Embed Size (px)
Citation preview
Internal Audit AnEffectiveGovernanceTool
Program Partner of
PresentedBy:
1
Introductions
Grayle James, Board of Trustees
Member
Greg Gibson, CPA, President
Cheyanne Rolf, PMP Program/Project
Manager
Today’s Topics
01
02
03
04
05
What is Internal Audit Anyway
What Would Internal Audit Look Like for Us
What do Results Look Like
How do I Implement an Internal Audit Program
Questions?
01What is Internal Audit Anyway
Internal Audit Defined
01 Assurance and Consulting ActivityIndependentandObjective
03 Identifies potential threats to an organization’s goals
MitigatesRisks
02Looks at activities related to an organization’s operation
Examines,Monitors,andAnalyzes
6
A
ExternalAudit
1
2
Opinion on financial accuracy
May include observations made
7
InternalAudit
B1
2
Looks beyond finances
Higher level of rigor and scrutiny
3 Not required
Who’s the Boss
Nowmust report directly to the Board (Texas Education Code Section 11.170 (2006))
Historicallyunder the Superintendent or Business Office
02What Would Internal Audit Look Like for Us
What’s in an Audit…
Audit Universe
01
02
03
Academic
Administrative
Operational
12
Benefits of Internal Audit
A
B
C
D
F
Identify risks before they become
headlines
Demonstrate continuousdistrict
improvement
Ensure that district assets are
safeguarded
Helps ensure compliance with applicable laws, regulations, and
board policy
Ensure funds are used efficiently;
streamline internal operations so that
staff can work more effectively
Internal Audit Lifecycle
RiskAssessment
AuditPlan
AuditProjects
SpecialNeeds
AuditProjects
AuditProjects
AuditProjects
AuditProjects
Follow‐up
AnnualUpdate
What’s in an Internal Audit Report? Policy and regulatory framework
Description of operations, processes, systems, and organization
Key operating statistics and performance measures
Analysis:
― Transaction testing
― Data analytics
― Organizational, efficiency, process, internal controls, and compliance analysis
Audit findings and recommendations
03What Do Results Look Like
Human Resources Selected for audit because personnel costs represent 80% of district budget
New leadership; new HR strategic plan
Major audit findings:
― Personnel file management largely manual and not well controlled
― Opportunities exist for additional automation and for integration of information systems
― Minor TRS compliance exceptions noted
Human Resources
‐
10
20
30
40
50
60
70
80
Jun‐14 Jul‐14 Aug‐14 Sep‐14 Oct‐14 Nov‐14 Dec‐14 Jan‐15 Feb‐15 Mar‐15 Apr‐15 May‐15 Jun‐15 Jul‐15 Aug‐15 Sep‐15
Human ResourcesPriority No. Recommendation
1 Clarify HR department titles so that they generally reflect their individual functions.
2Add more specificity to the HR strategic plan by establishing priorities for completingprojects for the most immediate needs with detailed steps in action plans that establishlead person(s) responsible, deadlines, and completion dates.
3 Implement performance measures and establish performance targets for HR.
4Update Board Policies DIA (LOCAL) Freedom from Discrimination, Harassment, andRetaliation and FB (LOCAL) Equal Education Opportunity to list the names and otherrequirements of the two coordinators who have been designated.
5
Post EEO and ADA posters in conspicuous work locations within both the Fort Bend ISDadministration building and the HR Division in accordance with federal EEO and ADA lawsand board policies. Place EEO and ADA statements on each opening page of the district’swebsite.
6Secure immediately and protect the confidentiality of personnel folders and files in the filesroom.
Unique because audit was pre-emptive – evaluated district readiness for bond program before it started
District selected program manager
Major recommendations included:
― Improved management reporting
― Reconsider construction management approaches
― Enhanced safety and security standards for schools
Follow-up study conducted following year to ensure implementation
Construction Management
Results Implementation Tracking
1
2
As more audits are conducted, difficult for Board to keep up with
Increased accountability
3 Ensure you are good stewards of taxpayer investments
4 Spreadsheets are OK
21
04How Do I Implement an Internal Audit Program
01 02 03One‐TimeAudit
Projects based on actual or perceived risk
or problem
InternalAuditProgram
Program Driven by risk assessment and long-
term plan
In‐housevs.Outsource
In-house staff on payroll versus
outsourced function
Pros― Full-time staff dedicated to
audits― Staff develop deep
understanding of operations
― Lower cost per hour Cons
― Staff do not have deep knowledge of all potential audit areas
― Fixed investment
In-House
Outsource
In-House
Outsource
In-House
Pros― Broader skill sets and
experience available― Outside, independent,
third-party― Variable investment
Cons― Higher cost per hour― Not as accessible
Outsource
Outsource
In-House
Outsource
In-House
Fort Bend ISD History
Had an internal audit department that audit committee was responsible for but in practical terms could not manage on a daily basis
Audit Committee of 2013-14 recommended termination of this department and retained outside consultant
Tried a blend of internal auditor and outside consultant
Now have 100% outsourced this effort
12 audits, 2 follow-up audits, over 160 recommendations made in past 5 years
How it Works at Fort Bend ISD02
03
04
05
06
01Approve
AuditExecute
Audit
Review Results
Present Results
Conduct Follow-up Audit
Monitor Results
How it Works at Fort Bend ISD01ApproveAudit
Audit Committee approves audit to commence based on risk assessment/audit plan or special needs of the district
02
03
04
05
06
01Approve
AuditExecute
Audit
Review Results
Present Results
Conduct Follow-up Audit
Monitor Results
How it Works at Fort Bend ISD02ExecuteAudit
Auditor meets with department to be audited to establish “rules of the road”.
Auditor conducts audit.
02
03
04
05
06
01Approve
AuditExecute
Audit
Review Results
Present Results
Conduct Follow-up Audit
Monitor Results
How it Works at Fort Bend ISD03ReviewResults
Department reviews results and provides feedback.
Auditor meets with department and administration to review results and provides an opportunity for administration to respond to audit.
02
03
04
05
06
01Approve
AuditExecute
Audit
Review Results
Present Results
Conduct Follow-up Audit
Monitor Results
How it Works at Fort Bend ISD04PresentResults
Auditor conducts detailed report results briefing with Board Audit Committee.
Once approved, Auditor presents results to the full Board.
02
03
04
05
06
01Approve
AuditExecute
Audit
Review Results
Present Results
Conduct Follow-up Audit
Monitor Results
How it Works at Fort Bend ISD05ConductFollow‐upAudit
Auditor performs follow-up audit 12-15 months later to determine status of recommendation implementation.
Reports results to department/administration, the Board Audit Committee, and full Board.
02
03
04
05
06
01Approve
AuditExecute
Audit
Review Results
Present Results
Conduct Follow-up Audit
Monitor Results
How it Works at Fort Bend ISD06MonitorResults
Board Audit Committee monitors administration’s implementation efforts.
02
03
04
05
06
01Approve
AuditExecute
Audit
Review Results
Present Results
Conduct Follow-up Audit
Monitor Results
Investing in Internal Audit
$ = < of 1%
of TOTALbudget
Internal Audit is SO Helpful!
HOORAYInternal Audit!
Internal Audit is the
Best! BoardAND
Superintendentneedtobeinvested
CONTINUOUSIMPROVEMENT
QUESTIONS
Greg Gibson, [email protected]
(512) 328-0885
Cheyanne Rolf, Project Manager [email protected]
(512) 685-2679
