A U D I T S INTERNAL CONTROLS E T H I C S F R A U D

PURPOSE OF AUDITS A N AUDIT ENSURES THE ORGANIZATION IS : P ROVIDING ACCURATE AND RELIABLE FINANCIAL INFORMATION AND REPORTS C OMPLYING WITH LAWS AND POLICIES S AFEGUARDING ITS ASSETS M AKING ECONOMICAL AND EFFICIENT USE OF ITS RESOURCES A CHIEVING ITS ESTABLISHED GOALS AND OBJECTIVES CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud2

T YPES OF A UDITS F INANCIAL AUDITS C OMPLIANCE AUDITS G OVERNMENT LAWS AND REGULATIONS T RUSTEE RESOLUTIONS AND POLICIES C HANCELLOR ’ S O FFICE E XECUTIVE O RDERS P OLICIES AND D IRECTIVES ICSUAM CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud3

C OMPLIANCE AUDITS ( CONTINUED ) S TATE A DMINISTRATIVE M ANUAL (SAM) S TATE U NIVERSITY A DMINISTRATIVE M ANUAL (SUAM) P OLICIES AND PROCEDURES ESTABLISHED BY THE CAMPUS T ERMS AND CONDITIONS OF GRANTS AND CONTRACTS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud4 Types of Audits

T YPE OF A UDITS O PERATIONAL OR P ERFORMANCE AUDITS I NFORMATION S YSTEMS (IS) OR I NFORMATION T ECHNOLOGY (IT) AUDITS I NVESTIGATIONS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud5

E XTERNAL A UDITS A NNUAL AUDITS BY KPMG C AMPUS AND SYSTEMWIDE FINANCIAL STATEMENTS -- THE GAAP AUDIT D ORMITORY R EVENUE F UND B OND AUDIT F EDERAL A-133 S INGLE A UDIT NCAA -- I NTERCOLLEGIATE A THLETICS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud6

E XTERNAL A UDITS F EDERAL A UDITS D EPARTMENT OF E DUCATION N ATIONAL S CIENCE F OUNDATION F EDERAL E MERGENCY M ANAGEMENT A GENCY O THER F EDERAL A GENCIES I NTERNAL R EVENUE S ERVICE CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud7

E XTERNAL A UDITS S TATE A UDITS S TATE C ONTROLLER ’ S O FFICE P AYROLL, A CCTS P AYABLE, P ROCUREMENT C ARD D EPARTMENT OF F INANCE B UREAU OF S TATE A UDITS C OMPENSATION, H IRING, T EXTBOOKS S TATE B OARD OF E QUALIZATION S ALES AND U SE T AX AUDITS C ALIFORNIA S TUDENT A ID C OMMISSION CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud8

O FFICE OF THE U NIVERSITY A UDITOR U NIVERSITY A UDITOR : L ARRY M ANDEL FISMA A UXILIARY O RGANIZATIONS D ELEGATIONS OF A UTHORITY C ONSTRUCTION I NVESTIGATIONS S PECIALIZED T OPICS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud9

R EQUIRED P ERIODIC A UDITS FISMA: F INANCIAL I NTEGRITY AND S TATE M ANAGER ’ S A CCOUNTABILITY A CT I NTERNAL ACCOUNTING AND ADMINISTRATIVE CONTROLS O CCURS EVERY 2 YEARS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud10

R EQUIRED P ERIODIC A UDITS A UXILIARY O RGANIZATIONS I NTERNAL C OMPLIANCE &I NTERNAL C ONTROLS O CCURS EVERY 3 YEARS D ELEGATIONS OF A UTHORITY E VERY 5 YEARS C ONSTRUCTION 12 PER YEAR CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud11

A NNUAL A UDIT S UBJECTS T RUSTEE S ELECTED A UDIT C OMMITTEE - S ELECTS THREE AUDIT SUBJECTS EACH YEAR H IGH RISK RANKING C AMPUS R ISK A SSESSMENT N OT COVERED BY REQUIRED PERIODIC AUDITS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud12

W HAT IS I NTERNAL A UDIT ? “A N INDEPENDENT, OBJECTIVE ASSURANCE AND CONSULTING ACTIVITY DESIGNED TO ADD VALUE AND IMPROVE AN ORGANIZATION ’ S OPERATIONS.” I NSTITUTE OF I NTERNAL A UDITORS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud13

C AMPUS I NTERNAL A UDITORS A SSESS COMPLIANCE WITH POLICIES, PROCEDURES, LAWS, REGULATIONS E NSURE PROCEDURES ARE APPROPRIATE TO SAFEGUARD UNIVERSITY ASSETS R EVIEW POLICIES / PROCEDURES / CONTROLS TO ENSURE EFFECTIVE AND EFFICIENT USE OF RESOURCES P ROVIDE ANALYSIS, ADVICE, AND INFORMATION M AKE R ECOMMENDATIONS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud14

C AMPUS I NTERNAL A UDITORS C OORDINATE EXTERNAL AUDITS L IAISON BETWEEN AUDITORS & CAMPUS A SSIST C AMPUS WITH R ESPONSES TO THE A UDIT R ECOMMENDATIONS C ORRECTIVE A CTION P LANS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud15

RISK THE PROBABILITY OF SOMETHING HAPPENING WITH IMPACT TO UNIVERSITY RISK IDENTIFICATION RISK ASSESSMENT RISK RESPONSE AVOID REDUCE SHARE ACCEPT CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud16

R ISKS F INANCIAL R ISKS I NTERNAL C ONTROLS IT – S ECURITY & S YSTEMS B USINESS I NTERRUPTION O PERATIONAL R ISKS A CADEMIC F ACILITIES AND I NFRASTRUCTURE H UMAN R ESOURCES CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud17

A LL E MPLOYEES A RE R ESPONSIBLE FOR M ANAGING I NTERNAL C ONTROLS 18 CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud

W HAT A RE T HEY ? S YSTEM OF CHECKS AND BALANCES P ROCEDURES TO PREVENT AND DETECT ERRORS, THEFT OR UNAUTHORIZED USE W AYS TO MANAGE AND REDUCE RISK G OOD BUSINESS PRACTICES CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud19

W HY D O W E N EED T HEM ? R ELIABILITY AND INTEGRITY OF INFORMATION AND REPORTS C OMPLIANCE WITH L AWS AND R EGULATIONS P OLICIES AND P ROCEDURES C ONTRACT AND G RANT P ROVISIONS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud20

W HY D O W E N EED T HEM ? S AFEGUARDING OF A SSETS E CONOMICAL AND E FFICIENT U SE OF R ESOURCES A CCOMPLISHMENT OF G OALS AND O BJECTIVES CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud21

T YPES OF C ONTROLS P REVENTIVE C ONTROLS D ETER UNDESIRED OUTCOMES BEFORE THEY OCCUR D ETECTIVE C ONTROLS I DENTIFY UNDESIRED OUTCOMES C ORRECTIVE C ONTROLS P REVENT RECURRENCE CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud22

S EGREGATION OF D UTIES N O ONE PERSON SHOULD CONTROL MULTIPLE STEPS OF A TRANSACTION : A UTHORIZATION R ECORDING – A CCOUNTING C USTODY R ECONCILIATION CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud23

S AFEGUARDING A SSETS P HYSICAL INVENTORY E QUIPMENT USE OFF - CAMPUS C ASH COLLECTIONS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud24

P ROPER A UTHORIZATIONS & R EVIEWS E XPENDITURES P URCHASE AND T RAVEL R EQUISITIONS /O RDERS D IRECT P AY R EQUESTS P ROCUREMENT C ARD T RAVEL C LAIMS T IMESHEETS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud25

V ALIDITY OF E XPENDITURES 1. I N THE BEST INTERESTS OF U NIVERSITY AND FOR OFFICIAL U NIVERSITY BUSINESS 2. C OMPLY WITH ALL APPLICABLE FEDERAL, STATE, & U NIVERSITY LAWS, REGULATIONS, POLICIES / PROCEDURES 3. D O NOT PROVIDE ANY PERSONAL BENEFIT TO ANY EMPLOYEE CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud26

V ALIDITY OF E XPENDITURES CONT 4. R EASONABLE : QUALITY & QUANTITY OF GOODS / SERVICES SUFFICIENT TO MEET, NOT EXCEED, NEED 5. W ITHIN APPROVED BUDGET AND USE OF PROPER FUNDING SOURCE 6. R ECEIVED APPROPRIATE LEVEL OF MANAGEMENT APPROVAL CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud27

E THICS E THICAL BEHAVIOR MEANS B EING HONEST, T ELLING THE TRUTH, D OING WHAT YOU SAID YOU WERE GOING TO DO. B ARBARA J ORDAN S TATE S ENATOR – T EXAS US. C ONGRESSWOMAN CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud28

C ORE V ALUES A CT R ESPONSIBLY AND B E A CCOUNTABLE I NTEGRITY / C REDIBILITY / E XCELLENCE M EET C OMMITMENTS R ESPECT C ONFIDENTIALITY S UPPORT / R ESPECT C ONTROLS A DHERENCE TO LAWS, RULES, REGULATIONS, POLICIES CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud29

Y OUR B EHAVIOR P ROTECT U NIVERSITY A SSETS F INANCIAL, P EOPLE, D ATA U SE OF U NIVERSITY A SSETS P HONES ( OFFICE AND CELL ), PHOTOCOPIER, FAX, SOFTWARE, OFFICE SUPPLIES S TEALING OF U NIVERSITY T IME A RRIVE LATE, LEAVE EARLY, LONG LUNCH, “ SICK ” DAY C ONDUCTING PERSONAL BUSINESS ON U NIV TIME CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud30

Y OUR O BLIGATIONS D O YOUR JOB : ADHERE TO POLICIES, LAWS, REGULATIONS, AND BEST BUSINESS PRACTICES B E A WARE OF O THERS – M ISUSE OF P OSITION I NAPPROPRIATE A CTIVITIES A VOID C ONFLICTS OF I NTEREST AND THE A PPEARANCE OF C ONFLICTS OF I NTEREST CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud31

C ONFLICT OF I NTEREST L AW SEEKS TO MINIMIZE THE EXTENT TO WHICH PUBLIC EMPLOYEES PURSUE THEIR OWN FINANCIAL INTERESTS AT THE EXPENSE OF PUBLIC INTEREST A CCEPTING GIFTS / HONORARIA O UTSIDE EMPLOYMENT THAT WOULD IMPAIR INDEPENDENCE OF JUDGMENT RELATED TO STATE DUTIES D ISCLOSURE OF CONFIDENTIAL INFORMATION R ECEIPT OF PERSONAL OR FINANCIAL BENEFIT CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud32

FRAUDULENT ACTIVITIES DO OCCUR CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud33

F RAUD F RAUDULENT, U NLAWFUL, D ISHONEST A CTS I NTENTIONAL OR D ELIBERATE A CT T HEFT OR M ISAPPROPRIATION OF A SSETS D IVERSION OF R EVENUE C HARGE U NIVERSITY FOR E XPENSE W ITHOUT P ROPER A UTHORIZATION W RONGDOING CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud34

F RAUD T RIANGLE M OTIVE P ERCEIVED O PPORTUNITY I NADEQUATE I NTERNAL C ONTROLS R ATIONALIZATION / J USTIFICATION I DESERVE IT I AM UNDERPAID I WILL PAY IT BACK O THERS DO IT CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud35

F ISCAL I MPROPRIETIES T RAVEL R EIMBURSEMENTS O VERSTATED E XPENSES F ICTITIOUS E XPENSES P ROCUREMENT C ARD P ERSONAL I TEMS C ONCEALED AS B USINESS E XPENSE M ISUSE OF U NIVERSITY A SSETS C OMPUTER, P HONE, O FFICE S UPPLIES CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud36

L AYERS OF R ESPONSIBILITY I NDIVIDUAL A CTION CSU/U NIVERSITY R EGULATIONS G OVERNMENT R EGULATIONS CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud37

S UMMARY I NTER - RELATIONSHIP A UDITS I NTERNAL C ONTROLS E THICAL B EHAVIOR F RAUD A UDITORS : R EVIEW – A SSESS – R EPORT DOCUMENTATION IS KEY W RITTEN P OLICIES / P ROCEDURES R ECEIPTS / I NVOICES CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud38

Q U E S T I O N S T HANK Y OU CSU 101, March 8-11, 2009 Audits, Controls, Ethics, Fraud39