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I.
ACTION ITEM (Ms. Deily)
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Audit
Schedule
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AGENDA
ITEM: I. Audit Charter
BACKGROUND:
Mr. Sandridge will present the importance of an Audit charter
before changes are discussed. This discussion will include
the important elements of a charter as well as why changes
are currently necessary. Ms. Deily will then present the recommended
changes to the Audit Committee.
ACTION
REQUIRED: Approval by the Audit Committee and the
Board of Visitors
APPROVAL
OF REVISIONS TO AUDIT CHARTER
The President will propose the adoption of the following resolution:
RESOLVED that the policy on the role of the Internal Audit
Department be and it is hereby approved effective immediately.
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It is the policy of the University to establish and support
the Audit Department for the purpose of assisting management
in the effective discharge of its responsibilities for the
control of University resources.
The mission and objectives of the Audit Department are as
follows:
To perform financial audits for the purpose of ensuring that:
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(a)
Cash, accounts receivable, and other assets of the University
are promptly and completely recorded, accounted for, authorized
and adequately safeguarded against losses and misappropriation.
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(b)
Liabilities of the University have been properly incurred
and are properly recorded and discharged. Audits directed
to financial accountability will include a review of records,
source data, fiscal procedures and internal controls.
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To
perform operational audits for the purpose of ensuring that
University operations are conducted efficiently, effectively,
and in accordance with appropriate and adequately documented
policies, plans, and procedures. Operational audits will encompass
a review of the policies, plans, procedures, organizational
structure, staffing, and output of the audited unit. These
audits will also include evaluating the accomplishment of
established objectives and goals for operations and programs.
To provide senior management with an independent, fair and
objective appraisal of the effectiveness of the Universitys
financial accountability systems and operational performance
in accordance with the priorities established by the Director
of Audits in coordination with the Executive Vice President
and Chief Financial Officer and approved by the President
and the Board of Visitors.
To provide management with constructive criticism and positive
recommendations designed to strengthen and improve performance
results and cost effectiveness of their operations.
To inform the Board of Visitors and Senior University management
of any financial irregularities, investigations, or other
risks to the institution that the auditors discover during
the course of their work.
The work of the Audit Department will be conducted in accordance
with the Standards for the Professional Practice of Internal
Auditing as promulgated by the Institute of Internal Auditors.
Other professional standards, such as the Government Accounting
Office "Yellow Book", shall be utilized when appropriate.
The following policies identify the responsibilities of the
Audit Department and provide guidelines for its interaction
with all University departments and activities.
Organizational Responsibilities
The Director of Audits will coordinate the departments activities
with the Board of Visitors, the President, and with the Executive
Vice President and Chief Financial Officer. The Director will
have unrestricted access and be responsible to the President
and the Board of Visitors. The Director is responsible for
the direction of the audit function and for seeing that the
results of examinations and actions taken are communicated
to appropriate levels of University management and, as appropriate,
the President and the Board of Visitors.
The Director of Audits, with participation by the Executive
Vice President and Chief Financial Officer, and with input
from the other Vice Presidents and the audit staff, will draft
an annual audit plan. The plan will be submitted to the President
and the Board of Visitors for review and suggested changes
in scope.
The Audit Department will give full consideration to scheduling
special audit requests made by any department or activity.
All requests should be in writing to the Director of Audits
and state the purpose and scope of the audit.
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Independence
The Audit Department will be organizationally and functionally
independent from all University operations and will have no
responsibility for the departments and activities being audited
while being responsive to their needs and requirements. Because
the Audit Department must be independent in carrying out its
responsibility to monitor and evaluate control procedures
instituted by management, the extent of audit work to be performed
with respect to those procedures is limited to the assessment
of such procedures.
The Audit Department normally performs tests of underlying
records and documentary support for transactions. Accordingly,
objectivity would be lost if the Audit Department participated
in accumulating data or reconstructing records.
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Authorities
and Limitations
The Audit Department personnel will have complete, free and
unrestricted access to all University departments, activities,
records, properties and personnel, and is not to be restricted
in their activities. Where appropriate, special arrangements
will be made for the examination of confidential information.
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Systems
Planning and Development
The Audit Department will participate in the planning, development,
implementation, and modification of major computer-based and
manual systems to ensure that:
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(a)
adequate controls are incorporated in the system;
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(b)
thorough system testing is performed at appropriate stages;
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(c)
system documentation is complete and accurate; and
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(d)
the resultant system is a complete and accurate implementation
of the system specifications.
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The
Audit Department will conduct post installation evaluations
of major information technology systems to ensure that these
systems meet their intended purpose and objectives. The department
also will review computer operations supporting such systems
to ensure that generally accepted standards for systems integrity
and security, as well as system-specific controls, are being
observed.
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Security
Investigations
The Audit, Risk Management and University Police Departments
are to be notified if assets have been lost through defalcation
or other security breaches. The Audit Department will perform
sufficient tests and investigations to identify the weaknesses
in procedures, which permitted the defalcation to occur. However,
the investigation of the specific event with the objective
of recovery and/or prosecution is the responsibility of the
University Police Department, with the decision to prosecute
being the responsibility of the appropriate Commonwealth's
Attorney.
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Coordination
with External Auditing Agencies
The Director of Audits will coordinate the departments audit
efforts with those of the University's independent public
accountants or other external auditing agencies by participating
in the planning and definition of the scope of proposed audits
so the work of all auditing groups is complementary, and their
combined efforts provide comprehensive, cost-effective audit
coverage for the University. Duplication of work will be avoided
as much as possible.
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Reporting
Prior to the completion of a formal report, an exit conference
will be conducted with the department or activity head. The
conference will be a review of all findings, conclusions,
and recommendations. A formal report will be issued at the
conclusion of every audit, which will present a concise, clear
and factual review of the conditions found, together with
recommendations for improvement. A memorandum shall be issued
to the Director of Audits within 30 days responding to each
finding, recommendation, and exception included in the audit
report. This memorandum will include the departments or activitys
plan for implementing the recommendations or a presentation
of significant disagreement with the findings and/or recommendations.
A follow-up review of significant audit recommendations will
be made by the Audit Department to establish that agreed-to
recommendations have been adopted. A memorandum will be issued
on the follow-up review to the President and the Executive
Vice President and Chief Financial Officer.
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Distribution
of Reports
Audit reports will be issued to the Vice President responsible
for the department or activity involved. In addition, copies
of all such reports will be distributed to the President,
the Executive Vice President and Chief Financial Officer,
and the senior fiscal administrator having a functional interest
in the subject matter.
All audit reports will be available for review by the Board
of Visitors.
A summary of significant audit findings will be prepared for
each Board meeting and submitted to the Board of Visitors,
the President, and the Executive Vice President and Chief
Financial Officer
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AGENDA
ITEM: II. Information Report
DISCUSSION:
Ms. Deily will inform the Board of the status of the completion
of audit projects. This does not require formal action, but
is information of which the Board should be made aware.
ACTION
REQUIRED: None
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