Overview
In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of ServiceNet, Inc. for the period July 1, 2016 through June 30, 2018.
We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
Below is our audit objective, indicating the question we intended our audit to answer, the conclusion we reached regarding the objective, and where the objective is discussed in the audit findings.
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Objective |
Conclusion |
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No; see Finding 1 |
To achieve our audit objective, we gained an understanding of the internal controls we determined to be relevant to the objective by reviewing applicable laws, regulations, and agency policies and procedures, as well as conducting interviews with ServiceNet’s staff and management. We evaluated the design and tested the effectiveness of controls over non-payroll expenses and determined whether they operated as intended during the audit period (see Finding 2).
Additionally, we performed the procedures described below.
Credit Card Purchases
For our review of credit card purchases, we selected a nonstatistical, judgmental sample of 10 months of the 24-month audit period from ServiceNet’s main credit card account. We reviewed the credit card activity of all 16 users for the 10 months sampled. The sample consisted of 830 expenses among the 16 cardholders, totaling $150,571. We reviewed credit card statements and supporting documentation (e.g., receipts, invoices, packing slips) on file for these expenses to determine whether they were properly charged to state contracts and documented.
Cash Disbursements
For our review of cash disbursements for purchases of goods and services charged to state contracts, we determined our population to be 110,141 non-payroll expenses, totaling $39,853,148. We selected a nonstatistical, judgmental sample of 80 transactions, totaling $182,849, from the population of 2,197 transactions identified as travel, meeting, and consultant expenses, totaling $1,081,572. We also selected a random, statistical sample (with a confidence level of 95%, a tolerable error rate of 5%, and an expected error rate of 0%) of 60 transactions, totaling $12,658, from the remaining population of 107,944 transactions, totaling $38,771,576. However, we did not project the result to the entire population. We reviewed supporting documentation (e.g., receipts, invoices, packing slips) for these transactions to determine whether each one was properly charged to a state contract and documented.
Data Reliability
ServiceNet uses the Microsoft Dynamics Great Plains system to record and process all accounting transactions. We determined the reliability of Great Plains by testing access controls, application controls, configuration management, contingency planning, and segregation of duties that ServiceNet had implemented. We also performed the following tests:
- We selected a judgmental sample of 50 expenses from Great Plains and determined whether the information in Great Plains matched information on hardcopy supporting documentation (such as invoices and reimbursement check requests).
- We selected a judgmental sample of 50 hardcopy supporting documents and traced them to Great Plains for agreement.
Based on our audit work, we determined that the data obtained from Great Plains were sufficiently reliable for our audit work.
When nonstatistical sampling methods were used, we did not project the results of our testing to the population.
| Date published: | November 6, 2019 |
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