Nov. 30, 2004

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Compliance Issues and Audits

• Nov. 30, 2004

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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

• Controllers 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/CONTROLLERS 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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What is an Audit?

• Systematic review
• Evaluate conformance to some norm or benchmark

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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 AUDITORS OFFICE

• Presentation by Norm Coffman

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Internal Controls

• Management process for keeping an entity on
  course in achieving its 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

• Auditors 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-existent 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!