Academic journal article The Government Accountants Journal

Automating Assessments of Internal Controls, A GAO Perspective

Academic journal article The Government Accountants Journal

Automating Assessments of Internal Controls, A GAO Perspective

Article excerpt

INTRODUCTION

The United States General Accounting Office (GAO) conducts financial and performance audits of federal agencies to improve government management and operations. These audits often require significant resources to document, summarize and to report the results of internal control tests.

In order to increase audit efficiency, GAO has developed a Personal Computer (PC) based software program called "AUTOCARE." The AUTOCARE software program incorporates GAO's Control and Risk Evaluation (CARE) Methodology used in earlier (Pre-1992) financial audits. The PC application is methodology neutral and can be adapted to changes in control testing procedures as GAO continues to evaluate and enhance its methodology. The approach focuses on identifying, assessing and testing the effectiveness of an agency's internal controls. The AUTOCARE programs capture and process the results or the auditor's internal control tests. AUTOCARE's features include: an efficient means to collect and summarize data from internal control tests, a uniform method for reporting test results, and an organized record of internal control test results for workpaper documentation.

REQUIREMENTS FOR DOCUMENTING INTERNAL CONTROL ASSESSMENTS

Before the development of the Automated Control and Risk Evaluation (AUTOCARE) system, many staff hours were spent preparing voluminous schedules either manually or using LOTUS 123. Because these systems made it difficult to control the method in which results were being recorded, many remote audit sites initiated their own system for recording test result data. When it came time to consolidate the sites, several staff days were spent correcting the unorganized, illogical and inconsistently formatted data so that meaningful results would be produced. In addition, any work performed must meet the working papers and documentation guidelines of Government Auditing Standards (1988 Rev).

Due to the increasing quantity of staff hours spent on financial audits coupled with the growing demand to perform such audits, GAO was faced with developing a solution to overcome these obstacles. In response to this dilemma, GAO's Accounting and Financial Management Division (AFMD) and Los Angeles Regional Office (LARO) in a cooperative effort, developed a microcomputer-based software tool called "AUTOCARE" to increase audit efficiency and effectiveness.

With the implementation of the Chief Financial Officer (CFO) Act of 1990, federal agencies will have added responsibilities to insure that internal controls are working to maintain the integrity of the agency's fiscal systems. In conducting these reviews, automated tools can assist CFO's and Inspector General's (IG) staff in performing such reviews and documenting the results. Having captured such reviews in an automated form, they can be used to assess changes in policy, procedures and standards or whether recommendations and changes made are effective in controlling the weaknesses found as a result of the previous internal control review.

HOW DOES GAO's AUTOCARE IMPROVE THE PROCESS OF INTERNAL CONTROL REVIEWS?

The use of automated support tools to increase the efficiency and economy of an audit is not a new realization. Its use has been reported in many publications over the past 10 years (see suggested readings). Development of an audit program is a tedious process which on a recurring basis, can be minimized if the audit program has been automated and easily changed year to year.

AUTOCARE is a user-friendly, menu-driven system designed with features to speed internal control data collection and summarization. This complex system contains highly-sophisticated dBASE III+ code with algorithms specifically designed to manage the input, storage, data processing analysis, and reporting of control test results. The end users (GAO evaluators) participated in the design of the system to support their needs. Functionally, AUTOCARE supports their audit objectives and the processes to attain those objectives. …

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