Generally Accepted Government Auditing Standards (GAGAS) mandate that government audit organizations have an external quality control review assessment, known as a peer review, every three years. In order to comply with this requirement, our office participates in the peer review program sponsored by the National Association of State Auditors, Comptrollers and Treasurers (NASACT). Under this program, NASACT provides a team of qualified government auditors from other states and the federal government to conduct a review of our quality control procedures. The teams are selected by NASACT from a pool of volunteer auditors that each participating state audit organization is obligated to provide. The team selected to conduct our peer review examined our quality control procedures to determine whether such procedures were sufficient to ensure that all audits performed by our office during the review period were conducted in accordance with professional auditing standards.
Our most recent peer review was completed during the summer of 2013 and covered the one-year period of July 1, 2012 to June 30, 2013. The report issued as a result of this review gave our office a peer review rating of pass with deficiencies, which is one step below the highest rating of a peer review rating of pass. The conclusion reached in this report was that the system of quality control of the Auditors of Public Accounts during the review period had been suitably designed and was complied with during the period to provide our organization with reasonable assurance of performing and reporting in conformance with GAGAS in all material respects, with the exception of one deficiency.
The peer review team disagreed with the reporting format of the audit certification that our office utilizes in our audits of state departments and agencies. The audit certification we currently use includes reports on each department’s system of internal control and on its compliance with laws, regulations, contracts or grant agreements, both of which are supposed to be based on an audit of financial statements conducted in accordance with financial auditing standards. These financial auditing standards require our office to opine on the audited agency’s financial statements. Because separate financial statements for each department are not included in our departmental audit reports, it has been our practice to include a simple reference to the statewide audit opinion that our office separately issues on the entire State of Connecticut’s financial statements. Based on the peer review finding, it is apparent that this reporting approach must change.
In response to this finding, our office plans to modify its departmental audit reporting model, underlying internal control and compliance audit objectives, and related audit procedures so that they conform to the sections of GAGAS governing performance audits instead of the those applicable to financial audits.
Our audit procedures and opinions for the Comprehensive Annual Financial Report (CAFR) and the State Single Audit are not affected by the deficiency cited in the peer review.
Our office is also expected to monitor its operations between peer reviews to ensure continuing effectiveness of the quality control system. To that end, we require that an annual internal quality control inspection be conducted to ensure that the control system is working as intended. As a result, during the summers of 2014 and 2015, two members of our audit staff will be assigned to conduct an internal inspection of our office’s system of quality control covering the one-year periods ending June 30, 2014 and 2015, respectively.
Our next external peer review , covering the one year period ending June 30, 2016, should be conducted sometime during the summer of 2016.
Interested individuals may view our office’s most recent peer review report by clicking on the following link.