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Office of the Chief Internal Auditor - Charter

Introduction

Internal Auditing is an independent and objective assurance and consulting activity. It is guided by a philosophy of adding value to the operations of South Carolina Department of Transportation (SCDOT) by evaluating and improving the effectiveness of its risk management, control, and governance processes. Internal Auditing assists SCDOT in accomplishing its mission by bringing a systematic and disciplined approach to evaluating and improving these processes.

Role

The Chief Internal Auditor’s position was established by Act 114 of the SC General Assembly, 117th Session 2007-2008, and its responsibilities are now defined in SC Code Section 57-1-360 (the codification of Act 114) and further clarified by the Audit Committee of the SCDOT Commission as part of its oversight function.

Professional Standards

The Office of the Chief Internal Auditor (hereinafter referred to as "Internal Auditing") will endeavor to meet or exceed the auditing standards contained in Government Auditing Standards (The Yellow Book), published by the Comptroller General of the United States and authoritative publications of the Government Accounting Standards Board (GASB).The Internal Auditing Staff shall govern themselves by adherence to the qualities contained in the Institute of Internal Auditors' "Code of Ethics." The Institute's "International Standards for the Professional Practice of Internal Auditing" (Standards), as may be modified in this Charter, shall constitute the operating procedures for Internal Auditing. These two documents constitute an addendum to this charter. In addition, Internal Auditing will adhere to the State of South Carolina’s and SCDOT’s policies and procedures, as necessary.

Authority

S. C. Code Section 57-1-360(B)(2) requires SCDOT and any entity contracting with SCDOT to fully cooperate with the Chief Internal Auditor in the discharge of his or her duties and responsibilities and to timely produce records necessary in connection with an internal audit. In this regard, Internal Auditing is granted full, free, and unrestricted access to any and all of SCDOT records, physical properties, and personnel relevant to any function under review. All employees are requested to assist Internal Auditing in fulfilling its function. Internal Auditing shall also have free and unrestricted access to the Audit Committee of the SCDOT Commission and its records.

Documents and information given to Internal Auditing during a periodic review will be handled in the same prudent and confidential manner as by those employees normally accountable for them.

Organization

The Chief Internal Auditor shall report administratively and functionally to the Audit Committee of the SCDOT Commission. The Chairman of the Audit Committee shall provide direct oversight.

Independence

All Internal Auditing activities shall remain free of influence by any element of SCDOT, including matters of audit selection, scope, procedures, frequency, timing, or report content so that the independence and objectivity of the auditing process can be preserved.

Internal Auditing shall have no direct operational responsibility or authority over any of the activities it reviews. Accordingly, Internal Auditing shall not develop nor install systems or procedures, prepare records, or engage in any other activity which would normally be audited.

Audit Scope

The scope of the internal audit process encompasses an examination and evaluation of the adequacy and effectiveness of the organization's governance, risk management process, system of internal control structure, and quality of performance in carrying out assigned responsibilities to achieve SCDOT’s stated goals and objectives. It includes:

  • Reviewing the reliability and integrity of financial and operating information and the means used to identify, measure, classify, and report such information.
  • Reviewing the systems established to ensure compliance with those policies, plans, procedures, laws, and regulations which could have a significant impact on operations and reports and whether the organization is in compliance.
  • Reviewing the means of safeguarding assets and, as appropriate, verifying the existence of such assets.
  • Reviewing operations or programs to ascertain whether results are consistent with established objectives and goals and whether the operations or programs are being carried out as planned. The efficiency and effectiveness of the operation or program reviewed will be determined and reported upon.
  • Reviewing specific operations at the request of the Audit Committee as appropriate for either compliance or efficiency and effectiveness.
  • Monitoring and evaluating the effectiveness of the organization's risk management system.
  • Reviewing the quality of performance of external auditors and the degree of coordination with Internal Auditing.
  • Reviewing the internal control statement by senior management and the related opinion by the external attest auditor for audit planning.

Audit Planning

Annually, the Chief Internal Auditor shall submit to the Audit Committee a summary of the audit work schedule, staffing plan, and budget for the following fiscal year. The audit work schedule is to be developed based on a prioritization of the audit universe using a risk-based methodology. Any significant deviation from the formally approved work schedule shall be communicated to the Audit Committee through periodic activity reports.

Reporting

The Chief Internal Auditor or designee will prepare and issue a written report, including an executive summary, at the conclusion of each audit. The audit report will be distributed to the Chairman of the SCDOT Audit Committee. Following full Commission review, copies of the report will also be forwarded to the Legislative committee chairs identified in Code Section 57-1-360(B) (2).

The Chief Internal Auditor or designee may include in the audit report the auditee's response and corrective action taken or to be taken in regard to the specific findings and recommendations. Management's response should include a timetable for anticipated completion of action to be taken and an explanation for any recommendations not addressed.

In cases where a response is not included within the audit report, management of the audited area should respond, in writing, within thirty days of publication to Internal Auditing and those on the distribution list.

Internal Auditing shall be responsible for appropriate follow-up on audit findings and recommendations. All significant findings will remain in an open issues file until cleared by the Chief Internal Auditor with the approval of the Audit Committee.

Periodic Assessment

The Chief Internal Auditor should periodically assess whether the purpose, authority, and responsibility, as defined in this charter and as required by law, continue to be adequate to accomplish its objectives and responsibilities. The result of this periodic assessment should be communicated to the Audit Committee of the SCDOT Commission.