FY 2003 Annual Internal Audit Report
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The University of Texas at Arlington Annual Internal Audit Report Fiscal Year 2003 THE UNIVERSITY OF TEXAS AT ARLINGTON Fiscal Year 2003 Annual Internal Audit Report November 1, 2003 THE OFFICE OF INTERNAL AUDIT BOX 19110 ARLINGTON, TX 76019-0110 The University of Texas at Arlington Annual Internal Audit Report Fiscal Year 2003 Purpose of the Annual Report: To provide information on the benefits and effectiveness of the internal audit function. In addition, the annual report assists central oversight agencies in their work planning and coordinating efforts. Table of Contents I. Internal Audit Plan for Fiscal Year 2003…………………………………………….……………….…….…1 II. External Quality Assurance Review…………………………………………………………………….….….2 III. List of Audits Completed ……………………………………………...………………………………..……...7 IV. Organizational Chart………………………………….…………………………………………….………...17 V. Report on Other Internal Audit Activities…………..………………………..…………………….…….….17 VI. Internal Audit Plan for Fiscal Year 2004……………………………………………...……………………..18 The University of Texas at Arlington Annual Internal Audit Report Fiscal Year 2003 I. Internal Audit Plan for Fiscal Year 2003 Key Financial and Operating Audits System-wide Audits Equipment, and Equipment and Buildings Depreciation 350 Accounts Receivable and Allowance for Bad Debts 325 Auxiliary ...
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The University of Texas at Arlington Annual Internal Audit Report Fiscal Year 2003
THE UNIVERSITY OF TEXAS AT ARLINGTON Fiscal Year 2003 Annual Internal Audit Report
November 1, 2003 THE OFFICE OF INTERNAL AUDIT BOX 19110 ARLINGTON, TX 76019-0110
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The University of Texas at Arlington Annual Internal Audit Report Fiscal Year 2003 Purpose of the Annual Report:on the benefits and effectiveness of the internalTo provide information audit function. In addition, the annual report assists central oversight agencies in their work planning and coordinating efforts. Table of Contents I.Audit Plan for Fiscal Year 2003
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The University of Texas at Arlington Annual Internal Audit Report Fiscal Year 2003 I. Internal Audit Plan for Fiscal Year 2003 Key Financial and Operating Audits System-wide Audits Equipment, and Equipment and Buildings Depreciation Accounts Receivable and Allowance for Bad Debts Auxiliary Revenues/Expenditures Cash Counts Consulting Activities Special Projects Financial Statements Institutional Compliance Audits Environmental Health and Safety NCAA Compliance Financial Aid Institutional Compliance Program Design Consulting Activities Reviews of the High Risk Areas Special Projects Ethics Hotline Investigations Subtotal Information Technology Audits General Computer Controls (IT Planning/Computer Operations) Student Billing/Student Accounts Receivable Subtotal Core Business Processes Human Resource Management Research Office of Sponsored Projects Instruction and Academic Support Accreditation and Institutional Effectiveness Purchasing and Warehousing Operations and Bid Processes Out-Sourced Operations (Food Services Contract) Collections Process Enrollment Management Consulting Activities Performance Measures Special Projects Subtotal Change in Management Departmental Audits not fully completed from prior year Consulting Activities Change in Management Audits (including those not yet identified) Special Projects Subtotal Follow-up on Prior Audits Subtotal Projects Cost Savings Report Annual Internal Audit Report Quality Assurance Reviews
350 325 250 60 125 80 1190 400 300 150 510 125 180 1665 300 300 600 350 350 340 350 200 200 200 100 125 2215 120 440 125 685 550 550 300 60 125
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The University of Texas at Arlington Annual Internal Audit Report Fiscal Year 2003 Audit Plan Preparation 60 Audit Committee 60 Subtotal605 Total Audit and Project Hours7510 Explanation of Deviations from 2003 Audit Plan The following audits were in progress at August 31, 2003: • Environmental Health and Safety • General Computer Controls • Research Office of Sponsored Projects • Collections Process • Out-Sourced Operations (Food Services Contract) The Executive Director plans to complete these audits and issue the reports prior to December 31, 2003. As documented in the Audit Committee meeting minutes, the following audits were deleted from the Annual Audit Plan: • Program Design (the UT System Action Plan for InstitutionalInstitutional Compliance Compliance was revised during fiscal year 2003, and this audit is no longer required.) • Consulting - Reviews of the High Risk Areas (in February 2003, the Office of Internal Audit and the Office of Institutional Compliance were temporarily combined when the Director of Internal Audit resigned. Therefore, Internal Audit did not complete their reviews of the high-risk areas. This has been added to the fiscal year 2004 Audit Plan.) • Human Resources Management • Instruction and Academic Support Accreditation and Institutional Effectiveness The audits of Auxiliary Revenues/Expenditures and Enrollment Management were not considered priority audits and were not completed during the fiscal year. This was approved by the Audit Committee. Midway through fiscal year 2003, the Director of Internal Audit and three staff members resigned. An Interim Director was immediately appointed; however, it took six months to fill the other three vacancies. Therefore, the number of hours available to complete the audits on the audit plan was reduced, and this greatly impacted our ability to complete our entire audit plan. II. External Quality Assurance Review (Peer Review) The following represents the Executive Summary from the Quality Assessment Review of The University of Texas at Arlington Office of Internal Audit Report issued in June 2003. The entire report can be requested from the Executive Director of Internal Audit at (817) 272-3089.
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The University of Texas at Arlington Annual Internal Audit Report Fiscal Year 2003
EXECUTIVE SUMMARY At your request, we have conducted a quality assessment of the Office of Internal Audit (Internal Audit) at The University of Texas at Arlington (UTA). The principal objectives of the quality assessment (QA) were to assess Internal Audit's conformity to The IIA'sStandards for the Professional Practice of Internal Auditing (Standards),evaluate Internal Audit's effectiveness in carrying out its mission (as set forth in its charter and expressed in the expectations of UTA's management), and identify opportunities to enhance its management and work processes, as well as its value to UTA. As part of the preparation for the QA, Internal Audit prepared a self-study, with detailed documentation. Prior to the commencement of the onsite work by the QA team, the team members reviewed the self-study and supporting documentation. During the onsite work performed by the QA team on March 24 - 26,2003, the team interviewed key executives and Internal Audit staff. Additionally, we reviewed Internal Audit's risk assessment and audit planning process, audit tools and methodologies, engagement and staff management processes, and a representative sample of Internal Audit's working papers and reports. The Internal Audit environment where we performed our review is currently in transition. The Director of Internal Audit resigned effective January 31, 2003, and a part-time Interim Director has been appointed. Additionally, three other members of the staff have left the employment of UTA during the past month, leaving two full-time employees. The Interim Director is actively recruiting to fill two of the vacancies. Internal Audit strives to ensure that theStandardsare understood and management is endeavoring to provide useful audit tools and implement appropriate practices. Among these tools and practices are automated audit sampling software; professional training and encouragement of certifications for Internal Audit staff; concise reports with a focus on risk; and a good reputation and credibility with customers. Consequently, our comments and recommendations are intended to build on this foundation already in place in Internal Audit. Our recommendations are divided into two groups: Those that concern UTA as a whole and suggest actions by senior management. Some of these are • matters outside the scope of the QA, as set out above, which came to our attention through the interviews. We include them because we believe they will be useful to UTA management and because they impact the effectiveness of Internal Audit and the value it can add. • Those that relate to Internal Audit's structure, staffing, deployment of resources, and similar matters that should be implemented within Internal Audit activity, with support from senior management. Highlights of our recommendations are set forth below, with details in the main body of our report.
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The University of Texas at Arlington Annual Internal Audit Report Fiscal Year 2003
PART 1 - MATTERS FOR CONSIDERATION OF UTA MANAGEMENT 1. vacant positions to ensure an appropriate audit staffing level isSupport/facilitate the filling of maintained. 2. Support/facilitate increased coverage of UTA's operations, including those operations outside the financial areas of the organization. PART II - ISSUES SPECIFIC TO INTERNAL AUDIT 1. Update the Audit Manual to reflect the newStandardsand any other changes in departmental operating procedures. 2. Enhance the audit plan process by establishing a documented process for development of the risk universe to ensure that appropriate coverage is given to UTA's risks in the developed audit plan. 3. Enhance relations with Internal Audit's customers and solicit their input into the engagement planning process. 4. and planning process to ensure that planning documentationEnhance the engagement preparation includes both strengths and weaknesses of the operations being reviewed and the consideration these are given in the assessment of risk and development of the audit program. 5. Ensure changes in audit scope and objectives are clearly documented within the working papers. 6. This shouldEnhance the oversight of Internal Audit management on individual engagements. include establishment of appropriate time budgets with regular monitoring and regular, timely review of working papers. 7. to ensure that working paper documentation supportsEnhance the internal quality assurance process reported information (including referencing and dispositions). 8. Ensure audit reports are timely and contain management responses and implementation dates, when appropriate. Consideration should also be given to including information related to improving effectiveness. 9. to the audit report being issued.Customer survey forms should be sent out to all auditees subsequent 10. Develop a consistent, documented follow-up process for audit recommendations to ensure timely implementation. 11. Review the Internal Audit resources and skill set mix, in light of the current budget constraints, staffing needs, and the expected discontinuation of co-sourcing the IT audit activities with Deloitte & Touche. 12. Develop a plan for staff enhancement that includes annual training and certifications.
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The University of Texas at Arlington Annual Internal Audit Report Fiscal Year 2003
OPINION AS TO CONFORMITY TO THE STANDARDS It is our opinion that Internal Audit generally conforms to the followingStandards: • 1000 - Purpose, Authority, and Responsibility (Charter), • and Objectivity,1100 Independence -• 1200 - Proficiency and Due Professional Care • 1300 - Quality Assurance/Improvement Program, 2100 - Nature of Work, • 2400 - Communicating Results, • 2600 - Management's Acceptance of Risks, and • The IIA'sCode of Ethics. It is our opinion that Internal Audit partially conforms to the followingStandards: • 2000 - Managing the Internal Audit Activity, • 2200 - Engagement Planning, • 2300 - Performing the Engagement, and • 2500 - Monitoring Progress. In our terminology, "generally conforms" means that Internal Audit has a charter, policies, and procedures that are judged to be in accordance with theStandards,with some opportunities for improvement, as discussed in our recommendations. "Partially conforms" means deficiencies in practice are noted and are judged to deviate from theStandards,these deficiencies did not preclude Internal Audit from performingbut its responsibilities in an acceptable manner. "Does not conform" means deficiencies in practice are judged to be so significant as to seriously impair or preclude the internal audit activity from performing adequately in all or in significant areas of its responsibilities. It is our opinion that there are no areas in which Internal Audit does not conform to theStandards. We appreciate this opportunity to be of service to UTA. We will be pleased to respond to further questions concerning this report and to furnish any desired information.
Charles G. Chaffin, CPA, CIA Team Leader Director of Audit The University of Texas System
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The University of Texas at Arlington Annual Internal Audit Report Fiscal Year 2003
Team Members: Kimberly Hagara, CPA, CIA Assistant Director for System-wide Compliance The University of Texas System Toni Messer, CPA, CIA Director of Internal Audits The University of Texas at Dallas Christie Oliver, CPA, CIA Audit Supervisor The University of Texas System
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The University of Texas at Arlington Annual Internal Audit Report Fiscal Year 2003 III. List of Audits Completed Showing High-Level Objectives, Observations/Findings, Recommendations, and Status Report No. Report Date Name of Report High-Level Audit Objective(s) Observations/ Findings and Current Status (with brief description if Fiscal Impact/ Other Recommendations not yet implemented) Impact • Implemented • Planned In progress • • Factors delay implementation • Agency does not plan to implement recommendation 02-12 Nov. 13, 2002 Appropriations Our objectives were to determine if Based on our audit, it appears that ot Applicable. the reliability and integrity of the Appropriations are accounted for financial information and the accurately, adequately safeguarded, safeguarding of assets are adequate and accounted for to the state in in order to ensure compliance with compliance with key University and key University and state policies and state policies and procedures. No procedures. exceptions were noted in our tests of the selected reports.
ot Applicable.
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02-16 Oct. 10, 2002 ATP/ARP
Reduce the risk of non-compliance with state policies and procedures as they relate to ATP/ARP Grants.
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