Internal Audit Department Charter

The Global Internal Audit Standards require that an Internal Audit Charter be developed and maintained that at a minimum includes the purpose of internal auditing, the commitment to the Global Standards, the scope of internal audit services, governing body responsibilities, and internal auditing’s position within the organization.

Charter

Purpose

The Internal Audit Department (IAD) is an independent, objective, assurance and consulting service designed to add value and improve the operations of Dallas College (DC). The IAD helps DC accomplish its objectives by bringing a systematic, disciplined approach to evaluate and help to improve the effectiveness of risk management, control, and governance processes.

The purpose of the IAD is to strengthen DC’s ability to create, protect, and sustain value by providing the Board of Trustees, leadership, and management with independent, risk-based, and objective assurance, advice, insight, and foresight.

The internal audit function enhances DC’s:

Successful achievement of its objectives.
Governance, risk management, and control processes.
Decision-making and oversight.
Reputation and credibility with its stakeholders.
Ability to serve the public interest.

Mission

Guided by a philosophy of adding value, the mission of the IAD is to enhance and protect organizational value by providing high-quality, objective, risk-based assurance and consulting services, advice, and insight, while embodying the commitment of improvement and betterment of the College, its students, and the community.

Global Internal Audit Standards

The IAD will govern itself by adherence to the mandatory elements of The Institute of Internal Auditors' International Professional Practices Framework, including the Global Standards (Standards) and Topical Requirements. The Chief Audit Executive will report periodically to the Audit Committee of the Board of Trustees (Audit Committee), the Chancellor, and senior management regarding the IAD’s conformance to the Standards.

Authority and Oversight

The Chief Internal Auditor (the Chief Audit Executive – CAE) will report functionally to the Audit Committee and administratively (i.e., day-to-day operations) to the General Counsel. To establish, maintain, and assure that the IAD has sufficient authority to fulfill its duties, the Audit Committee will:

Approve the IAD’s Charter and review periodically to consider changes needed.
Approve the risk-based internal audit plan.
Consider recommendations from the College’s Finance Department, and as part of the College’s budgeting process, approve the IAD’s budget and resource plan.
Receive communications from the CAE on the IAD’s performance relative to its plan and other matters.
Consider recommendations from the Chancellor, approve decisions regarding the appointment and removal of the CAE and the CAE’s compensation.
Make appropriate inquiries of management and the CAE to determine whether there is inappropriate scope or resource limitations.
Ensure a quality assurance and improvement program has been established and review the results annually.

The CAE will have unrestricted access to, communicate, and interact directly with, the Audit Committee including in private meetings, as permitted by law, without management present.

The CAE shall remain independent and objective with the ability to report directly to the Audit Committee any situation where the auditor perceives a conflict of interest with, or on the part of, the Chancellor’s involvement with the subject of an audit. In addition, the IAD shall have the ability to report directly to outside legal counsel or an applicable state agency any situation where the auditor perceives a conflict of interest with, or on the part of, the Audit Committee’s involvement with the subject of an audit.

The Audit Committee and Chancellor authorizes the IAD to:

Have full, free, and unrestricted access to all functions, records, property, and personnel pertinent to carrying out any engagement, subject to accountability for confidentiality and safeguarding of records and information.
Allocate resources, set frequencies, select subjects, determine scopes of work, apply techniques required to accomplish audit objectives, and issue reports.
Obtain assistance from the necessary personnel of DC, as well as other specialized services from within or outside DC, in order to complete the engagement.

Independence and Objectivity

The CAE will be positioned at a level in DC that enables the IAD’s services and responsibilities to be performed without interference from management, thereby establishing the independence of the IAD.

The CAE will ensure that the IAD remains free from all conditions that threaten the ability of internal auditors to carry out their responsibilities in an unbiased manner, including matters of audit selection, scope, procedures, frequency, timing, and report content. If the CAE determines that independence or objectivity may be impaired in fact or appearance, the details of impairment will be disclosed to appropriate parties.

Internal auditors will maintain an unbiased mental attitude that allows them to perform engagements objectively and in such a manner that they believe in their work product, that no quality compromises are made, and that they do not subordinate their judgment on audit matters to others. Internal auditors will have no direct operational responsibility or authority over any of the activities audited.

Accordingly, internal auditors will not implement internal controls, develop procedures, install systems, prepare records, or engage in any other activity that may impair their judgment, including:

Assessing specific operations for which they had responsibility within the previous year.
Performing any operational duties for DC or its affiliates.
Initiating or approving transactions external to the IAD.
Directing the activities of any DC employee not employed by the IAD, except to the extent that such employees have been appropriately assigned to auditing teams or to assist internal auditors.

Where the CAE has, may, or is expected to have roles and/or responsibilities that fall outside of internal auditing, safeguards will be established to limit impairments to independence or objectivity.

Internal auditors will:

Disclose any impairment of independence or objectivity, in fact or appearance, to appropriate parties.
Exhibit professional objectivity in gathering, evaluating, and communicating information about the activity or process being examined.
Make balanced assessments of all available and relevant facts and circumstances.
Take necessary precautions to avoid being unduly influenced by their own interests or by others in forming judgments.

The CAE will confirm to the Audit Committee, at least annually, the organizational independence of the IAD. If the governance structure does not support organizational independence, the CAE will document the characteristics of the governance structure limiting independence and any safeguards employed to achieve the principle of independence. The CAE will disclose to the Audit Committee any interference and related implications in determining the scope of internal auditing, performing work, and/or communicating results. The disclosure will include communicating the implications of such interference on the internal audit function’s effectiveness and ability to fulfill its mandate.

Scope of Internal Audit Activities and Responsibilities

The scope of internal audit activities encompasses, but is not limited to, objective examinations of evidence for the purpose of providing independent assessments to the Audit Committee, Chancellor, and senior management, and outside parties on the adequacy and effectiveness of governance, risk management, and internal control processes and structures for DC. Internal audit assessments include evaluating:

Risks relating to the achievement of DC’s strategic objectives are appropriately identified and managed.
The adequacy and effectiveness of the DC’s internal control structure.
The actions of DC’s officers, directors, employees, and contractors comply with DC’s policies, procedures, and applicable laws, regulations, and governance standards.
The results of operations or programs are consistent with established goals and objectives.
Operations or programs are being carried out effectively and efficiently.
Established processes and systems enable compliance with the policies, procedures, laws, and regulations that could significantly impact DC.
The integrity of information and the means used to identify, measure, analyze, classify, and report such information are reliable and have integrity.
Resources and assets are acquired economically, used efficiently and sustainably, and protected adequately.
Effective business processes to achieve internal control at a reasonable cost.

The CAE will report periodically to the Audit Committee, the Chancellor, and senior management regarding:

The IAD’s purpose, authority, and responsibility.
The IAD’s plan and performance relative to its plan.
The IAD’s conformance with Standards, and action plans to address any significant conformance issues.
Significant risk exposures and control issues, including fraud risks, governance issues, and other matters requiring the attention of, or requested by, the Audit Committee, Chancellor, or senior management.
Results of audit engagements or other activities.
Resource requirements.
Any response to risk by management that may be unacceptable to DC.

The CAE also coordinates activities – where possible – and considers relying upon the work of other internal and external assurance and consulting service providers as needed. The IAD may perform advisory and related client service activities, the nature and scope of which will be agreed upon with the client, provided the IAD does not assume management responsibility. Opportunities for improving the efficiency of governance, risk management, and control processes may be identified during engagements. These opportunities will be communicated to the appropriate level of management.

Responsibility

The CAE has the responsibility to:

Submit, at least annually, to the Audit Committee and the Chancellor a risk-based internal audit plan for review and approval.
Communicate to the Audit Committee, the Chancellor, and senior management regarding any impact of resource limitations on the internal audit plan.
Review and adjust the internal audit plan, as necessary, in response to changes in DC’s business, risks, operations, programs, systems, and controls.
Communicate to the Audit Committee, the Chancellor, and senior management any significant interim changes to the internal audit plan.
Ensure each engagement of the internal audit plan is executed if applicable, including the establishment of objectives and scope, the assignment of appropriate and adequately supervised resources, the documentation of work programs and testing results, and the communication of engagement results with applicable conclusions and recommendations to appropriate parties.
Follow up on engagement findings and corrective actions, and report periodically to the Audit Committee, the Chancellor, and senior management (as necessary and applicable) any corrective actions not effectively implemented.
Ensure the principles of integrity, objectivity, confidentiality, and competency are applied and upheld.
Ensure the IAD collectively possesses or obtains the knowledge, skills, and other competencies needed to meet the requirements of the internal audit charter.
Ensure trends and emerging issues that could impact DC are considered and communicated to the Audit Committee, the Chancellor, and senior management as appropriate.
Ensure emerging trends and successful practices in internal auditing are considered.
Establish and ensure adherence to policies and procedures designed to guide the IAD.
Ensure adherence to DC’s relevant policies and procedures, unless such policies and procedures conflict with the internal audit charter. Any such conflicts will be resolved or otherwise communicated to the Audit Committee, the Chancellor, and senior management, as applicable.
Ensure conformance of the IAD with the Standards, unless the IAD is prohibited by law or regulation from conformance with certain parts of the Standards, the CAE will ensure appropriate disclosures and conformance with all other parts of the Standards.
Understand, respect, meet, and contribute to the legitimate and ethical expectations of the organization and be able to recognize conduct that is contrary to those expectations.
Encourage and promote an ethics-based culture in the organization.
Report organizational behavior that is inconsistent with the organization’s ethical expectations, as described in applicable policies and procedures.

If the Standards are used in conjunction with requirements issued by other authoritative bodies, the CAE will ensure that the IAD conforms with the Standards, even if the IAD also conforms with the more restrictive requirements of the other authoritative bodies.

Quality Assurance and Improvement Program

The IAD will maintain a quality assurance and improvement program that covers all aspects of the IAD. The program will include an evaluation of the IAD’s conformance with the Standards and an evaluation of whether internal auditors apply The IIA’s Code of Ethics. The program will also assess the efficiency and effectiveness of the IAD and identify opportunities for improvement.

The CAE will communicate to the Audit Committee, the Chancellor, and senior management (as applicable) regarding the IAD’s quality assurance and improvement program, including results of internal assessments (both ongoing and periodic) and external assessments conducted at least once every five years by a qualified, independent assessor or assessment team from outside DC.