Policy 1.092

Internal Audit Function

1. Purpose

1. It is the express interest of the School Board and the Superintendent of the School District of Palm Beach County to promote fiscal responsibility and accountability for the operations of the District. The internal audit function shall be considered an essential element in achieving these goals, with a view to assisting the School Board and District management in carrying out their responsibilities relating to fiscal policies, internal controls, and management reporting practices.

2. Internal audit will serve an independent appraisal function within the District to examine and evaluate its activities, including the adequacy and effectiveness of the District's system of internal controls and the quality of performance. Internal audit will provide analyses, appraisals, recommendations, counsel, and information concerning the activities reviewed. The School Board and management of the District will be notified of any potential problem areas. The District Auditor will advise individual Board members periodically of significant findings identified during audits, before the final report is released.

2. Organization of the Internal Audit Function

1. To promote the independence and objectivity of the audit function, the District Auditor shall report to, and be evaluated by, the School Board pursuant to Fla. Stat. § 1001.42(10)(l), with input from the Audit Committee in accordance with Policy 1.091(2)(c)ii.

2. The Audit Committee is governed by Policies 1.09, "Advisory Committees to the Board" and 1.091, "Audit Committee," and it shall promote independence in the internal audit function and advise on ensuring broad audit coverage, adequate consideration of audit reports, and appropriate action on audit reports.

3. The District Auditor's office shall be free of organizational and political pressures that limit its objectivity in selecting areas to be examined in implementing the audit plan. The District Auditor should not be involved in any political campaign for a School Board elective office nor make financial contributions to any such campaign.

4. The District Auditor's office should be adequately staffed, within financial constraints, to perform its auditing activities; and auditors should maintain their technical competence through continuing education.

5. The District Auditor and personnel on the internal audit staff are required to follow the Audit Manual and all the Policies, procedures, and guidelines which govern other District employees. The District Auditor is responsible for administering and enforcing the audit staff's compliance with such Policies, procedures, and guidelines and the Audit Manual.

3. Authority

1. To properly carry out its responsibilities, internal audit shall reasonably be granted:

1. The authority to conduct performance and financial audits of all departments, offices, activities; programs under the control of the School Board; and expenditures incurred by the School District;

2. Complete and unrestricted access to all District records, documents, and facilities or other assets owned, borrowed, or used by the District, which includes information regarding District vendors, as deemed necessary in performing audit activities;

3. The authority to request reasonable assistance from appropriate personnel in locating assets and obtaining records and documents; and

4. Unrestricted interview privileges, both written or oral, with all District management and employees. The District Auditor may also obtain information from District vendors when such information is needed while conducting an audit.

2. Auditors are to have no authority over, or responsibility for, the activities they audit. The District Auditor or any of the employees of the Office of District Auditor shall not conduct or supervise an audit of an activity for which he/she was responsible or within which he/she was employed during the preceding two (2) years.

4. Responsibility and Scope of Activities

1. Before the beginning of each fiscal year, the District Auditor shall develop, for approval by the Board, a proposed audit plan after consultation with the Board and Audit Committee at a joint meeting, and with input from the Superintendent and other high-level administrators. Before presenting the proposed audit plan for approval by the Board, the District Auditor shall first submit the proposed plan (reflecting budget, staffing, scheduled audits, and non-audit activities) for review and discussion by the Audit Committee, whose advice on the proposed plan will be reported to the School Board before a vote by the Board. The District Auditor may amend the approved plan during the fiscal year only by approval of the School Board with input from the Audit Committee.

2. The School Board shall have the authority to make changes in the approved audit plan during the year, and these changes shall be submitted to the Audit Committee for advisory input. All staff requests for amendments to the audit plan shall be reviewed by the Audit Committee and submitted to the School Board for approval, along with a report stating the Audit Committee's advice on the requested amendments.

3. Types of audits to be performed by internal audit shall include, but not be limited to: performance audits, economy and efficiency audits, program audits, financial statement audits, and financial-related audits, as defined by the Government Auditing Standards.

5. Auditing and Reporting Procedures

1. Internal audit will conduct its affairs in accordance with this Policy; the Audit Committee charter as set forth in Policy 1.091; the Government Auditing Standards; and the Audit Manual, which is hereby incorporated by reference herein and made a part of this Policy, provided that nothing in the Manual shall be interpreted as contrary to state or federal law. The Audit Manual shall be filed with the Clerk of the School Board as a part of this Policy and shall be available for inspection in the Public Information office. If any part of the Audit Manual may be deemed to conflict with this body of the Policy, the provisions within this body of the Policy shall control.

2. The District Auditor, in collaboration with the Superintendent, may initiate and conduct any emergency audits or reviews not listed in the audit plan, if deemed necessary, in view of potential illegal acts, fraud, abuse, or misuse of District funds. Evidence of such irregularities shall be referred to the School Police and the School Board's Office of Chief Counsel for further investigation.

3. Except for audits intended to be unannounced, reasonable notice should be given to appropriate personnel of an intent to audit in their area.

4. During the course of audit work, the District Auditor and Audit staff shall be alert to any indications of fraud, abuse, or illegal acts. If the District Auditor detects apparent violations of law or apparent instances of misfeasance, malfeasance, or nonfeasance by an employee or information that dereliction may be reasonably anticipated, the District Auditor shall consult with the Superintendent, Chief Counsel to the School Board, and the School Police Chief. If the irregularity may be criminal in nature, the investigation shall be handled by the School Police Department, in conjunction with the Office of Chief Counsel to the School Board.

5. Each internal audit will result in a written report. Audit reports shall be objective, clear, concise, constructive, and timely and shall contain the professional conclusions of the auditor regarding the activities audited.

6. Before issuing a final written report, the District Auditor will communicate with, and schedule a meeting to review the preliminary report and response with, the respective audited department, office, or division. When auditing a vendor, and/or in the event information and response is needed from a vendor, this step may include meeting with the vendor when the audit is near completion, and the vendor or affected person must agree to maintain the confidentiality of preliminary/draft report and the information contained therein pursuant to Fla. Stat. § 119.07(3)(y) and shall enter into a written confidentiality agreement for the period until the audit is completed. A vendor's failure to enter such written confidentiality agreement shall be deemed to constitute that vendor's waiver of the opportunity to respond to the preliminary report, and the audit shall be completed without the vendor's response.

7. The District Auditor shall advise the Superintendent of the findings. However, the Auditor shall not provide any preliminary reports to the School Board or individual Board members until the final draft of the report is distributed (absent a Board vote requesting receipt of a preliminary/draft report before the final draft of the report).

8. The District Auditor will place on the agenda the finalized audit report for the next available Audit Committee meeting prior to submitting the final report to the School Board.

9. Pursuant to § 119.07(3)(y), Fla. Stat., and Ch. 95-399 § 2, Laws of Fla., work papers, notes, and preliminary or draft audit reports shall be held confidential and exempt from public-records disclosure until the audit is completed by submission of the final draft of the report to the School Board.

10. To enhance the independence, objectivity, and effectiveness of the auditing process, the final report shall be submitted at the same time to all members of the School Board, the Superintendent, and affected department heads. After submission of the final draft or final report to the School Board, audit reports will be available to members of the press and the general public upon request.

11. The District Auditor may request periodic status reports from audited departments, offices, or divisions regarding corrective actions taken to address reported deficiencies and audit recommendations.