Internal Audit Activity Charter
Internal Audit Activity Charter
Houston Independent School District
Internal Auditing is an independent and objective assurance and consulting activity that is guided by a philosophy of adding value to improve the operations of the Houston Independent School District (HISD). It assists HISD in accomplishing its objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of the organization's governance, risk management, internal control.
The internal audit activity is established by the HISD Board of Education, Audit Committee, or highest level of governing body (hereafter referred to as the Board). The internal audit activity’s responsibilities are defined by the Board as part of their oversight role.
The internal audit activity will govern itself by adherence to The Institute of Internal Auditors' mandatory guidance including the Definition of Internal Auditing, the Code of Ethics, and the International Standards for the Professional Practice of Internal Auditing (Standards). This mandatory guidance constitutes principles of the fundamental requirements for the professional practice of internal auditing and for evaluating the effectiveness of the internal audit activity’s performance. The Institute of Internal Auditors' Practice Advisories, Practice Guides, and Position Papers will also be adhered to as applicable to guide operations. In addition, the internal audit activity will adhere to HISD’s relevant policies and procedures and the internal audit activity's standard operating procedures manual.
The internal audit department will also perform its work in accordance with Generally Accepted Auditing Standards (GAAS), as promulgated by the American Institute of Certified Public Accountants, Generally Accepted Government Auditing Standards (GAGAS), as promulgated by the United States Government Accountability Office, and any special auditing and reporting guidelines as may be required by the Texas Education Agency, the Texas State Comptroller’s Office, or any other regulatory or oversight authority. The auditing standards that need to be applied depend upon the nature of the audit.
The internal audit activity, with strict accountability for confidentiality and safeguarding records and information, is authorized full, free, and unrestricted access to any and all of HISD’s records, physical properties, and personnel pertinent to carrying out any engagement. All employees are requested to assist the internal audit activity in fulfilling its roles and responsibilities. The internal audit activity will also have free and unrestricted access to the Superintendent and the Board.
The Chief Audit Executive will report functionally to the Board’s Audit Committee and administratively to the Superintendent. The Audit Committee responsibilities are completely detailed in the Audit Committee Charter. In summary, the Audit Committee shall:
Approve the internal audit charter.
Approve the risk based internal audit plan.
Approve the internal audit budget and resource plan.
Receive communications from the Chief Audit Executive on the internal audit activity’s performance relative to its plan and other matters.
Approve decisions regarding the appointment and removal of the Chief Audit Executive.
Approve the remuneration of the Chief Audit Executive.
Make appropriate inquiries of management and the Chief Audit Executive to determine whether there is inappropriate scope or resource limitations.
The Chief Audit Executive will communicate and interact directly with the Board, including in closed session as authorized by law and between Board meetings as appropriate.
Independence and Objectivity:
The internal audit activity will remain free from interference by any element in the organization, including matters of audit selection, scope, procedures, frequency, timing, or report content to permit maintenance of a necessary independent and objective mental attitude. Internal auditors will have no direct operational responsibility or authority over any of the activities audited. Accordingly, they will not implement internal controls, develop procedures, install systems, prepare records, or engage in any other activity that may impair internal auditor’s judgment. Internal auditors will exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined. Internal auditors will make a balanced assessment of all the relevant circumstances and not be unduly influenced by their own interests or by others in forming judgments. The Chief Audit Executive will confirm to the Board, at least annually, the organizational independence of the internal audit activity.
The scope of internal auditing encompasses, but is not limited to, the examination and evaluation of the adequacy and effectiveness of the organization's governance, risk management, and internal controls as well as the quality of performance in carrying out assigned responsibilities to achieve the organization’s stated goals and objectives. This includes:
Evaluating risk exposure relating to achievement of the organization’s strategic objectives.
Evaluating the reliability and integrity of information and the means used to identify, measure, classify, and report such information.
Evaluating the systems and internal controls established to ensure compliance with policies, plans, procedures, laws, and regulations which could have a significant impact on the organization.
Evaluating the means of safeguarding assets and, as appropriate, verifying the existence of such assets.
Evaluating the effectiveness and efficiency with which resources are employed.
Evaluating operations or programs to ascertain whether results are consistent with established objectives and goals and whether the operations or programs are being carried out as planned.
Performing general audits, analytical reviews, or investigative audits by applying various audit techniques and procedures to evaluate the system of internal controls and/or for the detection of fraud or deterrence to fraud.
Monitoring and evaluating governance processes.
Monitoring and evaluating the effectiveness of the organization's risk management processes.
Evaluating the quality of performance of external auditors and the degree of coordination with internal audit.
Performing consulting and advisory services related to governance, risk management and control as appropriate for the organization.
Reporting periodically on the internal audit activity’s purpose, authority, responsibility, and performance relative to its plan.
Reporting significant risk exposures and control issues, including fraud risks, governance issues, and other matters needed or requested by the Board.
Evaluating specific operations at the request of the Board or management, as appropriate.
Internal Audit Plan:
At least annually, the Chief Audit Executive will work collaboratively with the Audit Committee for input to create the internal audit plan. The Chief Audit Executive will submit the completed internal audit plan for the Audit Committee’s review and approval, and a copy shall be provided to senior management. The internal audit plan will consist of a work schedule as well as budget and resource requirements for the next fiscal/calendar year. The Chief Audit Executive will communicate the impact of resource limitations and significant interim changes to the Audit Committee. The internal audit plan will be developed based on a prioritization of the audit universe using a risk-based methodology, including input and collaboration with senior management, the Audit Committee, and the Board. The Chief Audit Executive will review and adjust the plan, as necessary, in response to changes in HISD’s business, risks, operations, programs, systems, and controls. Any significant deviation from the approved internal audit plan will be communicated to the Audit Committee through periodic activity reports.
Reporting and Monitoring:
A written report will be prepared and issued by the Chief Audit Executive or designee following the conclusion of each internal audit engagement and will be distributed others as appropriate. The internal audit report may include management’s response and corrective action taken or to be taken in regard to the specific findings and recommendations. Management's response, whether included within the original audit report or provided thereafter (i.e. within thirty days) by management of the audited area should include a timetable for anticipated completion of action to be taken and an explanation for any corrective action that will not be implemented. The internal audit activity will be responsible for appropriate follow-up on engagement findings and recommendations. All significant findings will remain in an open issues file until cleared.
The Chief Audit Executive will periodically report to senior management and the Audit Committee on the internal audit activity’s purpose, authority, and responsibility, as well as performance relative to its plan. Reporting will also include significant risk exposures and control issues, including fraud risks, governance issues, and other matters needed or requested by senior management and the Board.
Quality Assurance and Improvement Programs:
The internal audit activity will maintain a quality assurance and improvement program that covers all aspects of the internal audit activity. The program will include an evaluation of the internal audit activity’s conformance with the Definition of Internal Auditing and the Standards and an evaluation of whether internal auditors apply the Code of Ethics, and other applicable professional standards.. The program also assesses the efficiency and effectiveness of the internal audit activity and identifies opportunities for improvement.
The Chief Audit Executive will communicate to senior management and the Audit Committee on the internal audit activity’s quality assurance and improvement program, including results of ongoing internal assessments and external assessments conducted at least every five years.
Internal Audit Activity Charter:
Approved this 11th day of May , 2015 .
SIGNATURE ON FILE
Chief Audit Executive
SIGNATURE ON FILE
President of the Board
SIGNATURE ON FILE
Secretary of the Board