Central Piedmont Community College Internal Audit

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Central Piedmont Community College Internal Audit
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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 

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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.

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Services Provided

• General Audits
• Financial
• Compliance
• Operational
• Special Investigations
• Consulting

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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 managements decision-making

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Internal Control Components

• Monitoring
• Control Environment
• Risk Assessment
• Control Activities
• Information Communication

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Internal Control ComponentsMonitoring

• Monitoring includes the following

• Supervising
• Observing
• Testing
• Reporting to Responsible Individuals

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Internal Control ComponentsMonitoring
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

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Internal Control ComponentsRisk 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
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Internal Control ComponentRisk Assessment

• Risk can pertain to external internal factors
• External risk factors are outside of the
  College, usually beyond managements span of
  control
• Internal risk factors are within the College,
  usually within managements control

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Risk Assessment External Risk Factors

• Economic changes
• Changing student community needs
• New/changed legislation regulations
• Technological developments
• Natural catastrophes
• Competitive conditions

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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

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Risk Assessment Risk Analysis

• After the risk factors have been identified, they
  must be evaluated or analyzed in terms of risk
  and the associated levels

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Risk Assessment Risk Analysis
Administrators must determine

• What can go wrong
• What areas have the most risk
• What assets are at risk
• Who is in a position of risk

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Addressing Identified RiskControl Activities

• Control activities are the policies and
  procedures that help ensure that management
  directives are carried out

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Examples of Control Activities

• Authorizations
• Segregation of Duties
• Recording
• Safeguarding
• Reconciliations

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Internal Control As Defined by COSO Is
(Committee of Sponsoring Organizations)

• A process, affected by an entitys 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

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Internal Control Is

• A Process Not Merely Policies, Procedures and
  Forms

• Affected by People

• Directed Toward the Achievement of Objectives

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Internal Control Primary Objectives

• Compliance
• Accomplishment of Goals Objectives
• Reliability Integrity of Information
• Economical Efficient Use of Resources
• Safeguarding of Assets

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Perfect Internal Control?

• There is no such thing as a perfect internal
  control system there are inherent limitations,
  which typically cannot be controlled

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Perfect Internal Control? Inherent Limitations

• Misunderstanding of Instructions
• Mistakes of Judgment
• Personal Carelessness
• Distraction
• Fatigue
• Management Override
• Staff Size Limitations
• Collusion Among Individuals

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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

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Internal ControlsResponsibility For

• A weak link in the organizational structure can
  create a weakness in the control system

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Internal Controls ResponsibilityAdministrator
Level

• Administrator is responsible for
• Executing major institutional policies and
  procedures
• Designing and implementing control systems

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Internal Controls ResponsibilityPresidents
Cabinet

• The Presidents 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

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Internal Controls Responsibility Individual

• Each individual is responsible for being
  cognizant of proper internal control procedures
  related to their job.

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Internal Controls ResponsibilityInternal Auditors

• Internal auditors are responsible for
• Examining the adequacy and effectiveness of the
  Colleges internal controls,
• Making recommendations where control improvements
  are needed
• Contributing to the effectiveness of the control
  environment

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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

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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

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Benefits of Internal Audit

• Pragmatic, business oriented advice
• Local knowledge of policies, procedures, culture
  and environment
• Conduit to other resources

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Any Questions
Prepared By Brenda M. Leonard, C.B.M., Ed.D.
(brenda.leonard_at_cpcc.edu)
Janice Hill (janice.hill_at_cpcc.edu)
For additional information visit the Internal
Audit website _at_ http//inside.cpcc.edu/audit/defau
lt.htm