Grant audits are an important part of the assurance process, which is aimed at ensuring the proper use of government funds and facilitating decision making on the disbursement of the latter. Grant Audit process generally helps the government to decide whether or not a grant should be renewed in accordance with predetermined performance-based principles. Grant Audit are essentially intended to provide the government with assurance that disbursed funds are put into the intended use in accordance with the grant agreement including the performance framework and approved budget and that the financial statements are a fair representation of the financial transactions and balances of the grant (The Global Fund, 2014). To conduct an audit of a grant to a municipal police department whose purpose is to reduce driving while intoxicated violations, I would need the following documents:

1. Financial statements
2. The grant agreement and other sub-grant agreements
3. Any supporting source documents and books of original entry related to the financial statements including: assets and liabilities, income and expenditure, cash records etc.
4. Interim quarterly or monthly grant activity reports (financial as well as programmatic)
5. Cash book, General ledger, other important books and records
6. Original supporting documents to all reported expenditures.
7. Bank statements.
8. Important correspondence between the government and the police department pertaining to matters about grant implementation;
9. Financial procedures manuals, systems descriptions or any other documentation explaining the processes contributing to the production of reliable financial reports and maintaining internal control;
10. Minutes of management meetings;
11. Internal audit reports relevant to government expenditures or any systems, governance or other issues which impinge on government grants.

The main objectives of the audit would be:

1. To ensure that all the transactions carried out by the police department comply in all material respects with the applicable legislation
2. To ensure that disbursed funds were spent in conformity with the approved work plan and budget existing at the expenditure and consistent with the provisions of the grant agreement.
3. To assess the effectiveness and adequacy of the internal control systems in monitoring expenditures being incurred by the program.
4. To follow up on the status of the findings of previous audit reports
5. To evaluate whether the designated accounts being used by the police department are maintained and operated in accordance with the provisions of the grant agreement.
6. To check whether the police department has put mechanisms in place to track and safeguard the assets purchased with funds obtained though the grant and ensure that they being put to the intended use.
7. To ensure that necessary supporting documents, accounts and records have been retained in accordance with the provisions of the grant agreement.
8. To ensure that goods and services are being procured in accordance with the grant agreement.
9. To evaluate the efficiency and economy of the grant’s expenditures.

I believe a performance audit is most appropriate audit for this situation because the main aim of the audit is to assess the program’s effectiveness and the program results or achievements (Kearney, 2013). Moreover, this type of audit not only analyses the relative economy and efficiency with which an activity is operated but also evaluates the internal or management control. Additionally, it entails value for money audits and analysis of the entity’s compliance with laws and regulations.

References

Kearney, E. F. (2013). Wiley federal government auditing : laws, regulations, standards, practices, & Sarbanes-Oxley. Hoboken, N.J. : John Wiley & Sons.

The Global Fund. (2014, January 31). Guidelines for annual audits of global fund grant program financial statements. Retrieved from http://www.theglobalfund.org/documents/core/guidelines/Core_AnnualAuditsOfFinancialStatements_Guideline_en/