Internal Audit Services
Chapter 3250
Revised April 24, 2015
Table of Contents
.010 Introduction
.020 Internal Audit Charter
.030 Objectives and Scope
.040 Responsibility and Authority
.050 Independence
.060 Budget and Staff
.070 Duties
.080 Procedures
.090 Requesting an Audit
.100 Questions
.010 Introduction
The Internal Audit Office is an independent appraisal activity within Kansas State University responsible for the review of operations as a service to management. The Internal Audit Office reviews and determines appropriateness, soundness and adequacy of institutional accounting, financial and operational controls. It is a managerial tool which functions by measuring and evaluating the effectiveness of controls.
The Internal Audit Office reports to the President through the Vice President, Chief Operating Officer. However, the Internal Audit Office will report directly to the Kansas Board of Regents Audit Committee any situation wherein the internal auditor perceives a conflict of interest with or on the part of the Chief Executive Officer relative to any aspect of an audit. The Internal Audit Office does not exercise direct authority over any of the activities at the institution that are reviewed.
.020 Internal Audit charter
Purpose:
The Kansas State University Internal Audit Department provides consulting, independent, objective analysis and recommendations to assist University managers in effectively discharging their administrative responsibilities. The Department assesses the adequacy and effectiveness of internal controls with the goal of promoting effective controls at reasonable costs. The Internal Audit Department performs internal audits in accordance with their annual audit plan and conducts special audits or reviews at the request of University management or the Kansas Board of Regents.
Authority:
The Internal Audit Department reports to the President through the Vice President, Chief Operating Officer. The Department has no direct responsibility for any day-to-day University activities or operations for the activities they audit. The Internal Audit Department is authorized to have full and free unrestricted access to all Kansas State University records, property and personnel relevant to an audit. Their scope of work shall also include the review of university controlled affiliated corporations, including a review of the IRS form 990 for each such corporation, with a focus on potential conflict of interest and transactions between the university and university controlled affiliated corporations. The Internal Audit Department shall report to the Board of Regents Audit Committee any situation wherein the internal auditor perceives a conflict of interest with or on the part of the President relative to any aspect of an audit.
Responsibilities:
The Internal Audit Department will report annually to the Board of Regents Committee on Fiscal Affairs and Audit, summarizing the prior year's activities and audit plans for the coming year. Any completed internal audit reporting material financial weakness or fraud is to be submitted to the Board President and Chief Executive Officer who shall be responsible for recommending to the Committee on Fiscal Affairs and Audit any specific audit findings that should be further reviewed by the Committee.
The Internal Audit Department advises University management on the adequacy and effectiveness of internal controls. The Department is guided by the International Professional Practices Framework (IPPF) adopted by the Institute of Internal Auditors. Additional resources, tools and guidance include those obtained through the Association of College and University Auditors and the Committee of Sponsored Organizations. The major principles considered by the Internal Audit Department as it develops audit guidelines and conducts audits include the following:
- Assess the soundness, adequacy and application of accounting, financial, and other operating controls;
- Determine adherence to University plans, policies, and procedures;
- Assess compliance with applicable laws, regulations and generally-accepted accounting principles;
- Ascertain whether program results are consistent with established objectives;
- Ascertain the adequacy of controls for safeguarding University assets from losses of all kinds; and
- Assist in the improvement of University operations by making appropriate constructive suggestions and recommendations.
The overall objective of Internal Auditing is to assist all University officials in the effective discharge of their responsibilities by furnishing them with objective analysis, appraisals, recommendations and pertinent comments concerning activities reviewed. The Internal Audit Office is concerned with any phase of University activity where it can provide service to management. This involves going beyond the accounting and financial records to obtain a full understanding of the operation under review. The attainment of this overall objective involves such activities as:
Reviewing and appraising the soundness, adequacy and application of accounting, financial, and other operating controls and promoting effective controls at reasonable cost.
Ascertaining the extent of compliance with established institutional policies, plans and procedures.
Determining the extent to which University assets are accounted for and safeguarded from losses of all kinds.
Ascertaining the reliability of management data developed within the organization.
Appraising the quality of performance in carrying out assigned responsibilities.
Recommending operating improvements.
.040 Responsibilities and Authority
The Internal Audit Office is responsible for performing internal audits, reviewing programs, assisting external auditors, reviewing system designs and other similar functions. The related authority provides the Internal Auditors full access to all of the University's records, properties and personnel relevant to the subject under review. The Internal Auditors are free to review and assess policies, plans, procedures and records. The Internal Auditors responsibilities are as follows:
Inform and advise management, and discharge this responsibility in a professional manner. The Internal Audit Office will adhere to the Standards for the Professional Practice of Internal Auditing, Code of Ethics and Statement of Responsibilities of Internal Auditing adopted by the Institute of Internal Auditors.
Coordinate activities with others so as to best achieve the audit objectives and the objectives of the University.
In performing the audit functions, the Internal Auditors have no direct responsibility for, nor authority over, any of the activities which are reviewed. Therefore, the internal audit review and appraisal does not in any way relieve other persons in the organization of the responsibilities assigned to them.
.050 Independence
Independence is essential to the effectiveness of internal auditing. This independence is obtained primarily through organizational status and objectivity.
The organizational status of the internal auditing function and support accordant to it by management are major determinants of its range and value. The Chief Audit Executive is accountable to the Vice President, Chief Operating Officer, whose authority is to assure both a broad range of audit coverage and adequate consideration of effective action on the audit findings and recommendations.
Objectivity is essential to the audit function. Therefore, the Internal Auditors should not develop and install procedures, prepare records, or engage in any other activity which they would normally review or assess and which could reasonably be construed to compromise their independence. The Internal Auditor's objectivity need not be adversely affected by their review and recommendation of the standards of control to be applied in the development of system and procedures under review.
.060 Budget and Staff
The Internal Audit Office has their own budget which is supported by General Use funds. The staff currently consists of three unclassified full-time positions which includes the Chief Audit Executive and two Senior Auditors.
.070 Duties
The Internal Auditor's duties are to perform internal audits, review programs, assist external auditors, review financial and operational system design and other similar functions. The specific duties are as follows:
Develop and implement auditing procedures and techniques.
Perform audits on a routine basis of the University activities.
Upon request perform special audits as requested from University Officials through the Vice President, Chief Operating Officer.
Coordinate with and assist all external auditors in conducting their audits.
Assist in the preparation of written responses to State Legislative Post Audit Division and other external auditors outlining steps taken in implementing audit recommendations.
Maintain the official file of all external audit reports.
Assist with financial and operational system designs and modifications to University and departmental systems, as needed.
.080 Procedures
The Internal Auditor will design audit programs for the area or function to audit or review and depending upon the size of the department and its activities, the range or scope of the audit may vary. During most audits, the following steps will be performed:
Hold an entry interview with the Dean, Director or Department Head of the area to be reviewed.
Perform the audit or review of the selected activity.
Prepare a rough draft of the audit report.
Conduct an exit interview with the Dean, Director or Department Head of the audited activity.
Issue a draft audit report and forward it to the area audited for management's response to the audit.
Upon receiving management"s response, add the response to the audit report and issue an official report.
The official report is distributed to the President, the head of the area audited, and the appropriate University Officials responsible for the area audited.
The Internal Audit Office will also make unscheduled checks or reviews on certain activities within the University periodically. In these instances, a formal entry interview will not be conducted. The Auditor(s) will arrive at the audit location unannounced. An exit interview will be conducted.
.090 Requesting an Audit
On certain occasions, a Dean, Director or Department Head may wish an audit of an activity under their jurisdiction. When this occurs, the Dean, Director or Department Head is to direct their request to the Vice President, Chief Operating Officer of the University.
If there is a reasonable basis for believing fraudulent or other wrongful acts have occurred, those situations are to be reported immediately to the Internal Audit Office in accordance with the Policies and Procedures Manual, Chapter 3220, Reporting Fraud or Dishonest Conduct.
.100 Questions
Questions are to be directed to the Internal Audit Office at internalaudit@ksu.edu.
