Auditing: A critical Tool for the Control in the University

1. Auditing: A critical Tool for the Control in the University Presentation at 3 Day Workshop February 19, 2013 Prepared by Dan Bart - Plange

2. Summary of Audit Policy • Mission, Vision, objective • Authority & Responsibility • Independence / Confidentiality • Standards & Code of Ethics • Responsibility for detecting fraud (Investigation) • Scope of Internal Audit function • Other services provided by Internal Audit • Audit Process (gathering evidence, entry / exit conference) • Reporting • Relationship with External Auditors Prepared by Dan Bart - Plange

3. Introduction • Internal Auditing is an activity; and it is either • An Assurance Activity or • A Consulting Activity Designedto add value to the operations of the organisation • It is suppose to Manage risk (risk defined) in an organisation through • Risk Identification • Risk Evaluation • Control / develop response to the Risk • Internal Audit ends at report and recommendation Prepared by Dan Bart - Plange

4. Mission & Vision • The mission of the Internal Audit Department is to provide independent and objective reviews and assessments of • business activities, • operations, • financial systems and • Internal controls of KNUST. • The reviews are to ensure that University resources are used efficiently and effectively • All resources are to be used to achieve the Goal of the University • Therefore Internal Audit help the University achieve its goals. Prepared by Dan Bart - Plange

5. Authority & Responsibility • The Internal Audit function derive its authority from the Statute of the University and the Internal Audit Agency Act, 2003; Act 658 • Section 17 of the statute mandates the Internal Auditor to • Ensure that InternalAuditing system of the University is Efficient & Effective • Carry out periodic internal audit of the University in conformity with standards & the Law • Recommendations should be implemented by Finance Committee Prepared by Dan Bart - Plange

6. Independence & Confidentiality • Independence In the context of External auditing - having no business relationship or interest in the company you audit • Independence in the context of Internal Audit (refer to Std) is having a reporting line which enables you to review all job areas – satisfied • Confidentiality : • All information obtained during an audit is deemed confidential unless otherwise instructed. Staff are not supposed to disclose audit information to anybody. • Audit Reports are highly confidential Prepared by Dan Bart - Plange

7. Standards & Code of Ethics • We use International Standards for the Professional Practice of Internal Auditing • Planning • Gathering evidence • Documentation of work • Reporting • We have not developed any Code of Ethics for ourselves except that Audit staff should: • Have Integrity • Be Objectivity • Be Professional on the job • Be discreet about information Prepared by Dan Bart - Plange

8. Responsibility for Detecting Fraud • When it comes to fraud it is a shared responsibility • The management of the University is responsible for establishing and maintainingcontrols to discourage perpetuation of fraud. • Internal Audit is responsible for examining and evaluating the adequacy and effectiveness of those controls. • Audit programmes are developed in such a way that when there are serious fraud, the audit should be able to identify it Prepared by Dan Bart - Plange

9. Scope of Internal Audit • Statute 47 assign the following responsibilities to QAPU (in part) • Coordinate the activities of the University’s Colleges, faculties & Departments regarding: • Strategic plan preparation, implementation & monitoring and evaluation • Academic and Service excellence in respect to teaching, research, administration and other services • Everything shall be done in consultation with the Provost, Deans and Heads of Departments Prepared by Dan Bart - Plange

10. Scope of Internal Audit • The rest (non - academic activities) are for Internal Audit • Governance & Organizational Management (Policies) • Assets management (including use of KNUST vehicles) • Budget preparation and monitoring • Revenue management • Cash management • Payments procedures • Procurement / stores procedures • Financial reporting Prepared by Dan Bart - Plange

11. Scope of Internal Audit • Implementation of policiesfrom Management (A critical Tool For Control In the University) • Supporting document for payments • Authority level for payment • Permission for Travelling • Assets register • Retiring of special advance • Preparing of budget • Packing of vehicles after 5 pm • Banking of income • Etc. Prepared by Dan Bart - Plange

12. Scope of Internal Audit • Over the years, the scope of Audit in the University has been skewed towards; the following : • reviewing of P.V, (Pre – Audit) • Verifying items purchased (Verification) • Reviewing cash book • Special assignments / investigation • This reviews, even though still relevant, the procedure has to be improved to address the changing circumstances of the University; bear with us. Prepared by Dan Bart - Plange

13. Scope of Internal Audit • The following have started on a pilot basis: • New approaches to verification of items where we visit the departments and confirm the receipt of the goods, the quality and delivery period etc. • Revenue Reviews – where we will give assurance to Provost, Deans / HODs on the component of your revenue, the part transferred to investments, other transferred made, etc • We will need your cooperation in the area of supply of information and implementing acceptable recommendations Prepared by Dan Bart - Plange

14. Scope of Internal Audit • A lot of Internal Audit departments in Government Agencies devoted all their efforts on cash / assets loss in the past • This has created some misconception about Internal Audit in organizations till date • Audit is only Monetary • Every Audit job is equated to investigation • Audit should uncover fraud • Audit should arrest and dismiss culprit • Audit report should always have something to do with cash loss • etc. • This has to change and see Audit as partners for development Prepared by Dan Bart - Plange

15. Scope of Internal Audit • Cash / asset loss is still relevant but what is killing government organisation these days is inefficiency • There is the need to tackle inefficiency, waste of resources and cash / assets loss together • Some perceptions • Compare the finances with Elephant • Compare inefficiencies with the movement of a ship • Being paid extra for your normal job Prepared by Dan Bart - Plange

16. Other Services Provided by Internal Audit • In the definition of Internal Audit, Consulting Activity is part of the functions; here Audit is to suggest new and improved ways to add value to the organisation. In the University: • Assets disposal • Use of ICT to improve efficiency • Accounting for Power & water distribution • Obtaining value for money from suppliers of goods and services • Effective use of available facilities • etc Prepared by Dan Bart - Plange

17. Other Services Provided by Internal Audit • Give Professional Accounting advice to all income generating units on • How to increase profitability • Investment appraisal issues • Preparation of budgets at departments / units • Variance analysis report • Stocks controls • Etc Everything on my slide portray what Audit can do, the next time we meet it should be what we are doing Prepared by Dan Bart - Plange

18. Audit Process The following are the broad guidelines in audit process • Planning • Gathering evidence • Documentation of work • Entry / Exit conferences • Reporting Prepared by Dan Bart - Plange

19. Reporting & Follow - Up Audit Reports should be: • Timely • Concise and Constructive • Discussed with the audit client and have their inputs • Addressed to the Chief Executive and Council sub committee on Finance Follow – up should be done on previous audit recommendations Control environment is very critical for internal audit to thrive in organisations (implementation of recommendations) Prepared by Dan Bart - Plange

20. Conclusion • Define "… an independent, objective, assurance and consulting activity designed to add value and improve an organization's operations.  • It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve effectiveness of risk management, control, and governance processes.” Prepared by Dan Bart - Plange

21. Q&A Thank You Prepared by Dan Bart - Plange