In order to ensure the integrity of the reimbursement process, Petroleum Storage Tank Fund Auditors will periodically conduct audits focused on two key areas - the Fieldwork Audit and the Site Audit.

The Fieldwork Audit verifies the costs requested for reimbursement to ensure they conform to the agreed-upon scope of work and that the tasks performed were necessary for remediation of the site.

The Site Audit verifies that the remediation equipment is installed and operable and that the remediation work necessary to install the equipment was performed.

The Fieldwork Audit may be conducted concurrently with the Site Audit, or the two audits may be conducted separately.

Who and what is audited?

Petroleum Release events where reimbursement applications (RAPs) have been submitted may be audited, and these audits may involve participation from Responsible Parties, their Consultants, or both.

Fund Audit Process

The chart below provides an overview of the steps in the Fund Audit process. Click on the tabs beneath the chart for more details about each step.

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The Fund Auditor will contact the Auditee to schedule the audit.

Email and Phone Interview

Initially, the Fund Auditor will send the Auditee an “Intent to Audit” email to notify the Auditee that he/she has been selected for an audit and to schedule a preliminary phone interview.

The Intent to Audit email also includes the list of items the Fund Auditor will discuss with the Auditee during the preliminary phone interview. These items are listed below.

• Who are the officers at the Auditee’s organization?

• Which officer at the Auditee’s organization will sign the Management Representation Letter?

• Which officer at the Auditee’s organization will represent the organization at the Auditor's interview of management?

• What is the organization's structure (including field personnel, administrative/accounting personnel and management)?

• What internal controls are in place to ensure integrity and consistency when constructing a RAP - from field tasks to application completion?

• What are the Auditee organization's source documents or records (field logs, methods of time tracking, accounting software and reports, etc.)?

• Which personnel will be available for documentation review, walkthrough testing, or both?

• Where is the Auditee’s organization located (the place were RAPs are administrated and source documents and records are housed)?

Setting the Audit Date

After the preliminary phone interview, the Fund Auditor will contact the Auditee to schedule the audit, providing the following audit details:

• The audit date

• The approximate length of time the audit will take

• The audit objective(s) and proposed method

• A description of the Auditee’s expected participation and the type(s) of audit(s) to be performed (fieldwork, site, or both)

• The documentation the Auditee will be required to provide (labor detail, original invoices and cancelled checks, etc.)

The Fieldwork Audit will include an interview with the Auditee’s management, and potentially with hands-on personnel, regarding the organization’s internal controls (including recordkeeping/accounting systems and procedures for data entry, analysis and reporting).

Documents Involved

The Fund Auditor may request that the Auditee provide the following source documents and records to provide reasonable assurance that the costs are correct for work that was done.

• General Ledger

• Accounts Payable

• Accounts Receivable

• Payroll

• Job Cost Accounting Reports

• Statements/Invoices to Clients

• Supplier/Subcontractor Backup Statements/Invoices

• Deposit Slips

• Canceled Checks

• Time Keeping and Equipment Logs (i.e., time cards, job logs and field notes)

• Any other documentation discovered in the interview with management regarding recordkeeping/accounting systems and internal control procedures

Walkthrough Testing

The Fund Auditor may shadow the Auditee’s internal control process to determine whether they function efficiently.

Fund Auditor Review

The Fund Auditor will also identify and test procedures and review the requested documentation to determine whether the internal controls operate effectively and efficiently.

This evaluation will occur at the OPS office using the internal control documents and information gathered at the Auditee’s location.

The Site Audit is a quantifiable visual inspection of the remediation equipment in place at the Event location.

The Event’s Technical Reviewer will observe and evaluate the remedial system, and the Fund Auditor will verify whether the documentation submitted in support of the RAP(s) for reimbursement substantiates the need for the equipment installed and remediation work that has been performed.

The Fund Auditor will evaluate the Site Audit information at the OPS office following the visit to the facility.

Once the Fund Auditor completes the evaluation of the information gathered during the audit, the Fund Auditor will generate an Audit Report to present the findings to the Auditee.

The components of the Audit Report are as follows:

• An evaluation of audit evidence, compared against the audit criteria and objective(s)

• A determination of whether the audit criteria were met

• An identification of the Auditee’s best practices and potential areas of improvement

The Auditee will receive a copy of the Audit Report and will have an opportunity to respond.

The results of the audit will also be presented to the Petroleum Storage Tank Committee.