2. MnSCU Audit Committee September 18, 2002

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

4. 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

5. 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

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

7. Legislative Auditor Reports MnSCU Audit Committee September 18, 2002

8. OLA Audit Finding Trend

9. Internal Audit Annual Report MnSCU Audit Committee September 18, 2002

10. 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

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

12. OLA Audit Finding Trend

13. 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

14. 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

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

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

17. Performance Measures Work Plan Action Steps Performance Measurement Framework Proposed (December 2002) Establish Baselines & Context (February 2003) Set Performance Targets (June 2003) 17.1 17.2 17.3

18. 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.

20. 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.

21. Accountability – Side View Board of Trustees Colleges & Universities

22. Accountability Cross Section Board of Trustees Colleges & Universities

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

24. 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

25. 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.

26. 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)

27. MnSCU Office of Internal Auditing A CATALYST FOR IMPROVEMENT Website: www.internalauditing.mnscu.edu