8.2.7 Audit Review
To ensure the internal control processes and procedures for the agency’s bond program are effective, a public agency should employ periodic audits of the program. These may be performed by internal auditors or be incorporated in the external auditor’s work plan. Any effort to monitor the agency’s internal control system must include control functions performed by the conduit issuer in the case of a conduit financing.
When performed on bond funds, the scope and purpose of a financial audit may differ from that of a performance audit. A financial audit may track, account for, and report on specific expenditures of bond proceeds, while a performance audit may be used to determine the outcome of expenditures of proceeds.130 The opportunity for an auditor to assess the value of bond expenditures when conducting a performance audit is a function of the specificity of the original bond act in defining the purpose or objectives of the bond program. A financial audit may answer questions about when, to whom, and how much was paid out, while a performance audit may address whether the funds were spent for the intended purposes. Audit findings should be considered an opportunity to improve the management of proceeds.