Question

Your CPA firm has been contracted by the state to serve as the internal audit function for The

Commission on Workforce Development. The Commission was established several years ago by the

state legislature to “increase the job skills of individuals receiving public assistance and help them to

obtain employment to be able to support themselves and their dependents.” To accomplish this

objective, the Commission enters into contracts with private sector contractors to train individuals in

computer data entry, local area network administration, cable and telecommunications installation,

auto mechanics, and other fields where there is an acknowledged need for employees.

The program works as follows:

The Commission staff identifies individuals eligible for enrollment in the program through

referrals from case workers in local county and city welfare departments. The Commission staff

then determines whether the individuals need general skills, specific skills, or both and assigns

them to entities with which the state has contracted for training services. The Commission also

determines the specific fields in which training will be provided through periodic assessments

of employer needs across the state. For purposes of this assessment, the state is divided into five

regions. Training offerings are set for each region based on surveys of employers’ current and

expected needs.

Contractors are responsible for a) providing individuals with the general work skills, if needed

(literacy, basic math, etc.) and b) providing all individuals with specific work skills (training in

auto mechanics, typing, network administration, etc.). Contractors are also responsible for helping

all trained individuals to obtain employment.

Your firm uses a business process approach to internal auditing.

A. Identify four key activities/processes involved in the operations of the Commission (there are

more than four). Prioritize them in terms of significance to the board’s operations (1 = most

significant, 4 = least significant).

Activity/Process	Significance (1 to 4)
1.
2.
3.
4.

B. For the activity/process you ranked the most significant, identify and evaluate three risks. For

each risk, identify a control that would help mitigate the risk.

Risk	Impact (H,M,L)	Probability (H,M,L)	Control
1.			1.
2.			2.
3.			3.

Answer 1

A.

Activity/Process	Significance (1 to 4)
1. Bus mgmt.-oversee commission staff to ensure individuals are properly trained, monitored and employable	1
2. Resource mgmt.- effective resource mgmt. processes will provide competent employees and capable training equipment needs are met (ex. Computers, typewriters, cars to work on , etc)	2
3. Marketing/sales- the commission must effectively communicate to potential employers that individuals are hirable.	3
4.Supporting- monitor private sector needs across state on a weekly/monthly basis to ensure individuals are receiving training in the areas of highest employer demand	4

B.

Risk	Impact (H,M,L)	Probability (H,M,L)	Control
1. Selecting contractor with limited skills and means to provide required knowledge to workers	HIGH	HIGH	1. Prepare a checklist before providing contract
2. Contractor breaching the terms of contract	MEDIUM	MEDIUM	2.Provide for penal cause in such cases to compensate the loss
3. Contractor providing private coaching and taking money from individuals in the name of that they are government sponsored and authorized agency	LOW	LOW	3.Conduct regular physical check ups and see that undue practices are not followed