Financial Services Manual (FIN)

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Effective: 9/16/1992

Revised: 4/3/2008

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FIN 701: ASU University Audit and Advisory Services Charter

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Purpose

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To define the purpose/mission, authority, and responsibility of ASU University Audit and Advisory Services

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Source

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University Administration and Legal Affairs

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Policy

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Purpose/Mission

The University Audit and Advisory Services (University Audit) Department is an independent appraisal function to examine and evaluate university activities as a service to university management personnel at all levels. University Audit’s mission is to provide objective, independent assurance and consulting services that are responsive to the university stakeholders. It assists the university to accomplish its mission by bringing a disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.


Authority

University Audit is authorized full, free, and unrestricted access to the university’s functions, records (irrespective of medium), property, and personnel relevant to any review. Documents and information given to internal auditors during a review are handled in at least the same prudent manner as by those employees normally accountable for them. Access is also granted to the records of any component unit (e.g., ASU Foundation) in the possession of a university department or employee that relates to the department, area, or program being audited.

The director of University Audit and Advisory Services shall confer with the Audit Committee of the Board of Regents at least annually, outside the presence of university officials, on any subject germane to University Audit’s area of responsibility. In addition, if the circumstances ever warrant such action, the director of University Audit and Advisory Services may communicate directly with the chair of the Audit Committee.


Professional Auditing Standards

University Audit will primarily follow the standards for the professional practice of internal auditing as established by the Institute of Internal Auditors. However, depending upon circumstances, some engagements will be performed pursuant to professional guidance issued by the American Institute of Certified Public Accountants. Such guidance covers audits of financial statements and attestation engagements. In addition, University Audit will adhere to the policies and procedures included in its Operating Procedures Manual.


Organization

University Audit is responsible to the university’s president under the operational supervision of the vice president of University Administration and General Counsel.

University Audit provides the following documents to the Arizona Board of Regents (ABOR) Audit Committee:

  1. the annual audit plan, after approval by the university president
  2. audit reports, as they are issued

    and

  3. quarterly reports on the status of open audit recommendations.

The director of University Audit and Advisory Services attends the ABOR Audit Committee’s quarterly public meetings to discuss audit reports issued during the previous quarter, the status of the current annual audit plan, and other matters of interest to the Audit Committee. Also, the director of University Audit and Advisory Services and the Audit Committee can meet privately regarding pertinent matters. University Audit will coordinate as necessary and appropriate with ABOR’s Central Office auditors and the university system auditors regarding risk assessment to plan audit coverage in order to meet ASU and system-wide needs.


Independence

All University Audit activities, such as audit selection, scope, procedures, timing, and report content, will remain free of influence by any element in the university in order to maintain an independent and objective perspective. At least once annually, the director of University Audit and Advisory Services will confer with the Audit Committee, outside the presence of university officials, to discuss any germane subject. Furthermore, if circumstances warrant, the director of University Audit and Advisory Services may communicate directly with the chair of the Audit Committee.

Internal auditors will not have any direct operational responsibility or authority over any of the activities that they review. They will not develop nor install systems or procedures, prepare records, nor engage in other activities that would normally be reviewed by the internal auditors. Recommendations on standards of control to apply to a specific activity may be included in the written report of audit findings and opinions, which is given to management for review and implementation.


Scope of Activities

University Audit’s coverage will encompass reviews of any and all management operations, including the following:

  • Financial audits, which address questions of accounting and reporting of financial transactions, including commitments, authorizations, and receipt and disbursement of funds. Accounting controls are designed to safeguard assets and to ensure the accuracy of financial records.
  • Operational audits, which review operating information and the means used to identify, measure, classify, and report such information; review the means for safeguarding assets; and provide analysis and evaluation of operational results in comparison with established university goals, objectives, plans, policies, directives, and procedures.
  • Compliance audits, which measure the degree of adherence with laws, rules and regulations, including those established by the NCAA.
  • Follow-up audits, to determine whether there has been successful implementation of prior audit recommendations.
  • Investigative audits, which review possible waste, fraud, or abuse. These are specifically requested by a departmental or administrative unit and approved by senior management.
  • Audits at the request of senior management, which are typically performed on a one-time basis.
  • Management consulting projects, which are typically requested by a department or administrative unit.


General Responsibilities

The general responsibilities of University Audit include, but are not limited to, conducting reviews of university departments, programs, and control systems to determine whether they are effectively contributing to the university’s achievement of its objectives and represent a high standard of administrative practice.

These responsibilities include:

  1. Review the reliability and integrity of financial and operating information.
  2. Review systems established to ensure compliance with laws, regulations, rules, policies, and practices that could have a significant impact on operations.
  3. Review procedures related to safeguarding of assets and, as appropriate, verify the existence of assets.
  4. Review the economy and efficiency of the deployment of resources.
  5. Review operations and programs to determine whether results are consistent with objectives.
  6. Perform special reviews at the request of senior management.
  7. Consult on internal controls for new and major system changes.
  8. Report the results of reviews to an appropriate level of management to ensure corrective action.
  9. Follow up on prior audit reports to ensure significant recommendations have been implemented.
  10. Evaluate potential risk in various segments of university operations.
  11. Develop an annual audit plan and obtain approval of the plan.
  12. Coordinate efforts with the audit staffs of the Arizona Board of Regents and the Arizona State Auditor General to maximize use of available resources.

In addition, the director of University Audit and Advisory Services at ASU, through the execution of the annual audit plan, is responsible for the periodic review of the internal control environment to determine whether adequate internal controls exist and are operating effectively. The director of University Audit and Advisory Services will also include observations and recommendations for improved internal controls in the audit reports submitted to the Audit Committee and university administration for appropriate action.


Audit Procedures and Protocol

Specific audit procedures and protocol are formally documented in the FIN 702, “Scheduled Internal Audits” and FIN 703, “Ad Hoc, Special Purpose Audits and Reviews.”

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Cross-References

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For information on external and internal audit coordination, see FIN 205–01, “Audit Liaison.”

For information on audit procedures and protocol, see:

  1. FIN 702, “Scheduled Internal Audits”

    and

  2. FIN 703, “Ad Hoc, Special Purpose Audits and Reviews.”

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