Not only has management’s need for information grown, but accountability for the appropriate and efficient use of institutional resources has become a matter of great concern to students, legislative bodies, government agencies, the general public, and all levels of institutional management. Internal auditing is no longer limited to the practice of ensuring appropriate financial activity and policy compliance. Internal auditors now also evaluate the effectiveness of system procedures and activities in operational audits. Thus, the full scope of internal auditing encompasses an examination of financial transactions, including an evaluation of the adequacy of controls; an evaluation of compliance with and adequacy of applicable policies and other requirements both internal and external; and a review of the effectiveness of the use of institutional resources. Internal auditing is concerned with every phase of institutional activity.
The internal auditing process should include:
• Examining financial transactions for accuracy and compliance with an organization’s policies
• Evaluating financial and operational procedures for adequate internal controls
• Testing the timeliness, reliability, and usefulness of organizational records and reports
• Evaluating the cost-effectiveness of operations and activities
• Monitoring the development, implementation, and major revision of methods, systems, and procedures, including those pertinent to computer applications
• Evaluating and monitoring the computer center’s system of internal control to ensure adequate security and controls related to hardware, software, data, and operating personnel and to ensure retrieval of necessary data for audit purposes
• Evaluating control over end-user computing
• Determining the level of compliance with required internal policies and procedures, state and federal laws, and government regulations
• valuating program performance and program or contractor monitoring
• Coordinating work with external auditors
• Reviewing the contractual and project management control for projects
TYPES OF INTERNAL AUDITING
Financial audits determine whether the financial statements or other reports provide timely, accurate, relevant, reliable, and complete information upon which to make decisions. Financial audits concentrate on accounting controls, which can be divided into three principal areas:
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