TYPES OF AUDITS
While an audit can have multiple purposes, each audit can usually be described as one of the following types.
Financial Audits
Examine the accounting and reporting of financial transactions. The auditor reviews controls over the receipt and disbursement of funds, the safeguarding of assets, and the recording of transactions in accordance with Generally Accepted Accounting Principles, or GAAP. The audit report should provide assurance regarding the reliability and integrity of the methods used to identify, measure, classify, and report financial information.
Compliance Audits
Review whether all applicable laws, regulations, policies, and procedures are being followed. CSU campuses are subject to:
· Federal, State, local gov. laws & regulations; including Internal Revenue and State Education Codes;
· Resolutions and policies established by the CSU Board of Trustees;
· Executive Orders issued by the Chancellor;
· Policies & directives issued by the Chancellor's Office, usually coded memos;
· State Administrative Manual, or SAM;
· State University Administrative Manual, or SUAM;
· Policies and procedures established by the campus;
· Terms and conditions of grants and contracts received by the campus.
The audit report will identify areas where compliance is lacking or inadequate, and will recommend improvements in processes and controls intended to ensure future compliance.
Operational or Performance Audits
Examine whether the organization is using available resources in the most effective, efficient, and economical manner to achieve the unit's mission and objectives. This can include looking at whether good business practices and internal controls are being followed, and whether operations or programs are being carried out in accordance with established goals and plans (e.g. a "program review"). The audit report may recommend business process changes.
Information Systems (IS) or Information Technology (IT) Audit
A specialized type of audit that focuses on the internal control environment of automated information processing systems. IS audits have become increasingly important as we automate more and more of our record keeping processes. IS audits typically evaluate input and output, system access and security, and backup and recovery plans.
Financial audits focus on the past and provide an opinion on the accuracy of accounting reports. Compliance, operational, performance, and information systems audits base their findings on what is happening now in order to make recommendations for improved operations in the future. Some audits will be a combination of two or more of the different types of audits.
There is also one special type of audit.
Investigations
Investigations are conducted when there is a suspicion or allegation of fraud, embezzlement, waste, or other "improper governmental activity" to use the legal term. Investigations involve the examination of records and interviews of employees to determine if any illegal activities have taken place, which, if proven, normally lead to disciplinary action and/or criminal prosecution.
