Agency Audits: What are the Auditors Looking For and How to be Prepared for One

1. RAD 301 Agency Audits: What are the Auditors Looking For and How to be Prepared for One Lorena Li, CMA, MBA Manager, Continuous Improvement Lorena.Li@ualberta.ca

2. Agency Audits – Overview • Types of Audits • What to expect on an Audit. • Questions to ask the Auditor. • Preparing for the Audit. • Supporting Documentation. • Surviving the On-site Audit. • After the Audit – What’s Next?

3. 1. TYPES OF AUDITS • Institutional Audits – Conducted by the Auditor General’s auditor (Deloitte) • Internal Audits – Conducted by the University of Alberta’s Internal Audit Department • External Audits – Performed by an Accounting Firm selected by the Sponsor

4. 2. WHAT TO EXPECT ON AN AUDIT INSTITUTIONAL AUDITS: • 1ST Interim Audit in Mid November (Nov 12 – 22). Auditor General of Alberta will focus on University Processes. • 2nd Interim Audit in Mid February (Feb 17 – Mar 7). This is a transaction testing audit to the end of January. • Annual External Audit (Apr 21 – May 16) of the University of Alberta financial statements. • University of Alberta Audited Financial Statements are posted on the website no later than June 30th.

5. 2. WHAT TO EXPECT ON AN AUDIT (Cont’d) INTERNAL AUDIT SERVICES (IAS) IAS mission is to evaluate and enhance the effectiveness of risk management, control and governance processes at the University of Alberta. • Internal Auditing • Operational Audits • Financial Audits • Information Systems Audits • Compliance Audits • Investigating cases of alleged fraud or irregularities.

6. 2. WHAT TO EXPECT ON AN AUDIT (Cont’d) EXTERNAL AGENCY AUDITS • Reference to “Audit” written in the Executed Agreement. • Contact from Sponsor/Audit of upcoming Audit. • Advise RSO of the Audit request. • Pre-audit Questionnaire (Internal Controls, Procedures, Policies). • Reference Existing Documents. • Request for a Detailed General Ledger List.

7. 3. QUESTIONS TO ASK THE AUDITOR • Will the Audit be conducted on site or off site? • How long will it take to complete the audit/field work? • Who will the Auditors need to speak with? • Do the Auditors need to see original copies? • What type of supporting documents will they require? • Timing of the Engagement?

8. 4. PREPARING FOR THE AUDIT • Provide a suitable workspace. • Identify an audit contact person. • Setup meeting times with key individuals. • Gathering the supporting Documentation.

9. 5. SUPPORTING DOCUMENTATION - Gathering Know who to contact to obtain the documentation required. • Revenue – Copy of payments deposited (cheque, electronic deposit). • General Expenses – Invoices, Purchase Orders, Expense Claims, Interdepartmental expenses, Proof of Payment. • Salary Expenses – Pay Action Forms, Employment Contracts, Time Sheets, Payroll Records, Proof of Deposit. • Expense Transfer or Redistributions – Explanation of transfer, copy of transfer journal and documents for original entry.

10. 5. SUPPORTING DOCUMENTATION – Reviewing • Check that correct documents have been received. • Confirm that authorization appears on the documents. • Remove any unnecessary documents (emails, packing slips). • Start organizing and referencing the supporting documents. • Create a file or binder to store documents. • Make a duplicate copy for your records.

11. 6. SURVIVING THE ON-SITE AUDIT • Be organized and prepared. • Don’t be afraid to ask the Auditor questions. • Attempt to resolve potential findings on the spot. • Keep line of communication going, be as helpful as possible.

12. 7. AFTER THE AUDIT – WHAT’S NEXT? • Preliminary Audit Results/Draft Audit Report. • Audit Response. • Ready for the Next Audit?

13. QUESTIONS?

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