General Audit Process

Financial Affairs, Management Advisory Services   |   Approved July 9, 2015

Purpose

General step by step process if your department is reviewed by auditors, what to expect and how to respond.

Applicability

All University of Maryland, Baltimore (UMB) departments and partner organizations such as contractors, state agencies, or other universities.

UMB sees a range of audit review including from the University System of Maryland Office of Internal Audit (Internal Audits) and Maryland General Assembly Office of Legislative Audits (Legislative Audits).

Instructions

1. UMB is generally notified through the President’s office that the audit is beginning.
   • Internal Audits. The President receives an engagement letter detailing the type of audit, the expectations, objectives of the audit, and the timeframe.
   • Legislative Audits. Auditors generally call the Chief Administrative and Financial Officer.
   • Other auditors may contact the department or responsible Primary Investigator directly.
2. Auditor may request entrance meeting with key management to discuss audit objectives, scope, and timeframe.
3. Initially, auditors will be looking to gather information about the university, gain understanding of important functions/operations/business processes, and determine what areas of operations the audit will focus on, usually based on significance, risk and sensitivity.
4. Auditors will then interview key personnel to learn about day to day operations, business processes and internal controls. Auditors will perform tests of controls and transactions to ensure processes are in compliance with State, University System of Maryland (USM) and UMB requirements. During this phase, they will request larger quantities of documentation and have numerous questions.
   1. If you or someone in your office is contacted directly by an auditor see Respond to Auditor Inquiry procedure.
5. Keep communication with auditors in your area open and inquire how audit is progressing.  Early notification of issues with the review may allow time for the department to provide clarification or even for audit findings to be mitigated. If immediate action is taken to correct findings, it may be positively reflected in the report.
6. Email Management Advisory Services (MAS) immediately with any audit findings or suspected problems throughout the auditing process.
7. Auditors may communicate initial findings.
   • Internal Audits. Auditors communicate results through a draft report.
   • Legislative Audits. Auditors communicate results through discussion notes.
   • Other auditors may only give oral notification.
8. Final results are formally communicated through the Audit Report, which is distributed to the President, Board of Regents, and other University leadership. Legislative Audit Reports are also sent to the Legislature and made available to the public.
   1. If you receive a report, notify MAS.
9. MAS works with the departments to develop an appropriate response to any audit findings and assists in clarification from auditors if necessary.
   1. If findings exist, MAS coordinates an exit meeting which is held to discuss findings and recommendations.
   2. MAS will provide assistance in drafting responses to the recommendations and will also work with your office on necessary corrective actions.
10. During the interim UMB has the responsibility to take corrective action for any of the findings cited. 
    1. MAS will conduct reviews and testing to ensure sufficient corrective actions have been properly implemented before the auditors return to follow up.
11. Review of any findings will take place during subsequent audits and will be a priority to resolve. 
    1. If previous legislative audit findings are not resolved they will be considered repeat finding and will have budgetary consequences for UMB.