6.11 Audit Management

1. The University will undergo periodic examinations or audits of fiscal and administrative management to ensure that funds and resources are used and reported in accordance with the appropriate methods prescribed by law, University and Board of Regents rules and regulations, and generally accepted accounting principles. As such, audits are a means of determining whether the activities of operating units are safeguarding the assets of the University, operating efficiently, and overseeing operations in a manner that is consistent with public policy. The objectives of audits are beneficial; therefore, it is the policy of the University of Arizona that administration of audits will be conducted so as to ensure the achievement of these purposes. This document describes the standards, guidelines, and procedures to be used for all such examinations.

   Definitions

2. Audit Liaison Official: The Associate Vice President, Financial Services is the administrative officer responsible for all official contact with external and internal auditors.
    

3. Audit Coordinator: The Associate Vice President's designee acts on behalf of the Audit Liaison Official and is normally the intermediary contact for the routine management and functioning of audit activities within the University.
    

4. Internal and Arizona Board of Regents Auditors: University of Arizona internal audits will be conducted by the Internal Audit Staff. The University system-wide audit function is assigned to the Arizona Board of Regents (ABOR) staff. The types of audits performed by the Internal Audit staff and the ABOR staff include management, performance, procedural, and financial examinations.
    

5. External Auditors: Federal, State and other outside, independent auditors that audit various University activities and programs at University request, or as required by law, Board of Regents policy, grantor agency, or other external entities.

   Internal and ABOR Audits

6. In accordance with an annual published plan, the Internal Audit staff and ABOR staff conduct audits throughout the year on a continuous basis. Units that are to be audited will normally be notified in writing prior to the auditors' arrival. If an unannounced audit will be conducted, the auditor must provide written notification to verify his/her authority.
    

7. At any time, if questions arise concerning the conduct of an auditor, contact the Audit Coordinator for further instructions.
    

8. Administrative units should cooperate with the auditor to the extent requested; however, availability of records and responsible personnel and conflicts of scheduled activities should be negotiated as necessary where conflicts of priority arise. If problems occur which cannot be satisfactorily resolved, contact the Audit Coordinator.
    

9. The auditor, upon completion of work, will brief the appropriate administrative officials and the Audit Coordinator of any recommendations, findings and/or problems noted during the course of the examination. At that time, the findings, recommendations and conclusions should be thoroughly discussed and any factual or incorrect items clarified. Discrepancies noted by the auditor and subsequently corrected by the administrative unit may still be included in the final report. The auditor must provide the department or administrative unit and the Audit Coordinator a draft report to review before a final report is issued. Any disagreements on the items noted in the draft report between the examined unit and the auditor should be thoroughly discussed and, if agreement cannot be reached, the Audit Coordinator should be contacted for further actions. The report, in its recommended final format, will be reviewed with the Audit Liaison Official.
    

10. Reports issued by the ABOR audit staff consist of the main report and internal recommendations. Items of a serious nature or a repetition of a previous comment requiring corrective action may be included in the main report. The final report is released in its entirety to the University and reviewed at a regular meeting of the Board of Regents.
     

11. Depending upon the administrative unit, several review meetings may be held at appropriate supervisory levels. The Audit Coordinator will attend the final briefing on the draft audit report, prior to the final review with the Audit Liaison Official.
     

12. The Audit Coordinator will prepare the formal audit response to the auditors and coordinate the review by the Audit Liaison Official. The administrative units involved will prepare an initial draft response to any audit finding/problems noted in the draft report, indicating corrective action already taken or under review, and forward the draft response to the Audit Coordinator for review and inclusion in the audit report.
     

13. After the last briefing on the draft audit report has been conducted, the report will be prepared in final format and presented to the Audit Liaison Official.
     

14. If a recommendation by the Internal Audit staff, the ABOR audit staff or an external auditor requires that the institution invest additional or incremental resources to undertake corrective action or implement selected recommendations, the Audit Liaison Official shall, prior to final approval and official release, advise appropriate members of executive management of the estimated resource commitment required by the recommendations. The Auditor's recommendations or the University's response in the audit report should reflect the institution's agreement or refusal to make such a resource commitment.
     

15. When items of a serious nature or a repetition of a previous comment requiring corrective action are to be included within an internal or external audit report, the Audit Liaison Official will review the items with appropriate members of the executive management prior to final approval and official release.
     

16. The formal audit response reviewed and approved by the Audit Liaison Official includes corrective actions to be taken by the University in response to any problems noted in the report. Although this response does not appear in detail in the final report, the status of all unresolved items will be formally reported annually to the Board of Regents until finally resolved or otherwise brought to closure.

    External Audits

17. External auditors and the State of Arizona Auditor General are engaged by the University to perform specific functions (for example, Annual Financial Audit, KUAT Audit) or have been directed by external agencies to audit activities or programs administered by the University.
     

18. Audits initiated by the University will be coordinated through the Audit Coordinator on behalf of the Audit Liaison Official. The Audit Coordinator or designee will schedule audit activities, monitor audit actions and resolve audit-related problems. Exit interviews, review of findings and draft reports will follow normal administrative channels, to include participation by the Audit Coordinator as well as any administrator so delegated. The type of response that may be required by the University concerning the results of the audit will vary depending on the specific scope of the work. In any event, the Audit Coordinator will coordinate all responses for final approval and official release by the Audit Liaison Official.
     

19. The Audit Coordinator should be notified immediately when an audit action is initiated by an outside agency. Depending on the circumstances, audit coordination may be delegated to the relevant University Administrator. However, procedures noted in the preceding paragraph are applicable.

    Corrective Action - Internal/ABOR/External Audits

20. Actions identified in the final report to resolve audit findings must be completed by the audited department or administrative unit. Upon completion, notify the Audit Coordinator.
     

21. Quarterly, the department or administrative unit must provide status reports of all unresolved audit findings to the Audit Coordinator. The Audit Coordinator will advise the Audit Liaison Official of any required corrective actions for which resolution or adequate progress towards resolution has not been achieved or are beyond reasonable institutional resources to resolve.
     

22. Quarterly, the Audit Liaison Official will notify the responsible vice president of unresolved audit findings on units reporting to that vice president. The notification will identify units evidencing both satisfactory and unsatisfactory progress and, if appropriate, recommendations for making progress toward resolution.
     

23. Annually, the Arizona Board of Regents will be notified of all outstanding audit findings, the activity to resolve the finding since the last report, and the completion date.