05 May 2013

Trustee Audit Program Turns 25 – New Focus for 2013

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Compliance Tip:

New Audit Focus for 2013

DOJThe trustee audit program was formally launched in 1988 with the Office of the Inspector General audit. Often called the OIG, this audit was conducted every 2 years.  In 1997, the program transitioned to the Field Exam and, for most Trustee offices, is now conducted every 4 years.  The Office of Oversight has made some recent changes to the audit program to improve and increase efficiencies.

Some changes to the program that you need to know about include:

  • The Internal Control Questionnaire has been reduced from 20 pages to 10 pages.
  • Less significant inquiries such as the “u” designation for unscheduled assets has been removed from scrutiny; allowing more time to focus on other important areas of the audit.
  • Trustees no longer have to explain why a TDR has not been filed within 9 months of the date of the TFR. This comes after realizing many timeline factors are out of the control of the trustee
  • Focus has returned to the more significant assets and large transactions
  • The recent handbook changes are in focus, specifically the guidelines regarding auctions and sales
  • The audit findings are now delivered in Word format, making it easier for trustees to respond within the body of the report.

During the lifecycle of these audit findings, significant improvements have been made to the proper receipt handling and tracking functions.  The findings also suggest progress to the trustee management of segregation of duties.  Unfortunately Form 1 errors continue to make the top of the list, and have held a top ten spot for the majority of the audit program.  Following close behind are bank reconciliation errors, such as improper documentation, which still continued to be reported. The audit process is focused on removing repeat errors and omissions previously reported in past audits.  With the error rate hovering around the 50% mark for repeat errors, improvements still need to be made.

New changes to the audit program are designed to reduce these repetitive errors and safeguard the bankruptcy estate funds. Because of this the audit program continues to evolve and develop to account for the needs of trustees. In order to continue increasing these efficiencies, the United States Trustee Office encourages you to work closely with them in order to keep up with improvements.

For further information regarding audit changes please visit: http://www.justice.gov/ust/eo/public_affairs/articles/docs/2013/nabtalk_spring2013.pdf