Columbus, Ohio – Ohio Governor Ted Strickland today signed an executive order creating a Division of Internal Control and Audit Oversight at the Office of Budget and Management and the State of Ohio Audit Committee.
“This is a step toward ensuring greater efficiency and effectiveness in state government,” Strickland said. “By enhancing our internal auditing management practices we will make Ohio government work better for the people we serve.”
The order directs the Office of Budget and Management to appoint an OBM employee as chief internal controller to oversee the Division. This individual will work closely with the internal controllers at each agency, state board and commission to ensure the state of Ohio has a strong and effective system of internal control in state government.
Specifically, the order creates a program of internal control, risk management and internal audit functions that will enhance and standardize the state’s internal audit functions within each agency, board and commission. The Division will ensure accountability and compliance with internal control programs across state agencies, boards and commissions, especially in mitigating financial risks to state operations.
The enhanced program will focus on all aspects of internal controls including, but not limited to: Fiscal, Financial Reporting, Payroll, Human Resource Management, Procurement and Information Technology (including data security and privacy).
The executive order also establishes the State of Ohio Audit Committee (SOAC), which will be charged with identifying and encouraging effective governmental financial management, internal control and internal auditing practices in all components of Ohio’s government.
Representatives from the following offices will be invited to serve on the audit committee: Attorney General, Secretary of State, Treasurer of State, Chief Justice of the Supreme Court, President and Minority Leader of the Ohio Senate, and the Speaker and Minority Leader of the Ohio House of Representatives. The director of the Office of Budget and Management will serve as chair of the audit committee.
The audit committee will be responsible for submitting an annual report to the Governor and Auditor of State on its work as well as any recommendations regarding the role of the committee.
Text of the Executive Order follows:
Executive Order 2007 -25S
Creating the Division of Internal Control and Audit Oversight and the State of Ohio Audit Committee
1. The Office of Budget and Management’s Accounting Responsibilities. Ohio law requires the Director of the Office of Budget and Management (the “OBM”) to evaluate, on an ongoing basis, the internal accounting controls used by the State’s cabinet agencies, boards, and commissions (collectively, the “State Agencies”) and, if necessary, to make recommendations to improve those controls.
2. Statewide Internal Accounting Control Program Implemented. In 1999, Governor Taft, through Executive Order 1999-14T, directed all state agencies to conform with the Internal Accounting Control Program (the “Program”) developed by the Director of the OBM and outlined in Ohio law. The Program required state agencies to prepare and submit an annual report on the adequacy of an agency’s internal accounting control system and to work with the Director of the OBM to implement the Program consistently across all state agencies.
3. The Current Internal Accounting Control Program for State Agencies is Outdated. The Director of the OBM has reviewed the Program that was implemented in 1999 and has determined that:
a.the Program has not been significantly reviewed or revised in several years
b. the Program has become outdated in light of current best practices identified by outside governing bodies
c. the Program must make significant changes to reflect new business processes, like the State’s new payroll and financial system.
4. Creation of the Division of Internal Control and Audit Oversight. Because it is imperative that the State has a thorough internal control program to ensure that all of the State Agencies are using effective and efficient accounting operations and reliable financial reporting, I hereby order the creation of the Division of Internal Control and Audit Oversight (the “Division”), within the Office of Budget and Management.
5. Role of the Division. The Division will oversee and monitor compliance with internal control programs within each of the State Agencies and assure that adequate internal controls exist to continuously diminish financial risks to state operations. The Division will also develop a program of internal control, risk management, and internal audit governance for the State Agencies and enhance the State’s internal audit function. The program shall focus on all aspects of internal controls including, but not limited to: Fiscal, Financial Reporting, Payroll, Human Resource Management, Procurement and Information Technology (including data security and privacy).
6. Leadership for the Division. I hereby direct the Director of the Office of Budget and Management to appoint a Chief Internal Controller (the “CIC”) to lead the Division. The CIC will oversee the Division and will work directly with Internal Controllers at each state, who will report both to the Directors of their respective agencies, as well as to the CIC.
7. Creation of the State of Ohio Audit Committee. In her Management Letter regarding the financial statements of the State of Ohio dated, March 23, 2007, and her State of Ohio Audit released today, Auditor of State Mary Taylor recommended that a state audit committee be created to facilitate the State’s responsibility “for establishing and maintaining internal controls over financial reporting.” While the establishment of an audit committee with oversight authority over the separate branches of the Ohio government and the separately elected constitutional officeholders could raise significant constitutional issues, the establishment of an audit committee aimed at encouraging the recognition and implementation of best financial management practices would benefit the people of Ohio. Accordingly, I am ordering the creation of the State of Ohio Audit Committee (SOAC), which shall work to identify and encourage the use, by all components of the Ohio government, of effective governmental financial management, internal control and internal auditing practices.
8.Composition of the State of Ohio Audit Committee. The SOAC shall be composed of the following individuals:
a. In recognition of their independent constitutional status, representatives of the following officeholders will be invited to appoint a staff representative to the SOAC: The Auditor of State, The Attorney General, The Secretary of State, The Treasurer of State, The Chief Justice of the Supreme Court, The President and Minority Leader of the Ohio Senate, and The Speaker and Minority Leader of the Ohio House of Representatives
b. The Director of the Office of Budget and Management will serve as the SOAC’s chair
c. I will also appoint, as suggested by the Auditor of State, other individuals who are knowledgeable about governmental financial practices including individuals from outside the state government
9. SOAC Operations. The SOAC, through its Chair, shall report, annually, in writing, to the Governor and the Auditor of State regarding the effectiveness of the SOAC in bringing about improvements in Ohio’s financial management, internal control and internal auditing practices and making any recommendations for modifications to the Committee and its charge.
10. I signed this Executive Order on July 26, 2007 in Columbus, Ohio and it shall expire on my last day as Governor of Ohio unless rescinded before then.
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Ted Strickland, Governor
ATTEST:
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Jennifer Brunner, Secretary of State