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Audit FAQs

Below are some questions and definitions as it relates to audits and internal control.

What is an audit?

Webster’s Dictionary defines the noun “audit” as “a methodical examination and review." As a verb, it means to “examine with intent to verify.” But here is another view. Auditors:

• verify what's really going on at a point in time;
• find out about potential problems ( hopefully before it’s too late to fix them);
• evaluate school business situations objectively;
• make informed and sometimes difficult decisions;
• consult with management and suggests corrective actions, changes and improvements where needed.

Why do we need audits?

We need audits to assist members of the District in the effective discharge of their responsibilities. Internal auditing provides management with analyses, appraisals, recommendations and information concerning the internal control structure and the quality of performance in carrying out assigned activities and established objectives.

What are internal controls?

Internal controls comprise the plan of organization and all the coordinated methods within an organization to safeguard its assets, check the accuracy and reliability of its accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies. Internal controls extend beyond those matters which relate directly to their functions of accounting or finance.

How do I prepare for an audit?

The best way to prepare for an audit and to ensure that an audit flows smoothly is to create and maintain good records. Audits rely on central databases and records whenever possible. Having complete and orderly departmental records is extremely important.

Why have we been selected for audit?

Campuses and departments may be audited for many different reasons. Many audits are simply randomly generated or they may be generated due to a change in management. Being selected for an audit does not mean that you are doing something wrong. The fact is that audits of one type or another are a regular part of the business process.

When is my school or department going to be audited?

Each year the auditor performs a risk assessment. Audit resources are directed to the program areas deemed high risk. The goal is to evaluate and to help improve the management of these risks. Generally speaking, high schools will be audited each year. Elementary and Middle Schools will be audited every year to 18 months, based on the risk assessment. Departments are audited every three to five years as needed.

How long do audits take?

There is no easy answer to this question, as each audit’s length will depend on the nature and scope of the review. Small audits might last 10-20 hours while more complex reviews can last several weeks or months.

If I have a policy question can Internal Audit help me?

Absolutely, if you have questions on policies, procedures, or best practices the auditor will be glad to help. In some cases the auditor will know the answer to your question, but if not, the auditor will be glad to research the answer to your question.

So, what are internal controls?

Simply put, internal controls are anything done at the District that helps to achieve planned objectives. Everyone uses internal controls in the day-to-day activities. Here are some examples of internal controls.

Reconciliations:

Do you balance and reconcile your activity fund bank statement each month? Hopefully so, because

1) it ensures that you know the correct balance in your checking account,
2) it ensures that no one has accessed your funds, and
3) it makes sure that the bank has not made mistakes with their records regarding your account.

Security of Assets:

Do you leave the doors to your campuses and departmental buildings unlocked all night? Hopefully not because Klein ISD wants to protect the assets in our buildings from theft. Klein ISD, like all governmental entities, must make the most of each dollar that is received, and it would not be a prudent use of funds to constantly replace things that are lost because we do not lock up our buildings at night.

Segregation of Duties:

Would you allow your bookkeeper to have the authority to reconcile the books, receipt money, and issue disbursements (checks), and to sign off on activity fund checks? Or would you have a situation where one employee has total control over the cash handling responsibilities? Hopefully not. Cash handling responsibilities should be assigned to at least two employees. One employee should receive payments and issue receipts. The other employee should be responsible for reconciling and/or entering the daily deposit.

What is the purpose of internal controls?

Internal controls have many purposes. They allow the District to:
1. Protect District assets.
2. Ensure records are accurate.
3. Promote operational efficiency.
4. Encourage adherence to policies and procedures.

Are there different types of internal controls?

Yes, generally speaking, there are two different types of internal controls: preventative and detective controls.

  • Preventative controls discourage errors, fraud, or irregularities from occurring.
  • Detective controls are designed to find errors after they have occurred.

How can I be sure that my campus or department has the appropriate internal controls?

You can perform a self assessment of your internal controls. Or, you can contact the auditor for assistance with the process. The auditor can provide you with tips to enhance your internal control structure; do an audit; or provide you with benchmarks and training on internal controls.

 

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