Audit and Assurance Unit

 

AUDIT AND ASSURANCE UNIT

 

 

 

 

 

 

 

 

Date Prepared:   20 May 2007

Approved:          Audit & Compliance Committee meeting 2/07 held 7^th June 2007 

Review Date:     November 2007

 

 

 

 

A.       INTRODUCTION

B.        REVIEW OF 2006/07  OPERATIONS

 

®       Goals Set

®       Activities Carried Out

®               Achievements

®               Progress Against Strategic Goals

C.       PROPOSED 2007/08 OPERATIONS

®       Introduction

®       Risk Identification and Assessment

®       Audit Work Program 2007/08

D.       RESOURCES

E.        2007/08 WORK PROGRAM

 

APPENDIX:

A        Proposed 2007/08 Work Program

 

 

 

 

 

 

This annual plan is an integral part of the Audit and Assurance Unit quality assurance process.  It forms the second tier of the planning component of this process, and essentially operationalises the first year of the Audit and Assurance Unit Strategic Plan for 2007/08 to 2009/10.

Each year an annual audit plan and work program is prepared to outline the achievements of the Audit and Assurance Unit for the previous audit year, including progress with strategic goals, and the proposed operations for the current year. 

This annual plan has also been prepared in accordance with section 78(b) of the Financial Management Standard 1997 (Qld), which states:

“An agency’s internal audit function must prepare an annual audit plan, having regard to:

(i)       the responsibilities of the statutory body under the prescribed requirements; and

(ii)      a risk assessment for each area of the agency’s operations”.

This annual plan will be reviewed on a six-monthly basis, with any proposed amendments being approved by the Audit & Compliance Committee.

 

 

Goals

The strategic goals of the Audit and Assurance Unit are established in the Audit and Assurance Unit Strategic Plan.  Performance against these goals is outlined below in Appendix A. 

 

Essentially these goals are to:

®               provide strategic support to University management through performing independent appraisals and reporting on control structures, risk exposures and legislative requirements;

 

®               provide maximum value to the University; and

 

®               achieve an independent audit function of best practice standard, with a focus on continuous improvement.

Activities Carried Out

a.        During the 2006/07  year of operation, the following audit activities were conducted:

®               10 formal approved audit reviews were finalised with reports issued (7 in 2005/06);

®                1  management letter was issued (1 2005/06);

®                12 informal audit activities or reviews were undertaken at the request of management (20 in 2005/06);

®               31 grant acquittals or financial statement certifications were provided (29 in 2005/06); and

®                3 investigations of alleged staff misconduct were carried out (6 in 2005/06).

Overall, a large number of significant audit recommendations were made to management in letters and audit reports.  Recommendations not actioned by University management were reported to the Audit and Compliance Committee each quarter via the Update Checklist and High Priority List reports.

 

b.               Recommendations were made on improvements to the quality of internal controls operating within the University. 

 

c.               Co-ordination of the internal and external audit efforts, including the conduct of audit work upon which significant reliance was placed by the external auditors.

 

d.               Provision of advisory services to senior officers of the University.

 

e.               Involvement in the update or introduction of new financial management software or operations and the development and formulation of University policy documents.

 

 

 

Achievements for 2006/07

 

a.        A program of audit activities was prepared based on perceived areas of risk to the University. 72% (75% in 2005/06) of scheduled reviews were finalized 8 work-in-progress (2 in final draft awaiting management comments). Please note that there were 6 new reviews added to the program and of these 2 were not scheduled nor budgeted for in the work program. If the drafts are finalized before the 31^st of May, the achievement would be 85%. This is considered to be an acceptable level of achievement considering lack of staff resources.

 

b.        Areas within the University were identified where improvements could be made to internal controls, reporting processes, legislative compliance and policy documentation.  The majority of audit recommendations made during the year have been implemented, or are in the process of implementation.

 

c.        The internal and external audit efforts were co-ordinated, ensuring optimum effectiveness and minimal overlap of work.   The external auditors placed a high level of reliance on Audit and Assurance Unit work thereby reducing the time required for the external audit. 

 

d.        A number of matters were referred to the Audit and Assurance Unit by University staff and senior management for opinion, advice or resolution.  Timely responses were provided to these matters.  3 matters referred involved staff investigations which were actioned as a priority and satisfactorily resolved. Of these, one escalated to fraud investigation and concluded with the respondent charged with 47 count of stealing amounting to $ 11,880.78 .

 

e.       A productivity rate of 85% of available time was achieved against a budget of 90% (82% in 2005/06). 

           A significant number of research and external grant acquittals were audited during the year and audit certifications provided.  For the current year, these totalled 31 with a value just over $ 9.02M of funds audited (29 in 2005/06 with a value of just over $11.9M).

 

g.       Professional auditing and advisory services were provided at an all inclusive hourly charge of $65.00 over 3489 available audit staff workhours ( Comprised of $43.60/hr for key audit staffs and $21.40 for support staff and services). This compared favourably to the tendered rate of $185 per hour ($93.50/hour in 2005/06).

In contrast with 2005/06, no external contractor was engaged to provide assistance to the audit Bookshop, JCU Halls of Residence, Investment and various grants certification (other than external audit certification).

[2005/06 (160 hours at $93.50/ 136 hours at $110 and 6 grants certification at an average cost of $3,438 ].

            

 

h.        Improvements were made to the quality assurance system in place within the Audit and Assurance Unit, including the use of client feedback surveys.  In addition, better practice internal audit practices were performed including a benchmarking exercise, and the introduction of a web-site and audit brochure covering the Unit’s activities.

 

i.         The quarterly reports and follow-up items for the Audit and Compliance Committee were prepared and actioned in a timely fashion.  The annual report by the Committee to Council, as required by legislation, was prepared by the Audit and Assurance Unit and approved by the Committee in March 2007.

 

k.        Time was spent on fraud prevention and detection activities, including 129(2006/07 – 315) reviews of reimbursements over $300 to staff, reviews of alleged misconduct activities and a few surprise audits were conducted covering high risk areas of cash handling.  With effect from September 2006, AAU is no longer involves in the approval process for payments to staff over $300.

 

l.         The Audit and Assurance Unit maintained a high level of professional independence during the year.  There were no conflict of interest matters raised in relation to audit operations.

 

m.      Cost savings to the University were achieved through the work carried out by the Audit and Assurance Unit on behalf of the external auditors, in-house grant certifications, in-house advisory services and audit recommendations made in reports and management letters.

Progress Against Strategic Goals

STRATEGIC GOALS FOR 2006/07 TO 2008/09

MEASUREMENT AGAINST PERFORMANCE INDICATORS