Financial Audit Reports
Our two main financial audits are mandated by State and/or federal laws. They are:

State of Michigan Annual Comprehensive Financial Report Audit
Statewide Single Audit

Financial audits are designed to provide reasonable assurance about whether the basic financial statements and/or financial schedules of an audited entity are presented fairly, in all material respects, in conformity with generally accepted accounting principles.

Performance Audit Reports
Most of our discretionary, nonmandated, audit hours each year are focused on performance auditing. Performance audits provide recommendations and conclusions based on an evaluation of the audited entity’s activities compared with applicable criteria, such as laws, policies, procedures, and best practices.

We conduct performance audits based on the potential for improving the effectiveness and efficiency of State government operations.

Follow-Up Reports
We perform limited testing related to findings reported in previously issued performance audit reports to assess the entities' compliance with prior audit recommendations.

Investigative Audit Reports
Investigative audits take place based on reported allegations of fraud, waste, or abuse involving State government officials, State employees, or entities receiving State money or other support. These audits are designed to detect and deter the misappropriation of public assets.

Preliminary Survey Summaries
If the results of a preliminary survey do not identify significant potential program improvements and/or risks of deficiencies that could impair management’s ability to operate a program effectively or efficiently, we terminate the performance audit and release a summary report of our preliminary survey.

We develop our audit plan using an approach based on assessments of risk and opportunities for improvement.

We focus audit efforts on the activities identified through a preliminary survey that we believe have the greatest probability for improvement and/or the most significant consequences if proper execution does not occur.

Auditing identifies where and how improvements can be made; therefore, audit reports are written on an exception basis. Stated another way, we typically do not continue audits if the program appears to function as intended; our resources are more impact-driven if we focus on areas for improvement.

Generally, we conduct audits in three main phases:

Planning Phase
This phase sets the foundation for the audit and includes conducting a preliminary survey, brainstorming, conducting research, developing the audit scope and objectives, setting the audit’s time frame, and performing many other activities. In this phase, we:

• Review organization structure.
• Review applicable State and federal laws.
• Research legislation impacting the audited program.
• Understand how the auditee strives to reach its mission, goals, policies, and procedures.
• Review agency-produced reports.
• Identify relevant criteria to audit against, such as best practices, benchmarks, and audits of similar entities and from other states.

Audit Fieldwork Phase
This phase begins the strategic audit activities. During audit fieldwork, we will:

• Interview agency personnel.
• Sample and analyze data.
• Issue surveys if applicable.
• Validate evidence.
• Determine materiality of potential findings.
• Communicate with the agency.
• Issue draft audit findings.

Report Preparation Phase
This phase is the final stage of the audit. At this time, we:

• Draft the preliminary report.
• Ensure compliance with auditing standards.
• Ensure compliance with internal quality standards.
• Provide the agency with draft report.
• Obtain the agency preliminary response.
• Meet with the agency to address its concerns.
• Finalize the report.
• Release the report.

Agency Preliminary Response
In each audit report containing findings, we include the agency's initial response (i.e., agency preliminary response) in which the agency indicates if it agrees, partially agrees, or disagrees with the recommendation(s) and its plan to comply.

Corrective Action Plan
By State law, upon completion of an audit, the agency is required to submit its plan to comply with the recommendations to the State Budget Office, which either accepts the plan as final or contacts the agency to take additional steps to finalize it. Our website includes the final plan to comply following each audit report.

Generally accepted auditing standards of the American Institute of Certified Public Accountants.
Government Auditing Standards issued by the Comptroller General of the United States.
Title 2, U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance)

Article IV, Section 53 of the Michigan Constitution.
Section 13.101 of the Michigan Compiled Laws

Yes, the Government Auditing Standards requires a triennial peer review of our operations . The peer review is performed by a multi-person National State Auditors Association external quality control review team. We have received thirteen consecutive unmodified “clean” opinions. This is the highest level of opinion.