PURDUE UNIVERSITY
OFFICE OF THE EXECUTIVE VICE PRESIDENT AND TREASURER
MEMORANDUM NO. A-34
December 7, 1992
To: Vice Presidents, Chancellors, Deans, Directors, and Heads of Schools, Divisions and Offices
Re: Charter and Mission Statement of the Internal Audit Office
POLICY:
The Bylaws of the Trustees Article IV, Section 6, states that the Treasurer shall ". . maintain an internal audit office independent of any other office of the Corporation or of the University. The Director of Audits shall submit to the Board annually a written report on the work of internal audit office for the preceding calendar year. In addition, the Director of Audits, prior to the presentation of the written annual report, shall make an annual oral presentation concerning the work of the internal audit office to the Audit Committee, which shall be made in the presence of the Treasurer. Immediately following the completion of each oral presentation, the Director of Audits shall confer with the Audit Committee, outside the presence of the Treasurer or any other officer of the University on any subject germane to the area of responsibility of the internal audit office. The written annual report to the Board shall be made at a stated meeting selected by the Audit Committee but in no event shall it be deferred beyond July 1 of each year without the consent of the Chairman. In addition, at any time when in the Judgment of the Director of Audits circumstances warrant or in response to a request from the Chairman of the Audit Committee, the Director of Audits shall make a written or oral report to the Chairman of the Audit Committee without informing the Treasurer or any other University officer. Subject to the foregoing, the Treasurer shall attend the meetings of the Audit Committee and serve as its Secretary and keep a record of its proceedings".
MISSION:
The mission of the Internal Audit Office is to serve as an independent appraisal function within the University, to examine and evaluate its financial and management activities, and to furnish analyses and recommendations concerning areas reviewed so that members of this institution can properly discharge their responsibilities. While the primary focus is on financial activities and the protection of University assets, attention may also be given to managerial issues.
AUTHORITY AND RESPONSIBILITIES:
The Internal Audit Office has the authority to audit all parts of the University and is granted full and complete access to any records (in any form), physical properties, and personnel relevant to a review. Documents and information given to internal auditors during a review will be handled in the same manner as by those employees normally accountable for them.
The Internal Audit Office has no direct authority over or responsibility for any of the activities or operations they review. Therefore, the internal audit review and appraisal does not in any way relieve other persons in the organization of the responsibilities assigned to them.
The Director of Audits is responsible for supervising the Internal Audit Office and for coordinating all internal and external auditing functions, including annual financial audits by Certified Public Accountants and the Indiana State Board of Accounts. The Director of Audits will be responsible for coordinating federal audits with appropriate University offices.
The Internal Auditor's Statement of Responsibilities adopted by the Association of College and University Auditors, is used as a guide by the Internal Audit Office. The statement of responsibilities is an adaptation of the statement issued by the Institute of Internal Auditors. The following is quoted.
NATURE:
Internal auditing is an independent appraisal activity within an organization as a service to the organization. It is a control which functions by examining and evaluating the adequacy and effectiveness of other controls.
OBJECTIVITY AND SCOPE:
The objective of internal auditing is to assist members of the organization in the effective discharge of their responsibilities. To this end, internal auditing furnishes them with analysis, appraisals, recommendations, counsel, and information concerning the activities reviewed. The audit objective includes promoting effective control at reasonable cost.
The scope of internal auditing encompasses the examination and evaluation of the adequacy and effectiveness of the organization's system of internal control and the quality of performance in carrying out assigned responsibilities. The scope of internal auditing includes:
- Reviewing the reliability and integrity of financial and operating information and the means used to identify, measure, classify, and report such information.
- Reviewing the systems established to ensure compliance with those policies, plans, procedures, laws, and regulations which could have significant impact on operations and reports, and determining whether the organization is in compliance.
- Reviewing the means of safeguarding assets and, as appropriate, verifying the existence of such assets.
- Appraising the economy and efficiency with which resources are employed.
- Reviewing operations or programs to ascertain whether results are consistent with established objectives and goals and whether the operations or programs are being carried out as planned.
ORGANIZATION AND REPORTING:
The Director of Audits shall prepare and present to the Executive Vice President and Treasurer before the beginning of each calendar year a complete audit plan deigned to provide audit coverage for various University units and operations. The Director of Audits may add special audit requests during the year that may materially change the department's previously presented audit plan.
Within the organization of the University, the Director of Audits will report to the Executive Vice President and Treasurer. The Director of Audits may also report directly to the Board of Trustees in unusual circumstances.
A written report will be prepared and is issued by the Director of Audits following the conclusion of each audit. Copies of the report will be distributed as appropriate. Each year the Director of Audits shall prepare a summary of significant audit results for presentation to the Executive Vice President and Treasurer. In addition the Director of Audits will submit an annual report to the Board of Trustees as required by their Bylaws.
SPECIAL INVESTIGATIONS:
Individual staff members are urged to contact the Internal Audit Office directly to report financial or operating irregularities or areas of doubt and concern. The identity of any employee making such contact will be kept confidential if so requested.
INTERNAL AUDIT STAFF CODE OF ETHICS:
Internal Audit staff have a responsibility to conduct themselves so that their good faith and integrity should not be open to question. While having due regard for the limit of their technical skills, they will promote the highest possible internal auditing standards to the end of advancing the interest of the University. Standards of professional behavior are based upon the Code of Ethics issued by the Institute of Internal Auditors and the Association of College and University Auditors. Staff shall realize that individual judgment is required in the application of the standards.
- Staff shall have an obligation to exercise honesty, objectivity, and diligence in the performance of their duties and responsibilities.
- Staff shall exhibit loyalty in all matters pertaining to the affairs of the University.
- Staff shall refrain from entering into any activity which may be in conflict with the interest of the University or which would prejudice their ability to carry out objectively their duties and responsibilities.
- Staff shall not accept a fee or a gift from an employee, a client, a customer or a business associate of the University without the knowledge and consent of the Executive Vice President and Treasurer.
- Staff shall be prudent in the use of information acquired in the course of their duties. They shall not use confidential information for any personal gain nor in a manner which would be detrimental to the welfare of the University.
- Staff shall use all reasonable care to obtain sufficient factual evidence to warrant an opinion or expression. In their reporting, staff shall reveal such material facts known to them, which, if not revealed, could either distort the report of the results of the operations under review or conceal unlawful practice.
- Staff shall continually strive for improvement in the proficiency and effectiveness of their service.
F. R. Ford
Executive Vice President
and Treasurer
