City of Claremont WHAT ARE FORENSIC AUDITS? PRESENTED BY New - PowerPoint PPT Presentation

City of Claremont WHAT ARE FORENSIC AUDITS? PRESENTED BY New VACHON, CLUKAY & COMPANY PC Hampshire Presented August 14, 2019

What is a Financial Audit? A financial audit is an independent objective evaluation of the City’s financial reports and financial reporting processes. Our audit planning includes risk assessments, analytical review, expectation analysis, fraud inquiries, of management and governing body (“City Council”) and the evaluations and testing of internal controls Statistical compliance testing of those controls for federal and grant programs when necessary( Federal A-133 Compliance procedures) on a statistical basis

What is a Forensic AUDIT? A Forensic Audit is an examination and evaluation of the City’s financial records to derive evidence that can be used in a court of law or legal proceedings. The primary difference between a financial audit and forensic lies in the purpose of the audit. Forensic audits relate directly to an issue such as employee fraud or embezzlement, or vendor fraud.

Issues with Forensic Audit Defining the scope for the examination by the City management or City Council. Forensic audits are usually very specific such as all payments to one or more vendors or one or more employees The cost of the forensic audit has a direct relationship to the scope of the examination and the volume of records being examined.

City of Claremont’s volume of transactions REVENUES ◦ Over 15,000 motor vehicle permit collections ◦ Property tax commitments and collections on a quarterly basis. ◦ Other receipts such federal and state grants, water and sewer billings and other receipts EXPENDITURES ◦ Over 2,000 payroll checks annually ◦ Over 3,700 vendor disbursement checks

Forensic Audits Concerns The cost of the audit vs the findings noted If the findings are significantly less than the cost of the forensic audit, the use of a forensic audit is not a cost- effective examination unless the matter is criminal in nature. In my professional career of more than 48 years, I have never conducted nor heard about a 100% forensic audit of all transactions. It is simply too expensive!

Forensic Audit Concerned (Continued) A NH community (Manchester) has an independent internal auditor who reports directly to the City Council. This approach would be more cost- effective but it still is expensive. In a past forensic audit, the auditor (not us) charged the government over $100,000 dollars and found only a verifiable fraud disbursement of $100 in a NH community

What have we found in past audits Reported no significant deficiencies in the City’s finances The prior auditor also found no significant deficiencies. Regardless of the amount of an embezzlement, we would report that finding to the City Council. In the past, we noted no deficiencies internal control or compliance deficiencies. The prior two audit firms also reported no deficiencies.

Honorable I WILL GLADLY TAKE YOUR Members of QUESTIONS AT THIS TIME City Council