nov. 30, 2004 compliance issues and audits. topics to be discussed audits – definition, types of...
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Nov. 30, 2004
Compliance Issues and Audits
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TOPICS TO BE DISCUSSED
• Audits – definition, types of auditors, types of audits
• Role of WSU Internal Auditor
• Internal controls – definitions and types
• Selected compliance issues
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Roles and Responsibilities
• Controller’s office – establishes, maintains and reviews the system of internal control.
• Organizational unit managers - responsible for internal control within that unit.
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OBJECTIVES
• Provide employees with knowledge and skills so that we can be better prepared for an audit.
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OBJECTIVES
• Encourage all employees to “take ownership”
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OBJECTIVES
• Decrease overall risk for WSU Extension/CAHNRS
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OBJECTIVES
• Create/maintain organizational efficiencies and local control
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BUSINESS AFFAIRS/CONTROLLER’S OFFICE OTHER CENTRAL SERVICES
EXTENSION, CAHNRS, VETMED, SCIENCES, ETC.
DEPARTMENT /DISTRICT ADMINISTRATIVE ASSTS.
COUNTIES
PRINCIPAL INVESTIGATORS, PROGRAM DIRECTORS, LEARNING
CENTER COORDINATORS; INSTRUCTORS; EXTENSION ADMINISTRATOR
EMPLOYEE
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• Systematic review
• Evaluate conformance to some norm or benchmark
What is an Audit?
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Types of Auditors
• Internal – WSU Employees
• External – State Auditors, Private Firms
• Governmental Audit Agencies (GAA)
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Types of Audits
• Financial Statement Audits - assure users that statements are fairly presented (External and GAA)
• Compliance Audits – obtain reasonable assurance of compliance with state and local laws and regulations (Internal, External, GAA)
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Types of Audits
• Single Audits – meet the needs of all federal grantor agencies (External, GAA)
• Investigative – Fraud, whistleblower (Internal, GAA)
• Performance - Coming soon?
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FREQUENCY OF AUDITS
• CAHNRS – last six month period• Compliance audit – payroll, external auditor•Whistleblower
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CONSEQUENCES OF AUDIT FINDINGS
• Financial Statement Audit: Restatement
• Compliance Audit: • Implementation of Internal Controls to Avoid Future
Findings;
• Investigative• Repayment, dismissal, hard-time
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CONSEQUENCES OF AUDIT FINDINGS
• Single Audit• Repay unallowed costs• Extrapolate to all of WSU
• Performance
• All Audits: Unwanted publicity, loss of respect and/or trust
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INTERNAL AUDITOR’S OFFICE
• Presentation by Norm Coffman
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Internal Controls
•Management process for keeping an entity on course in achieving it’s organizational objectives.
• Provide reasonable assurance that entity objectives are being met.
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Entity Objectives
• Compliance with state laws and regulations
• Reliability of financial reporting
• Effectiveness and efficiency of operations
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Internal Control System Requirements
• Should provide reasonable assurance that an organization will accomplish its objectives
• Reasonable assurance recognizes that cost of an internal control should not exceed the benefit derived therefrom
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Internal Control System Requirements
•Management defines level of risk the organization is willing to accept and strives to maintain risk within those levels
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Types of Internal Controls
• Control Environment – sets the tone of an organization, influences control consciousness of its people, foundation for all other components.
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TYPES OF INTERNAL CONTOLS
• Risk Assessment – Identification and analysis of relevant risks to achieving the objectives
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Types of Internal Controls (cont)
• Information and Communication – Pertinent information must be identified, captured and communicated in a form and time frame that enables people to carry out responsibilities.
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TYPES OF INTERNAL CONTOLS
• Control Activities – Internal policies and procedures that help address the risks.
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TYPES OF INTERNAL CONTOLS
•Monitoring – Assess quality of performance over time.
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SINGLE AUDIT ACT
• Selected items specifically related to Sponsored Projects by Dorothy Heitter
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TEMPORARY EMPLOYMENT
• Selected items specifically related to Temporary Employment by Trudy Kenny
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TRAVEL
• Selected items specifically related to Travelling for WSU business by Michelle Ely.
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Cash Handling – Compliance and Investigative
• Auditor’s check list for Cash Handling by Tucson Smith
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Purchasing – Compliance Audits
• Do purchases meet local, WSU, state, guidelines for allowability?
• Highest risk – purchases under $2,500 (k-orders, purchasing cards)
• Internal controls • Communication – BPPM, training, BFO• Approval – somebody who has knowledge• Review
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Purchasing – Investigative Audits
• Investigative Audit – Are state funds being used for personal gain? Examples (non-existant vendors, purchasing goods for
self)
• Counties and small departments – segregation of duties can be problematic.
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Purchasing – Investigative Audits
• Internal Controls – local level highly important Authorization Review – purchases for authorization
- budget statements for purchases
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Purchasing – Investigative Audits (cont)
• Internal Controls Risk Assessment – is there adequate separation
of duties? Control Activities – authorized signatures, review
budget statements Monitoring – review orders for signature, sample
orders from budget statements
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ASSET MONITORING - Audits
• Compliance Audit: Are assets being used for mission of university?
• Investigative Audit: Are assets being used for personal gain?
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ASSET MONITORING - Controls
• Physical Safeguarding• Cash, mail meters
•Written policies regarding usage• Challenge course equipment• Volunteers using assets
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ASSET MONITORING - Controls
• Authorization codes• Phones, fax machines,
• Review budget statements
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QUESTIONS?
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THE END
•THANK YOU FOR JOINING US!