Financial Services
Policies and Procedures - Internal Audit
Policy 2 - Audit Process and Procedures
Audit Process
Entrance Interview:
The entrance interview enables the Office of the Internal Auditor to review
the objective and scope of the examination with the auditee. In addition, a
preliminary survey may be conducted during the interview to gain familiarity
with the activity to be audited. Questionnaires may be used in the preliminary
survey to ensure sufficient information is gathered, to organize data, and
to save interview time.
Fieldwork:
The bulk of the audit work will be conducted during this phase of the audit
process. Information is gathered from tests and inquiries in the field which
documents the findings addressed in the audit report. A formal audit program
is an integral part of the documentation.
Exit Conference:
The exit conference precedes the distribution of a final audit report. The
Office of the Internal Auditor reviews with the auditee an initial draft of
the report. The purpose of the exit conference is to inform the auditee of
the findings and recommendations of the examination prior to distribution of
a formal document. This provides an opportunity to address any inaccuracies
that the auditee believes to exist in the findings or other contents of the
report.
Audit Report:
The format of the audit report consists of three major parts. The foreword
describes the examination by stating the objective and scope of the audit work.
Background information about the activity which is the focus of the audit may
also be provided. Audit findings and recommendations of the Office of the Internal
Auditor are described in the main body of the document. The report concludes
with a summary of the audit findings and opinions. Reports may also contain
an organization chart, a description of functional responsibilities, or other
relevant information concerning the activity examined.
Audit Report Distribution:
The final audit report is addressed directly to the Chancellor. A transmittal
letter may be signed by the Chancellor and addressed to the appropriate Vice
Chancellor responsible for the activity audited. The transmittal, which is
attached to a copy of the audit report, requests a written response to the
audit recommendations.
Copies of internal audit reports may be provided to the Vice Chancellor for
Business Affairs in support of his responsibilities for monitoring University
internal controls. The Office of the State Auditor requests copies of internal
audit reports during the annual financial audit of the University. The Audit
Committee of the University Board of Trustees is required to obtain quarterly
updates from the Director of Internal Audit that report material conditions,
the corrective action plan for these conditions, and their final resolution.
Follow-Up:
Management responses to audit recommendations are reviewed by the Office of
the Internal Auditor. A follow-up review may be conducted at a reasonable future
date to determine whether corrective action has taken place.
Internal Control
Review of the effectiveness of an organization’s internal controls is
an integral part of the audit process. Internal control comprises the plan
of organization adopted by the University to provide reasonable assurance that:
- transactions are authorized
- transactions are recorded as necessary to maintain accountability for assets
- access to assets is permitted only with proper authorization
- operational efficiency is being promoted
- prescribed University policies are being followed.
General Audit Procedures
Review of an activity by the Office of the Internal Auditor will include
the following general audit procedures:
- Review of organizational charts and job descriptions.
- Review of documents detailing plans, policies, and procedures.
- General review of financial reports.
- Review of individual asset, liability, revenue, and expenditure accounts, as applicable.
- Review of detailed transaction activity.