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Sample Topic for a Science Investigatory Project

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									      Internal Audit
    “Breaking the Mystic”

         August 15, 2007

        Office of Internal Audit


•   Industry Overview
•   What is Internal Audit?
•   Recent Office History
•   Governance
•   Charter
•   Audit Plan
•   Project Development
•   Sample Audits
•   Risks and Internal Controls
Industry Overview

• Internal auditing evolved steadily with the
  progress of management science after World War
  II and it deals with advising organizations on how
  to better achieve their objectives.

• The Institute of Internal Auditors (IIA) - primary
  standard setting body - has over 130,000
  members in over 165 countries.

• The Sarbanes-Oxley Act of 2002 heightened the
  Internal Audit profession.
What is Internal Audit?

• Internal audit is a profession and activity involved
  in advising organizations on how to better
  achieve their objectives.

• It involves the utilization of a systematic
  methodology for analyzing business processes
  or organizational problems and recommending
Recent Office History

  July 2003
      Joined Kandi Pilliod

          That first year......

  August 2004
     Hired Kathleen Bryson (CPA)

  March 2005
     Governance Structure

  June 2005
     Hired two student interns

  June 2006
     Audit Plan

  July 2007 and Beyond

July 2003 - February 2005       March 2005 - Present

                              Board of
        General                              VP for Finance
                            Trustees Audit         &
        Counsel              Committee       Administration/


Committees of the Board Rule 3359-01-03

The Audit Committee of the Board of Trustees is
  responsible for reviewing and concurring in the
  appointment, replacement, reassignment, or
  dismissal of the internal auditor who shall have a
  dual reporting responsibility to the Vice President
  for Business and Finance/CFO and to the audit

Internal Auditor University Rule 3359-07-02

• The university internal auditor is responsible for
  conducting the following audits:
   – Financial
   – Operational
   – Compliance
   – Investigative
Audit Plan

• Development

• Plan/Unplanned
   – Capital Assets
   – Retail Store Inventory Testing
   – Credit Card and Travel Expenses
   – Construction
   – Cash Collection Point Testing and Petty Cash
   – Student Receivable Testing
Project Development

• Scope

• Kick Off

• Fieldwork

• Recommendations/Responses

• Reports
Sample Audits

• Accounts Payable Testing (FY 2005 & FY 2006)

• Federal and State Grants

• Procurement Project

• Capital Assets Testing (FY 2005 & 2006 Audit)

• A133 Compliance Testing (FY 2005 Audit)

• Contract Compliance
Sample Audits

• Financial Activity Review

• Conflict of Interest/Commitment Disclosure

• Student Receivables Testing

• Retail Store Inventory Project

• Risk Assessment
Sample Audits

• Credit Card and Travel Expenses
   – 85 credit cards have been reviewed since
     August 2003
   – Total credit card charges reviewed - $2 million
   – Total travel expense charges reviewed -

• Investigatory Projects (15)
    Sample Audits

    Project Work List

              Sponsor or                                Formal (F);
                 IA         Initial                     Email (E);      Control
   Topic      Sponsored    Contact    Started Completed Verbal (V)       No.      Location
Student       FY '07       Oct-06     Oct-06   Feb-07    F - JK, FJC,   2007-27     OM
Receivables   Audit Plan                                  DM, FM,
Testing                                                       CP
Computer      FY '07       Mar-07     Mar-07   Jun-07     F - JS, JC,   2007-47     OM
Solutions     Audit Plan                                   TB, JK
Risks and Internal Controls

What is Risk?

Risk is the probability of an event or action
  having an adverse effect on your
Risks and Internal Controls

Examples of Risk include the risk that:
• Operations are not operating effectively or
• Financial and operating reports are unreliable.
• Assets are not adequately safeguarded against
• Operations are not in compliance with laws, rules,
  & regulations.
• Unit’s missions or goals are not achieved.
Risks and Internal Controls

Internal Controls - Five notable concepts:

•   Internal control is a process integrated with all
    other processes within an agency.

•   Internal control is established, maintained, and
    monitored by people at all levels within an

•   Internal control increases the possibility of an
    agency achieving its strategic goals and
Risks and Internal Controls

•   Internal control must be cost effective and cost
    of implementation should not exceed the
    benefits derived from having the control in place.

•   System of internal control in an organization is
    the responsibility of all employees, from
    management who design, implement, and
    maintain controls to staff who execute
Questions and Answers

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