This charter sets forth the purpose, authority, and responsibility of the internal audit activity at Louisiana Tech University. The charter establishes the internal audit activity’s position within the University; authorizes access to records, personnel, and physical properties relevant to the performance of engagements; and defines the scope of internal audit activities.
MISSION AND SCOPE OF WORK
The mission of the internal audit activity is to provide independent, objective assurance and consulting services designed to add value and improve the University’s operations. It helps the University accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. The internal audit activity is guided by a value-driven philosophy of partnering with other departmental units to continuously improve the operations of the University.
The scope of work of the internal audit activity is to determine whether the University’s network of risk management, control, and governance processes, as designed and represented by management, is adequate and functioning in a manner to ensure:
- Risks are appropriately identified and managed.
- Interaction with the various governance groups occurs as needed.
- Significant financial, managerial, and operating information is accurate, reliable, and timely.
- Employee's actions are in compliance with policies, standards, procedures, and applicable laws and regulations.
- Resources are acquired economically, used efficiently, and adequately protected.
- Programs, plans, and objectives are achieved.
- Quality and continuous improvement are fostered in the University's control process.
- Significant legislative or regulatory issues impacting the University are recognized and addressed properly.
Opportunities for improving management control, profitability, and the University’s image may be identified during audits. They will be communicated to the appropriate level of management.
The University’s Director of Internal Audit (Director) and staff of the internal audit activity have responsibility to:
- Develop a flexible annual audit plan and submit that plan to the University President and the University of Louisiana System Board of Supervisors (Board) for approval. The plan is to be developed based on internal audit’s assessment of risk with input from management regarding areas of concern and areas of increased risk.
- Implement the annual audit plan, as approved, including, as appropriate, any special tasks or projects requested by University management, the System Director of Internal Audit, and/or the Board’s Audit Committee.
- Maintain a professional audit staff with sufficient knowledge, skills, experience, and professional certifications to meet the requirements of this charter.
- Establish a quality assurance program by which the Director assures the operations of internal auditing activities are acceptable.
- Perform consulting services, beyond internal auditing’s assurance services, to assist management in meeting its objectives. Examples may include facilitation, process design, training, and advisory services.
- Evaluate and assess significant new or changing services, processes, operations, and control processes coincident with their development, implementation, and/or expansion.
- Assist in the investigation of significant suspected fraudulent activities within the University and notify management and the audit committee of the results.
- Consider the scope of work of the external auditors and regulators, as appropriate, for the purpose of providing optimal audit coverage.
- Submit written and timely reports to the President of the University and appropriate members of management at the conclusion of each engagement to acknowledge satisfactory performance or to set forth observations and/or recommendations for correction or improvement. A copy of each internal audit report and a summarization will be forwarded to the System’s Director of Internal Audit.
As discussed in the Board’s Internal Audit Charter, the University’s internal audit activity will include the following general objectives:
- Determining that the University’s overall system of internal control and the controls in each departmental unit or activities under audit are adequate, effective, efficient, and functioning by conducting audits on a periodic basis so that all major systems are reviewed. Such reviews will be coordinated with the State of Louisiana Office of the Legislative Auditor to avoid unnecessary duplication of effort.
- Determining the reliability and adequacy of the accounting, financial, and reporting systems and procedures.
- Determining, on a test basis, that University activities, including the administration of grants and contracts received or made, are in conformance with the University policies and procedures, state and federal laws and regulations, contractual obligations, Board Rules, and good business practices.
- Determining the extent to which University assets are accounted for and safeguarded from losses of all kinds and, as appropriate, verifying, on a test basis, the existence of such assets.
- Evaluating operational procedures to determine whether results are consistent with established objectives and goals and whether the procedures are being carried out as planned.
- Evaluating the design of major new electronic data processing systems and major modifications to existing systems prior to their installation to determine whether the system of internal control will be adequate, effective, and efficient. Prior to its installation, sufficient information must be provided to the internal audit activity regarding the intended internal controls, so they can complete their evaluation and issue recommendations.
- Conduct investigations as required or directed related to the general objectives previously stated.
The Director and staff of the internal audit activity are authorized to:
- Have unrestricted access to all functions, records, manual and automated systems, properties, and personnel of the University.
- Audit or review any function, activity, or unit of the University and the accounts of all organizations required to submit financial statements to the University.
- Have direct access to the President of the University and shall present to the President any matter considered to be of sufficient importance to warrant attention or that has been brought to the internal audit activity for review.
- Allocate resources, set frequencies, select subjects, determine scopes of work, and apply the techniques required to accomplish audit objectives.
- Obtain the necessary assistance of personnel in units of the University, as well as other specialized services from within or outside the University.
The Director and staff of the internal audit activity are not authorized to:
- Perform any operational duties for the University or its affiliates.
- Initiate or approve accounting transactions external to the internal audit activity.
- Direct the activities of any University employee not employed by the internal audit activity, except to the extent such employees have been appropriately assigned to the internal audit function or to otherwise assist the internal auditors.
INDEPENDENCE AND OBJECTIVITY
To provide for the independence of the internal audit activity, its personnel report to the University’s Director, who reports functionally to the Board through the System Director of Internal Audit and administratively to the President of the University. In performing their work, the Director and other internal audit staff members have no direct authority over, nor responsibility for, any of the activities reviewed. Internal auditors will not develop and install procedures, prepare or approve records, make management decisions, or engage in any other activity, which could be construed to compromise their independence. Therefore, internal audit reviews and appraisals do not in any way substitute for nor relieve other persons in the University of the responsibilities assigned to them. Staff of the internal audit activity shall be objective and maintain an independent mental attitude in performing engagements.
The Director in the discharge of his/her duties shall be accountable to management to:
- Assess the adequacy and effectiveness of the University’s processes for controlling its activities and managing its risks in the areas set forth under the mission and scope of work.
- Report significant issues related to the processes for controlling the activities of the University and its affiliates, including potential improvements to those processes, and provide information concerning such issues through resolution.
- Provide information periodically on the status and results of the annual audit plan and the sufficiency of department resources.
- Coordinate with other control and monitoring functions.
AUDIT COMMITTEE FOR THE BOARD OF SUPERVISORS
To maintain oversight of the auditing function, both internal and external, the Audit Committee will review and approve a System-wide audit program for the upcoming year. The Audit Committee will also review the previous year’s System-wide audit program, along with the annual financial and compliance audits, including any specific issues of concern. As appropriate, any background documents related to specific audit issues will be sent to the Audit Committee upon request.
STANDARDS OF AUDIT PRACTICE
The internal auditing staff shall govern themselves by adherence to the Institute of Internal Auditors’ “Code of Ethics.” Assurance and consulting services shall be conducted in accordance with the Institute’s “International Standards for the Professional Practice of Internal Auditing” using such audit programs, techniques, and procedures as are considered necessary under the circumstances. Although not mandatory, internal auditing staff may obtain guidance in particular engagement situations from the Institute of Internal Auditors' “Practice Advisories”, the Information Systems Audit and Control Association’s “Standards for Information Systems Auditing”, the American Institute of Certified Public Accountants’ “Statements on Auditing Standards”, and the United States General Accounting Office’s “Government Auditing Standards”.