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TABLE OF CONTENTS | PAGE |
Chapter 1 – Introduction and Basic Elements of Cannabis Compliance Audits | 1 |
1.1 Introduction | 1 |
1.2 Objectives | 1 |
1.3 Cannabis Compliance Audits in a Public Sector Context | 2 |
1.3.1 Elements of a Cannabis Compliance Audit | 2 |
1.3.2. Authorities and Criteria | 2 |
1.3.3. Subject Matter | 3 |
1.3.4. Three Parties | 3 |
1.3.5. Assurance | 3 |
1.3.6. What does the Compliance Officer Look For in Different Audits? | 3 |
1.3.7. Different Ways to Conducting a Compliance Audit | 4 |
1.4 Compliance Audit as a Stand-Alone Activity | 4 |
1.4.1. Compliance Audit with Other Types of Audit | 4 |
1.5. HOW COMPLIANCE RELIANCE, INC. HELPS TO CONDUCT COMPLIANCE AUDITS | 5 |
1.6 Principles of Compliance Auditing | 5 |
GENERAL PRINCIPLES OF COMPLIANCE AUDITING | 5 |
1.7 The Compliance Audit Process | 29 |
1.8 Conclusion | 30 |
Chapter 2: Main Concepts of Cannabis Compliance Auditing | 31 |
2.1 Introduction | 31 |
2.2 Definition of Audit and Compliance Audit | 31 |
2.3 Subject Matter and Subject Matter Information | 32 |
2.3.1. Identifying the subject matter | 32 |
2.4 Laws, Statutes, Regulations and Criteria | 32 |
2.4.1. Conflicting Authorities | 33 |
2.4.2. Criteria | 33 |
2.4.3. Propriety | 34 |
2.5 The Three Parties | 34 |
2.6 Assurance | 35 |
2.7 Attestation Engagements and Direct Reporting | 36 |
2.8 Assertions and Audit | 37 |
2.9 Professional Judgment and Professional Skepticism | 38 |
2.10 Conclusion | 39 |
Chapter 3: Planning and Designing a Cannabis Compliance Audit | 40 |
3.1 Introduction | 40 |
3.2 Initial Considerations for Planning | 40 |
3.2.1 Determining the Level of Assurance to be Provided | 40 |
3.2.2. Consideration of Audit Risk and Its Impact on Assurance | 42 |
3.3 Planning process | 44 |
3.3.1. Determining Subject Matter, Criteria and Scope in Planning a Compliance Audit |
45 |
3.3.2. Understanding the Entity | 46 |
3.3.3. Understanding the Control Environment and Internal Control System | 47 |
3.3.4. Risk Assessment of the Subject Matter/Audited Entity | 48 |
3.3.5. Consideration of Risks of Fraud | 61 |
3.3.6. Determining Reliance on Internal Controls | 63 |
3.3.7. Linking Identified Risks to Audit Strategy | 90 |
3.4 Determining Materiality at Planning Stage | 90 |
3.4.1. Professional Judgments About Materiality | 91 |
3.4.2. Determining Materiality | 91 |
3.4.3. Qualitative and Quantitative Factors in Determining Materiality | 92 |
3.5 Audit Strategy and Audit Plan | 94 |
3.5.1. Planned Audit Procedure | 95 |
3.6 Conclusion | 95 |
Chapter 4: Gathering Audit Evidence | 96 |
4.1 Introduction | 96 |
4.2 Audit Evidence | 96 |
4.2.1. Quantity and Quality of Available Evidence | 97 |
4.2.2. Sufficiency, Appropriateness and Reliability of Audit Evidence | 97 |
4.2.3. Gathering of Evidence | 98 |
4.3 Evidence Gathering Techniques | 99 |
4.3.1. Procedures to Obtain Evidence for Reasonable and Limited Assurance Engagements |
102 |
4.3.2. Professional Skepticism in Gathering Audit Evidence | 103 |
4.3.3. Professional Judgment in Gathering Audit Evidence | 104 |
4.4 Consideration of Non-compliance that may Indicate Fraud and Unlawful Acts | 104 |
4.5 Conclusion | 105 |
Chapter 5: Evaluating Evidence and Forming Conclusions | 106 |
5.1 Introduction | 106 |
5.2 Evaluation of Evidence and Forming Conclusions | 106 |
5.2.1. Evaluating Evidence | 106 |
5.2.2. Forming Conclusions | 107 |
5.3 Conclusion | 108 |
Chapter 6: Documentation and Communication | 109 |
6.1 Introduction | 109 |
6.2 Documentation | 109 |
6.2.1. What to Document | 110 |
6.2.2. When to Document | 111 |
6.2.3. Document Retention | 111 |
6.2.4. Confidentiality and Transparency Issues | 111 |
6.3 Communication | 112 |
6.3.1. Communication at the Planning Phase | 113 |
6.3.2. Communication at the Evidence Gathering Phase | 114 |
6.3.3. Communication at the Reporting and Follow Up Phase | 114 |
6.4 Conclusion | 114 |
Chapter 7: Reporting a compliance audit | 115 |
7.1 Introduction | 115 |
7.2 Reporting a Compliance Audit | 115 |
7.3 Forms of a Compliance Audit | 116 |
7.4 Contents of a Compliance Audit | 116 |
7.5 Conclusions/Opinions in a Compliance Audit | 120 |
7.5.1. Conclusions/Opinions in Reasonable and Limited Assurance Engagements | 121 |
7.5.2. Unmodified Conclusion/Opinion | 122 |
7.5.3. Modified Conclusion/Opinion | 123 |
7.5.4. Qualified Opinion Conclusion | 124 |
7.5.5. Adverse Conclusion/Opinion | 125 |
7.5.6. Emphasis of Matter and Other Matter | 126 |
7.5.7. Disclaimer/Conclusion/Opinion | 127 |
7.6 Example of a Short Form Compliance Audit Report | 128 |
7.7 Audit Follow Up | 130 |
7.7.1. Why to Follow-up | 130 |
7.7.2. What to Follow-up | 131 |
7.7.3. When to Follow-up | 131 |
7.7.4. How to Follow-up | 131 |
7.7.5. Decisions of the Compliance Officers/Auditors | 132 |
7.8 Conclusion | 132 |
Chapter 8: Implementation Strategies for Compliance Audit Findings | 133 |
8.1 Introduction | 135 |
8.1.1. Compliance Audit Findings and Recommendation Implementation Strategy | 133 |
8.1.2 Compliance Strategies Implementation Framework | 134 |
8.2. Process for Formulating the Compliance Officer’s Implementation Strategy | 134 |
8.3 Formulation of an Action Plan | 141 |
8.4 Commitment of the Leadership in Implementing the Action Plan | 141 |
8.5 Guidance on Preparing the Action Plan | 141 |
8.6 Conclusion | 142 |
Chapter 9: Cannabis Compliance Audit Guide | 143 |
9.1. What is a Compliance Audit? | 143 |
9.2. What is an Auditee? | 143 |
9.3. The Compliance Audit as a Regulatory Tool | 143 |
9.4. Objectives of the Compliance Audit | 143 |
9.5. Auditing Standards | 144 |
9.6. Knowledge and Skills of Auditors | 150 |
9.8 The Audit Process | 151 |
9.8.1. Collecting Background Information | 159 |
9.8.2. Audit Checklists | 160 |
9.8.3. Providing Prior Notice of an Audit | 161 |
9.8.4. Opening Meeting | 161 |
9.8.5. Collecting Audit Evidence | 162 |
9.8.6. Closing Meeting and Communication | 164 |
9.8.7. Evaluation of Audit Evidence | 166 |
9.8.8. Compliance Audit Report | 168 |
9.8.9. Follow-up Action Program | 168 |
9.8.10. Regulatory Review | 169 |
9.8.11. Quality Assurance and Record Keeping | 169 |
9.8.12. Quality Assurance | 169 |
GUIDELINES FOR THE QUALITY ASSURANCE PLAN | 170 |
9.8.13. Record Keeping | 183 |
Chapter 10 – Conducting an Internal Compliance Audit of a Cannabis Facility | 184 |
Chapter 11 – Creating a Cannabis Compliance Audit Plan | 227 |
Chapter 12 – The Model Compliance Report | 254 |
Chapter 13 – Remediating and Correction Compliance Citations | 327 |
Chapter 14 – Step by Step Guide to Conducting a Cannabis Compliance Audit | 414 |
Chapter 15 – Grower/Processor Inspection Checklist | 558 |
Chapter 16 – Dispensary Compliance Checklist | 659 |
Chapter 17 – Checklists | 697 |
Air Ventilation and Circulation | 698 |
Anti-Diversion | 701 |
Advertising and Marketing | 704 |
Canopy/Size Restrictions | 709 |
Chain of Custody | 711 |
Cleaning and Maintenance | 714 |
Computer Network Software and Data Storage | 719 |
Cultivation | 724 |
Curing | 728 |
Dispensary Operations | 730 |
Drying | 736 |
Edibles | 738 |
Emergency Action Plans | 743 |
Employment Practices | 746 |
Employment Training | 750 |
Energy Conservation | 752 |
Environmental Impact | 754 |
Extraction | 756 |
Federal Law Considerations | 758 |
Financial and Organizational Records | 761 |
Hazards and Hazardous Materials | 763 |
HIPAA Compliance | 765 |
Indoor Cultivation | 767 |
Infused Products | 770 |
Labeling | 773 |
Laboratory Testing | 778 |
Licensing | 780 |
Light Pollution | 783 |
Monitoring, Surveillance and Security Requirements | 784 |
Nutrient Requirements | 792 |
Outdoor Cultivation Requirements | 794 |
Packaging | 797 |
Patient Education | 800 |
Patients/Caregivers | 804 |
Pest Management | 807 |
Plant Waste | 810 |
Post Licensing | 811 |
Pre-Licensing | 813 |
Pre-Licensing | 813 |
Processing Operations | 814 |
Product Destruction | 821 |
Public and Community Relations | 823 |
Records and Reporting | 825 |
Safety | 827 |
Sample Testing | 835 |
Seed to Sale Tracking | 838 |
Soil and Waste | 840 |
Staffing | 841 |
Storage of Cannabis | 845 |
Transportation | 848 |
Trimming | 852 |
Utilities and Service Systems | 853 |
Visitor Access | 855 |
Waste Material (Collection and Disposal) | 857 |
Water Quality, Riparian rights and Hydrology | 859 |