Texas Department of Transportation
Texas Department of Transportation - Effectiveness of Internal Audit Engagement
Report Number 97-359
June 1997
Overall Conclusion
The Texas Department of Transportation (Department) internal audit function may be impaired because it does not fully comply with statutes which require qualified internal auditors in each division and district. Internal Review Analysts (IRAs) in the districts and divisions, which constitute 72 percent of the audit staff, do not report to and are not fully supervised by either the Department's Director of Audits (appointed the internal auditor for the Department pursuant to the Texas Internal Auditing Act) or the Texas Transportation Commission (Commission), as required by statute.
Prior to September 1, 1995, the Department did not consider the IRAs in the districts and divisions to be part of the headquarters internal audit function. The General Appropriations Act, Rider 22, required internal auditors to be located in the district and division offices.
The Department has made or proposed the following changes:
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- The IRAs are submitting their reports to the Director of Audits.
- The IRAs' contribution to the planning process began August 1996.
- The Director of Audits meets annually with each IRA to address any limitations on review work or reporting.
- An internal peer review process is being implemented for IRAs.
These changes will not meet the legislative intent for the IRAs to report to and be fully supervised by the Department's internal auditor or the Commission.
Without consideration of the requirements of Rider 22, the Internal Audit Office would be effective in all eight effectiveness criteria.
As of September 1, 1995, Rider 22 increased the number of internal audit staff, including the IRAs and the Audit Office staff, to 61 auditors. Of this number, 44, or 72 percent, are IRAs. Audit coverage includes total revenue of $1.8 billion, contract expenditures of $1.9 billion, and more than 15,900 employees.
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