Management Audit Procedure – R&R and W&S, approved September/26/ 2001

Introduction:

The By-laws require the execution of an annual Management Audit for both the R&R and the W&S Associations. The following procedure should be used for these audits:

Procedure:

1. The Rules Committee selects an Audit Team and Lead Auditor for each audit.

2. The Lead Auditor schedules the audit meetings with the board, and the individual officers. Additional meetings may be scheduled with the Manager and office staff. The Lead Auditor also prepares a general plan for the audit and communicates it to the team and the auditees.

3. The Audit Team conducts the audit according to the Audit Plan and the Audit Checklist. The primary standard for conducting the audit is the Association By-laws (the By-laws also reference the Colorado Statutes, Articles of Incorporation, Declarations, Policies, Procedures, etc., which may also be used as standards in the course of the audit process). The Audit Team may also follow audit trails that will require interviews with committee members, office staff, etc. The first phase of the audit should be completed before November 15 for the year in question. Time constraints and cyclical events that normally occur later in the fiscal year may require a second phase of the audit at a later date.

4. The Audit Team will record any non-compliances that are discovered and reference them to the specific article of the By-laws or specific policies / procedures that are at issue. Objective evidence will always be cited to substantiate the non-compliance.

5. The Audit Team will complete a Summary Audit Report after completion of the first phase of the audit, which will include a numbered listing of non-compliances, which have been discovered to date.

6. The Board (or other auditee) must submit a response to the audit within 30 days of the audit report. This response must include an Action Plan that addresses how and when (date) each non-compliance will be effectively resolved.

7. The Audit Team will review the Action Plan response and approve or reject it. The basis for approval will be whether or not the team believes that the plan will actually resolve the non-compliance and also whether the timetable is appropriate to the issue (emergency issues, e.g. legal, safety, etc. need urgent action; important issues must be resolved in an efficient, cost effective and timely manner and less important or complex issues need a reasonable plan but may extend over a longer timeframe).

8. Responses that are rejected by the Audit Team must be re-worked until approved.

9. The Audit Team will do follow-up audits, based on the completion dates specified in the action plans, to verify actual completion and to determine whether the action taken was effective in resolving the cause for the specific non-compliance. The Audit Team may also do a second phase audit to cover areas or events that could not be covered in the first phase. They will follow the same procedure as phase 1 (Steps 1 to 9, as appropriate). A final follow-up checkpoint will be completed shortly before the Annual Meeting to determine the status of all action taken to date.

10. An Audit Status Report will be prepared by the Lead Auditors prior to the Annual Meeting for inclusion in the Annual Meeting Reports.
Jim Chisholm 9/25/01, approved by Rules Committee 9/26/01