central piedmont community college internal audit
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Central Piedmont Community College Internal Audit
Definition of Internal Auditing
Internal Auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
The Institute of Internal Auditors
Internal Audit MissionThe mission of Internal Audit is to assist all levels of administration in the achievement of the College goals and objectives by striving to provide both quality customer service and a positive impact on the efficiency and effectiveness of administrative functions.
The Office achieves this impact by providing ongoing, objective, and independent reviews of internal controls and independent appraisals (i.e. audits), analyses, and counsel related to the assessment of business risk.
Services Provided
General Audits Financial Compliance Operational
Special Investigations
Consulting
Audit Activities (Selected) Determine the accuracy and validity of financial
transactions
Evaluate the financial and operational procedures for adequacy and effectiveness of internal controls
Verify the existence of College assets and ensure that assets are adequately safeguarded against loss
Evaluate the adequacy related to information relied on during management’s decision-making
Internal Control Components
Monitoring Control Environment Risk Assessment Control Activities Information & Communication
Monitoring includes the following:
Internal Control Components:Monitoring
Supervising
Observing
Testing
Reporting to Responsible Individuals
Internal Control Components:Monitoring Activities Include
Evaluation of Trends Reviews of Outstanding
Encumbrances Surprise Cash and Asset Counts Follow-up on complaints Review of Financial Reports Spot Checking of transactions to
ensure compliance with policies and procedures
Internal Control Components:Risk Assessment …
Is the identification and analysis of relevant risks associated with the achievement of objectives
Is an ongoing process that is a critical component of an effective internal control system
Economic changes
Changing student & community needs
New/changed legislation & regulations
Technological developments
Natural catastrophes
Competitive conditions
Risk Assessment External Risk Factors
New Personnel Low Morale Competency & Integrity of Personnel New or Revamped Information Systems Size of Organization Complexity & Volatility of Activities Geographical Dispersion of Operations Changes in Management Responsibilities
Risk Assessment Internal Risk Factors
After the risk factors have been identified, they must
be evaluated or analyzed in terms of risk and the
associated levels
Risk Assessment Risk Analysis
What can go wrong What areas have the most risk What assets are at risk Who is in a position of risk
Risk Assessment Risk Analysis
Administrators must determine …
Control activities are the policies and procedures that
help ensure that management directives are carried out
Addressing Identified Risk:Control Activities
Examples of Control Activities
Authorizations Segregation of Duties Recording Safeguarding Reconciliations
Internal Control As Defined by COSO Is …(Committee of Sponsoring Organizations)
A process, affected by an entity’s board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: Reliability of financial reporting;
Effectiveness and efficiency of operations; and
Compliance with applicable laws and regulations
Internal Control Is …
A Process … Not Merely Policies, Procedures and Forms
Affected by People
Directed Toward the Achievement of Objectives
Internal Control Primary Objectives
Compliance Accomplishment of Goals & Objectives Reliability & Integrity of Information Economical & Efficient Use of Resources Safeguarding of Assets
Perfect Internal Control?
There is no such thing as a perfect internal control
system … there are inherent limitations,
which typically cannot be controlled
Perfect Internal Control? Inherent Limitations
Misunderstanding of Instructions Mistakes of Judgment Personal Carelessness Distraction Fatigue Management Override Staff Size Limitations Collusion Among Individuals
Everyone has a role in regard to internal controls
Internal ControlsResponsibility For …
Roles will vary depending on level of responsibility and the nature of involvement by the individual
Internal ControlsResponsibility For …
A weak link in the organizational structure can create a weakness in the control system
Internal Controls ResponsibilityAdministrator Level
Administrator is responsible for: Executing major institutional policies and
procedures Designing and implementing control
systems
Internal Controls ResponsibilityPresident’s Cabinet
The President’s Cabinet is responsible for: Providing leadership and guidance Providing direction and oversight to
senior administrators Establishing a presence of
Integrity Ethics Competence Positive Control Environment
Internal Controls Responsibility Individual
Each individual is responsible for being cognizant of proper internal control procedures related to their job.
Internal auditors are responsible for:
Examining the adequacy and effectiveness of the College’s internal controls,
Making recommendations where control improvements are needed
Contributing to the effectiveness of the control environment
Internal Controls ResponsibilityInternal Auditors
Internal auditors are a part of the internal control system, not the whole system
They are not responsible for establishing or maintaining them
Internal Controls …And Internal Auditors
Internal Controls …And Internal Auditing
Internal Auditing helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of …
Risk management
Control
Governance Processes
Benefits of Internal Audit
Pragmatic, business oriented advice Local knowledge of policies,
procedures, culture and environment Conduit to other resources
Any Questions
Prepared By: Brenda M. Leonard, C.B.M., Ed.D. (brenda.leonard@cpcc.edu)
Janice Hill (janice.hill@cpcc.edu)
For additional information visit the Internal Audit website @ http://inside.cpcc.edu/audit/default.htm
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