State Assessment of Internal Controls Final Report, May 2007

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V. ESTIMATED COSTS

A. Objectives of the Cost Analysis

This chapter reports on costs of the pilot implementation of the State Internal Control Self-Assessment Instrument in nine States. The pilot State cost estimates provide useful data instructive for States and Federal Regional staff regarding the feasibility of future implementations of the Instrument.

B. Measuring the Costs to Conduct the State Internal Control Assessment Pilot

The Federal Project Team requested that States track the hours spent preparing for and implementing the Instrument, including the time spent on the site visit and any necessary follow-up activities. States submitted hours contributed by each participating staff person, with an estimate of the hourly rate of staff salary and benefits costs. The Federal Project Team then multiplied the number of hours by the salary and benefits of the participating staff, factoring in any additional costs, such as travel or copying.

The following table highlights the estimated costs incurred by States while conducting the State Internal Control Self-Assessment project. Illinois was unable to provide cost data; therefore, there is no estimate for Illinois.

Exhibit 3. Estimated costs of conducting a State Internal Self-Assessment

The costliest variable for States was the number of participating staff. Some States included more staff in the site visit than did other States. For example, Montana had 25 participants at the site visit; Puerto Rico included 27 people at a two-day site visit, while the majority of States had between nine and twelve participants. Other variables that potentially could affect costs were travel, copying, or teleconferencing costs. Although cost data were not reported by variable, the costs of these other variables is assumed to be minimal, based on anecdotal information.

Given the scope and complexity of the Instrument, the costs are relatively modest. Kentucky and Maine estimated costs of approximately $3,000, while Montana and Washington estimated between $8,000 and $9,500. The costs were higher for the Commonwealth of Puerto Rico for several reasons. Puerto Rico had higher preparation costs due to translating the Instrument to Spanish and involving a larger number of the staff in the two-day training site visit, which involved simultaneous translation services. Puerto Rico enlarged the scope of its self-assessment process to include issues raised in an earlier fiscal audit. Puerto Rico also included the largest number of persons (47) in the process to complete the Instrument. The large number of participants and the expansion of the scope of the project resulted in costs that were substantially higher than any other State.

The average cost to States, excluding the atypical amount for Puerto Rico, was $5,156.

Posted January 31, 2008