September 2010 Budget Managers Meeting Internal Audit Presentation

1. September 2010 Budget Managers Meeting Internal Audit Presentation Dave Cutri, Director of Internal Audit 530-8718

2. Topics to Cover Today ·  Developing an internal controls education program to be delivered to the various departments.  I will update the group on that and solicit your input. ·  Internal Audit plans to conduct mini-audits at the department level as a regular part of our audit plan.

3. Internal Controls Education Program • Key Components • Overview • Objectives • What Is Business Risk Management? • Who Is Responsible for Business Risk Management? • What Are Business Objectives? • Sources for Identifying Business Objectives • COSO Methodology

4. Internal Controls Education Program • Key Components (Continued) • What Are Key Business Risks? • Risk Assessment Concepts and Terms • What Are (Internal) Controls? • COSO Internal Control Framework • Control Concepts and Terms • “Driving to Work” Analogy • “Paying the Bills” – Accounts Payable Analogy • Group Activity

5. Internal Controls Education Program • Key Components (Continued) • Evaluating Controls • Control Testing • Who Is Responsible for Business Risk Management? (other resources available at the University) • A Word about the Internal Audit Department • Key University of Toledo Policies • Summary

6. Internal Controls Education Program • Other Points • Controls Are Not Always Complicated • Controls Are Not Always Expensive to Implement • Controls Can Often Be Utilized by Using Current Resources • Three Common Reasons for Management Not Implementing Controls • taking the time to develop the process • cost • resources (workers) • Sources That Can Be Bookmarked and Accessed for Reference/To Answer Any Questions • University of Toledo Internal Audit website • Institute of Internal Auditors website • Etc.

7. Departmental “Field” Audits • Key Components • Background • Non-payroll Expenditures • Account Reconciliation • Income and Cash/Check Receipts • Payroll Expenditures and Time Reporting • Assets • Information Technology • Segregation of Duties

8. Departmental “Field” Audits • Background • Review Internal Control Questionnaire • Obtain Organizational Chart • Non-payroll Expenditures • Determine Signature Authority • Select Non-payroll Expenditures Sample • Perform Non-payroll Expenditure Testing • proper approval • adequate supporting documentation is maintained • support is mathematically accurate • appropriateness • transaction is properly recorded as to account, coding, and fiscal year • Perform P-card Expenditure Testing • Perform Travel Expenditure Testing

9. Departmental “Field” Audits • Account Reconciliations • Conduct Account Reconciliation Testing • Income and Cash/Check Receipts • Gain Understanding of Income Process • Test Cash/Check Receipts • Payroll Expenditures and Time Reporting • Test Professional Salaries • Test Classified Salaries • Verify Longevity • Verify Overtime Pay for Non-exempt Employees • Test Fringe Benefits • Test Wages

10. Departmental “Field” Audits • Assets • Test Personal Use of University Property • Test Record Retention Policy • Test Inventory • Information Technology • Identify Unique Software • Test Key Controls over Unique Software • Segregation of Duties • Conclude on Whether Adequate Segregation of Duties Exists in the Department to Ensure the Reliability and Integrity of Key Financial Information and Safeguarding of Assets