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An Overview: The Role of the Audit Committee in Monitoring, Oversight, and Compliance

Derry Harper, Inspector General and Director of Compliance

June 18, 2010

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Duties & Responsibilities: SUS

Per the Audit and Compliance Committee

Charter, the Audit Committee is

responsible for:

• receiving and reviewing university audit

reports;

• identifying trends in such reports and

confirming adverse trends are addressed by the

university;

• initiating inquiries if the Committee has

reasonable cause to believe a UBOT is unwilling

or unable to provide an appropriate response to

an audit finding. (Emphasis added)

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Duties & Responsibilities: SUS (con’t.) •directing the Inspector General to conduct an

investigation into substantiated allegations of

waste, fraud, or financial mismanagement

within a state university if the Board

determines that a UBOT is unwilling or unable

to do so.

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Duties & Responsibilities: SUS (con’t)University Board of Trustees Powers and

Duties, BOG Regulation 1.001(6)(g):

• Each UBOT shall establish policies and

procedures for the performance of annual

internal audits of university finances and

operations. All reports of such audits must be

submitted to the BOG via the Inspector

General. (Emphasis added.)

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Types of Audit Reports Received

• Financial and Operational Audits conducted

by the Auditor General

• Independent audited financial statements of

Direct Support and Health Services Support

Organizations, and Form 990s

• Audits of federal award, contracts & grants

received by universities (Florida Single Audit

Act)

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Internal Audit Reports

• UBOT Powers and Duties Regulation requires

all eleven universities to submit internal audit

reports conducted by university auditors.

• BOG SUS Management Information System

Regulation [3.007] establishes the State

University System Data Collection Process.

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The Inspector General’s Role

As directed by the Audit Committee, the IG

reviews each audit report to:

• Identify adverse trends

• Follow-up with universities regarding findings

and corrective actions

• Provide comments and suggestions to

Chancellor and Board Senior Staff for

enhancing internal controls.

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Institutional Compliance Program

Broadly Defined:

• A program that has been reasonably

designed, implemented, and enforced so that it

will generally be effective in preventing and

detecting violations of law.

• Program must evidence the organization’s

“due diligence” in seeking to prevent and

detect violations of law.

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The Brogan DoctrineStep 1: Establish Compliance

ProgramIdentify Project Owner or ChampionEstablish a Steering Committee

Step 2: Identify Key Objectives

List Key ObjectivesPrioritize Key Objectives

Step 3: Identify Key Compliance Risk Areas

Brainstorm and assess high risk areasAssign high risk areas to process owner

Step 4: Establish Systematic Compliance

ProgramDevelop Compliance MatrixTrainingMonitoringIdentify areas of non-complianceCorrective Action Plan Process

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Compliance Matrix - Schema

BOG Internal Operating Policies

& Procedures

State Statutes

Regulations, Policies & Procedures

Federal Statutes

BOG/Chancellor

Charters BOG Regulations

BOG Policy

External Policies & Procedures????

External Policies & Procedures

Florida Constitution

U.S. Constitution

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Regulation Compliance Project (RCP)The RCP was launched Fall 2009:

• 89 BOG Regulations to be reviewed or

analyzed

• Access database created to record analyses

• To date, approximately 25% analyzed

• IG will review reports and make

recommendations to Senior Staff for enhancing

and improving existing procedures.

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Next Steps

• BOG Compliance Steering Committee -

comprised of Senior Staff from all units

• SUS Compliance Work Group – comprised

of representatives from four universities

• Each work group will assist the IG in

developing a recommendation for the

establishment of a compliance program for the

Board Office and the State University System.