This operational audit focused primarily on the Public Service Commission’s regulatory audit function and the processes applicable to personnel administration.  The audit included the period July 2003 through February 2005, and selected actions taken through June 2005.  Our audit disclosed that Commission operations could be improved through changes in certain procedures and methodologies, as described below:

Finding No. 1:     Greater assurance of the quality and reliability of regulatory audits could be obtained through improved communication of the applicability of auditing standards and the objectives applicable to the various types of audits performed by the Bureau of Auditing.  Additionally, revisions to audit guidance are necessary to account for changes in the Commission’s organizational structure and standard documents, and changes in the auditing profession over the last six years. 

Finding No. 2:    Commission procedures regarding auditor independence from regulated entities could be strengthened to provide for periodic updates which address all aspects of independence, including acceptance of gifts, personal relationships, financial interests, and offers of employment.

Finding No. 3:     The Commission should take steps to ensure that established quality control procedures are followed for all audits. 

Finding No. 4:     Revised record keeping procedures are necessary to ensure the continued availability of documentation of employment reference checks completed for Commission employees. 

Finding No. 5:     As noted in audit report No. 2004-031, dated August 2003, certain provisions in Chapter 350, Florida Statutes, relating to railroads and the position of chief auditor no longer correspond to the Commission’s regulatory authority and organizational structure.  Additionally, the maximum regulatory assessment rates allowed are different than those specified in related statutes. 

The Executive Director's response is included in its entirety at the end of this report as Exhibit D.