September 2010 Budget Managers Meeting Internal Audit Presentation Dave Cutri, Director of Internal Audit

2 · Developing an internal controls education program to be delivered to the various departments. I will update the group on that and solicit your input. · Internal Audit plans to conduct mini-audits at the department level as a regular part of our audit plan. Topics to Cover Today

3 Key Components Overview Objectives What Is Business Risk Management? Who Is Responsible for Business Risk Management? What Are Business Objectives? Sources for Identifying Business Objectives COSO Methodology Internal Controls Education Program

4 Key Components (Continued) What Are Key Business Risks? Risk Assessment Concepts and Terms What Are (Internal) Controls? COSO Internal Control Framework Control Concepts and Terms “Driving to Work” Analogy “Paying the Bills” – Accounts Payable Analogy Group Activity Internal Controls Education Program

5 Key Components (Continued) Evaluating Controls Control Testing Who Is Responsible for Business Risk Management? (other resources available at the University) A Word about the Internal Audit Department Key University of Toledo Policies Summary Internal Controls Education Program

6 Other Points Controls Are Not Always Complicated Controls Are Not Always Expensive to Implement Controls Can Often Be Utilized by Using Current Resources Three Common Reasons for Management Not Implementing Controls  taking the time to develop the process  cost  resources (workers) Sources That Can Be Bookmarked and Accessed for Reference/To Answer Any Questions  University of Toledo Internal Audit website  Institute of Internal Auditors website  Etc. Internal Controls Education Program

7 Key Components Background Non-payroll Expenditures Account Reconciliation Income and Cash/Check Receipts Payroll Expenditures and Time Reporting Assets Information Technology Segregation of Duties Departmental “Field” Audits

8 Background Review Internal Control Questionnaire Obtain Organizational Chart Non-payroll Expenditures Determine Signature Authority Select Non-payroll Expenditures Sample Perform Non-payroll Expenditure Testing  proper approval  adequate supporting documentation is maintained  support is mathematically accurate  appropriateness  transaction is properly recorded as to account, coding, and fiscal year Perform P-card Expenditure Testing Perform Travel Expenditure Testing Departmental “Field” Audits

9 Account Reconciliations Conduct Account Reconciliation Testing Income and Cash/Check Receipts Gain Understanding of Income Process Test Cash/Check Receipts Payroll Expenditures and Time Reporting Test Professional Salaries Test Classified Salaries Verify Longevity Verify Overtime Pay for Non-exempt Employees Test Fringe Benefits Test Wages Departmental “Field” Audits

10 Assets Test Personal Use of University Property Test Record Retention Policy Test Inventory Information Technology Identify Unique Software Test Key Controls over Unique Software Segregation of Duties Conclude on Whether Adequate Segregation of Duties Exists in the Department to Ensure the Reliability and Integrity of Key Financial Information and Safeguarding of Assets Departmental “Field” Audits