The Quaestor - Volume 12, Issue 1

Attribute Standards address the key characteristics  required  for  a quality  internal  audit  function such  as  authority, independence, objectivity,  competence, professional development, quality assurance,  and  improvement.    Performance  Standards  provide  quality  criteria against  which   the  performance  of  internal  audit  services  can  be  measured  in areas  such  as  engagement  planning,  objectives,  scope,  documentation,   and reporting.

Attribute  Standard  1312  –  External  Assessments  requires  an  appraisal  be conducted at least once every five years by an outside independent  assessor or assessment team to evaluate an internal audit activity’s conformance with The IIA’s  Definition  of  Internal  Auditing,  Code  of  Ethics,   and  Standards.    This external assessment can be in the form of a full external assessment, or a self-assessment with independent external validation.

Similar to the Middle States Accreditation  process, IACA utilizes a  self-assessment  with  independent  external  validation  which   involves  the  use  of  a qualified,  independent  external  assessment  team  of  two  validators to  conduct an independent validation of the internal self-assessment. Independent external assessors must be well versed in successful internal audit practices.

A self-assessment with independent external validation includes a comprehensive and fully documented self-assessment process that requires the chief  audit  executive  (CAE)  to   oversee  the  efforts  of  an  internal  assessment team  that  completes  planning  documentation,  performs  assessment  work programs,   evaluates  conformance  with  The  IIA’s  mandatory  guidance,  and produces a report summarizing assessment results.

The  independent  assessment  team  validates  the  work  of  the  internal  assessment  team through  review  of  assessment  planning   documentation,  re-performing  a  sample  of assessment work program steps, conducting interviews with key stakeholders (trustees, executive leadership, operating management, and internal audit staff), and assessing the conformance  conclusions  reported  by  the  internal  assessment  team.    The  external assessment  team will  conclude  on  whether or  not  IACA  has  achieved  conformance  with the  Standards.    The  Standards  require  IACA  to  report  the  results  of  the  external assessment to senior management and the Audit Committee of the Board of Trustees.

IACA’s next assessment, will occur in April 2017, will be the third one we have completed (previous  assessments  were  performed  in  2012  and  2007).  In  both  of  our  prior assessments,  IACA was  found  to  be  in  conformance  with the  Standards.    Not  all of  our internal  audit peers  at  other  higher  education  institutions  complete  these  assessments, so we take great pride in knowing we are operating at the highest levels  of standards and practices in our profession.
 
We are looking forward to our “audit!”

Reference

International  Professional  Practices  Framework  (IPPF),  by  the  Institute  of  Internal Auditors.

WHAT IS A DATA BACKUP?

Backing up data is the process of copying files and folders to a separate secure location for the purpose of restoring them in case of data loss. Losing data is harmful to both individuals and companies as it may result in months’ or years’ worth of work if the information is destroyed and otherwise unrecoverable. Within the last few years, data loss has become a huge issue because of the rise of ransomware, a dangerous malware capable of encrypting a user’s data so that the data cannot be recovered unless a “ransom” is paid to the attacker.

WHY SHOULD I BACK UP MY COMPUTER?

Backing up a computer allows the recovery of data that has been lost due to an incident such as a ransomware attack or even physical destruction. Backups are fast, simple, and relatively low cost making it easy for everyone to do it on a regular basis. The amount of time put into backing up a system is well worth the cost of recovering files from data loss or paying a ransom.

WHAT ARE SOME WAYS TO LOSE DATA?

1. Ransomware is a malicious attack that is responsible for encrypting a user’s files. The files cannot be recovered unless a fine is payed to the attacker. Backing up your data will make it possible to recover your encrypted files after restoring your system to factory settings. Read more about ransomware at https://www.rit.edu/security/ransomware-0.
2. Physical destruction is a common cause of data loss...even if your device is destroyed, your data will be safe as long as you backed up your files.
3. Theft can also lead to data loss. This is the result of when someone steals your laptop, tablet, or phone and you no longer have access to your data.
4. Hard drive failure occurs when your system’s hard drive crashes/dies and fails to provide the user with their data. This can result from worn out parts and internal damage. The average duration of a hard drive is 5 years.

HOW DO I BACK UP MY DATA AT HOME?

There are several different methods to back up your data. Choose one that feels most convenient to you.

1. An  external  hard  drive  is an easy-to-use, cost effective option limited only by the amount of data it can store. An external hard drive plugs into your computer so that you copy over any important files that you want to back up directly to the hard drive. (Do not leave it plugged into the computer after backing up to it because it could also be  encrypted by  the  same  ransomware  that encrypted  your  files  on  your  internal  hard  drive.)  Keep  your hard drive in a place that you will remember and is safe from physical threat, such as a locked drawer near your computer.
2. The  cloud  is a more recent method of backing up data that is free for a limited amount of data. Popular cloud software includes Google Drive and Dropbox. This method is also convenient because it is not a physical device, but an application that can be accessed from any of your devices. Note: if you are a student of RIT, you automatically have access to a Google Drive account that stores an unlimited amount of data.
3. A  Network  Attached  Storage  device  shares features from both an external hard drive and the cloud. It is a device that connects to your network and stores your data without having to plug it into your computer. You can also configure the settings to do automatic backups.
4. Time  Machine  for  Mac  users  is designed to be simple and convenient for personal automatic backups. This program requires an external hard drive as a source for the backups. The Time Machine application runs with a simple user interface designed by Apple making it fast and easy to restore any lost data.

WHAT IF I AM AN EMPLOYEE OF RIT?

Backup options vary at RIT. Check with ITS or your department to determine which method of backup is appropriate for your RIT device. One common method of backing up data on RIT-owned Windows desktop computers within the F&A department is the “FAST  User  Backup” application that backs up all files to the “share” drive with a simple two-click system. We recommend users save their RIT work on a network share rather than storing all of your data locally. This adds an extra layer of security to your data due to your backups being stored in more than one place: locally and on the share.

HOW OFTEN SHOULD I CONDUCT A DATA BACKUP?

We recommend backing up at a minimum of once a month. How often you back up your data depends on the type of work that you are doing and at what rate. How much data can you afford to lose?

IMPORTANT NOTICE ON BACKUPS

Backing up your files is only one part of making sure that your data is safe. Restoring that data is equally important.  Confirm that your backups are working and your data is safe by conducting a restore.

Whether you are using an external hard drive, cloud drive, or a network attached storage device, you should attempt to restore your backups to assure your safety for when the time comes to act.

Signature Delegation and Approval Limit Amounts (ALA):

• Budget  heads  can delegate  online  signatory  authority  by  giving  direct  reports  approval  limit amounts  (ALA) through the Oracle Responsibility: RIT Approval Limit Delegation.  
• Standard list of values are available for supervisors to choose from when delegating HR and financial ALA. 
• A direct supervisor’s delegation is routed and approved online by a management level above the supervisor based on the HR organizational chart.

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Transaction Approval Routing:

• The  new  process  electronically  routes  HR  supplemental  pay,  iExpenses,  employee  reimbursements,  online invoice payment forms,  requisitions, and invoice loaders. 
• AME Workflow is consistent for HR and financial transactions while allowing the ALA to differ.
• Departments can designate a different reviewer and 1st approver for HR and financial transactions.

Reviewer:

• Field can be null if the department does not need a transaction reviewer.
• The first employee to review the transaction after it is prepared.
• When the reviewer “approves” the transition, it is forwarded to the 1st approver; if  rejected, returns to the preparer for correction. 

1st Approver:

• Employee with the lowest Approval Limit Amount (ALA) for a department.
• Determines the supervisory branch the approval will follow.
• Approves transaction if sufficient ALA, otherwise transaction routes to 1st approver's supervisor based on HR supervisory chart and continues until transaction amount is satisfied.
• If also recipient (payee), transaction routes to 1st Approver's supervisor. 

Additional Controls:

• Creator or employee in the transaction can't be the final approver. 
• Final approver cannot report to the employee in the transaction. 
• If creator or employee is also the vacation delegatee of an approver, that approver is skipped. 
• Principal investigator must approve all transactions charged to his/her grants. 

The Workflow – as easy as 1, 2, 3

• Transactions route first to the employee in the Reviewer field for a department.
• The  Reviewer  approves  the  transaction,  if  the  field  is  blank,  the  approval  request  routes  to  the  1st Approver.
• The 1st approver can approve, or reject the transaction. If the transaction amount is higher than the 1st Approver’s  ALA,  it  routes  to  the  1st  Approver’s  supervisor  and  up  the  HR  supervisory  hierarchy  until someone with a sufficient ALA can approve it in full. 
• The team is currently working on the next and final phase of the project to enable the online re-certifications for approval limit amounts and departmental reviewers and 1st Approvers scheduled to go live October 2017.

Personal Note:

"I  am  thankful  for  the  opportunity  to work side-by-side  with colleagues  who are  committed  to  the university and  its  diverse group  of  stakeholders. We met  in-person  with  those  responsible  for  the approval  of HR  and financial transactions, explained the functionality, listened to their feedback, made changes/modifications, and went  through specific  examples.  Throughout  this  process  –  one principle  bound  us  together, doing  “what  is best for our customers”.

In addition, the Framework includes points of focus or characteristics that are examples of behaviors or processes that would be expected to be in place to demonstrate that the related principle is in fact present and functioning. This edition of the COSO Corner will summarize the tenth  COSO  principle  which  is  the  first  principle  related  to  the  Control  Activities  component  of  the  COSO Framework, as well as the related points of focus.

Principle 10 – The university selects and develops control activities that contribute to the mitigation of risks to the achievement of objectives to acceptable levels.  When designing and implementing control activities, management should consider:

• Alignment with Risk Assessment – Control activities should be in alignment with the assessed level of risk and management’s desired risk response.  If management chooses to reduce the likelihood and impact of a risk by implementing  control activities,  these  procedures  should  be  commensurate  with  the  associated  risk  (i.e., consideration of cost/benefit). 
• Implementation of a Mix of Control Activities – Control activities should include a range and variety of controls and  a  balance  of  approaches  to  mitigate  risks,  including  both  manual  and  automated  controls,  and preventative  (e.g.,  designed  to  avoid  an  unintended  event  or  result  at  the  time  of  initial  occurrence)  and detective  controls  (e.g.,  designed  to  discover  an  unintended  event  or  result  after  the  initial  processing  has occurred but before the ultimate objective has concluded).
• Control Activities at Different Levels of the University – The university should design and implement a mix of control  activities  that  operate  both  at  the  transaction-processing  level  as  well  as  those  that  operate  more broadly  and  that  typically  take  place  at  higher  levels  in  the  organization  (i.e.,  management  oversight  and monitoring controls).
• Segregation  of  Duties  –  When  designing  and  implementing  control  activities,  management  should  consider whether  responsibilities  are  divided  or  segregated  among  different  people  to  reduce  the  risk  of  error  or inappropriate or fraudulent actions.  Where such segregation is not practical, management should design and implement compensating control activities (i.e., management oversight and monitoring controls).

To  learn  more  about  how  you  can  mitigate  business  risks  by  establishing  and  maintaining  effective  business practices  and  control  activities,  register  for  the  IACA  training  session,  “Internal  Controls  and  Fraud  in  the Workplace,” which is offered quarterly through RIT’s Center for Professional Development.

Reference
Committee of Sponsoring Organizations of the Treadway Commission (May 2013). “Internal Control – Integrated Framework – Framework and Appendices”