1 NORTH CAROLINA COUNCIL OF INTERNAL AUDITING October 31, 2007.

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NORTH CAROLINA COUNCIL OF INTERNAL AUDITING

October 31, 2007

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Legislation• The North Carolina Internal Audit Act

House Bill 1401 (SL 2007-424) – State Agencies covered

• Annual operating budget exceeds $10 million, or• More than 100 full-time equivalent employees, or• Receives and processes more than $10 million in cash

in a fiscal year

– Internal Auditing requirements• State agencies establish a program of internal auditing

– Safeguard public funds and assets– Ensure compliance with laws, regulations, and other

requirements– Ensure effectiveness and efficiency of program

operations

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Legislation

• The North Carolina Internal Audit Act House Bill 1401 (SL 2007-424) – Standards

• Comply with current standards

– Appointment and Qualifications• Minimum qualifications established• Agency head appoint Director of Internal Auditing

who shall report to agency head

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Legislation• North Carolina Internal Audit Act

House Bill 1401 (SL 2007-424) Council of Internal Auditing Responsibilities

– Promulgate guidelines for the uniformity and quality of State agency internal audit activities

– Recommend number of agency internal auditors– Develop internal audit guides, technical manuals, and

suggested best practices– Administer an independent peer review system– Provide central training sessions, professional development

opportunities, and recognition programs – Administer program for sharing internal auditors– Maintain central database of all annual internal audit plans;

topics for review; internal audit reports issued– Require agency reports and conduct hearings as necessary– Issue an annual report of service efforts and accomplishments

of State agency Internal Auditors and propose legislation

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Internal Audit Guidelines

• Guidelines for State agencies internal audit activity.– Provide statewide uniformity and quality

assurance.

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Staffing Analysis

• Recommend number of internal audit employees required by each State agency.– Initial Survey

• Surveyed State agencies on current internal audit function.

– Detailed Staffing Analysis• Conduct additional analysis of internal audit staffing

levels.• Recommend appropriate number of State agency

internal audit employees.

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Guides, Manuals, Best Practices

• Develop internal audit guides, technical manuals, and suggested best practices for Statewide Internal Audit program.– Ensure policies and procedures developed

complement statewide internal controls efforts.

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Peer Review System

• Administer independent peer review system– Specify frequency of reviews– Assist agencies with selection of peer

reviewers from other State agencies– Maintain database of qualified peer reviewers– Develop method for monitoring peer review

system

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Central Training

• Provide central training sessions, professional development opportunities, and recognition programs for internal auditors.– Identify outside training opportunities– Develop Office of Internal Audit sponsored

training sessions– Work with agency internal auditors to develop

a recognition program

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Staffing• Administer program for sharing internal auditors

– Office of Internal Audit

FY 2007/08 FY 2008-09

Expenditures

Personal Services 430,310$ 526,851$

Purchased Services

Central Database Dev. & Maitenance 150,000 20,000

Training & Development 60,000 100,000

Information Technology Services 14,000 14,000

Travel, Telephone, Miscellaneous 7,500 14,000

Total Purchased Services 231,500 148,000

Supplies 1,000 1,500

Property, Plant, & Equipment 18,500 5,000

Total Expenditures 681,310 681,351

Revenues

Appropriations 683,000 683,000

Revenues Over Expenditures 1,690$ 1,649$

Office of Internal Audit

Proposed Budget

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Staffing

• Establish team of interagency internal auditors

• Develop protocol for service request• Schedule audit requests

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Database

• Maintain central database– Annual internal audit plans– Topics for review proposed in audit plans– Issued internal audit reports– Individual findings and recommendations

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Reports and Hearings

• Require reports in writing relative to any internal audit matter

• Conduct hearings as necessary

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Annual Report

• Issue annual report– State agency internal auditors

• Service efforts• Accomplishments

– Propose legislation

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Proposed Timeline

ID Task Name Start FinishQ3 07 Q2 08Q4 07 Q1 08

May JunSep Nov AprFeb MarJanOct Dec

1 10/1/20079/3/2007Hire Director of Quality Assurance & Dev.

4 11/30/20079/17/2007Hire Research Assistant

1/16/200811/1/2007Hire Internal Audit Manager

4/30/20082/1/2008Hire Information Systems Auditor

12 4/18/20082/1/2008Hire 2 Internal Auditors

2/29/200811/1/2007Draft Statewide IA Guidelines

4/30/200811/1/2007Draft IA Practices & Procedures

6/30/20083/3/2008Peer Review System

4/30/20081/1/2008Central Training

4/30/200812/3/2007Database

Office of Internal Audit Program Timeline

3 10/31/200710/31/2007Council of Internal Auditing Meeting

1/30/20081/30/2008Council of Internal Auditing Meeting

4/30/20084/30/2008Council of Internal Auditing Meeting

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2 10/31/20079/17/2007Staffing Survey

2/28/200811/1/2007Staffing Analysis

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10/30/20087/31/2008Annual Report

Q3 08

Jul

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