Managing an Audit

Here are some suggestions to consider when interacting with auditors, both internal and external. These suggestions are not meant to restrict the auditors in any way, but instead are meant to expedite the audit process while minimizing disruptions to day-to- day departmental operations. It is important to both the auditors and the departments to have accurate and objective findings and conclusions.

Planning

Designate an audit liaison person. In most cases, this person is the department manager. Designate an alternate in case the audit liaison is not available.

Contacts

Know the contacts in the University offices.

Kevin Kimball , Associate VP for Business and Financial Affairs Business & Financial Affairs
Telephone 963-2325
Office Information

John Ebenal , Accounting Supervisor
Grants and Asset Management
Telephone 963-1996

Wayne Quirk , Associate VP GSR
Graduate Studies & Research
Telephone 963-3101

Communicate to all faculty and staff that if the auditors contact them directly, they should immediately notify the liaison person.

When contacted by an external auditor, notify the University Director of Internal Audit.

Margaret Smith , Director
Telephone 963-2299

Entrance Conference

• Demonstrate a positive attitude.
• Have the auditor explain why your department was selected for an audit.
• Clarify the audit objective and scope (areas to be tested and period covered by the audit).
• Discuss the results of prior audits as this may limit the scope of the current audit.
• Understand the audit process.
• Understand the reporting process and determine who will receive audit reports.
• Determine staffing and space requirements.
• Identify the timelines i.e., beginning and end of fieldwork, report date, etc.
• Know contacts in the external auditor's office.
• Consider giving the auditor a tour of your facilities.

Access to Records by Auditor

• Obtain a list of requested records.
• Pull records and provide them to the auditors. Do not provide records that are not relevant.
• Ensure original documents do not leave department premises without prior approval.
  Make copies of any documents leaving department premises.
• If a request is ambiguous, ask the auditor for the purpose of reviewing the document.
  Be prepared to recommend alternate documents that would achieve the auditor's purpose.
• Unless absolutely necessary, do not allow full access to your file drawers, storerooms, etc.
  Auditors are expected to obtain permission and state their objective for accessing these areas.
• Communicate the reasons for any significant delays in providing records.
• Have documents available upon their arrival. Subsequent requests should be handled as soon as possible.
• Maintain a list of records provided to the auditor. Ensure all records are returned at the completion of audit fieldwork.
• Review records you are providing to anticipate questions. If records will hurt University's interest, notify department management and the University Director of Internal Audit (for external audits) of the issue.

During the Audit Fieldwork

The Audit Liaison Person Should:

• Keep the audit focused.
• Facilitate the audit.
• Keep constant communication with the auditor.
• Resolve audit issues as soon as they are brought to the department's attention.
• Keep all parties informed on the progress of the audit.
• When possible, attend meetings between the auditors and employees. (But the department should respect an employee's wish to meet with the auditor alone)

Do and Don't for Interacting with Auditors

Do

• Be honest and open.
• Recognize they may be experts.
• Realize they may not be subject experts.
• Understand the purpose of the meeting and review related records prior to interviews.
• Listen carefully and understand each question before answering. Be sure responses are complete and accurate.
• Respond only to the question asked - keep answer simple and direct.
• Weigh answers carefully, being certain you have the facts to back them up.
• Limit comments to areas where you have "first hand" knowledge.

Don't

• Do not speculate or answer hypothetical questions.
• Do not agree or disagree with opinions.
• Do not "ramble" or provide irrelevant information.
• Do not get offended by WHY questions.
• Do not sign anything on behalf of the University.

Audit of a Specific Transaction

• Limit conversation to transaction in question.
• Explain how the transaction benefited the grant or budget.
• Explain how the transaction was identified to the grant or budget.
• Do not bring in funding issues or departmental politics.

Responding to Audit Findings

• Keep informed of issues throughout the audit.
• Ensure an exit interview is held. Use it to verify facts and respond to the audit. Ask a representative from Internal Audit and/or Financial Services Office to attend if there are questioned or disputed findings.
• Ask for time to review findings, and then re-verify calculations and source data.
• Concede valid findings, but do not speculate on whether they apply to other areas on campus.
• Take immediate corrective action and resolve the issues before they are put in writing.
• Discuss with the auditor the disposition of audit issues, i.e. verbal comment, exit item, management summary, or report item. The disposition of the issues is based upon several factors.

If necessary, appeal the auditor's conclusion with their supervisors. For external audits, this action should be coordinated with Internal Audit and the Business and Financial Affairs.

Responding to the Audit Report

• Ask to review the draft report.
• Provide management response which should include:
  1. Whether you agree or disagree with the finding
  2. Corrective action plan
  3. Target date for implementation.
• Understand the audit follow-up process.
• For external audits, consult with Internal Audit and Business and Financial Affairs prior to finalizing response.