Internal auditing is a process that can provide significant growth to the school district to aid in achieving objectives and goals. However, district leaders may be unaware or have a skewed perspective of internal auditing functions and the benefits that can come from this practice.
What Is Internal Auditing?
Internal auditing is an evaluative process used to improve the operations of a school district. This practice helps the district accomplish its goals by bringing a systematic approach to evaluating and improving the effectiveness of various areas (risk management, governance, etc.).
Internal auditing may evaluate technology standards and practices, risks, ethics, communication methods, finances, and other processes or procedures of the district. These assessments make certain that satisfactory regulations and checks are in place to mitigate risks.
Auditors are focused on all facets of the school district, financial and non-financial. This is imperative as their assessments are not just concerned with current operations and performance, but also the future of the district.
Auditors cannot be a part of the management or oversight of any process, procedure, or function of the district that they may audit, which can impact the responsibilities and duties of the auditor. Internal auditors do not:
- Create or approve budgets for the district.
- Authorize any transactions or payments on behalf of a department other than their own.
- Maintain district financial accounts.
- Serve as general counsel.
- Hire, supervise, or terminate employees other than their own.
- Report to the school board on behalf of other managers or administrators.
- Implement plans of corrective action.
- Maintain permanent records.
- Assume the role and duties of, or implement anyone or anything that they will ultimately audit.
When making certain that the district is “in compliance,” the auditor will assess whether the district (school board, administrators, staff, etc.) have met responsibilities in complying with federal, state, and local regulations, policies, laws, procedures, and even contracts.
The work performed by the auditor must be comprehensive, as it should help the district in accomplishing its goals and objectives, developing better practices and procedures, mitigating risks, and improving district governance.
Benefits of Internal Auditing
Leaders in education can sometimes hold a skewed view of internal auditing functions. However, internal auditing departments can provide great value to the district and its leaders. Internal auditing offers school boards and administrators an independent and unbiased source of information and feedback that can assist the district leaders in identifying and addressing some of the most important operational and compliance concerns that may be preventing the district from achieving its goals.
The diversity of the areas that internal auditors study gives these individuals a broad perspective on the district, making the auditor a valuable resource. The work performed by the auditor helps the school board, administrator, staff, and other district personnel accomplish goals while strengthening the processes and procedures of the district.
An internal auditor determines the efficiency and effectiveness of the district, while ensuring compliance, evaluating the internal operations of the district, and investigates issues related to theft, fraud, or other indiscretions. In addition to investigating fraud, auditors may also receive whistleblower complaints and address issues of ethics within the district.
Atlanta Public Schools’ internal audit found areas where the school district was at risk for waste and fraud. The audit report provided feedback to improve the checks and balances for areas that were more susceptible to accidental or deliberate abuse. Utilizing the internal auditing function for their district allowed school administrators to address issues and make improvements to processes that could have been taken advantage of.
Internal auditors are independent of the activities they audit. While the auditor is an integral part of the district and provides monitoring and assessment of these activities, they do not actually take part in any work of the district other than providing evaluation and feedback regarding the operations.
Internal auditors typically report directly to the Finance or Risk Management Committee to avoid any internal bias or complications. These individuals must stick to a code of ethics and professional standards, often established by a professional association or state regulations.
The goal of the auditor’s report is not to just highlight errors, but to point out areas where procedures or processes may be deficient. The focus of the audit is to improve the district and its operations. Once the findings from the audit have been passed on to the appropriate channels, then a plan of corrective action can be developed to either strengthen procedures or address other issues that have been identified in the audit. The auditor may follow up to see that findings from the prior audit have been sufficiently addressed.
State Regulations for Auditing
Some states have regulations or policies regarding internal auditing for school districts. For example, the state of New York has passed legislation to strengthen auditing and other oversights by school district officials and school boards. Some of the requirements are that school districts must establish an internal audit function, create an audit committee, and the school board must have direct involvement and a response to any issues that are brought up in an audit.
Technology to Simplify Audits
Meeting agendas, past meeting minutes, budgets, bylaws, policy guides, training materials, manuals, and strategic plans are all vital to the work conducted by the auditor in reviewing policies, procedures, and processes. Leveraging software, like Community by Diligent, school districts are able to ensure that these essential documents are easily accessible by auditors, school board members, administrators, and members of the public.
Auditors should have the capability of retrieving these documents from any device or location, securely. Utilizing Community, auditors can easily access these materials from any device with internet access, anytime and anywhere. This level of accessibility allows auditors, board members, and administrators to share and access materials that may be significant to the auditing process.
Community’s software promotes transparency and trust through the availability of pertinent information (often helping the school district maintain compliance with the state’s sunshine laws). Auditors may even share audit reports with the board, administrators, and members of the public through Community’s portal.
Internal auditing is a process that can provide substantial improvements to the school district to aid in accomplishing objectives and goals. Leveraging the right technology, auditors can seamlessly access and maintain a plethora of information related to district performance, procedures, assessment, and more. To ensure better practices and governance for the district, education leaders must be willing to utilize internal auditors and make significant changes related to their findings.