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AP XIX, Sec. 3 Office of audits

Baldwin's Kentucky Revised Statutes AnnotatedAdministrative Procedures of the Court of JusticeEffective: August 8, 2022

Baldwin's Kentucky Revised Statutes Annotated
Administrative Procedures of the Court of Justice
Part XIX. Internal and External Audits of the Administrative Office of the Courts
Effective: August 8, 2022
Administrative Procedures, AP XIX, Sec. 3
AP XIX, Sec. 3 Office of audits
(A) Director of Audits
(1) The AOC Director of Audits will report functionally to the Chief Justice and administratively for day-to-day operations to the AOC Director's Office.
(2) The AOC Director of Audits will have unrestricted access to and may communicate and interact directly with the AOC Director's Office, the Committee, and when necessary, the Chief Justice.
(3) The AOC Director of Audits will have unrestricted access to and may communicate and interact directly with all AOC employees. This ability to communicate includes the ability to speak in private meetings without management present.
(4) The AOC Director of Audits has the responsibility to:
(a) Oversee and supervise the Office of Audits, including the Division of Audit Services and the Division of Internal Audit.
(b) Establish and ensure adherence to policies and procedures designed to guide the Division of Audit Services and the Division of Internal Audit.
(c) Submit to the Committee, at least annually, a risk-based internal audit plan for the Office of Audits for review and approval.
(d) Communicate to the Committee the impact of resource limitations on the annual audit plan.
(e) Review and adjust the internal audit plan, as necessary, in response to changes in the AOC's business, risks, operations, programs, systems, and controls.
(f) Communicate to the Committee any significant interim changes to the annual audit plan.
(g) Ensure each annual audit plan is executed, including the establishment of objectives and scope, the assignment of appropriate and adequately supervised resources, the documentation of work programs and testing results, and the communication of audit results with applicable conclusions and recommendations to appropriate parties.
(h) Follow up on audit findings and corrective actions, and report periodically to the Committee any corrective actions not effectively implemented.
(i) Confirm the principles of integrity, objectivity, confidentiality, and competency are applied and upheld.
(j) Certify the Office of Audits collectively possesses or obtains the knowledge, skills, and other competencies needed to meet the requirements of these rules.
(k) Validate trends and emerging issues that could impact the AOC and communicate to the Committee as appropriate.
(l) Ensure adherence to the AOC's relevant policies and procedures, unless such policies and procedures conflict with these rules. Any such conflicts will be resolved by or otherwise communicated to the Committee.
(m) Document conformance of the Office of Audits with the standards set forth in these rules.
(n) Coordinate and assist in external audits as required by Section 4 of these Rules.
(o) Receive and investigate all claims of fraud, waste, and abuse made to the KCOJ Courts Tipline1 .
(B) Independence and Objectivity of the Office of Audits
(1) The AOC Director of Audits will ensure that the Office of Audits remains free from all conditions that threaten the ability of the Office to carry out its responsibilities in an unbiased manner, including matters of audit selection, scope, procedures, frequency, timing, and report content.
(2) If the AOC Director of Audits determines that independence or objectivity may be impaired in fact or appearance, the details of impairment will be disclosed to the Committee.
(3) Office of Audits employees will maintain an unbiased mental attitude that allows them to perform engagements objectively.
(4) The Office of Audits will have no direct operational responsibility or authority over any of the activities audited. Accordingly, Office of Audits employees will not implement internal controls, develop procedures, install systems, prepare records, or engage in any other activity that may impair their judgment, including:
(a) Assessing specific operations for which they had responsibility within the previous year.
(b) Performing any operational duties for the AOC or other judicial branch offices.
(c) Initiating or approving transactions external to the Office of Audits.
(d) Directing the activities of any AOC employee not employed by the Office of Audits, except to the extent that such employees have been appropriately assigned to auditing teams or to otherwise assist the Office of Audits.
(5) Where the AOC Director of Audits has or is expected to have roles and/or responsibilities that fall outside of the Office of Audits, safeguards will be established to limit impairments to independence or objectivity.
(6) Office of Audits employees will:
(a) Disclose any impairment of independence or objectivity, in fact or appearance, to the AOC Director of Audits.
(b) Exhibit professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined.
(c) Make balanced assessments of all available and relevant facts and circumstances.
(d) Take necessary precautions to avoid being unduly influenced by their own interests or by others in forming judgments.
(7) The AOC Director of Audits will disclose to the Committee any interference and related implications in determining the scope of internal audit, performing work, and/or communicating results.
(C) Division of Internal Audit
(1) There is established a Division of Internal Audit within the Office of Audits. The Division of Internal Audit (IA) will provide independent assurance that the AOC's risk management, governance, and internal control processes are operating effectively.
(2) Purpose and Mission
(a) The purpose of IA is to provide independent, objective assurance and consulting services designed to improve the AOC's operations, promote transparency, and maintain the public trust and confidence in the AOC.
(b) The mission of IA is to maintain the public trust and confidence in the AOC by providing risk-based and objective assurance, advice, and insight.
(c) IA will bring a systematic, disciplined approach to evaluate and improve the effectiveness of governance, risk management, and control processes.
(3) IA will evaluate the AOC's internal controls, including its governance, operations, information technology security, and accounting processes. It will:
(a) Ensure compliance with applicable laws, Administrative Procedures of the KCOJ, and Rules of Court, and with all AOC policies and procedures;
(b) Provide support in accurate and timely financial reporting and data collection; and
(c) Help maintain operational efficiency by identifying problems and correcting lapses before they are discovered in an external audit.
(4) The AOC Director of Audits and employees of IA shall be unbiased and objective in the performance of their job duties. The AOC Director of Audits and employees of IA must be independent from the operations they evaluate.
(5) IA must be staffed with qualified, skilled, and experienced people who work in accordance with the Institute of Internal Auditors (IIA) Code of Ethics and Standards.
(6) Professional Standards
(a) The AOC Director of Audits shall comply with the International Standards for the Professional Practice of Internal Auditing (IPPF) (Institute of Internal Auditors for the Division of Internal Audit.1
(b) IA will govern itself by adherence to the IPPF.
(c) The AOC Director of Audits will report to the Committee regarding IA's conformance to the IIA Code of Ethics and Standards.
(d) IA will be proficient in the following standards to ensure the AOC is adhering to best practices:
(i) IIASB IPPF (Red Book Standards); and
(ii) IIA Code of Ethics and Standards.
(7) Authority of IA
(a) IA shall have full, free, and unrestricted access to all functions, records, property, and personnel pertinent to carrying out any audit, subject to accountability for confidentiality and safeguarding of records and information.
(b) IA shall allocate resources, set frequencies, select subjects, determine scopes of work, apply techniques required to accomplish audit objectives, and issue reports.
(c) IA shall obtain assistance from any AOC personnel, as necessary or appropriate, as well as other specialized services from within or outside the AOC, in order to complete an engagement.
(8) Scope of the Division of Internal Audit
(a) The scope of IA encompasses, but is not limited to, objective audits for providing independent assessments to the Committee, the Supreme Court, the AOC Director's Office, and outside parties on the adequacy and effectiveness of governance, risk management, and control processes within the AOC.
(b) IA audit plans may include audits that evaluate whether:
(i) Risks relating to the achievement of the AOC's strategic objectives are appropriately identified and managed.
(ii) The actions of the AOC's officers, directors, management, employees, and contractors are in compliance with applicable laws, Administrative Procedures of the KCOJ, and Rules of Court, and with all AOC policies and procedures.
(iii) The results of operations or programs are consistent with established goals and objectives.
(iv) Operations or programs are being carried out effectively and efficiently.
(v) Established processes and systems enable compliance with applicable laws, Administrative Procedures of the KCOJ, and Rules of Court, and with all AOC policies and procedures.
(vi) Information and the methods used to identify, measure, analyze, classify, and report such information are reliable and have integrity.
(vii) Resources and assets are acquired economically, used efficiently, and protected adequately.
(c) The AOC Director of Audits will meet quarterly with the Committee and report periodically as needed regarding:
(i) IA's plan and performance relative to its plan.
(ii) IA's conformance with the IIA's Code of Ethics and Standards, and action plans to address any significant conformance issues.
(iii) Significant risk exposures and control issues, including fraud risks, governance issues, and other matters requiring the attention of, or requested by, the Committee.
(iv) Results of audits or other activities.
(v) Resource requirements.
(vi) Any response to risk by management that may be unacceptable to the AOC or the Supreme Court.
(d) The AOC Director of Audits may rely upon the work of other internal and external assurance and consulting service providers as needed.
(e) IA may perform advisory and related service activities, the nature and scope of which will be agreed to with stakeholders, provided IA does not assume management responsibility.
(9) Quality Assurance and Improvement Program
(a) IA will maintain a quality assurance and improvement program that covers all aspects of IA. The program will include an evaluation of IA's conformance with the standards set forth in subsection (C)(6) of these rules and an evaluation of whether IA is adhering to the IIA's Code of Ethics. The program will also assess the efficiency and effectiveness of IA and identify opportunities for improvement.
(b) The AOC Director of Audits will communicate to the Committee the IA's quality assurance and improvement program, including results of ongoing and periodic internal assessments and external assessments. External assessments will be conducted in accordance with the applicable standards by a qualified, independent assessor or assessment team from outside the AOC.
(D) Division of Audit Services
(1) There is established a Division of Audit Services within the Office of Audits. The Division of Audit Services (Audit Services) will audit the financial activities of Circuit Court Clerks, Master Commissioners, and Domestic Relations Commissioners. Audit Services will complete transfer packets, which close out the accounts of former circuit court clerks and master commissioners when new officials take office. Audit Services will perform annual audits of operating costs for judicial centers, courthouses, and other court facilities.
(2) Purpose and Mission
(a) The purpose of Audit Services is to provide independent and objective audits.
(b) The mission of Audit Services is to maintain the public trust and confidence in the judicial branch by performing required annual audits and other investigations as warranted.
(3) The AOC Director of Audits and employees of Audit Services shall be unbiased and objective in the performance of their job duties. The AOC Director of Audits and employees of Audit Services must be independent from the operations they evaluate.
(4) Audit Services must be staffed with qualified, skilled, and experienced people.
(5) Authority of Audit Services
(a) Audit Services shall have full, free, and unrestricted access to all functions, records, property, and personnel pertinent to carrying out any circuit court clerk, master commissioner, domestic relations commissioner, or court facility operating costs audit, subject to accountability for confidentiality and safeguarding of records and information.
(b) Audit Services shall allocate resources, set frequencies, select subjects, determine scopes of work, apply techniques required to accomplish audit objectives, and issue reports.
(6) Scope of the Division of Audit Services
(a) Audit Services will perform a financial and compliance audit of at least 40 Circuit Court Clerk's offices per year.
(i) Audit Services should conduct an audit in each Circuit Court Clerk's office at least once every three years.
(ii) Audit Services will issue the audit report to each Circuit Court Clerk audited. Copies of audits containing critical findings will be sent to the AOC Director.
(iii) The AOC Office of Public Information shall publish an annual report on the KCOJ website no later than December 1 each year listing the amount of funds collected by each Circuit Court Clerk pursuant to KRS 30A.120 for the preceding fiscal year.
(b) Audit Services will complete annual audits of Master Commissioners in accordance with the Administrative Procedures of the KCOJ, Part IV.
(c) Audit Services will complete annual audits of Domestic Relations Commissioners in accordance with the Family Court Rules of Procedure and Practice (FCRPP) 4 and the Domestic Relations Accounting Procedures Manual Section 100.1.
(d) Audit Services will perform annual operating costs audits for court facilities in accordance with KRS Chapter 26A and the AOC Policies for the Operation and Maintenance of Court Facilities.
(7) The AOC Director of Audits will meet quarterly with the Committee and report periodically as needed regarding:
(a) Audit Services' plan and performance relative to its plan.
(b) Significant risk exposures and control issues, including fraud risks and other matters requiring the attention of, or requested by, the Committee.
(c) Results of audits or other activities.
(d) Resource requirements.
(e) Any response to risk by an appointed or elected official that may be unacceptable to the Supreme Court.

Credits

HISTORY: Amended by order 2022-41, eff. 8-8-22; prior amendment by Order 2021-34, eff. 9-20-21; adopted by Order 2019-11, eff. 10-23-19

Footnotes

So in original.
Administrative Procedures, AP XIX, Sec. 3, KY ST ADMIN P AP XIX, Sec. 3
Current with amendments received through September 1, 2022. Some sections may be more current, see credits for details.
End of Document