Internal Audit

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North East Independent School District
Internal Audit Annual Audit Plan
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OVERVIEW

• Background
• Why an Annual Plan?
• Development Methodology
• Results - Key Projects
• Anti-Fraud Action Plan
• Brief Summary of FY 2007 Activity
• Recommendation
• Questions

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Background

• Government Accounting Office IIA Standards
  require approval of an annual plan
• House Bill 1 (79th Legislature) requires the
  internal auditor to report to the Board of
  Trustees and obtain approval for planned projects

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Why an Annual Plan?

• Standards
• Allows Board to direct/approve audit resources
• Provides framework for assessing audit
  contributions
• Gives senior leadership opportunity to request
  assistance/oversight

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Development Methodology

• Obtain suggested topics from management
• Risk assessment
• Nine risk factors
• Considers materiality, potential for fraud,
  change in resources, change in programs
• Attachment 1 to Annual Plan
• Prioritize workload based on risks
• Internal Audit Director may override some
  priorities based on media/leadership interests
• Prepare Annual Audit Plan (in packet) for Board
  approval

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Risk Assessment

• Weighted Factors
• Requested by Supt.
• Fraud potential
• Materiality
• Assoc. Supt. request
• Mandated by law
• Public scrutiny
• Mgmt. controls
• Prior coverage
• Change in resources

• Priority topics
• Composite total score is ranked
• Highest scores earn spot on To Do list
• Changes in priorities will be submitted to Board
  for approval
• Fraud or malfeasance may alter plan priorities

Risk
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Results Key Projects

• Special projects
• Supt. or Board requested reviews
• Quick turn-around analyses/studies
• Open records data verification work
• Concerns received via the Hotline
• Spontaneous issues requiring quick response
  (e.g., missing funds or equipment)

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Key Projects (continued)

• Review of Supt. contract expenses
• Community Education (operational audit)
• Construction contract monitoring
• Audit work for external auditors (CAFR)
• Cash, payables, inventories

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Key Projects (continued)

• Campus Audits
• Unannounced visits (cash and inventory
  verification)
• Full campus audits (one high school one middle
  school)
• Compressed campus audits
• Condensed scope when principals and bookkeepers
  change

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Key Projects (continued)

• Annual Review of HEB card program
• Annual Review of Conflict of Interest disclosure
  reports from budget managers

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Anti-Fraud Action Plan

• Attachment 3 to the Annual Audit Plan Prepared to
  provide direction on detecting, reporting and
  disposition of potentially fraudulent situations
• Part Imeasures to prevent, deter detect fraud
• Part IIprocedures to follow in response to fraud
  detection
• The fraud plan complements CAA(Local)
• CAALOCAL.htm

Fraud
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Recap of FY 2007 Activity

• Operational Audits
• Supplemental Pay
• Textbook Inventory Management
• Selected Aspects of Police Department Operations
• Vehicle use Replacement
• CRMS
• Unannounced Campus Audits (23)

Recap
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Recap of FY 2007 Activity

• Special Projects
• Wage rate update for new construction contracts
• 5 campus advisory services
• Accounting for ISA field trips
• District wide review of credit card usage
• Campus Audits (1-MS 1-ES)
• Hotline follow-up (13 concerns)

Recap
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Recommendation

• Approve the 2007 2008 Annual Audit Plan,
  including the Anti-Fraud Action plan

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Questions?
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