What is Internal Audit University of Date

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What is Internal AuditUniversity of Date
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What/Who is Internal Audit?

• A University department that reports directly
  to the Board of Regents (BOR) through the
  Secretary of the BOR and the Chair of the Regents
  Audit and Financial Advisory Committee (RAFAC)

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University of Internal Audit Organizational
Chart
Board of Regents
Chair-Regent Audit and Financial
Advisory Committee
Secretary of the BOR
President
Internal Audit Director
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What is Internal Audits purpose?

• To assist the Board of Regents in carrying out
  their fiduciary responsibility of the governance
  of the university.
• To assist the University community in recognizing
  and managing risks to the university.

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What kind of work does Internal Audit do?

• Audits
• Consultations
• Investigations
• Education

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Audits

• Evaluations of various processes, functions,
  departments, and activities (NOT people) to
• Identify risks
• Determine whether those risks are adequately
  mitigated

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Consultations

• Provide advice and information to University
  departments on internal controls, risk
  management, and sound business practices in such
  areas as policy development, system or process
  development, specific issue resolution, etc.

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Investigations

• Conduct internal investigations regarding
  allegations of fiscal misconduct and fraudulent
  actions that adversely impact the University.
• This work looks at the actions of individuals and
  their intent.

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Education

• Conduct workshops or any other information
  presentation to the University community on
  internal controls, risk management, fraud
  prevention, and sound business practices.

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How Does IA Figure Out What Audits to Conduct?
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Our Scope-Start with Risk Assessment

• Identify key risks of the organization
• Look at all areas of exposure, not just
  financial
• Focus on the issues that matter most
• Develop audit plan to examine higher risk areas

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Risk Assessment

• Factors that affect risk
• External influences (laws, regulations)
• Internal influences (policies, culture)
• Opportunity for misappropriation
• Degree of automation vs. manual processes
• Volume and size of activity
• Decentralization of processes

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Thinking About Risk

• Administrators have an important role
• Responsible for fiscal affairs of the unit
• Lots of expectations from lots of constituents
• Funding sources attach strings
• Public scrutiny
• Too much to do, too little time, too few
  resources means you have to evaluate risk and
  balance conflicting demands
• Whistleblowers monitor actions

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Audit Universe

• Core Processes
• Key Functions/Activities
• Common Functions/Activities
• Organizational Units

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The Audit Universe

• Core Processes
• HR/Payroll
• Procurement
• Sponsored Programs/Research
• Student-Related Services
• Academic

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The Audit Universe

• Key Functions/Activities (university-wide or
  campus based) examples
• Risk Management
• Facilities Management
• Information Technology Services
• Contracts and Grants
• Media Relations

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The Audit Universe

• Common Functions/Activities (department-based)
  examples
• Youth Programs
• Conferences/seminars
• Study Abroad
• Organizational units (2,500 of these across the
  University, within 500 higher level orgs)

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Why IA May Come Knocking on Your Door

• As part of a core process evaluation audit, a key
  function/activity audit, a common
  function/activity audit
• As part of a continuous audit (looking at
  specific transactions for compliance)
• As a department (organization unit) audit
• As part of an investigation
• In response to a request (consultation)

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What is an Internal Control?

• An internal control is a process within an
  organization designed to provide reasonable
  assurance that certain things happen the way we
  want them to
• Reliability and integrity of information
• Compliance with policies, plans, procedures,
  laws, regulations, and contracts
• Safeguarding of assets
• Economical and effective use of resources
• Accomplishment of established objectives
• and goals
• The cost of a control should not exceed its
  benefit!

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Examples of Internal Controls

• Directive Controls
• Designed to establish desired outcomes.
• Examples include
• Laws
• Policies
• Procedures
• Meetings

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Examples of Internal Control

• Preventative Controls
• Designed to prevent errors from occurring
• Examples
• Segregation of duties
• Pre-authorizations
• Adequate documentation
• Physical control over assets
• Computerized techniques, such as passwords and
  transaction limits.

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Examples of Internal Controls

• Detective Controls
• Designed to detect errors
• Examples include
• Reviews and comparisons
• Account reconciliations
• Physical counts of inventories

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Audits What does IA look for?

• In general, Internal Audit looks at what is
  happening and compares it to what should be
  happening, as defined by
• Laws, rules, regulations, policies
• Sound business practices

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Audits What does IA look for?

• Strategic Planning - clarity of objectives/goals
  risk assessment
• Culture, Management Style, Synergism
• Knowledge of authority
• Clarity of responsibilities
• Communication

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Audits What does IA look for?

• Awareness of applicable laws, rules, regs,
  policies
• Presence of controls to ensure objectives are
  achieved
• Segregation of responsibilities
• Monitoring
• Evaluation and continuous improvement

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A Word About Documentation

• What is documentation?
• In writing
• Forms of external documentation
• correspondence from outside the institution
• invoices, contracts, memorandums of understanding
• Forms of internal documentation
• forms, internal correspondence, schedules

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A Word About Documentation

• What does it do?
• Provides evidence of business activities
• Provides evidence of authorizations
• Why do we need it?
• Audit trail the series of documentation that
  provides evidence of the events that transpired
  to effect a business transaction. It helps to
  determine the process occurred as intended to
  ensure compliance and propriety.

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Fraud/Fiscal Misconduct
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Elements of Fraud/Fiscal Misconduct

• Act or failure to act
• Intent to deceive
• Relied upon by others
• Loss occurs

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Attributes Commonly Present in Fraud/Fiscal
Misconduct

• Need financial, ego
• Opportunity
• Rationalization

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Indicators of Fraud

• Doesnt take vacations
• Change in life style

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Resources

• Enter resources related to your campus

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How to Reach Internal Audit

• Website (internalaudit.yourschool.edu)
• Phone xxx-xxx-xxxx
• Fax xxx-xxx-xxxx
• Email IA_at_yourschool.edu