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Central Piedmont Community College Internal Audit

Central Piedmont Community College Internal Audit. Definition of Internal Auditing.

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Central Piedmont Community College Internal Audit

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  1. Central Piedmont Community College Internal Audit

  2. 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

  3. Internal Audit Mission The 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.

  4. Services Provided • General Audits • Financial • Compliance • Operational • Special Investigations • Consulting

  5. 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

  6. Internal Control Components • Monitoring • Control Environment • Risk Assessment • Control Activities • Information & Communication

  7. Internal Control Components:Monitoring Monitoring includes the following: • Supervising • Observing • Testing • Reporting to Responsible Individuals

  8. 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

  9. 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

  10. Risk Assessment External Risk Factors • Economic changes • Changing student & community needs • New/changed legislation & regulations • Technological developments • Natural catastrophes • Competitive conditions

  11. Risk Assessment Internal 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

  12. Risk Assessment Risk Analysis After the risk factors have been identified, they must be evaluated oranalyzed in terms of risk and the associated levels

  13. 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 Administrators must determine …

  14. Addressing Identified Risk:Control Activities Control activities are the policies and procedures that help ensure that management directives are carried out

  15. Examples of Control Activities • Authorizations • Segregation of Duties • Recording • Safeguarding • Reconciliations

  16. 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

  17. Internal Control Is … • A Process … Not Merely Policies, Procedures and Forms • Affected by People • Directed Toward the Achievement of Objectives

  18. Internal Control PrimaryObjectives • Compliance • Accomplishment of Goals & Objectives • Reliability & Integrity of Information • Economical & Efficient Use of Resources • Safeguarding of Assets

  19. Perfect Internal Control? There is no such thing as a perfect internal control system … there are inherent limitations, which typically cannot be controlled

  20. Perfect Internal Control?Inherent Limitations • Misunderstanding of Instructions • Mistakes of Judgment • Personal Carelessness • Distraction • Fatigue • Management Override • Staff Size Limitations • Collusion Among Individuals

  21. Internal ControlsResponsibility For … • Everyone has a role in regard to internal controls • Roles will vary depending on level of responsibility and the nature of involvement by the individual

  22. Internal ControlsResponsibility For … • A weak link in the organizational structure can create a weakness in the control system

  23. Internal Controls ResponsibilityAdministrator Level Administrator is responsible for: • Executing major institutional policies and procedures • Designing and implementing control systems

  24. 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

  25. Internal Controls Responsibility Individual • Each individual is responsible for being cognizant of proper internal control procedures related to their job.

  26. Internal Controls ResponsibilityInternal Auditors 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

  27. Internal Controls …And Internal Auditors • Internal auditors are a part of the internal control system, not the whole system • They are not responsible for establishing or maintaining them

  28. 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

  29. Benefits of Internal Audit • Pragmatic, business oriented advice • Local knowledge of policies, procedures, culture and environment • Conduit to other resources

  30. 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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