fall 2013 - audit connection

The Audit Connection Collaborating for Enterprise Excellence

1120 15th Street, Augusta, GA 30912 | Phone: 706-721-2661 | Fax: 706-721-9094

Ask the Auditor! We invite you to send your questions to [email protected], and we may feature it in future issues.

The Office of Internal Audit's purpose is to support the mission and vision of Georgia Regents University and Health System by: providing independent and objective management evaluations; identifying actual and potential problems; providing corrective guidance; developing management recommendations; and providing consultative services in accordance with professional internal auditing standards and compliance review guidelines.

We are here to help you!

706-721-2661

gru.edu/audits

Clay Sprouse…………………..CAO

Kathleen Boyd ..... Assoc. Director

Crystal Corey ......... Audit Manager

Danny Walters ....... Senior Auditor

Will Barnes............. Senior Auditor

Sheryl Brown ............... I.T. Auditor

Rufus Copeland…………...Auditor

Lisa Kedigh………Admin. Asst. III

Jessica Brown ............ Audit Intern

Michael Niezen………..Audit Intern

Inside this issue:

Advisory Services: Helping You Stay on Track to Prevent Fraud and Misconduct

1

Career Night at the Hull College of Business

2

Narrowing the Knowledge

Gap

3

Traveling on the Successful Path to Travel Reimbursements

4

Advisory Services: Helping You Stay on Track to Prevent Fraud and Misconduct Clay Sprouse, Chief Audit Officer

Complex Regulatory Requirements, Increased Penalties, and Tough Economy Increase Risk of Fraud

Recently, the GRU Hull College of Business brought the Enron whistleblower Sherron Watkins to speak about her role in exposing the Enron scandal as part of the Russell A. Blanchard Distinguished Lecturer series. Since 2001, governments and regulatory agencies have worked at a feverish pitch to enact new rules and requirements to prevent a repeat event. The extra effort has had limited success in preventing additional scandals, frauds, and general lack of confidence in the markets. However, it has most certainly increased the complexity and cost of compliance. Fines and penalties are significant to companies and employees that commit fraud or misconduct.

The stagnant economy with its high unemployment, increasing costs, and lack of real wage growth has created an environment that is ripe for fraud and misconduct.

Understanding the Problems and Risks

Fraud: Any intentional act committed to secure an unfair gain. Misconduct: A broad concept, generally referring to violations of law, regulations, internal policies, and market expectations of ethical business conduct.

Together, they fall into the following categories that can undermine public trust and damage the enterprise’s reputation for integrity.

Fraudulent financial reporting (improper revenue recognition, overstatement of assets, understatement of liabilities) Misappropriation of assets (embezzlement, payroll fraud, external theft, procurement fraud, royalty fraud, counterfeiting) Revenue or assets gained by fraudulent or illegal acts (over-billing, deceptive sales practices, falsification of results) Expenses or liabilities avoided by fraudulent or illegal acts (tax fraud, wage and hour fraud, leave abuse, falsifying compliance data provided to regulators) Expenses or liabilities incurred for fraudulent or illegal acts (commercial or public bribery, kickbacks, purchases for personal use paid by p-cards or check requests, internal orders, etc.) Other misconduct (conflict of interest, insider information, discrimination, theft of competitors trade secrets, research or restricted information, environmental violations)

(continued on page 2)

Fall, 2013 Issue No. 5

Internal Audit Staff

mailto:[email protected]

http://www.georgiahealth.edu/audits

The Audit Connection



It’s important for everyone to realize the risks of fraud. By establishing an ethical workplace and following good management practices, we can all do our part to prevent errors, irregularities, fraud, and misconduct. Policies and procedures, separation of duties, and management approval are key controls to keep us all out of trouble. With the number of new systems, processes, and organizational changes across the university and health system, we face a higher risk that controls may be missing or no longer effective.

How can you help?

If you encounter pre-signed documents, rubber stamping of approvals, self-approval of requests or reimbursements, or contemplate short cuts that circumvent internal control, you should think twice about why the steps are built into processes. That’s not to say things have to take longer or be complicated. If you see opportunities to make things faster or simpler and want to implement new procedures, tactics, or processes, you just need to ensure there are compensating controls that ensure adequate approvals, reviews, and recordkeeping are in place. If you want help as your processes change, please contact Internal Audit, and we will assist you with evaluating internal controls.

Career Night at the Hull College of Business Kathleen Boyd, Associate Director It was a packed house… on the evening of September 26, 2013, the JSAC Ballroom on the Summerville Campus was buzzing with business students eager to meet with prospective employers. For the second year, Internal Audit was invited to participate in Career Night, hosted by the Hull College of Business. This event provides an opportunity for students to speak directly with auditors. Kathleen Boyd, Associate Director of Internal Audit, greeted students throughout the evening and provided information about certification as an internal auditor. Local public accounting firms were also in attendance to speak with students about careers in public accounting. Students are not always aware that the Institute of Internal Auditors (IIA) offers a certification in internal audit (CIA). The CIA certification is an option to the certification in public accounting. Loran Adams, President of the CSRA Chapter of the IIA, led a round table discussion with Ms. Boyd, providing information to help students understand the distinction between the two certifications, the benefits of each, and how one complements the other. One HCOB accounting student gave her perspective on the event:

“It is so helpful to receive advice about internships, career paths, and future employment opportunities. It can all be a bit overwhelming at this stage without some mentoring.”

-Sarah Wilder, HCOB Junior, Georgia Regents University

(continue on page 3)


1


2


Gap

3


4


http://as.vanderbilt.edu/french-italian/manage/files/Career-Night.jpg




Ms. Wilder learned about the Volunteer Internship Program in the Georgia Regents Office of Internal Audit while at Career Night. As a result of this connection, she applied for the internship and is expected to start the program in January 2014.

For more information about IIA certification, the CSRA Chapter of the IIA, or the Internal Audit Internship Program, contact Kathleen Boyd, [email protected]. Narrowing the Knowledge Gap Crystal M. Corey, Audit Manager As a recently integrated and consolidated university and health system, many offices/departments have been assigned with brand new responsibilities. Employees of these departments are challenged with learning processes, regulations, policies, and operations of areas they may have never been exposed to, in order to perform their jobs. For example, with the university consolidation, the Office of Compliance and Enterprise Risk Management assumed compliance responsibility for athletics, a program that, at the time, did not exist for Georgia Health Sciences University. In the same regard, with the medical center integration, the Office of Internal Audit (IA) became responsible for not only auditing the university, but also the medical center and health system. IA quickly realized the staff lacked familiarity with medical center operations and more specifically health care auditing. Currently, the IA staff has only one auditor with a background in health care auditing. IA began considering ways to obtain knowledge of health care operations and auditing. With limited funding, IA decided to look in our own backyard where there is tremendous expertise and experience! Who better to teach our staff than those who know it best - the employees! Thus, IA has started an initiative to invite medical center employees to our staff meetings to learn about their operations. Linda Henderson, Director of Quality Management, graciously agreed to be first in our training initiative. The Quality Management staff has presented at several of IA’s staff meetings and has introduced us to the responsibilities of the office as well as the complaint and grievance management process. Our next session with Quality Management will introduce us to two more medical center topics: Patient Safety Net and Events Team. Not only is this narrowing our knowledge gap of health care operations, but it has allowed IA to meet more medical center employees. In January we are looking forward to a visit from Dr. Wallach, Vice Dean of Academic Affairs for the Medical College of Georgia. In addition, the Association of Healthcare Internal Auditors (AHIA) conference was held in August, and several auditors attended. The conference proved invaluable to the IA staff as we attended training sessions that included topics such as my first year in health care, diversion prevention and detection programs, revenue cycle reviews, auditing electronic medical record documentation, and meaningful use attestation. The conference also allowed our office to network with auditors at other health care organizations and building these relationships has already proved helpful to our office. We would like to invite any department/office interested in providing additional training to our staff to contact our office. We welcome the opportunity to learn about your operations!


1


2


Gap

3


4

Quality Assurance Review

Internal Audit Receives

Highest Rating!





Traveling on the Successful Path to Travel Reimbursements Rufus Copeland, Auditor

Business travel can have a positive impact on building and maintaining strong relationships with other organizations, attracting world-class talent, and increasing employee expertise and knowledge through training opportunities. However, complex travel guidelines can cause frustration, foster confusion, and increase the risk of wasting limited resources. Internal Audit recently conducted a limited review of travel reimbursements and found that there appears to be some confusion surrounding the travel process. The Georgia State Accounting Office approved new travel guidelines which took effect on July 1, 2013. All GRU travel reimbursements submitted within fiscal year 2014 are subject to these new rules. Those individuals engaged in travel should always be familiar with current policies. These guidelines can be found on the GRU Travel Office website or in the USG Business Procedures Manual. When in doubt on a particular issue, please consult the Travel Office. Everyone involved in the travel process has some level of responsibility to ensure compliance with applicable rules and regulations. Below are some helpful tips taken from our recent review that will guide employees when traveling on official business. Please be advised that this information is targeted primarily to university personnel and those classified as state employees. GR Health Policy 7.17 regarding travel for medical center employees is published on the GRHealth website. The journey through the travel process begins with the completion of the Travel Authorization (TA) form. TAs must be prepared and approved prior to travel per the Board of Regents Policy and due to the potential liability implications. Travel itineraries and agendas should be submitted with each authorization, if available. Such documents must detail the travel events. Employees should also note that the BOR policy prohibits employees from signing any travel forms for others. It is the responsibility of travelers to ensure the accuracy of their own expense statements by signing forms themselves. State employees are exempt from paying the local occupancy/excise tax when lodging within the state of Georgia. The Hotel-Motel Tax Exemption Certificate is located on the Travel Office website. Employees should be familiar with how to access the certificate and be mindful to present it during hotel check-in when traveling on official business within the state of Georgia. Travelers are asked to review their lodging bill before leaving the hotel to verify the excise tax has been removed. A per diem allowance is assigned to cover the cost of meals (including taxes and tips) when employees are on official travel status. In-State per diem rates are established by the State Accounting Office. The U.S. General Services Administration establishes the per diem for out-of-state and international travel. The applicable per diem is determined by the traveler’s destination or temporary duty (TDY) location. Meals on the first and last days of travel are subject to a 75 percent limit of the applicable rate. Meals eligible for overnight travel are determined by the following schedule:

Breakfast – depart prior to 6:30 a.m. or return after 6:30 a.m.

Lunch – depart prior to 11 a.m. or return after 1:30 p.m. Dinner – depart prior to 5:30 p.m. or return after 7:30 p.m.



1


2


Gap

3


4





Employees on official state business during non-overnight travel are eligible for the meal per diem only if they travel more than 50 miles from their residence/primary work station and are away for more than 12 hours. In addition, travelers must also leave prior to 6:30 a.m. to receive breakfast and return later than 7:30 pm to receive dinner. The 75 percent limit does not apply when there is no overnight lodging. Employees engaged in non-overnight travel receive 100 percent of the qualified meal per diem according to the established criteria mentioned above. The per diem allowance must be adjusted for any meals provided to the traveler courtesy of hotels, meetings, conferences, or any other source. Such meals cannot be claimed on the Travel Expense Statement. When claiming incidentals on travel reimbursements, employees should be aware that the $5 incidental rate is prohibited for both in-state and out-of-state travel. Incidentals are now reimbursed on an actual cost basis with provided receipts and should be entered as a miscellaneous expense. Such expenses are subject to the appropriate and reasonable standards as are all travel costs. When calculating mileage, employees must include only the business miles traveled. If an employee departs from or returns to headquarters, mileage is calculated as the distance between headquarters and the destination point. If an employee departs from or returns to his/her residence, mileage is calculated as the distance between the residence and the destination point, with a reduction for normal one-way commuting miles. If travel occurs on a weekend or holiday, mileage is calculated from the point of departure with no reduction for normal commuting miles. Also, if an employee does not regularly travel to an office outside of his/her residence (i.e., residence is employee’s headquarters), the requirement to deduct normal commuting miles does not apply. Commute miles are permissible when obtaining meals for which the employee is eligible for reimbursement, picking up additional passengers, or traveling to multiple work sites. All personal commute miles must also be deducted when calculating total business mileage. GRU Policy requires all travel costs to be supported by original receipts. Sufficient receipts are those provided by merchants. Credit card statements and/or receipts are not allowed. For those that prove difficult to obtain (i.e., gratuity for portage or housekeeping services), travelers are permitted to informally document transaction information. It is preferred that such documents be prepared on hotel stationery and obtain the recipient’s signature, if possible. The final step on the travel path is seeking reimbursement. New travel guidelines state, reimbursement requests should ideally be submitted within 10 days, but no later than 45 calendar days after completion of the trip or event. The 46 – 60 Day Reasonable Exception Request form must be completed for any requests over 45 days. Expenses submitted in excess of 60 calendar days may not be reimbursed. Travelers are encouraged to provide an itinerary with the expense statement if one was not supplied with the travel authorization. Training classes are offered for employees to learn more about the travel process. To sign up for classes or for more information about travel, please contact our Travel Office at 706-721-0013 or 706-721-2114. You may also send questions via email to [email protected].



1


2


Gap

3


4






Things to Remember:

Prepare Travel Authorizations to receive prior approval for all travel.

Travel agendas and/or itineraries are recommended when submitting Travel Authorizations or with the expense statement. A good practice would be to provide these schedules with both travel forms, if possible.

Print and provide the Local Excise Tax Certificate during hotel check-in for any in-state travel.

The per diem rate for meals includes taxes and tips. All travel, whether overnight or one day, is subject to the internal departure and return time schedule. A 75 percent limit of the meal per diem exists for the first and last days of overnight travel. Employees are permitted to claim 100 percent of eligible meals during one day trips.

Incidentals are reimbursed at actual costs, and receipts must be provided; the five dollar ($5) rate is no longer permitted.

Collect and retain original receipts for all travel costs, except meals.

When calculating total business mileage, travelers must deduct normal one-way commuting miles with some exceptions. Reimbursement for personal commute miles is not permitted under any circumstances.

Submit reimbursement requests within 45 calendar days of event.

Always make and retain copies of your Travel Authorizations, Travel Expense Statements, and receipts for your records.

Happy & Safe Traveling!

http://www.gru.edu/finance/controller/travel/ http://www.usg.edu/business_procedures_manual/section4/ http://hi.georgiahealth.edu/policylist/# http://www.gru.edu/finance/controller/travel/documents/georgia_meal_rate.pdf http://www.gsa.gov/portal/category/104711


1


2


Gap

3


4


fall 2013 - audit connection

Documents

payroll fraud

royalty fraud

procurement fraud

hour fraud

risk of fraud

risks fraud

illegal acts tax fraud

misconduct clay sprouse