s) designed to ensure compliance with Cabinet policies and procedures and external requirements.  Examples of external requirements include federal and state laws and regulations. Audit recommendations typically address the need for improvements in procedures and controls intended to ensure compliance with applicable regulations.

Financial audits address the accounting for, and reporting of, financial transactions, including commitments, authorizations, and receipt and disbursement of funds. The purpose of this type of audit is to verify that sufficient controls exist over assets, liabilities, revenues, and expenditures and that there are adequate controls over the acquisition and use of resources.

Information technology (IT) audits address the internal control environment of automated information processing systems and how people use those systems.  IT audits typically evaluate system input, output, and processing controls; backup and recovery plans; system security; and computing facilities. 

Operational audits examine the use of unit resources to evaluate whether those resources are being used in the most efficient and effective ways to fulfill the unit’s mission and objectives.  An operational audit may include elements of a compliance audit, a financial audit, and an IT audit.

Investigative audits focus on alleged civil or criminal violations of state or federal laws or violations of Cabinet policies and procedures that may result in prosecution or disciplinary action.  Allegations of theft or misuse of Cabinet assets, white-collar crime, and conflicts of interest are examples of issues addressed by investigative audits.  The full and complete cooperation of department personnel is required.