INSTRUCTIONS TO STAFF 340:110-1-21

Revised 7-1-08

1. (a) Audit schedule.  An internal audit of each supervisory district, the statewide licensing coordinator, and the residential licensing program is conducted every two years by the Oklahoma Child Care Services (OCCS) lead auditor. 

(1) An audit may be conducted at other times if there is a significant change in the program's process and service, or if a follow-up on corrective action is necessary. 

(2) The audit is scheduled by the OCCS lead auditor and approved by the director of Child Care Services.  An annual schedule is published along with biannual updates.

(b) Audit scope.  OCCS determines which system elements, physical locations, and organizational activities are audited within a specified time frame.  When applicable, an examination of the previous plan of correction is reviewed and evaluated according to current practice.  The audit includes:

(1) a review of licensing records to analyze policy and requirements for performance consistency, compliance, relevance, and clarity, and to identify positive practices;

(2) interviews with staff, providers, and other key persons associated with the licensing services program to determine whether requirements, policies, and procedures are being fully implemented and to evaluate the effectiveness of the program;

(3) observations of child care programs; and

(4) use of the computer tracking system.

(c) Audit plan.

(1) The audit plan is made available to the auditee at least 30 days prior to the scheduled audit, and includes:

(A) audit objective and scope;

(B) members of the audit team;

(C) date and location of the audit;

(D) identification of the organizational unit to be audited;

(E) schedule of audit activities; and

(F) audit report distribution list and expected date of issuance.

(2) The audit plan is designed to be flexible in order to permit changes in emphasis based on information gathered during the audit.  If the auditee objects to any provisions in the audit plan, the lead auditor resolves the objections prior to the audit. 

(A) Specific details of the audit plan are communicated to the auditee throughout the audit if disclosure will not compromise the collecting of objective evidence. 

(B) The lead auditor may make changes to the audit plan and the auditors' work assignments, with the auditee's agreement, if it is necessary to ensure the optimal achievement of the audit objectives. 

(C) If the audit objectives appear to be unattainable, the lead auditor reports the reasons to the auditee. 

(3) When applicable, a list of the case records to be audited is provided to the auditee at least five days prior to the audit so the records can be reviewed for completeness and chronological filing order. 

(d) Lead auditor responsibilities.  The lead auditor receives annual audit‑specific training and instruction, and is responsible for:

(1) defining and complying with applicable auditing requirements and other appropriate directives of each audit assignment;

(2) selecting and contacting audit team members and their supervisors;

(3) conducting the pre-audit orientation for the team members to ensure that the members are familiar with their roles and duties and the expectations of the audit;

(4) preparing the audit plan and ensuring the plan is received by the auditee at least 30 days prior to the scheduled date of the audit;

(5) preparing the working papers;

(6) preparing the audit notification letter;

(7) representing the audit team with the auditee and management;

(8) establishing the pace of the audit, redirecting or encouraging team members;

(9) conducting daily debriefing meetings with the auditee;

(10) reporting any major obstacles encountered in performing the audit;

(11) immediately reporting to the auditee critical non-conformities, defined in (g) of this Instruction;

(12) resolving problems;

(13) ensuring that the audit team is fully prepared for the exit conference;

(14) preparing the preliminary audit report and conducting the exit conference;

(15) reporting the results clearly, conclusively, and without undue delay;

(16) writing and submitting the final audit report; and

(17) conducting a mid-term review.

(e) Audit team.  The audit team:

(1) consists of the lead auditor from OCCS and at least two persons selected by the lead auditor and approved by the auditee.  The majority of audit team members must have a minimum of three years technical experience within the scope of the audit.  All audit team members must have supervisory approval to participate in the audit and be independent of the activity being audited;

(2) is responsible for:

(A) arriving on time, and being prepared and unbiased;

(B) observing, evaluating, and reviewing activities to determine adequacy, effectiveness, and compliance of licensing requirements and policies within the assigned scope of the audit;

(C) collecting and analyzing evidence;

(D) documenting observations objectively and reporting the audit results;

(E) verifying the effectiveness of corrective action taken as a result of a previous audit; and

(F) acting in an ethical manner and keeping confidential all information pertaining to the audit.

(f) Working papers.  Working papers prepared by the lead auditor are used as a guide to facilitate capturing and reporting results.  They do not rigidly dictate what is audited or restrict audit activities or investigations that may become necessary as a result of the information gathered during the audit.  Working papers containing confidential information are safeguarded by the lead auditor and OCCS. Working papers are retained in OCCS files for four years, and may include:

(1) checklists used for evaluating system elements;

(2) forms for reporting objective evidence; and

(3) forms for reporting supporting evidence for conclusions reached by the auditors.

(g) Non-conformities.  The audit team reviews all documented observations to determine non-conformities.

(1) Non-conformities are actions that clearly indicate licensing policy or requirements were not followed.  Non-conformities include but are not limited to:

(A) falsifying information;

(B) breach of confidentiality;

(C) blatant policy violation;

(D) one-time policy violation that could place children at risk; or

(E) unethical behavior.

(2) The audit team ensures non-conformities are identified, and supported by evidence, in terms of the specific requirements or policy against which the audit has been conducted.

(3) If the audit team cannot determine an action to be in non-conformance regarding existing policy but clearly identifies the action as a practice that does not complement the OCCS Licensing mission, it is listed as a management finding.

(4) Non-conformities that are significant are noted and investigated, even if they are not covered by the working documents.  Serious non-conformities or those forming a pattern are identified as audit findings.

(h) Entrance conference.  The lead auditor conducts an entrance conference with the licensing supervisor and staff for the purpose of:

(1) reviewing the scope and objectives of the audit and clarifying any unclear details of the audit plan;

(2) describing the methods and procedures to be used to conduct the audit;

(3) establishing the official communication links between the audit team and the auditee;

(4) confirming that the resources and facilities needed by the audit team are available; and

(5) confirming the time and date for the exit conference and any interim meetings between the audit team and the auditee.

(i) Exit conference.  At the end of the audit, the lead auditor and team members conduct an exit conference with the auditee, staff, and regional programs manager.  The lead auditor presents the preliminary written report that includes a summary of the audit, conclusions reached by the audit team, evaluation of the previous plan of correction, observed positive practices, and overall evaluation of the audited activities.

(j) Collecting and documenting information obtained during the audit.  The information obtained by the auditors through interviews, examination of documents, and observation of activities and conditions in the areas of concern is documented.  The audit team reviews all documented observations to determine which are to be reported as non-conformities, defined in (g) of this Instruction. 

(k) Audit report.  The lead auditor prepares the final report and is responsible for its accuracy and completeness.  The audit report and working papers are retained in OCCS files for four years.  The audit report is dated and signed by the lead auditor and the director of Child Care Services, and contains:

(1) the dates, scope, and objectives of the audit;

(2) the names of all audit team members and the auditee;

(3) identification of all reference documents used during the audit, such as licensing requirements and policy;

(4) observations of non-conformities listed as findings, observations, concerns, or issues to be addressed by State Office;

(5) identification of the auditee's positive practices observed by the audit team members;

(6) plan of correction forms for the auditee and OCCS to respond to audit non-conformities; and

(7) the audit report distribution list.

(l) Audit report distribution. The lead auditor distributes the final audit report within 30 days after the conclusion of the audit to the auditee, regional programs manager, statewide licensing coordinator, director of Child Care Services, policy specialist, and training coordinator. 

(m) Plan of correction.

(1) The plan of correction includes a description of the corrective action that will be taken by the auditee to address the non-conformities, defined in (g) of this Instruction, found during the audit.

(2) The auditee and regional programs manager submit a plan of correction to the lead auditor within 30 days after receiving the final audit report.  If an extension of time is needed to complete the plan of correction, a written request is made to the lead auditor explaining why an extension is needed. 

(n) Audit closure.  Final audit closure is contingent upon evaluation and acceptance of any required corrective action by the director of Child Care Services.  If the proposed corrective action is not approved, the plan of correction is returned to the auditee for modification.

(1) Corrective action is implemented by the auditee and supervisory or management staff. 

(2) Subsequent follow-up audits to the plan of correction are completed within a time period agreed to by the auditee and the lead auditor.