University of Missouri System Board of Curators April 5-6, 2012 Internal Audit Committee

1. University of Missouri System Board of Curators April 5-6, 2012 Internal Audit Committee Internal Audit Quarterly Report & Follow-up ReportsUM

2. Summary of Internal Audit ActivitySince our February 2012 Report to the Audit Committee • Completed three internal audits • Drafted three reports • Planning/performing fieldwork for three internal audits • Followed-up on the status of management’s responses to prior audit findings issued

3. InternalAudit Projects CompletedSince our February 2012 Report to the Audit Committee • College of Education, UMSL • Graduate Medical Education, MUHS • Tiger Institute for Health Innovation, MUHS Note – One page summaries and the full reports have been provided in advance to the Committee.

4. College of Education, UMSL • Background and Scope • The College is fully accredited by three higher-education organizations and is organized into four academic divisions. FY 2011 revenue was $15.0 million. • The audit focused on relevant processes and key internal controls in order to analyze the efficiency and effectiveness of operations and to assess compliance with policies. • Key Highlights • Clearly define and communicate policies and procedures for business processes unique to the college. • Improve processes for contracting and billing for fee-for-service activities. • Improve controls in the cash receipts process. • Improve the monitoring of financial activity for departmental accounts.

5. Graduate Medical Education, MUHS • Background and Scope • Graduate medical education (GME) prepares physicians for practice in a medical specialty. • The GME program’s 426 residents are primarily funded by CMS and also received funding from grants, state departments and other health providers. • In 2008 and 2009, several GME programs were placed on probation by the accrediting organization. All programs has subsequently been restored to full accreditation. • The audit focused on relevant processes and internal controls around the GME position funding process and accreditation related activities. • Key Highlights • Create a formal plan to proactively manage the risk of cuts in GME funding. • Obtain and document approval for each resident and fellow including the corresponding funding source.

6. Tiger Institute for Health Innovation, MUHS • Background and Scope • Tiger Institute is a contractual arrangement between the University of Missouri and Cerner Corporation to promote innovative health care solutions to drive down cost and dramatically increase quality of care for the state of Missouri. • There are two primary components of the Tiger Institute: • ITWorks – Outsourcing of information technology for MUHC • Tiger Institute Initiatives–includes Top 5%, Meaningful Use and the Living Lab • Procedures focused on relevant processes and key internal controls around governance and financial monitoring and tracking for the Institute. • Key Highlights • Create a succession plan for the Tiger Institute Executive Director. • Review all expenses and adjustments recorded by the Tiger Institute in MUHC’s tracking account. • Define metrics and report progress for each individual component of the Tiger Institute agreement.

7. Status of Management Responses (Follow-ups) • Audit findings designated as “High” or “Medium” risk for internal audit reports are subject to Follow-up procedures. • Follow-ups to determine the status of management’s responses to previously issued audit reports are performed twice a year. • The respective Internal Audit Steering Committee Representative is responsible for managing the process. • Internal Audit performs fieldwork on approximately 50% of the action items to validate the status provided by management.

8. Status of Management Responses(Follow-ups), Continued • For High and Medium risk action items scheduled for completion on or before January 31, 2012: • 54% are considered to be closed (32 of 59 action items) • 46% are considered to be past due (27 of 59 action items) • The 27 past due action items relate to the following reports: • UM System-wide Data Retention Assessment • UM System-wide Human Resources Pre-Implementation Assessment • UM System-wide 501(c)(3) Governance Assessment • UM System-wide Procure-to-Pay Review • UM System Division of Information Technology Project Management Office • UM System Non-Vested Pension Benefits • MU College of Education • Missouri S&T Human Resources • Missouri S&T Physical Facilities • UMSL Division of Institutional Safety • University Physicians – Physician Documentation • The following slide includes the status by risk and audit report.

9. Status of Management Responses(Follow-ups), Continued 1 Items listed as "in process" are action items from previously issued audit reports that were not scheduled to have remediation completed before January 31, 2012. 2 Audit findings include items to be remediated at the system level.