The Office of the Internal Auditor is an independent, objective appraisal activity designed to add value and improve The University of North Carolina at Greensboro’s operations. The internal audit function assists University management in accomplishing objectives by bringing a systematic, disciplined approach to the review of individual operations primarily through the evaluation of internal controls.
To provide for the independence of the Office of the Internal Auditor, its Director reports functionally to the Chancellor. Additionally, the Director has a clear and recognized reporting relationship with the Chair of the Compliance, Audit, Risk Management and Legal Affairs (CARL) Committee of the Board of Trustees.
The Office of the Internal Auditor is authorized to select subjects, determine scopes of work, and apply resources required to accomplish objectives. It has unrestricted access to all functions, records, property and personnel under review, to the extent permitted by law. It is authorized to obtain assistance of University personnel where necessary to perform audit activities.
In order to perform responsibilities in an unbiased manner, the Office of the Internal Auditor must report to a level within the University that allows objective accomplishment of internal audit responsibilities. To promote independence and objectivity, the Chancellor provides administrative direction. In addition, the Director of Internal Audit reports periodically to the Compliance, Audit, Risk Management and Legal Affairs (CARL) Committee of the Board of Trustees, which serves in an oversight capacity in accordance with the duties and responsibilities defined in the CARL Committee Charter.
In the performance of its responsibilities, the Office of the Internal Auditor intends to conduct its activities in line with the North Carolina Internal Audit Act, International Standards for the Professional Practice of Internal Auditing (IIA), and when appropriate, the Government Auditing Standards. Since financial audits are conducted by the Office of the State Auditor and independent external auditors, most of the examinations performed by the Office of the Internal Auditor are limited scope engagements with specific focuses on internal controls, compliance, efficiency and effectiveness, and so are conducted in a prudent manner in accordance with the intent of the externally referenced standards.
Planning of the audit begins with defining the objective and scope of the assignment. The objective and scope will be shaped by the collecting of preliminary background material. Information to be considered includes the organizational structure, process descriptions through flowcharts or narratives, internal controls, policies and procedures, etc.
The entrance interview enables the Office of the Internal Auditor to review the objective and scope of the examination with representatives of the area being audited. In addition, a preliminary survey may be conducted during the initial discussions to gain familiarity with the activity to be audited. Questionnaires may be used in the preliminary survey to ensure sufficient information is gathered, to organize data, and to save time.
A formal audit program is an integral part of fieldwork. The steps in the program provide guidance to achieve the audit objective. Sufficient detail is needed to address the work in an organized manner, but not to the extent that judgment is ignored. The audit program provides a flexible outline of the work to be performed.
The bulk of the audit work will be performed during the fieldwork phase of the audit process. Fieldwork is conducted to accumulate sufficient, reliable, relevant, and useful evidence to support the audit comments and recommendations.
Work papers are maintained for each internal audit assignment. The organization, design, and content of audit work papers will depend on the nature of the audit. They document the evidence in support of audit observations, opinions, and conclusions. Consequently, work papers are limited to items of significance and applicability to the objective of the assignment.
The exit interview precedes the distribution of a final audit report. The Office of the Internal Auditor reviews an initial draft of the report with the appropriate management personnel. The purpose of the exit discussion is to inform management of the findings and recommendations of the examination prior to distribution of a formal document. This provides an opportunity to address any inaccuracies that management believes to exist in the findings or other contents of the report.
The format of the audit report consists of three major parts. The foreword describes the examination by stating the objective and scope of the audit work. Background information about the activity which is the focus of the audit may also be provided. Audit observations and recommendations of the Office of the Internal Auditor are described in the main body of the document. The report concludes with a summary of the audit observations and opinions. Reports may also contain an organization chart, a description of functional responsibilities, or other relevant information concerning the activity examined.
The final audit report is addressed directly to the Chancellor. A transmittal communication may be provided by the Office of the Chancellor and addressed to the appropriate Vice Chancellor responsible for the activity audited. The transmittal, which accompanies a copy of the audit report, requests a written response to any audit recommendations. The CARL Committee of the University Board of Trustees is required to obtain updates from the Director of Internal Audit. The updates report any material conditions, the corrective action plan for these conditions, and their final resolution.
Copies of internal audit reports are provided to a number of entities associated with The University of North Carolina at Greensboro. They include the University of North Carolina System Office, the North Carolina Office of the State Auditor, and the Office of Internal Audit within the North Carolina Office of State Budget and Management. Internal audit reports may also be provided to the Vice Chancellor for Finance and Administration in support of his responsibilities for monitoring University internal controls.
Management responses to audit recommendations are reviewed by the Office of the Internal Auditor. A follow-up review may be conducted at a reasonable future date to determine whether corrective action has taken place.
North Carolina General Statute § 116-30.1 requires special responsibility constituent institutions such as the The University of North Carolina at Greensboro to make satisfactory progress in resolving audit findings within a ninety-day period following receipt of the auditor’s published report and management letter. As required by the status of the University as a special responsibility constituent institution, audit findings issued by the Office of the State Auditor will be subject to follow-up work by the Office of the Internal Auditor within a ninety-day period to verify satisfactory progress toward resolution.
Donald C. Skeen, CPA
Director of Internal Audit
Kathy M. Qualls, CPA, CFE
State Auditor’s Hotline