test audit details

Financial Audits
Financial audits are designed to provide reasonable assurance about whether the financial statements and/or financial schedules of an audited entity are presented fairly, in all material respects, in conformity with generally accepted accounting principles. Other objectives of financial audits, which provide for different levels of assurance and entail various scopes of work, may include providing special reports for specified elements, accounts, or items of a financial statement and/or financial schedule.

Single audits are financial audits designed to meet the needs of all financial report users, including an entity’s federal grantor agencies. Single audits require the assessment of compliance with requirements that could have a direct and material effect on a major federal program and the consideration of internal control over compliance in accordance with the U.S. Office of Management and Budget Compliance Supplement and Title 2, U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).

Performance Audits
Performance audits provide findings or conclusions based on an evaluation of sufficient, appropriate evidence against criteria. Performance audits provide objective analysis to assist management and those charged with governance and oversight in using the information to improve program performance and operations, reduce costs, facilitate decision-making by parties with responsibility to oversee or initiate corrective action, and contribute to public accountability. The OAG also follows up findings reported in previously issued performance audit reports to assess the entities' compliance with prior audit recommendations. Follow-ups typically focus on material conditions, which are considered more severe than reportable conditions.

We use a risk-based approach when selecting activities to be audited. This approach results in our audit effort being focused on operational areas having the greatest probability for needing improvement as identified through our preliminary review, hence limited audit effort is devoted to reviewing operational areas that appear relatively effective or efficient. By design, our limited audit resources are used to identify where and how improvements can be made and, consequently, our audit reports are prepared on an exception basis. To the extent practical, we add balance to our audit reports by presenting noteworthy accomplishments for exemplary achievements identified during our audit.

Investigative Audits
Investigative audits take place as a result of a reported allegation of fraud, waste, or abuse involving State government officials, State employees, or entities. These audits are designed to detect and deter the misappropriation of public assets. As such, these audits consist primarily of inquiries and the examination of selected financial records and other documentation, the scope of which is typically significantly less than that of financial or performance audits as defined by Government Auditing Standards.
OAG financial and performance audits are performed in accordance with the following professional standards and federal requirements:
  • 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).
To the Legislature
OAG reports provide independent and objective information that members of the Legislature can use in making informed decisions with confidence. The OAG also responds directly to requests from any member of the Legislature to review activities, programs, or funds not included in the scope of scheduled audits. Annually, OAG reports contain hundreds of recommendations that identify opportunities for improving effectiveness and efficiency in State operations and provide information needed by the Legislature to make decisions regarding the continuation of programs and levels of funding.

To the Auditee
OAG reports provide independent and objective information about the auditee’s operations that can be used by management to improve operations. OAG recommendations, when implemented, frequently result in more effective and efficient programs.

To Third Parties
Investors and creditors obtain OAG reports and use them as a source of information that they can rely on to make decisions. For example, the State of Michigan Annual Comprehensive Financial Report, which includes the Auditor General’s opinion regarding fair presentation in conformity with generally accepted accounting principles, is relied on by the financial community in setting bond ratings for State-issued debt. This financial audit report consistently qualifies for the annual Certificate of Achievement for Excellence in Financial Reporting presented by the Government Finance Officers Association.

Also, OAG Single Audit reports satisfy the federal government’s demand for accountability of federal funds allocated to the State of Michigan.

In addition, our performance audit reports provide investors and creditors with reliable information related to the State's operations.

Further, our investigative audit reports provide a basis, where applicable, for prosecutorial or administrative agencies to pursue criminal, civil, and/or administrative actions.

To the Citizens of the State of Michigan
The citizens have confidence in knowing that the Legislature is aggressive in its oversight and accountability of money paid to the State in the form of taxes, fees, and other revenue and prudent in expending funds in accordance with statutes and regulations.

Audit reports issued by the OAG are typically addressed to the department director for the audited entity, the chief executive officer, and/or the chair of a governing board or commission if applicable. Audit reports are typically distributed via e-mail.

At 1:00 p.m. on the business day prior to the public release of an audit report, the OAG sends a link to the full audit report to:

  • The department director, program administrator or chief financial officer, audit liaison, the Office of Internal Audit Services, and other department staff identified by the auditee.
  • Members of the Executive Office, including the chief of staff, communications personnel, and others.
  • The House and Senate Quadrant Leadership, if the report contains findings which may be of specific interest to the Quadrant.

At 1:00 p.m. on the business day prior to the public release of an audit report, the OAG sends a link to the audit report's report summary to all legislators, along with an indication that the full report will be available at 8:00 a.m. on the next business day.

At 8:00 a.m. on the day of the public release, our office posts the report publicly to the OAG Web site and e-mails a link to the complete report to:

  • House and Senate Fiscal Agencies.
  • The Office of Financial Management, State Budget Office.
  • All others who have specifically requested a report copy.

The OAG does not issue news releases on any audit report. However, the OAG sends a copy of each report to the Capitol pressroom, sends a copy of the report to a number of media outlets that subscribe to a ListServ to receive all reports, responds to media inquiries related to its reports, and provides a link to the report on Twitter, Facebook, and LinkedIn.

Section 18.1462 of the Michigan Compiled Laws and the State of Michigan Financial Management Guide (Part VII, Chapter 4, Section 100) establish requirements for following up audit findings and recommendations by the principal executive officer of the State agency. This follow-up is in addition to the agency’s preliminary response that is included in each OAG audit report.

Audited agencies must develop a plan to comply with the audit recommendations and submit it to the State Budget Office. Within 30 days of receipt, the Office of Internal Audit Services, State Budget Office, is required to review the plan and either accept the plan as final or contact the agency to take additional steps to finalize the plan.

Each plan must indicate (1) the audit recommendations the agency complied with, (2) the audit recommendations the agency agrees with and will comply with, and (3) the audit recommendations the agency disagrees with.

When the OAG performs an audit of a university or a community college, the annual appropriations acts require the principal executive officer of the audited institution to submit a written response to the audit to the OAG, the House and Senate Fiscal Agencies, and the State Budget Director. Community colleges are also required to respond to the House and Senate Appropriations Committees and to the Workforce Development Agency. The response is due within 60 days after the audit report has been issued and should specify the action taken by the institution regarding the audit report’s recommendations.

The OAG Web site includes the final plan to comply following each OAG audit report.
The OAG may follow up findings reported in previously issued performance audit reports to assess the entities' compliance with prior audit recommendations. Follow-ups typically focus on material conditions, which are considered more severe than reportable conditions. We may issue recommendations if corrective action was not effective at fostering improvements.
During the subsequent audit's preliminary survey, the OAG reviews the disposition of prior audit recommendations. The audited entity’s official response to the prior OAG audit includes information explaining how it plans to comply with the OAG findings and recommendations. Therefore, the OAG can review the status of all of the prior audit findings and recommendations. For most recommendations, compliance will have been satisfactorily achieved. However, when compliance has not been achieved and the facts are substantially the same as before, the OAG will repeat the audit finding and recommendation(s) in the current report.
The Auditor General Doug Ringler and Deputy Auditor General Laura Hirst presented to the House Committee on Oversight a brief history and the current status of the OAG and a description of the types of audits produced by the OAG.

Please use the link below to view the hearing:
House Committee on Oversight
Hearing date: February 18, 2021
OAG testimony: 02:25 - 08:29