Coordinating Work with External Auditors

General

IIA Performance Standard 2050 requires coordination of internal and external audit work to ensure adequate audit coverage and minimize duplicate efforts. Since audit resources are scarce and work in departments can be disrupted by too frequent audits we will coordinate our projects with the Office of the State Auditor and other external review bodies.

The State Auditor’s Office performs annual financial statement audits of the University. Other review bodies, such as the Southern Association of Colleges and Schools, the Joint Commission on Accreditation of Healthcare Operations, and the Environmental Protection Agency evaluate programmatic and regulatory issues. Individual departments or schools sometimes hire outside consultants to study and evaluate aspects of University operations. Work performed by each of these entities offers opportunities for coordination of efforts.

Coordination of audit efforts can be accomplished through:

• periodic meetings to discuss matters of mutual interest, such as planned audit activities;
• access to each other’s audit programs and working papers;
• exchange of audit reports and management letters; and
• common understanding of audit techniques, methods, and terminology.

Our approach to coordinating audit work has three major components:

• Annual planning;
• Planning for individual projects; and
• Interaction or direct assistance during an external review.

Annual Planning

The Chief Audit Officer (CAO) attends entrance and exit conferences for audits done by the Office of the State Auditor (OSA) and reviews follow-up work done about findings in OSA audit reports. Information obtained from those activities should be considered in developing the annual audit schedule;

The CAO will also inquire with members of University management to identify any recent reviews by consultants and or other external groups whose work may be relied upon. The CAO will consider the results of these discussions when developing the annual work plan each year.

If the OSA or other auditors have a review of a unit in process or have recently completed a review, deferring an internal audit of that area might avoid duplication of efforts. However, if a recent external review had findings, then the CAO should determine if a review to follow up on the status of those findings should be included in the work plan.

Individual Internal Audit Projects

During the preliminary survey phase of a project, the auditor-in-charge determines if there have been recent external audits of an area and, if so, discusses the nature of the review with auditee management and obtains a copy of any related report. The nature and extent of any work done by an external review body should be considered in establishing the scope and objectives for the internal audit project.

In some cases, the nature of an internal audit project may not provide opportunities for coordination of efforts. This situation may occur with misuse investigations or when an external review has a higher materiality level or broader focus. However, collective audit efforts should be coordinated to the extent practical.

Misuse investigations may require special coordination efforts with the State Auditor’s investigative staff, Human Resources, the Campus Police, or the State Bureau of Investigation. This topic is addressed in Chapter 13 of the Internal Audit manual.

External Reviews and Audits

While the University Controller and the Associate Vice Chancellor for Finance are the primary contacts for the State Auditor’s staff, Internal Audit will also work with the audit team during the annual financial statement audit.

During the early stages of the annual audit, we will provide the State Auditor’s staff with copies of audit reports and close-out letters issued since the last annual audit. We will also make our working papers for these projects available to the State Audit staff for their review.

The CAO will meet with the lead auditors of the State Audit team to discuss the upcoming audit and to provide information about internal audit work that the State Audit team should consider relying on.