MnSCU Audit Committee September 18, 2002

Discussion on the Role of the Audit Committee MnSCU Audit Committee September 18, 2002

Audit Committee Roles Audit Charter (Policy 1.D.) Hire Executive Director (Policy 1A.4 Part 5) Preserve Independence of Audit Function Set Tone for Ethical & Legal Conduct

Audit Committee Roles Approve Annual Audit Plan (June) Select External Auditors (April) –OLA –CPA firms Appraise Audit Quality –Review Audit Reports (Sept & Dec) –Annual Report (Sept) –Peer Review

Audit Committee Roles Monitoring –Significant Legal Violations –Unresolved Audit Findings –Performance Measurement

Legislative Auditor Reports MnSCU Audit Committee September 18, 2002

OLA Audit Finding Trend

Internal Audit Annual Report MnSCU Audit Committee September 18, 2002

Internal Auditing Major Accomplishments Board-level Indicators Project Progress on OLA reports Audited Financial Statements Increased Requests for Services Fraud Policy Guidelines for New Internal Auditing Standards

System-wide Studies Fiscal Year 2002 –Board-level Indicators Recent Years –Post-Secondary Enrollment Options –Network Security –Incumbent Workforce Training

OLA Audit Finding Trend

Audited Financial Statements December 2001 – Received clean opinion on 1 st Comprehensive MnSCU Financial Statements Added 6 college & university audits –St. Cloud State –Mn State University – Mankato –Mn State University, Moorhead –Bemidji State University –Winona State University –Northwest Technical College

Request Services Assurance Service Examples –University Budget Reporting Practices –College Student Life Fund –Grant Close-out Consulting Examples –Activity-based Costing –Shared Administrative Services –Business Process Improvement Workshop

Challenges Ahead Performance Measurement Framework Computer Security Issues Adding College & University Financial Statement Audits Internal Auditing Metrics

Board-Level Indicators: Update MnSCU Audit Committee September 18, 2002

Performance Measures Work Plan Action Steps Performance Measurement Framework Proposed (December 2002) Establish Baselines & Context (February 2003) Set Performance Targets (June 2003)

Measurement Framework System Focused –Core of Accountability for Colleges & Universities –Supplemented by Local Measures Monitoring Perspectives –Foreground –Background –External Address data sources, validation, timelines, system issues, etc.

Measurement Framework System Focused –Core of Accountability for Colleges & Universities –Supplemented by Local Measures Monitoring Perspectives –Foreground –Background –External Address data sources, validation, timelines, system issues, etc.

Accountability – Side View Board of Trustees Colleges & Universities

Accountability Cross Section Board of Trustees Colleges & Universities

Foreground Monitoring Is the strategic plan being implemented? Anchored in strategic plan and work plan Reconciled to College & University Work Plans

Background Monitoring Are operations legal, ethical, and in compliance with policy limits? Network of responsibility by Chancellor, Vice Chancellors, Internal Auditing, & Presidents Examples –Accreditation –Fraud

External Monitoring Trends outside MnSCU –Demographics –Economics –Higher Education Industry –Technology Various communication options, e.g., annual state of system or series of updates, etc.

Next Steps Create an internal structure to build measurement framework –Consult with presidents & other key stakeholders Determine role of Board of Trustees in planning & setting performance targets (Nov. retreat)

MnSCU Office of Internal Auditing A CATALYST FOR IMPROVEMENT Website: