Frequently Asked Questions
Below are some frequently asked questions and responses that will provide some insight into UMDNJ’s Internal Audit function.
Q: What is an audit?
A: An audit is an independent review of information, an area, an operation, or process to assess its accuracy, reliability, compliance, effectiveness, or efficiency. Basically, audits evaluate the effectiveness of internal controls in the following areas:
- Operational audits are comprehensive reviews of the varied functions within an enterprise to appraise the effectiveness of controls governing those processes and to monitor compliance with university policies, procedures, governmental laws, regulations and donor restrictions on use of funds.
- Financial audits are analyses of the economic activity of an entity as measured and reported by accounting methods.
- Information Systems audits are analyses of effectiveness, efficiency, confidentiality, integrity, availability, compliance, and reliability of data and programs on computer and communication systems.
- Construction audits evaluate the risks and controls associated with capital projects including contractor, architect, and subcontractor compliance. Reviews focus primarily on potential cost overcharges during the construction process.
Q: What is Internal Audit’s reporting structure?
A: Internal Audit functionally reports to the UMDNJ Audit Committee of the Board of Trustees and administratively to the President of UMDNJ.
Q: Who is responsible for internal controls?
A: EVERYONE is responsible for internal controls in varying degrees.
- Management: has direct and ultimate responsibility for internal controls
- Frontline Personnel: have baseline responsibility for internal controls
- Board of Trustees: guidance and oversight over the program of internal controls
- Internal Audit: evaluation of internal controls
Q: What is Management’s Role in the internal control process?
A: Management has direct and ultimate responsibility for internal controls, which include:
- Establishing a system of internal controls
- Ensuring resources are available to implement internal control processes
- Establishing measures to assess the performance of internal controls
- Establishing systems to monitor results, changes in risks, and the effectiveness of internal controls
- Setting the tone and being the example for staff to follow
Q: What is Internal Audit’s Role in the internal control process?
A: Internal Audit helps to improve UMDNJ’s internal control process by systematically and objectively evaluating UMDNJ’s operations and processes to determine whether:
- Financial and operating information is accurate and reliable
- Risks to UMDNJ are identified and minimized
- External regulations and internal policies and procedures are being followed
- Satisfactory standards of performance are being met
- University-wide objectives are being effectively achieved
- Results of Internal Audit’s evaluation are presented to management for corrective action.
Q: What is the “scope” of an audit?
A: Depending on the specific area of review, the scope of any audit can vary. Generally, the scope can include:
- Evaluation of internal controls
- Documentation and analysis of processes
- Benchmarking performance and best practices
- Confirmation of compliance with laws, regulations, policies and procedures
- Evaluation of the accuracy of records
- Evaluation of internal control designs and processes in developing systems
Q: What are Internal Audit’s core processes?
A: The following are Internal Audit’s core processes:
- Annual Risk Assessment Planning: Defining and ranking high risk processes
- Planning: Selecting which risk-prone processes will be audited within certain time periods
- Auditing: Auditing the processes selected
- Reporting: Preparing written reports to management
- Follow up: Determining whether management has implemented corrective actions
Q: What is the difference between UMDNJ’s internal auditors and the external auditors?
A: Basically, all auditors evaluate the effectiveness of internal controls, with varying degrees of focus.
- UMDNJ’s internal auditors focus on internal controls university-wide covering a broad spectrum of operations.
- External auditors are hired by the Board of Trustees to provide an independent review and assessment of the financial statements.