Department of Audit
The Department of Audit comprises two divisions — State Audit and Local Government Audit — and employs approximately 300 people. Each division is administered by a director. The two directors are responsible for coordinating the audit function within the department and for addressing concerns and issues in auditing and financial reporting.
The Department of Audit is a post-audit agency. The basic purpose of post-audits is to identify and report past errors and recommend future improvements. Pre-audits, in contrast to post-audits, are performed within an entity by its own employees to prevent errors, detect problems, and suggest improvements. The most important distinction between pre-audits and post-audits is that post-audits are organizationally independent of the audited entity. In this respect, a post-audit agency in government is comparable to an independent public accounting firm in the private or business sector.
Because independence is so important in a post-audit agency, the Department of Audit is in the legislative branch of state government. The department is accountable to the General Assembly and provides information to assist the legislature in overseeing the use of public funds and the efficient operation of government.
The department undergoes an external review of its quality control system every two years. Section 8-4-102, Tennessee Code Annotated, states:
Previous to the convening of each biennial general assembly, the speaker of the senate and the speaker of the house jointly may contract for the services of an independent public accounting firm to audit or review the operations of the office of the comptroller, or may call upon the director of the division of state audit to review with them a current audit of the comptroller of the treasury. The speakers may appoint a committee of the general assembly for the purpose of such review.
The Speakers directed the Department of Audit to undergo a quality assessment review under the auspices of the National State Auditors Association. The most recent review was performed in July 2014 by certified public accountants from the staffs of several local, state and federal audit organizations as well as other professionals holding executive level posts in federal and state governments. The purpose of the review was to ensure that the department is meeting its responsibility to perform audit work in accordance with government auditing standards generally accepted in the United States of America. The report of the peer review for the year ended June 30, 2014, rendered an unqualified opinion on the department’s system of quality control. In the opinion of the quality assessment team, “the system of quality control of Tennessee Comptroller of the Treasury, Department of Audit in effect for the period July 1, 2013 through June 30, 2014 has been suitably designed and was complied with during the period to provide the audit organization with reasonable assurance of performing and reporting in conformity with Government Auditing Standards in all material respects. Audit organizations can receive a rating of pass, pass with deficiency(ies), or fail. The Tennessee Comptroller of the Treasury, Department of Audit has received a peer review rating of pass.” The next peer review is scheduled for July 2016.
To view a copy of the National State Auditors Association opinion on the department’s system of quality control in effect for the year ended June 30, 2014 click here.