Sec.16-8-4. Reporting standards

(a) Periodic reporting oral and/or written. A written report shall be presented to the department after the audit examination is completed. Interim reports are to be transmitted in accordance with the engagement contract.

(b) Timeliness of reporting. Reports, both interim and final, shall be issued on or before the dates agreed to by the consulting firm or management audit team, the department and the auditee. If for any reason, the consulting firm or management audit team shall be unable to meet such dates, the consulting firm or management audit team shall notify the department and the auditee at the earliest possible date.

(c) Report form and content. Unless otherwise provided by the department, the report shall:

(1) Include a statement of the audit objectives and a description of the audit scope and methodology;

(2) Include a statement of professional standards adhered to in the examination and report;

(3) Include a description of the strengths and weaknesses found in the auditee's management and operations;

(4) Include a description of noteworthy accomplishments, particularly when management improvements in one area may be applicable elsewhere;

(5) Include recommendations for actions to improve problem areas noted in the audit, and to improve operations; the underlying causes of problems reported to assist in implementing corrective actions;

(6) Except as required by a prudence review or other department-stated objectives, place primary emphasis on improvement rather than on criticism of the past; critical comments shall be presented in a balanced perspective considering any unusual difficulties or circumstances faced by the auditee;

(7) Quantify the potential benefits, net of costs, to be realized if the auditee were to implement the recommended improvements and provide the basis for such qualifications;

(8) State the qualitative benefits of implementing the recommended improvements;

(9) Include a listing of significant issues and questions, if any, needing further study and consideration;

(10) Include a statement as to whether any pertinent information has been omitted because it is deemed privileged or confidential, describe the nature of such information, and state the law or other basis under which it is withheld;

(11) Be written in a narrative form and in language as clear and simple as the subject matter permits;

(12) Be concise but, at the same time, detailed enough to be understood by users;

(13) Be objective and present factual data completely to fully inform the users;

(14) Present factual data accurately and fairly, and include only information, findings, and conclusions that are adequately supported by sufficient evidence in the working papers to demonstrate or prove the bases for the matters reported and their correctness and reasonableness;

(15) Present findings and conclusions in a convincing manner;

(16) Set priorities for recommendations based on their impact and importance;

(17) Provide sufficient information to acquaint department personnel and auditee personnel with the principles, methods, and techniques applied, so that the improvements suggested or installed may be properly managed or implemented and continued after completion of the engagement; and

(18) Address the steps required to implement a recommendation and present a timeframe, which the auditee has agreed to be reasonable, within which the recommended improvements could be implemented.

(d) Noteworthy accomplishments. Reports may acknowledge satisfactory performance and corrective action. Such acknowledgments may include, but are not limited to, areas wherein the auditee's methods/operations are considered to be at the forefront of the state of the art. However, in that the primary purpose of the audit is to identify potential improvements, a simple acknowledgment of the well-managed area shall suffice.

(e) Draft report review. Before the final management audit report is issued, the consulting firm or management audit team shall present a draft report to the auditee for the sole purpose of permitting the auditee to verify the accuracy of the facts contained in the draft report. Other than the Department, no person or party, including the auditee and the Office of Consumer Counsel, shall view or otherwise be privy to the auditor's proposed conclusions and recommendations. At any time during the audit, and upon the Department's request, the auditor shall provide the Department a copy of any draft report. The Department may (1) verify the accuracy of facts contained in any draft report; (2) ensure a draft report's conformity with department regulations and with the scope of the audit; or (3) discuss with the auditor the contents of any draft report including the proposed conclusions and recommendations. The Department shall review draft reports within a reasonable period of time enabling the publication of the final audit report.

(f) Findings of fraud or abuse (oral or written)

(1) Consultants shall be alert to situations or transactions that could be indicative of fraud, abuse, or illegal expenditures and acts. If such indications exist, the consultant shall report the indications as appropriate to the auditee, including the chairman of the auditee's audit committee and the internal audit manager of the auditee, and inform the department. Consultants shall extend the workplan and procedures to identify the effect on management and operations as required by the department.

(2) Findings of fraud, abuse, or illegal acts may be covered in a separate report, as required by the department. The consultant and the department shall report serious indications of fraud, abuse or illegal expenditures and acts to the proper authorities as they deem fit pursuant to their professional judgment.

(g) Forecasts. Forecasts shall be substantiated by responsible opinions, statements and documentation. Forecasting methodologies shall be identified and described. All pertinent data sources and assumptions shall also be identified.

(Effective October 24, 1995; Amended March 4, 2010)