INTERNAL AUDITING:  Is an independent appraisal function established within an organization to examine and evaluate its activities as a service to the organization.

WHAT ARE INTERNAL CONTROLS?
  Accounting internal control:
  1.  Designed to safeguard University assets
  2.  Ensure the accuracy of financial records
 Administrative internal controls:
  1.  Designed to promote operational efficiency
  2.  Adherence to University Policies and Procedures

Is the internal auditor responsible for maintaining the University's systems of internal control?
 No.  University management is responsible for maintaining an adequate system of internal control.  Internal Audit's mission is to independently evaluate the adequacy of the existing internal control systems.  Internal Audit makes recommendations to management to improve controls.  Internal Audit is not part of the internal control system it
is a control over the internal controls.

What is the relationship between the internal auditor and the outside public accountants who audit the University's accounting records?
 The outside auditors review the adequacy of supporting documentation for the financial statements for the purpose of expressing an opinion on the reasonableness  of the financial statements.  They also review the adequacy of major system accounting controls (not administrative controls) to determine the extent to which financial statement audit procedures can be restricted.
 Internal audit reviews the adequacy of both accounting and administrative controls.  In addition, all significant systems are reviewed by the internal auditor.

Are auditors looking for fraud when performing audits?
 Auditors are not specifically searching for the existence of fraud when performing audits.  However, the performance of generally accepted auditing procedures will identify certain types of fraud.  An adequate system of internal control and a control conscious organizational environment will reduce the risk of fraud.

How are audit engagements selected?
 Audit engagements are selected by performing a risk analysis of the various financial systems.  The risk analysis evaluation prioritizes the systems for audit review purposes based on the following criteria:
 1.  Major University system (materiality)
 2.  Quality of controls
 3.  Potential risk of fraud or loss
 4.  Last audit performed
 5.  New program or significant system accounting changes.

Can University personnel seek advice from Internal Audit regarding internal control when an audit is not being performed?
 Yes.  Internal Audit acts as in-house consultant on internal control matters and provides guidance on control aspects of new systems and procedures.  Internal Audit should be contacted for internal control guidance

Must the auditee always implement audit report recommendations?
 No.  While the adoption of internal audit recommendations is encouraged, we do not have directive authority.  In most instances suggestions are implemented by auditees.  However, auditees may choose different procedures to correct control concerns identified during the audits.

INTERNAL AUDIT STANDARDS

Safeguarding assets
Compliance with policies, procedures, plans, laws and regulations
Reliability and Integrity of information
Efficient and economical use of resources
Accomplishment of established objectives and goals for operations of  programs

INTERNAL AUDIT AUTHORITY & RESPONSIBILITY

Authority:  The Board of Trustees and the President have approved a charter
 for the internal audit office which authorizes the internal auditor to  have full, free, and unrestricted access to all university functions,  records, property, and personnel.

Responsibility:  (See standards)
 

Specific Cash Handling Standards

Documentation File:  Departmental cash handling procedures

Prenumbered receipts or cash register tape:

Accept checks made payable to Trinity University

Restrictive endorsement on all checks ASAP

Coin operated machines must record counter readings

Incoming cash log

Transfers of cash:
 Imprest Fund - Cash advances,  temporary custodian, change custodian
          Change Fund -
  1.  Daily receipts to supervisor.
  2.  Supervisor cash bank to cashier
  3.  Supervisor to clerk to prepare deposit
  4.  Clerk to Courier to transfer cash to Business Office
  5.  Business office cashier to courier.

Daily cash reports for change fund operations signed by cashier & supervisor

Monthly financial report reconciliation - Should be performed by a non-cash handling employee.  Should match income amounts from source documents.

Supervisors are responsible for specific verification tests of the accounting records to ensure that all receipts are deposited accurately and timely.

Petty cash should not include personnel checks, IOU's, stamps or be commingled with private funds (coffee or flower funds).

Imprest fund turnover should be approximately quarterly.  Summer imprest
funds should be returned to the Business Office if inactive.

Access to cash handling areas should be restricted to authorized personnel only.  Petty cash funds should be maintained in an office that is not used for a reception area.

Losses or overages of $25 or more should be reported to the internal auditor
within 24 business hours.