posted July 25, 2017

Developing a Corrective Action Plan

by Katlin Michelle Gelber, CPA, Senior Associate

I recently had the opportunity to attend a presentation on how to develop an effective Corrective Action Plan (CAP), which was given by individuals from the Office of the Arizona Auditor General. This article provides a few key takeaways from the training.

An effective CAP contains the following components:

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Part I: Clearly define the deficiency

Be as specific as you can when stating the deficiency. If you do not have all of the necessary information to be specific, then reach out to the employee responsible for the area or the audit team for additional information.

Part II: Specify the corrective actions for the deficiency

Break the corrective actions into steps, and identify the individuals that are responsible for implementing the corrective action steps. When creating the steps to be performed, ensure the steps are specific and measurable rather than vague actions. For example, rather than indicating that an employee will receive training, indicate what type of training will be received, who will be providing the training, and what date the training is scheduled for. Additionally, noting an employee will receive training should not be the only corrective action step in the CAP. In addition, a deadline should be created for the corrective actions to be taken by.

Part III: Accountability

Identify an individual to monitor the progress to ensure the corrective action steps are being properly taken and are being performed in a timely manner according to the timeline that was set. If necessary, modify the timeline for the completion of the CAP.

Part IV: Verify that the action step corrected the deficiency

Determine what an appropriate verification of the correction would be. Consider whether observation of the process, testing a sample of transactions, or some other method could be used to verify corrections have been made. Document the date the verification is performed as well as the follow up date that may have been scheduled. Additionally, if during the verification process it was determined that corrections have not been made to remedy the deficiency, then modify the CAP if necessary.

In addition to creating a CAP when requested by the state, a CAP can also be utilized for each exception noted in the Uniform System of Financial Records (USFR) as well as for developing the management response to all financial and federal findings reported in accordance with Government Auditing Standards or Uniform Guidance, as applicable.

The Office of the Arizona Auditor General has issued guidance on how to develop an effective CAP, which can be found on their Frequently Asked Questions page for school districts (link provided below).This site contains additional information about corrective action plans, including a video with guidance and a sample template to use for preparing a CAP.

https://www.azauditor.gov/reports-publications/school-districts/faqs/audit-requirements


The content of these pages is for general information purposes only and does not constitute advice. Heinfeld, Meech & Co., P.C. tries to provide content that is true and accurate as of the date of writing; however, we give no assurance or warranty regarding the accuracy, timeliness, or applicability of any of the contents.