INT 101: How to Pass an Audit

An Introduction to Internal Controls

• Introductions

• Internal Audit Overview

• Basic Internal Controls

• Internal Control Examples

• How to “Pass” an Audit

Course Overview

Introductions

Who are the staff members in Internal Audit?

Internal Audit Staff

Name Title Email Phone

Stefanie Powell Chief Audit Executive powells 2-3457

Kelly Mintern Assistant Director minternk 2-3088

Shelley Morris Auditor morriss 2-3835

Cynthia Nickerson Auditor nickersonc 2-3857

Monica Crump Intern mlc1282

What is Internal Audit?

Internal Audit is:

• Part of UNCW

• Independent in nature

• Reports to the Audit, Risk and Compliance

Committee of the Board of Trustees

• Designed to protect the university

• Required under the North Carolina Internal Audit Act

• Charged with conducting audits, consultations and

investigations

Internal Audit Overview

Here to help!

What will I learn in this course?

What are internal controls?

• Formal definition

• Processes designed to help an organization

accomplish specific goals or objectives

• Informal definition

• Things you do to make sure things get

done right

• Examples

• Reviewing your bank account

• Counting inventory

• Reviewing work

Internal Controls

What happens when there are no internal controls?

• Could lead to fraud

• Is more likely to lead to errors

Lack of Internal Controls

What internal controls should I use?

• No one should control any process from start to finish.

• No one should approve their own expenditures.

• Internal controls are built into uShop, Works, and

Chrome River

• No one should approve an action who might benefit.

Internal ControlsSegregation of Duties

Internal ControlsRegulations, Policies, and Procedures

Federal Regulations/Accreditation Requirements

State Regulations

UNC Policies

UNCW Policies

Departmental Procedures

Documented procedures help:

• Current employees do their jobs

• New employees learn their jobs

• Evaluate employee performance

• Minimize problems if an employee is

not at work

Internal ControlsProcedures

Procedures should be:

• Consistently used

• Familiar to all employees

• Located in a central location

• Sammy, SharePoint, OneDrive

• Regularly updated and reviewed

Internal ControlsProcedures

• Ensure policies are followed and

exceptions documented

• Check documentation requirements of

responsible office

• Obtain and maintain original supporting

documentation when possible

• Document all unusual situations

Internal ControlsDocumentation

• Review by appropriate person

• Always know what you are signing

• Never sign a blank form

• Don’t let others sign your name or

initials

Internal ControlsApproval and Authorizations

What are some specific examples?

• Change funds should be established through the

Accounting Department

• Collect cash in as few locations as possible

• Make deposits at least as frequently as required by law

• Do not use bank accounts except the organization’s

formal ones

• A log or receipt book should be maintained

• Credit card receipts should be properly signed and

submitted with the deposit

• Combinations to safes should be regularly updated

• Be familiar with UNCW’s departmental funds receipting

policy

Control ExamplesAssets - Cash

• Keep records of all items

• Report gifts-in-kind to Advancement

Services

• Include items below fixed asset

threshold such as desks

• Photos are helpful

• Track iPads

• Conduct inventory counts at least

annually

Control ExamplesAssets - Other

• Each user of a system should have their

own login credentials

• Keep username and password

information secure

• Regularly review users’ access

• Know where information is stored and

protect it

Control ExamplesSystem Access and Use

• Documented procedures

• Backup and cross training for all critical

functions

• Current, approved Continuity of

Operations Plan

Control ExamplesBusiness Continuity

• Ensure transactions are recorded accurately.

• Ensure revenue and expenditures are in the right place

• Reconciliations

Control ExamplesFinancial Activity

• Physical security

• Training

• Job descriptions

• Communication

• Formal

• Informal

• Take vacation!

Control ExamplesOther

How do I make time for these activities?

• Fridays during summer hours

• Slower times of the year

• Get extra help

• Create goals and deadlines and hold

people accountable

• Speak with your supervisor about

prioritizing time

Finding Time to Improve Internal Controls

How can I “pass” an audit?

• Comply with all external guidance

• Create and utilize departmental

procedures

• Document well

• Ensure appropriate authorizations

• Secure cash and all other assets

• Protect electronic data

• Plan for business continuity

• Train, communicate, and take vacation!

Reminders

What if something doesn’t seem right?

Fraud, Waste, and Abuse Reporting

Agency/Office Website Phone/Email

Office of the State Auditor

www.ncauditor.net 1-800-730-TIPS

Office of State Budget andManagement

www.osbm.nc.gov/management/fraud

FWA@osbm.nc.gov

UNCW Office of Internal Audit

www.uncw.edu/ia 2-3457

Where can I get more information?

Office of Internal Audit

Hoggard 185