Washington State University
BUSINESS POLICIES AND PROCEDURES MANUAL
Washington State University cooperates with and assists external
auditors or investigators whose responsibilities involve examination and
confirmation of University transactions. External auditors seek to assure
that WSU has legally received and expended funds in accordance with generally
accepted accounting principles and standards.
External Auditor Defined
An external auditor is defined as any non-WSU auditor, e.g.,
state, federal, private firm. An audit can be initiated by any of the following:
- WSU invitation,
- Legally-mandated requirements, or
- Funding agent or agency request.
As part of the coordination process, the Internal Audit Office
serves as a liaison between central administrative offices, University departments,
and external auditors or investigators.
University personnel or offices receiving documents or communications from
external auditors or investigators are to ensure that the Vice President
for Finance and Administration and the Internal Audit Office receive copies.
The first contact with WSU central administrators is generally
a telephone call followed by a written notice from the external agency.
The written notice should contain the following information:
- A description of the scope, review period, and purpose of the audit
- The date the auditors or investigators will be on campus.
- The department or unit which is the primary contact.
Generally, external auditors conduct an entrance conference
with central administrators. A representative of the Internal Audit Office
may attend the entrance conference.
The entrance conference identifies the purpose, scope, and timing of the
audit; the information required by the auditors; the personnel who need
to interact with the auditors; and the physical facilities needed to accommodate
The first contact with the unit usually occurs when an external
auditor or investigator arrives at the unit facility.
University personnel who are contacted by external auditors
or investigators should request identification that indicates the agency
or organization name.
Notify Internal Audit
If the individual presents a business card as identification, University
personnel should compare it with another form of identification, e.g., a
driver's license. A business card alone is not sufficient identification.
When a University department is contacted, the department administrator
is to contact the Internal Audit Office as soon as feasible and inform that
office of the audit or investigation.
If requested by the external auditors, the administrator of
the audited department arranges interviews with appropriate employees. Scheduled
interviews and arrangements insure the following:
Interviews Regarding Effort Certification
- Proper employees are available to assist the auditors.
- Relevant records are assembled and available.
- The interview is scheduled around departmental activities.
External auditors are to conduct employee interviews regarding
personal effort for sponsored projects in the presence of a designated representative
of the audited department. There may be situations in which a designated
central University staff member and/or a representative of the Internal
Audit Office is present.
University records are available for audit purposes subject
to the normal privacy safeguards and availability. The University Records
Retention program allows destruction of records within prescribed time limits.
(NOTE: Auditors are not required to complete Public Records Request forms
to obtain access to records.)
Auditors are to utilize records in the Controller's Office as
- Controller's Office personnel assist the auditors in locating the
records they need to review. The auditors are instructed where to return
the records. All refiling is done by WSU employees.
- Records older than two years are normally transferred to the inactive
file storage area. Auditors should contact the Controller's administrative
secretary for information about the location of the inactive records.
- If it is necessary to remove a record from the Controller's Office,
the auditor must insert an "Out" card with the document number,
complete name of the auditor, and the date. The "Out" card replaces
If the auditor must examine subsidiary accounting records in
another office, he/she must make arrangements through the appropriate department
Record access procedures in departments other than the Controller's Office
should be similar to those described above.
External auditors make arrangements for follow-up visits to
departments if the additional visits are conducted within a reasonable time
after the initial visit and are not made as part of a separate audit. Otherwise
another entrance conference may be required.
In most cases, the external auditor will hold an exit conference
at the conclusion of the audit. Those audits which result in a report delivered
to a sponsor rather than to the University also include an exit conference.
The exit conference informs University representatives of the audit findings,
clarifies possible ambiguities, and seeks agreement upon the facts at issue.
AUDIT REPORT FACTS
If the external auditors feel that the audit does not require a formal exit
conference, the department administrator is notified by the external auditor
that the audit is completed. The department representative then notifies
the Internal Audit Office of the external auditor's decision. There may
be occasions when the Internal Auditor requests an exit conference.
The external auditor and the department administrator arrange the exit conference.
After the exit conference has been arranged, the department administrator
notifies the Internal Audit Office. Depending upon the scope of the audit,
a representative of the Internal Audit Office may attend the exit conference.
Every effort is made to ensure the correctness of facts included
in the audit report. The parties may review and suggest modifications to
a draft audit report.
Preliminary comments from University personnel on findings concerning
a specific transaction in an audit may be required. The auditors must provide
sufficient information to enable the University to adequately review the
questions and provide a meaningful response. Information requests must include
references to the specific grant or policy.
Response to State Audits
The following applies to unit responses to post-audit memorandums
prepared by the State Auditor's Office. A post-audit memorandum includes
audit findings and recommendations for improvement. The State Auditor's
Office addresses the memorandum to the department chair or equivalent administrator
and to the individuals in the unit with whom the auditors worked. The State
Auditor's Office sends a copy to the Internal Audit Office.
The department chair prepares a preliminary response within ten working
days of receiving the post-audit memorandum. The response memorandum describes
corrective actions taken by the department, how the unit will avoid repeat
findings, protect University resources, and ensure policy compliance. If
the unit has not yet taken corrective action, the response memorandum must
include a specific date by which corrective action will be completed. NOTE:
Internal auditors and/or state auditors may visit the audited unit at a
later date to ascertain the status of any corrective action.
The department chair routes the preliminary response to the Internal Audit
Office where it is reviewed for policy compliance and completeness.
After review, the Internal Audit Office notifies the unit to prepare a final
response. The unit routes the final response to the regional State Auditor's
Office and sends copies to the Vice President for Finance and Administration, Office
of Internal Audit, the dean or area supervisor, and the Controller.
Direct questions concerning interaction with external auditors
to the Internal Audit Office.