1. NACUBO 2017 Student Financial Services Conference
Understanding Audits
NACUBO 2017 Student Financial Services Conference
Presented by:
Lissa Perrone, MBA – Director, Business Affairs, Oregon State University
Julee Otter, CIA, CFE, CRMA, CCEP – Senior Audit Manager, Office of Audit Services, Oregon State University
LISSA – brief background on OSU
- public land grant
Founded 1868
# of students
$ of research
Overview and will leave time for questions at the end

2. JULEE

3. Objectives
Types of audits you may encounter and who will perform the reviews
Typical audit process
Best practices to effectively manage the audit
Proactive measures to prevent or reduce the impact of an audit
Common audit findings in student finance

4. Types of Audits Compliance Financial Statement Operational
Fraud investigations
Information technology
Objective 1

5. Compliance Audits Who audits Governmental audit agencies
Federal & state
External auditors
Internal auditors
Objectives of the review
Award terms
Federal regulations
Uniform Guidance
Single audit
Regulatory requirements & laws
IRS, EPA, OSHA

6. Financial Statement Audits
Who audits
Governmental audit agencies
Federal & state
External auditors
Objectives of the review
Validity
Completeness
Authorization
Accuracy
Classification
Accounting
Cutoff

7. Operational Audits Who audits Internal auditors
Objectives of the review
Economy
Efficiency
Effectiveness

8. Investigative Audits Who audits Internal auditors
Governmental audit agencies
Federal & state
Objectives of the review
Determination of facts
Objectivity
Confidentiality

9. Information Technology Audits
Who audits
External auditors
Internal auditors
Governmental audit agencies
Federal & state
Objectives of the review
Data integrity
Data security
Business processing
Change controls
Business continuity

10. Beware of the audit in disguise!
Reviews
Analysis
Site visit
Engagement

11. Audit Process Planning Fieldwork Summarization and reporting Follow up
Objective 2

12. Planning
Auditors are coming…
…send help!!!
Contact university audit liaison: Internal Audit, Business Affairs, Sponsored Programs?
Preliminary survey – data collection period
Entrance conference

13. Entrance Conference Demonstrate a positive attitude
Confirm objective(s), areas to be tested, and testing period
Identify staffing requirements
Obtain the timelines/deadlines
Establish contacts
Discuss reporting process and
follow up

14. Fieldwork Review documentation in order to anticipate questions.
Ensure documents are available upon the auditors’ arrival. Respond to subsequent requests ASAP.
Full access to files and original documents may be required. Unless fraud, only copies should be retained by the auditors.
Maintain a list of the records provided the auditor.

15. Summarization and Reporting
Keep informed of issues throughout the audit
Ask for time to review findings
Ensure exit conference is held
Confirm who gets the auditors’ report
Provide management responses
Agree or disagree
Action Plan
Target date(s) for implementation

16. Follow Up
Confirmation that agreed upon actions have been implemented to address audit findings
May be a separate review or part of audit procedures for annual audits
Results reported to senior leadership and the board
Repeat findings or failure to implement action plans not a good thing!
Be proactive! Consult with your auditors!

17. Tips on Interacting with Auditors
Designate a “point person”
Be positive, professional, and confident, honest
Listen carefully to questions and understand the question before answering
Only answer the question –
keep answers simple
and direct
Objective 3

18. More Tips Do not react to threats Do not answer hypothetical questions
Do not agree or disagree with opinions
Do not sign anything on behalf
of the university

19. Even MORE Tips Don’t be offended by WHY questions.
“Why isn’t…” “Why did…” Usually, the
auditor is asking your help in
understanding the situation.
Recognize they may be experts.
They may have worked in the specialty
area prior to becoming an auditor.
Realize they may not be subject experts.
This may be their first audit,
so be patient.

20. Proactive Measures to Help Ensure Good Audit Results
Review your internal controls
Perform a self audit
Monitor recent audit reviews and findings
Objective 4

21. Definition of Internal Controls
Control environment
Risk assessment
Control activities
Information and communication
Monitoring

22. How Do you Prevent Disastrous Audit Results? INTERNAL CONTROLS
If internal controls are functioning properly, the risk of financial irregularities, non-compliance issues, misstated financial statements, and ineffective and inefficient operations are reduced.
Management is responsible for the internal controls in your operation.

23. How can managers help ensure effective internal controls?
Maintain adequate policies and procedures
Communicate these policies and procedures
Monitor compliance with policies and practices

24. Maintaining Policies and Procedures
Ensure there are policies and procedures around the risks in the unit.
Risks: may be financial, compliance, or operational
Do staff know how to do their job and what is expected of them?
Where can things go wrong?
Are there procedures in place to prevent this from occurring?

25. Communicating Policies and Procedures
Use appropriate channels: face-to- face, , newsletters, meetings, etc.
Include this topic in new employee orientation
Continual communication is needed
Let it be known compliance is important to you

26. Monitor Compliance
Hmm… If I were an auditor, what would I look at?
Monitor the high risk areas or compliance with policies and practices to make sure everything is going as planned.

27. Self Audit Control Self Assessment Guides
Federal Student Aid (FSA) Assessments:
Oregon State University – Office of Audit Services – Internal Control Resources:
Contact your institution’s internal auditor.

28. Recent Audits & Findings
Department of Education Office of Inspector General Audit Reports:
Federal Student Aid (FSA) Program Reviews: center/school/program-reviews
Department of Education Presentations – FSA Conference: 16FSAConfSession33.ppt
Google Alerts to keep up to date on interesting and related topics
NACUBO – Bursars digest and searchable
Professional organizations

29. Common Audit Finding Areas
Return of funds (R2T4)
Calculation errors, funds returned late
Cash management
Disbursed late, excess cash not returned to Ed.
Over/Under awards
Student credit balances
Objective 5
LISSA

30. More Common Audit Findings
Segregation of duties
Data access
e.g., Conflicts, failure to remove access
Cash handling
PCI Compliance (credit cards)
Recordkeeping
JULEE

31. Conclusion
People fear audits because they don’t know what to expect or what the auditors are doing.
Hopefully, you are better armed with knowledge about auditing which will in turn help you to be prepared for the next audit.

32. Questions?
Thank You!

33. Speaker Contact Information
Lissa Perrone, MBA Director, Business Affairs Oregon State University 100B Kerr Admin Building Corvallis, OR T:
Julee Otter, CIA, CFE, CRMA, CCEP Senior Audit Manager, Office of Audit Services Oregon State University 240 Kerr Admin Building Corvallis, OR T: oregonstate.edu/leadership/audit