What is Pre-Audit?
It is a review of financial transactions from our accounting system’s (WOLFS) processing runs. The sample selections are chosen using a random selection process using various tools, like Benford’s Law. Agencies selected for testing are notified of sample selections and are requested to provide supporting documentation for the selected transactions. The transactions are reviewed for many different procedural aspects, for example:
- Does the supporting information match the payment document in WOLFS?
- Are there valid internal controls and separation of duties related to the transaction’s approval?
- Is the expenditure coded correctly using the right object/sub-object expenditure codes?
- Are the correct service dates used on the payment document? If so, do the accounting lines cross fiscal years or are they separated out according to the service date?
What is Benford’s Law?
It is a tool used in our audit software to detect potential evidence of fraud. Bendford’s Law completes a statistical analysis of our processing runs and returns any suspicious activity that has occurred outside of the normal distribution expected. Any anomalies are reviewed and, if necessary, further investigation may be conducted.
The accuracy of financial transactions and financial data is vital to the State of Wyoming’s commitment to excellence in financial reporting. Pre-audit is an internal review to help agencies strengthen their accounting practices. It is important that individual agency have strong policies and procedures in place related to financial transactions. The State Auditor’s Office is also fulfilling its responsibility in accordance with W.S. §9-1-403 (b)(iv) by implementing and operating a pre-audit function.