PURPOSE OF AUDIT REVIEWS
Audit reviews are performed as an assistance to departmental management and staff. Audit reviews are intended to assist departmental personnel in utilizing their resources in the best manner possible. The focus is on financial and other administrative controls as they relate to completeness and accuracy of information used for decision making purposes. Potential operational improvements in administrative procedures and specific concerns of departmental management are also included as part of the reviews. Financial records are examined; however, our auditing procedures extend beyond those normally associated with financial statement audits and include audit steps which enable us to review and report on economy, efficiency, effectiveness and accountability matters. The quality of education and the results of academic programs are not evaluated during the reviews.
DETERMINATION OF AUDIT AREAS
Audit reviews are performed in all administrative and academic departments of the University of Waterloo. Audit projects are mainly selected through a process of ranking potential audit areas according to potential risk factors. Specifically, the following criteria are ranked for each identified operational review:
Audit reviews focus on the administrative functions of a department or unit. Reviews may include:
Audit reviews normally include the following steps:
1. Introductory Meeting
Internal Audit staff will meet with departmental management to outline the approach to audit reviews and obtain background information on the department or areas to be reviewed. Management will be requested to identify any areas of possible concern or interest to be included in the review.
2. Interviews
Internal Audit staff conduct individual interviews with departmental personnel who have administrative responsibilities to obtain details of departmental systems and procedures. Where procedures or systems impact on other organizational units, interviews may be conducted with personnel in the other units. "Customers" may be surveyed or interviewed to obtain additional information on procedures or quality of service.
3. Documentation
The information obtained in the interviews is used to prepare flow charts or written narratives to document the departmental administrative activities.
4. Review of Systems
Internal audit staff use the above documentation to evaluate controls and identify areas for potential operational improvements. "Best practice" information may be obtained from reference materials or through surveys of other organizations. An internal control evaluation will be used to determine compliance with relevant University policies and practices, and external regulations.
5. Testing
An audit program is developed for testing transactions and internal controls. Identified compliance areas may also be included. Internal audit staff review departmental transactions on a sample basis to ensure that the administrative systems are operating as described. Further analysis work may also be performed to formulate recommendations for improvements.
6. Summary Review
Observations and recommendations which may result from each step in the audit process are reviewed with departmental management and staff.
7. Reporting
A written report of observations and recommendations is prepared. A draft of the report is discussed with departmental management prior to finalization.
REPORTING RESULTS OF AUDIT REVIEWS
Operational improvements and the basis for the recommendations are noted in the audit report. The costs and benefits of potential changes are considered as recommendations are made; however, ultimate implementation is the responsibility of management. An executive summary is included at the front of the report to help the reader focus on important issues detailed in the body of the report.
Management responses to our audit recommendations are normally included in the body of our audit reports. To facilitate this process, written or oral responses are required from departmental management within one month from the date of issue of the original draft report.
The final audit reports are normally distributed to senior management who are responsible for the area being reviewed. As a matter of course, copies of all audit reports are also sent to the external auditors and the following University officials: