Internal Audit Section (AUD)

POLICY 4

Effective Date: 01/01/2003

Last Modified Date: 08/22/2003

Introduction

The University's Public Safety and Internal Audit Departments review and investigate allegations of misuse or damage of University resources. Outside entities, such as the Office of the State Auditor and the State Bureau of Investigation, may also investigate these allegations.

Reporting

If management of an area has reason to believe that public property or funds may have been damaged, lost, or misused, they should notify the University Police and the Internal Audit Department. Depending on the circumstances involved, such allegations may also be reported to Human Resources, University Counsel, or the Office of the State Auditor.

Suspected misuse can be reported anonymously to Internal Audit, the University Police, or the State Auditor's Hotline [telephone 1-800-730-TIPS (-8477); or e-mail from the Web at the Fraud, Waste, and Abuse Unit].

The University is required to report all instances of known or suspected theft, embezzlement, or misuse of funds or property to the State Bureau of Investigation (NCGS #114-15.1). The Senior Legal Counsel submits these reports to the SBI on behalf of the University. Generally, University Counsel is notified of reportable losses through receipt of a police report. However, department management may submit information about the loss directly to University Counsel. Refer to AUD Appendix 1 for a sample reporting form.

Copies of all misuse reports submitted to the SBI are provided to the Director of Internal Audit.

Investigation of Report

When Internal Audit receives a report alleging potential misuse of public funds or property, they will conduct an initial review to determine if the allegations have merit and if further investigation by Internal Audit is necessary. While all reports will be given careful consideration and treated seriously, it is important to remember that allegations are unsubstantiated unless and until corroborating evidence is obtained. The initial review and any subsequent investigation will be conducted in a confidential manner and with respect for the rights of the individuals involved.

Audit generally limits its investigations to situations involving loss or misuse of funds or other types of misuse that may have occurred due to a breakdown in controls. The goal of these investigations is to determine if the allegations of misuse are valid, then to identify control weaknesses or breakdowns in procedure that allowed the situation and any related problems to occur, determine the extent of any loss, and recommend corrective action to prevent the situation from recurring.

Whenever possible, Internal Audit will notify appropriate members of management prior to beginning an investigation. Advance notice may not be possible in rare situations when even a small delay could allow additional funds to be lost or records destroyed. In these situations, Internal Audit will notify management as soon as possible after the investigation begins. If allegations involve possible misuse by management of an area, Audit will coordinate any investigation through an organizational level to which this area reports.

The processes of conducting, and reporting the results of, a misuse investigation will be similar to the process followed for a routine audit. However, if the investigation reveals a potential violation of any federal, state, or local law, Internal Audit will refer the matter to the University Police and University Counsel for further review and action. Audit will assist these entities with their reviews, as needed.

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