|Authority:||Single Audit Act of 1984 and Single Audit Act Amendments of 1996 (31 USCS 7501 et seq.); The Financial Integrity & State Manager's Accountability Act of 1983 (Gov. Code sec. 13400 et seq.); Government Code sections 1236 and 8546.4; Education Code section|
|Scope:||This policy applies to the campus community, inclusive of the auxiliary organizations. All faculty, staff and administrators share responsibility for audit compliance and are required to cooperate fully for the duration of the audit process.|
|Responsible Division:||Finance & Administrative Services|
|Signature Page/PDF:||View Signatures for Audits Policy|
Each campus and auxiliary organization of the California State University (CSU) is subject to annual and periodic audits. The CSU Office of the University Auditor (OUA) routinely audits campuses on internal controls and reviews special areas of audit concern based upon an annual risk evaluation. These special audits typically entail review of organizational units such as Extended Studies; of special programs such as the MBA program; or of special projects such as those related to Capital Construction.
With audit fieldwork performed on each campus, the CSU OUA responds to the Bureau of State Auditor's annual single audit of the general purpose financial statements included in the State Controller's Office Annual Report to the Governor. An external audit firm is engaged on behalf of the Trustees, to perform the system-wide financial audit in accordance with Generally Accepted Accounting Principles and to address the standards set by the Federal Office of Management & Budget regarding audits of states, local government, and non-profit organizations expending federal awards.
Other external audits may consist of, but are not limited to, those that are requested by the State Controller's Office, the State Department of Finance, the Bureau of State Auditors, the State Board of Equalization, and the Internal Revenue Service. Although numerous other audits and special investigations are possible, this list of audits represents those that most routinely occur.
Auxiliary organizations are required by California Education Code, Title 5, Section 42408 and Nonprofit Integrity Act of 2004 to have an annual fiscal and internal controls audit performed by a certified public accountant selected by the auxiliary organization. The OUA also administers an auxiliary audit program on behalf of the CSU Board to provide additional oversight of auxiliary organizations.
The Chancellor, through various Executive Orders, has delegated financial, administrative, and management responsibilities to the President at each campus. At Cal State San Marcos, the President has delegated authority and responsibility for centrally coordinating campus audits to the Vice President, Finance and Administrative Services, in accordance with EO 731.
Campus administrators are charged with efficiently managing resources and risks to attain program objectives while maintaining sound financial conditions and compliance with applicable laws and regulations. Specifically, they retain accountability for developing and maintaining a system of internal controls that identifies and manages risk within their areas of responsibility. These internal controls, as well as adherence to applicable laws and regulations, are subject to audit.
ProcedureI. GENERAL PROTOCOL
The President has designated the Vice President, Finance and Administrative Services, as the control point for audit coordination. All external campus audit requests should be promptly reported to the Office of the Vice President, Finance and Administrative Services, for coordination with appropriate campus administrators, Chancellor's Office representatives, and external audit agencies. This office is responsible for monitoring and reporting the results of all audits conducted by other audit agencies of the University or of any campus, department, operation or fund.
Officials and employees of the university and its auxiliary organizations are required to furnish all books, papers, contracts, management charts, and related information necessary for audit.
II. PROCEDURES FOR EXTERNAL AUDITS
A. Preparing for an External Audit/Program Review
- When contacted by a representative of an external agency regarding an audit, campus administrators will notify the Office of the Vice President, Finance and Administrative Services, within 24 hours of first notification.
- The Vice President, Finance and Administrative Services, or his/her designee, will contact the external auditor to confirm the scope and dates of the audit and will notify appropriate campus administrators. Confirmation that work space is available by the appropriate administrator will be required during the planning stage of the audit.
- The Vice President, Finance and Administrative Services, or his/her designee, will schedule the entrance conference and confirm that the appropriate campus administrators have gathered preliminary work papers and/or completed required Internal Control Questionnaires.
B. Coordinating On-Site Audit Activities
- Campus administrators will facilitate the audit fieldwork within their respective units, designating a primary point of contact within their unit who will gather documents and work papers requested for audit. They will also be responsible for the preparation of any reports or financial statements required of the audit; completing internal control questionnaires; and meeting with auditors as requested and ensuring timely response and full cooperation from his/her department or unit of responsibility.
- Upon completion of the audit, the Office of the Vice President, Finance and Administrative Services, will schedule an exit conference to review the preliminary audit report. After clarification of facts and resolution of any outstanding discrepancies in the report, the Vice President, Finance and Administrative Services, or his/her designee, will gather management responses from the campus administrators to bring resolution to the findings and recommendations.
The campus response to the audit report will not be considered final until it has been reviewed and approved by in consultation with the President. In some instances, the audit report will not be considered final until accepted by the Chancellor on behalf of the Trustees.
D. Implementing Audit Recommendations
Campus administrators will implement the audit recommendations consistent with the University response and within promised deadlines. The Vice President, Finance and Administrative Services, or his/her designee, will monitor the progress of compliance, providing validation obtained from the campus administrator, to the external auditor as required for status reporting.
III. PROCEDURES FOR AUXILIARY ORGANIZATION ANNUAL EXTERNAL AUDIT
A. Preparing for Auxiliary Organization Annual External Audit
- Executive Director, or designee, will confirm scope and dates of audit with the audit firm and the auxiliary's Audit Committee. Date of completion for financial report must be in compliance with campus deadlines for consolidated financial reporting to the Chancellor's Office.
- Executive Director will notify Office of the Vice President, Finance and Administrative Services, of the audit schedule.
- Auxiliary organization will make arrangements for space for audit work.
- Executive Director, or designee, will schedule entrance and exit meetings with appropriate staff and with Audit Committee.
- Executive Director, or designee, will facilitate the fieldwork, be responsible for preparation of any reports or financial statements required of the audit; be responsible for obtaining any information required from University units; complete internal control questionnaires; and meet with the auditors as requested, ensuring timely response and full cooperation from the auxiliary organization.
- Upon completion of the audit, Executive Director, or designee, will schedule an exit meeting. After clarification of facts and resolution of any outstanding discrepancies in the report, the auxiliary organization's designee will gather management responses to bring resolution to the findings and recommendations.
C. Responding to Audit
- By the due date, as determined by the campus, each auxiliary organization must have audited supplementary information in its financial statements (in electronic format) in the form and content as outlined in the financial reporting package template provided by the Chancellor's Office each year. Five copies of each auxiliary's financial statements are to be provided to the campus.
- The auxiliary organization's acceptance of the financial and management report will not be considered final until reviewed by Audit Committee, then presented to and accepted by the Board of Directors. After acceptance by the Board, Executive Director, or designee, will notify the President and the Vice President, Finance and Administrative Services, and make the report available to the public in accordance with their procedures.
D. Implementing Audit Recommendations
Executive Director, or designee, will implement the audit recommendations consistent with the organization's response and within deadlines. The Vice President, Finance and Administrative Services, or designee, will monitor the progress of compliance.
Auxiliary Organization-A nonprofit corporation officially recognized by the Chancellor's office as an auxiliary organization of the CSU.
Campus Administrator - The person responsible for the organizational unit or program to be audited.
External Auditor - The person outside of the local campus, conducting the audit. Examples include the CSU Office of the University Auditor (OUA), an independent certified public accounting firm, state auditors, federal auditors, and the US Internal Revenue Service.
Organizational Unit - An academic department or administrative office of the University or its auxiliaries.
V. ROLES AND RESPONSIBILITIES
Auxiliary Executive Directors are responsible for the coordination and preparation of the annual financial statements and external audit of their auxiliary. While these financial reports must be finalized through review with their respective Boards and the Vice President, Finance and Administrative Services, it is also critical to meet campus deadlines for consolidated financial reporting, coordinated through the University Controller. The Executive Directors are further responsible to communicate the audit findings and/or opinions of these audits to the Vice President, Finance and Administrative Services.
Campus Administrators coordinate the audit on a day-to-day basis within their organizational unit subject to audit. In addition, they work jointly with the Office of the Vice President, Finance and Administrative Services, to provide sufficient office space and arrange for provision of computer equipment and telephones as required by the auditors during the course of their fieldwork. Campus Administrators make relevant files and records available to the auditors and are responsible to protect the integrity of any confidential records subject to audit and to report any problems that arise during the course of the audit to their immediate supervisor.
External Auditor coordinates the audit fieldwork and provides information regarding the nature and scope of the audit, the period of time subject to audit, the timeline for performing the audit, and the documents required for review. External Auditor attends entrance and exit conferences and prepares a formal report to the appropriate governing board or executive officer.
Vice President, Finance and Administrative Services, is responsible for reviewing all financial statements, audit responses, and compliance status reports prior to their filing with the External Auditor, in consultation with the President. The Vice President, Finance and Administrative Services, or his/her designee, may attend all entrance and exit conferences with the audit agencies.