Audits: How to Prepare and What to Expect

1
Audits How to Prepare and What to Expect

• Council of Senior Business Administrators
• Focus Session
• April 21, 2004
• James Laird
• Assistant Dean for Finance and Administration
• College of Science

2
Organization/Delegation

• How are duties delegated within your units
  business function?
• Is there adequate segregation of duties in order
  to prevent one individual from solely completing
  a transaction?
• This is very important in the area of cash
  handling/ revenue management and disbursements.
• Are employees cross-trained in order to allow for
  backup of anothers responsibilities?
• Does a formal program or process to identify the
  continuing education or training needs of
  individual employees exist?

3
Information Technology

• Has your unit completed the ISAAC (Information
  Security Assessment, Awareness, and Compliance)
  risk assessment as required by the Texas
  Administrative Code?
• How is access to computing systems controlled?
• Formal process for granting or changing access to
  users
• User access removed upon termination
• Forced periodic password changes
• How is sensitive data stored and access to it
  controlled?
• Are your computing systems backed up periodically
  and are backups stored in an offsite location?
• Do you have a documented and approved disaster
  recovery plan on file? Has it been tested to see
  if it is reliable?
• How are computing assets safeguarded?
• Do you have a formal ongoing security awareness
  and training program to promote computer security
  issues?

4
Procard Procedures

• Do you maintain an updated list of all
  procurement cards in your department?
• Have primary users (not just cardholders) of the
  Procards been to disbursement training?
• How are the Procards secured? Is there a check
  out/in log for other users?
• How are the purchases from the Procards
  reconciled? Are transaction logs maintained as
  purchases are made and are reconciliations
  completed in a timely manner (within 30 days upon
  receipt of the monthly Bank of America
  statement)?
• What do you do when a receipt is given to you
  with tax or a card has been improperly used?
• Are there written procedures or guidelines for
  the use of Procards made readily available to the
  users?
• Have all unnecessary house accounts and credit
  cards with vendors been cancelled?

5
Cash Handling

• Are employees involved in cash handling
  knowledgeable of System Policy 21.01.02
  Receipt, Custody, and Deposit of Revenues?
• How is revenue accepted in your unit?
• Are official pre-numbered receipts being issued
  to customers for each remittance received as
  required?
• Do you have a logging procedure for receiving
  checks?
• Are checks restrictively endorsed for deposit
  immediately upon receipt?
• Is the transfer of custody of funds from one
  person to another documented during the receipt
  to deposit process?

6
Cash Handling - cont.

• Do you have a log for checking out receipt books
  to individuals in the department?
• How timely are deposits made? Remember the 3
  business day or 200 each day rule.
• If a deposit is not immediately made, how are the
  funds kept secure?
• Are keys or combinations to a safe properly
  issued and maintained?
• How are deposits to FAMIS reconciled with your
  bookkeeping system and/or attendance lists?
• Are there viable alternatives to collecting cash
  in your unit?

7
Purchasing and Disbursements

• Are requisitions being prepared for purchases in
  excess of 5,000?
• Are reasonably foreseeable payments to one
  vendor exceeding 5,000 per year?
• Are large orders being split into smaller ones in
  order to circumvent the delegation of authority
  limit?
• Are prompt payment reports reviewed for possible
  inefficiencies in accounts payable?
• Are good faith efforts being made to utilize
  HUB vendors

8
Travel Procedures

• How are travel disbursements handled in your
  operation?
• Are all requests for foreign travel and
  Washington D.C. approved prior to the trip?
• Are travel advances given in your department? If
  so, how do you manage the repayment of the
  advance and how do you insure timely repayment?

9
Inventory Management

• Are all inventoried items tagged with a
  handwritten number (within 10 days after receipt)
  as well as a bar code sticker from FMS?
• Are serial numbers being input to FFX upon
  receipt of the property?
• How often are spot checks and/or updates made to
  your inventory?
• Inventory management should not be a once-a-year
  project!
• How do you control the movement of items from one
  location to another?
• Is approved documentation on file for items
  checked out or located at employees homes or
  offsite locations?
• Do non-controlled items have a Property of Texas
  AM sticker affixed?
• Is unused and unneeded equipment transferred to
  surplus in a timely manner?

10
Payroll

• If possible, do you have separate people
  preparing biweekly and monthly payroll
  submissions?
• Are timesheets submitted on a timely basis?
• Are corrections to timesheets properly notated in
  ink and initialed by the employee?
• Are checks distributed by someone other than the
  preparer of the payroll involved?
• Are payroll checks properly secured?
• Are timesheets for biweekly employees reconciled
  against leave records?
• Are terminated employees removed from the payroll
  system in a timely manner?

11
Leave Records

• How are leave records kept? (Manual vs.
  LeaveTraq)
• Does a separate individual periodically audit
  records?
• Is the leave recorders leave kept by a separate
  individual and associated records stored in a
  different location than all the other leave
  records?
• Is medical information stored in a separate file
  from the leave records?
• Are notifications of leave balances distributed
  to staff and faculty periodically?
• Do all leave records contain the proper
  administrative approvals?
• Are flex schedules properly documented and
  accounted for?

12
Account Reconciliation

• Do you have an internal bookkeeping system and if
  so, how are the entries from that system
  reconciled with FAMIS accounting statements?
• Are all account reconciliations current?
• Are account reconciliations periodically reviewed
  by someone other than the preparer?
• Who prepares the account reconciliations and is
  there adequate segregation of duties so that the
  person reconciling an account is not also
  preparing transactions for that same account?
• Are unreconciled transactions taken care of in a
  timely fashion?

13
Performance Evaluations

• Are annual performance evaluations done on each
  employee within the required timeframe?
• Are probationary reviews being conducted as
  required?
• Do employees have a current job description in
  their personnel file and is it reviewed by the
  employee and the supervisor during the
  performance evaluation process?
• Are the performance evaluations documented on the
  prescribed form or a Human Resources certified
  form?
• Are the evaluations complete and signed?

14
Audits How to Prepare and What to Expect

• Council of Senior Business Administrators Focus
  Session
• April 21, 2004
• James Laird
• Assistant Dean for Finance and Administration
• College of Science
• Email james_at_science.tamu.edu
• Phone [phone]