The Audit Process
Frequently Asked Questions
The Office of Legislative Audits is an agency within the Maryland General Assembly’s Department of Legislative Services and reports to the Joint Audit Committee. The committee is established by State statute and consists of 20 General Assembly members. Ten members are appointed from the Senate by the Senate President and ten other members are appointed from the House of Delegates by the Speaker of the House.
OLA is an independent and non-partisan agency that provides audit services to assist the General Assembly in its oversight responsibilities. OLA is directed by the Legislative Auditor and is staffed by approximately 110 auditors, many of whom are certified public accountants or hold other certifications and advanced degrees. OLA has three field audit divisions: Fiscal Compliance, Performance, and Information Systems.
By law, OLA is required to conduct a fiscal compliance audit of each Executive and Judicial Branch agency of State government every three to four years. OLA may also conduct performance audits at its discretion or as requested by the Joint Audit Committee or the Executive Director of the Department of Legislative Services.
OLA is statutorily required to conduct audits in accordance with generally accepted government auditing standards. Under those standards, OLA is subject to an external peer review under the auspices of the National State Auditors Association once every three years. The purpose of the peer review is to determine whether OLA’s system of quality control is suitably designed in conformance with professional standards and is operating effectively.
A fiscal compliance audit is designed to evaluate an agency’s operations and internal controls and determine whether the agency complied with applicable laws and regulations. These audits are conducted by the Fiscal Compliance Audit Division and primarily focus on fiscal operations, information systems (with the assistance of the Information Systems Audit Division), and programs with financial impact on the State.
A performance audit is designed to evaluate whether an agency or program is operating in an economic, efficient, and effective manner or to determine whether desired program results have been achieved. These audits are conducted by the Performance Audit Division at OLA’s discretion or as requested by the Joint Audit Committee or the Executive Director of the Department of Legislative Services.
OLA is also required to conduct a performance audit of each of the 24 local school systems in the State to assess its financial management practices at least once every 6 years, unless there is an exemption as provided for by law. The next audit for those systems that have received an exemption will occur 12 years from their last audit.
By law, OLA is required to conduct a fiscal compliance audit of each Executive and Judicial Branch agency. These audits are conducted at an interval ranging from three to four years unless the Legislative Auditor determines, on a case-by-case basis, that more frequent audits are required. On the day that the auditors are ready to begin an audit, they will contact agency management and identify themselves before proceeding with any audit work. Agencies are generally given advance notice of audits to be conducted by the Performance Audit Division.
Soon after the audit begins, the audit team will hold an entrance meeting with the agency’s management to discuss the audit’s objectives and the audit approach.
Audits are generally conducted at the agency’s offices. Agencies are requested to provide the audit team with adequate facilities to conduct the audit on a day-to-day basis such as office space, telephone, computer network access, and access to a copier.
The length of the audit varies depending on an agency’s complexity and size, and the audit scope. Some audits are completed within a matter of weeks, while other audits could take six months or more. A time estimate for each audit is provided to agency management at the entrance meeting.
The number of auditors varies depending on the audit. Generally, the audit team consists of an audit manager, a senior auditor, and approximately one to five staff auditors. The senior auditor provides daily on-site supervision of staff auditors and reports to the audit manager who makes periodic visits to the audit site.
Audit teams, primarily through the senior auditor, periodically inform agency management about the progress of the audit and are available to discuss the audit with management at any time. It is helpful to have an agency employee designated as a liaison between agency management and the audit team to handle routine day-to-day communications.
Auditors conduct interviews of agency personnel, examine agency documents and records, and gather evidence to make conclusions regarding the audit objectives. By law, OLA has access to and may inspect any agency records, including those that are confidential by law.
Yes. Except for information disclosed in the final public report, State law requires OLA to maintain the confidentiality of information obtained during the course of an audit.
Preliminary audit findings and related recommendations are provided to agency management before the end of the audit via written discussion notes, which are confidential. Management is requested to respond to these discussion notes in writing. Then, the audit team and agency management hold an exit conference to discuss the findings and responses before the audit team finalizes the draft audit report.
OLA provides agency management with a confidential written draft audit report that includes findings and related recommendations, based on the discussion notes. Generally, fiscal compliance audit reports are designed to address only problems and related recommendations to improve agency operations, whereas performance audit reports focus on conclusions to the stated objectives and any resulting recommendations. The agency’s management is requested to prepare a written response, in the manner prescribed by the Joint Audit Committee’s guidelines, which addresses the audit recommendations in the draft audit report. The response is appended to the final audit report. By law, OLA distributes its audit reports to the agency audited, certain officials as specified by law, and other individuals requesting copies.
Yes. By law, audit reports are available to the public. Audit reports are available electronically on the OLA website and paper copies are available by contacting OLA or the Department of Legislative Services in Annapolis.
Any clarification of the agency’s response that might be needed is addressed with correspondence between OLA and the agency. Also, certain General Assembly committees, such as the Joint Audit Committee and the budget committees, may wish to discuss the audit report at public hearings. As permitted by law, OLA can also conduct a follow-up review to assess an agency’s progress in implementing the report recommendations.
|Please contact us at:||Office of Legislative Audits|
|301 West Preston Street, Room 1202|
|Baltimore, Maryland 21201|
|1-877-486-9964 (toll free)|