Audits applicable to the guaranty associations subject to the provisions
of this subchapter shall take the form of financial, performance or operational
audits, and may include, but not be limited to, the types of audits which
are described in paragraphs (1)-(4) of this section.
(1) Financial audits. The financial audit shall be undertaken
annually by an independent certified public accountant to determine whether
the financial statements of the audited entity present fairly the financial
position and the results of financial operations in accordance with generally
accepted accounting principles. The financial audits shall be conducted in
accordance with generally accepted auditing standards.
(2) Compliance audit. A compliance audit may be undertaken
to determine whether the following objectives are being met:
(A) the audited entity has obligated, expended, received, and
used funds in accordance with the purpose for which those funds have been
authorized by law;
(B) the audited entity has obligated, expended, received, and
used funds in accordance with any limitations, restrictions, conditions, or
mandatory directions imposed by law on those obligations, expenditures, receipts,
or uses;
(C) the audited entity has maintained its books, records, and
accounts in a manner which accurately reflects its financial and fiscal operations
relating to the obligation, receipt, expenditure, and use of funds including,
but not limited to, funds collected for a public purpose;
(D) the audited entity has collected all revenues and receipts
in accordance with the applicable laws and regulations of this state; and
(E) the audited entity has properly and legally handled or
administered any money, negotiable securities, or similar assets received
in accordance with the entity's governing statute.
(3) Economy and efficiency audit. An economy and efficiency
audit may be undertaken to determine whether the objectives set out in subparagraphs
(A) and (B) of this paragraph are being met and such audit shall make the
identifications set out in subparagraph (C) of this paragraph, as follows:
(A) the audited entity is managing or utilizing its resources,
including funds, personnel, contractors and subcontractors, consultants, procurement
of professional services, property, equipment, and space, in an economical
and efficient manner;
(B) the audited entity has presented financial, program, and
statistical reports in a fair manner, and such reports contain useful data;
and
(C) the causes of inefficiencies or uneconomical practices,
including inadequacies in management information systems, internal and administrative
policies and procedures, purchasing, procurement and contracting practices,
organizational structure, use of personnel, contractors, equipment and other
resources, have been identified.
(4) Effectiveness audit. An effectiveness audit may be undertaken
to determine whether the following objectives are being met:
(A) the audited entity is attaining program objectives established
pursuant to statutes and regulations, or by program criteria or program evaluation
standards applicable to it, in an efficient and effective manner;
(B) the audited entity is contributing to achievement of those
benefits intended by program design in an efficient and effective manner;
(C) the audited entity is discharging its duties and responsibilities
under statutes and regulations or according to program performance criteria
or program evaluation standards applicable to it in an efficient and effective
manner; and
(D) the audited entity is performing its duties and responsibilities
in connection with a program which does not duplicate, overlap, or conflict
with the duties, functions, and responsibilities of another entity with respect
to the same program, or with another program designed and intended to be applied
to the same persons served by the audited entity.
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