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Audit of the Baker Hill Road District Objectives, Scope, and Methodology

An overview of the purpose and process of auditing the Baker Hill Road District.

Table of Contents

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 certain activities of the Baker Hill Road District (BHRD) for the period January 1, 2019 through December 31, 2020.

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 a list of our audit objectives, indicating each question we intended our audit to answer; the conclusion we reached regarding each objective; and, if applicable, where each objective is discussed in the audit findings.

Objective

Conclusion

  1. Does BHRD file its annual reports with its prudential committee, as required by Section 4 of Chapter 41 of the Acts and Resolves of 1989?

No; see Finding 1

  1. Does the BHRD prudential committee prepare and approve an annual budget, as required by Section 6 of Chapter 41 of the Acts and Resolves of 1989?

Yes

  1. Does BHRD pay for contracted services in accordance with agreed-upon terms and account for those expenditures in its annual budget?

Yes

 

To achieve our audit objectives, we gained an understanding of the internal controls that we determined to be relevant to the objectives by reviewing BHRD’s mission statement, policies, and procedures, as well as conducting interviews with key personnel.

To determine whether BHRD complied with Section 4 of Chapter 41 of the Acts and Resolves of 1989, we collected and reviewed the district’s annual reports from the audit period to ensure that they had been prepared. Additionally, we asked BHRD prudential committee members whether they had received and reviewed the 2019 and 2020 annual reports.

To determine whether BHRD complied with Section 6 of the Acts and Resolves of 1989, we inspected a copy of BHRD’s budget for fiscal years 2019 and 2020 to verify that it had been created. Additionally, we determined whether the BHRD prudential committee had approved, and signed off on, the budget by reviewing the committee’s meeting minutes.

To determine whether BHRD paid for expenses incurred, and complied with all its contracts, during the audit period, we obtained a list of all its expenditures for the audit period. From the data we obtained, we created a population of 106 contracted service transactions. From this population, we selected a nonstatistical, judgmental sample of 41 transactions based on the percentage of the total number of transactions that each type of contracted service represented. The sample consisted of 20 transactions for BHRD’s attorney (this type of service represented 50.8% of the 106 transactions), 10 transactions for the Lanesborough Police Department (this type of service represented 23.6%); 10 transactions for the Lanesborough Department of Public Works, which is responsible for highways (this type of service represented 23.6%); and 1 transaction for the Lanesborough Volunteer Fire Department (this type of service represented 2.0%). To conduct our test of details, we reviewed BHRD’s bank statements, invoices, and contracts to confirm that each amount paid complied with the agreement signed by BHRD and the contractor.

We used a nonstatistical sampling approach, and as a result, we could not project the results of our testing to the population.

Data Reliability Assessment

To determine the reliability of the data about BHRD expenses during the audit period, we interviewed management personnel who were responsible for the source data. Additionally, we tested for gaps and duplicates in the list of expenditures using Audit Command Language software. We sampled 20 invoices from the BHRD check register using Audit Command Language and traced them back to hardcopy invoices. Additionally, we judgmentally sampled 20 hardcopy invoices and traced them back to the BHRD check register. We determined that the information was sufficiently reliable for the purposes of this audit.

Date published: March 24, 2022

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