The following is contained in a memo about audit request for proposals from Interim Executive Director Todd P. Schroll to the McHenry County 708 Mental Health Board Finance Committee, which will meet Thursday afternoon at 3:30 at the Crystal Lake office:
Based our analysis and consultation with Grant Resources LLC, we note three potential options:
1. Expand the scope of the Financial Statement Audit to provide for reports on specified elements in the areas of
- information technology.
This is the most comprehensive solution.
It may also be the most expensive option and take more time and effort than a more focused approach.
2. The MHB can first engage in a series of separate audits of the specific elements.
These would typically be evaluated separately and required to be completed (to the extent necessary) in the early stages of a financial audit.
After the Board receives the results of these separate audits, it can decide whether it wants to expand the project to a full financial statement audit.
If systems and internal controls were found to be lacking, the organization could implement changes that improves the organization and enhances the reliability of the financial data. Although it could be less expensive than option number 1, it may be the least optimal solution as it would require more formalities than option number 3 without providing any additional substantive information.
3. The MHB can engage these projects separately as internal audit consulting projects whose findings can be used if the Board decides a full audit is necessary. An “audit” carries risk at a high cost so one may consider the internal control and systems “audits’ to be consulting projects with the organization, forming an internal audit committee, who will drive and own the responsibility for improvement, without causing formal documentation that could be negative. [emphasis added here and below.]
Facilitating “audits” in this manner is more strategic and minimizes the risk to the directors and board. Viewing this as a collaborative effort, initially, is probably best versus asking for an “audit” that might be very damaging in its content and very expensive to perform.
It is the staff’s recommendation to explore option #3 in more detail. This strategy allows an auditor/vendor to work collaboratively with the Board to focus more specifically on the specific elements, with a specific focus on financial reporting and management through the use of a supplemental system.
Initial analysis of the County audit, as well as a potential exploration of specific areas of interest with a higher level of materiality, may be more feasible, achievable, and initially cost effective.