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How to Prepare for an Audit

FLORIDA ATLANTIC UNIVERSITY. How to Prepare for an Audit. O PERATIONS M ANAGEMENT. June, 1998. How to Prepare for an Audit. An audit does not have to hit you like a bolt of lightning. ...if you prepare for it!. Types of Audits.

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How to Prepare for an Audit

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  1. FLORIDA ATLANTIC UNIVERSITY How to Prepare for an Audit OPERATIONS MANAGEMENT June, 1998

  2. How to Prepare for an Audit • An audit does not have to hit you like a bolt of lightning ... ...if you prepare for it!

  3. Types of Audits • State Audits - conducted by the Auditor General’s auditors • Internal Audits - conducted by the Inspector General (FAU) auditors - may be systemwide or just at FAU • External Audits - performed by a CPA firm

  4. Compliance • Federal & State Statutes • FAC Rules • SUS Rules • Chancellor's Memoranda • Presidential Memorandums • Department Policies & Procedures

  5. Department’s Policies & Procedures • Do you have written policies & procedures? • If not - GET SOME! • Have they been given to employees? • Are they current? • Are they being followed?

  6. Document! • If you don’t have documentation, you have nothing! • Any deviation from the ordinary or from the written procedure must be documented. • Documentation helps to prove you did what you did and were aware of exceptions.

  7. Document! • Did you verify an action or review an employee’s work? - • Initial & Date • Were you unable to follow a policy? • Note reason, initial & date Approved

  8. Document! • Did you make a phone call? • Note who, when & what • Did you send an e-mail, fax or letter? • Keep a copy.

  9. Separation of Duties • Authorization • Custody of Assets • Record-keeping • The more negotiable the asset the greater the need for separation of duties.

  10. Separation of Duties • Duties are considered incompatible if someone can carry out and conceal an error or irregularity in the course of day-to-day activities.

  11. Separation of Duties • The primary purpose is to prevent and promptly detect errors or irregularities. • They should provide a cross check

  12. Separation of Duties • AUTHORIZATION • This refers to the person that can approve the transaction or any exceptions. • In the case of a small operation, this duty may be assigned to a supervisor. OK

  13. Separation of Duties • CUSTODY OF ASSETS • Assets are not just cash and checks, but equipment, files and records.

  14. Separation of Duties • RECORD-KEEPING • Relates to changes in any records - cash receipts, accounts receivable, SAMAS records, etc. Paid OK to Pay Debits Credits

  15. Useful Tips • Periodically have an “independent” review of operations and procedures - document the review • Make use of checklists and logs to document procedures • Cost/Benefit/Risk analysis

  16. Audit Responses • Keep response brief • Address the issues and only the issues in the recommendation • Not the place for excuses, reasons or explanations - or attachments • Do not go into detail about implementing recommendation

  17. Implementation • DO WHAT YOU SAID YOU WOULD BY THE DATE YOU SAID YOU WOULD! • THEY WILL CHECK!

  18. Assistance • The Inspector General’s Web Page has links to several useful sites, including booklets on... ...internal controls, ...separation of duties ...surviving an audit. - www.fau.edu/admin/oig/

  19. The End • Thank You!

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