Internal Audit Office
INTRODUCTION
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Internal Audit Office |
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Internal Audit performs audits of the University departments, auxiliaries, and subsidiaries. The Audit Department serves as an independent control and appraisal activity established to review the fiscal and administrative operations of the financial areas of the University. The Audit Department serves as liaison for the University and the Office of the State Auditor.
The Audit function is a staff and advisory function reporting directly to the Chancellor.
The types of audits are as follows:
a. Financial Audits
Financial audits are more limited in scope and concentrate on a review of the financial transactions and adequacy of:
1) Physical control over assets.
2) System of authorization and approval.
3) Separation of duties between operations and custody of assets.
The primary concerns are determining accuracy of data and evaluation of controls.
b. Compliance Audits
Compliance audits determine whether the department has complied with statutory regulations, UNCW policies and procedures, and departmental policies and procedures.
c. Operational Audits
Operational audits measure the effectiveness of controls. They are performed to achieve operational efficiencies to attain organizational and departmental objectives. The audits typically ask the following questions about each function:
1) What is being done?
2) Why is it being done? Could it be eliminated?
3) How is it being done? Why is it being done this way? Is there a better or simpler way of doing it?
4) When is it being done? Why should it be done then? Would it be better to perform this step earlier or later in the procedure or remove it from this process entirely and handle it separately?
5) Where is each step being performed? Could it be handled faster somewhere else? Would steps be eliminated if people, furniture and equipment were relocated?
6) Who does the work? Why does this person do it? Should someone else be doing it instead?
Answering these questions should result in many ideas for improvement. If time is limited and there are many procedures that are candidates for improvement, the ones with the best potential payoff are usually those with high cost, high volume, or high error rate, as well as those that require excessive paperwork or personnel.
d. Special Audits
Special audits include but are not limited to:
1) EDP Audits
The EDP audit assesses the adequacy and efficiency of internal controls within EDP operations to provide assurance that:
· Assets are safeguarded.
· Information is timely and reliable.
· Errors are discovered/reported/corrected.
· Operations are efficient and comply with administrative policies and procedures.
The department review will include segregation of duties, procedures for modifying programs, physical security, and evaluation of input, processing, and output control procedures.
2) Investigative Audits
Investigative audits may result from findings during a routine audit or from information received from personnel. The audit should be conducted immediately, collecting as much evidence as possible. It is essential that the records in question be removed from the department/employee under investigation or otherwise safeguarded.
3) Management Audits
A management audit assesses the quality of the decision-making process and the information environment. They may be requested by the senior officers or the need becomes apparent because of the number of findings within a department on other types of audits.
4) Program (Value for Money) Audits
These audits evaluate the economy, efficiency and effectiveness of a program. The auditor will concentrate on the inputs and outputs for a specific program. The purpose overlaps with operational and management audits and the process reviews.
The auditor should be cautioned that typically performance criteria will not be defined and there is too little review of strategy. A Public Manager Program (PMP) reference source, "Evaluating Program Results," is available.
5) Referencing
During the course of various types of audits, the auditor may determine some "themes" are recurring. When performing audits, you may note the same problem for different departments. These may be findings for two departments within a division which indicate a division or university finding; i.e., too little control, need for increased communication, no performance criteria, data processing policy needed, etc. When compiling annual reports on the Audit Department results, always consider these themes in scheduling audits for the next period-particularly when these items support the University mission.
Effective: October 25, 1991
Supersedes: July 1, 1983
Policy Statement
a. Purpose:
It is the policy of the University to maintain an internal audit function to provide assurance that within limitations of cost effectiveness:
1) Internal accounting controls are adequate and effective in promoting efficiency and protecting the assets of the University.
2) Departments comply with internal and external policies, regulations, and procedures.
3) Financial statements and reports conform to University, cognizant agency’s policies, procedures and generally accepted accounting principles.
b. Authority:
The Internal Audit Department is authorized by the Chancellor to assist the University’s management in the proper discharge of their responsibilities.
1) The objective is to provide service managers with independent evaluation of information regarding all significant aspects of institutional operations.
2) To obtain this objective, the Internal Audit Department is specifically empowered to audit the books and/or records of any University Department and to be allowed access to any books, papers, accounts and other documents pertinent to the audit.
3) The Internal Audit Department has the authority to examine any department, inspect property which the University owns or is responsible for and inquire into operational and managerial procedures.
c. Responsibilities:
1) The Chancellor is responsible for providing direction to the internal audit function. The internal audit function provides audit report copies to the Chancellor of all audit reports presented to management, including their responses and/or proposed course of action.
d. Limitations:
1) The internal audit function shall have no managerial authority over or responsibility for the activities audited, so as to maintain the necessary independence for adequate objectivity in the audit process.
3. JOB DESCRIPTIONS & WORK PLANS
a. DIRECTOR OF INTERNAL AUDIT
b. INTERNAL AUDITOR I
c. INTERNAL AUDITOR II
d. ACCOUNTING SPECIALIST
DR. ROSEMARY DEPAOLO Chancellor |
DANA HARRIS Assistant to the Chancellor for Compliance & Director of Internal Audit |
| STEFANIE POWELL Internal Auditor Internal Auditor II |
LAURA LaBREE Internal Auditor Internal Auditor I |
CAROL HARRIS Internal Auditor Internal Auditor I |
Statement of Organizational Purpose
The purpose of the Office of Internal Audit is to serve as an independent control and appraisal of fiscal and administrative operations of the University. Compliance reviews determine if the University has complied with statutory regulations. Reports promote the "optimum use of available resources and assets, " as required by the University’s mission statement.
a. MISSION
The Department of Internal Audit consists of four employees and reports to the Chancellor. The purpose of the department is to serve as an independent control and appraisal of fiscal and administrative operations of the university. Reports promote the "optimum use of available resources and assets," as required by the University’s mission statement. We assist all university managers in their duties by providing an independent assessment mechanism of institutional effectiveness.
b. ENVIRONMENT
Scanning the environment, we realize we need to do more with less because of the scarcity of new tax dollars. Education today must compete with other social needs such as infrastructure/energy, crime and health care. To preserve our share of tax dollars, auditing emphasis will necessarily shift to ascertaining the level of performance being achieved, determining if that level is satisfactory and, if not satisfactory, identifying causes and making recommendations. Another environmental trend is the advancing technological capabilities of state legislature to process and analyze data. This, in turn, has resulted in increased demands for all agencies to be accountable for the dollars they spend and to demonstrate the productive use of resources and assets. Given the recent reports of fiscal mismanagement by not-for-profit institutions, from the national to the local level, we also predict greater sensitivity by the public to the integrity of fiscal and administrative operations. This trend will emphasize audit’s responsibilities to ensure due care and diligence in the protection of assets.
c. VISION
We emphasize operational audits and strive to improve university processes, consistent with TQM. Operational audits are more judgmental, difficult to implement and include more conflict between auditors and managers than inherent in financial or compliance audits. We believe these audit’s best serve the university by questioning processes and not duplicating the services provided by state or federal auditors. We recognize every taxpayer, employee and student as our customer and pledge to provide them the best possible service through continuous professional development of staff and improvement of audit processes.
PLANNING DOCUMENT (Continued)
GOALS |
OBJECTIVES |
EXPECTED OUTCOMES |
| To allocate audit resources most effectively where potential for benefit is greater. | Make annual plan based on risk (with some time available for special projects) including all divisions. | Increase audit department effectiveness. |
| Narrow scope of audits. | ||
| Update department files for follow-up and subsequent audits or other considerations which save audit time. | ||
| Add half time clerical. | ||
| Use student/temp wages and coordinate coverage with state auditors to avoid duplication of effort. | ||
| Increase technical proficiency of staff. | ||
| Perform monthly test of random receipts and disbursements. | ||
| To be accessible and available as resource for all managers and foster good working relationships. | Be reasonable in expectations/recommendations and reporting. | Improve working relationships with departments. |
| Emphasize to auditee striving to attain UNCW goals over departmental goals. | ||
| Exit meeting before formal reports. | ||
| Assess controls over assets minimizing theft, fraud, cash shortages, and access to restricted information. | Perform annual fixed assets audits, information systems audits, conduct physical inventory, revenue reconciliation self assessment of internal controls, steps in monthly tests of receipts and disbursements. | Determine audit coverage has not declined and number of frauds, cash shortages have not increased. |
| Strengthen control in the system of authorization and approvals to assure resources are utilized in accordance with management's policies. | Keep abreast of university policies and revise audit procedures to review for compliance. | Reduce university departments noncompliance with policies and procedures. |
| Review departmental processes for consistent use of GAAP and good business practices. Report on audit findings to such management levels so that full consideration is given to the benefit of improving controls. | ||
| Promote compliance with university, state and federal policies to minimize risk of loss of funds and negative publicity for noncompliance practices. | Keep abreast of changes and revise audit procedures accordingly. | Decrease number of noncompliance findings by state/federal auditors. |
| Measure the effectiveness of accounting and management controls to provide management assurance controls operate as intended and achieve desired results. | Perform substantive tests of controls. Measure actual versus desired results. |
Minimize loss of funds or errors in system. UNCW as a role model. |
| Promote efficiency and effectiveness through recommendations which minimize waste, expense or unnecessary effort because such deficiencies would contribute to unaccomplished organizational and departmental objectives. | Design audits to review operational aspects. Serve on Assessment Committee and review university inventory of assessment techniques. | Improve university processes. |
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