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Internal Audit Department Charter

AUTHORITY

  1. It is Board policy that the Agency operate in a fiscally sound and accountable manner; that internal control be responsibly maintained; and that statutory laws, regulations, policies and procedures be followed.

  2. The Internal Audit Department has been established to perform reviews and audits of the Agency's operations. All systems, processes, operations, functions, and activities within the organization are subject to an internal audit evaluation.

  3. The Board and the President/Executive Director recognize the importance of an impartial and objective assessment of management's performance and support the Internal Audit Department as an independent appraisal function, which examines and evaluates Agency activities as a service to the Board and management.

  4. The Internal Audit Department must operate independently of management, including the chief financial and/or accounting officers, and must remain free from organizational impairments. It must have unrestricted access to all departments, information, documents, property and personnel, and have adequate staff and resources to perform its duties.

OBJECTIVES

  1. It is the objective of the Internal Audit Department to ensure that the Agency operates in accordance with laws, regulations, adopted policies, and established procedures, and to assist management and members of the Board in the effective discharge of their responsibilities.

  2. Internal Auditors are part of, and cooperative with, the management team in a joint effort to ensure success for DART in achieving its mission. Executive Management has direct input into the Internal Audit Department's plans, however, auditors must maintain independence in order to render impartial and unbiased judgments essential to the proper conduct of audits.
RESPONSIBILITIES

  1. The Director

    1. The Director of Internal Audit reports to the Audit Committee, which is charged by the Board with administering Board policies and procedures relative to the auditing function.

      1. The Director shall administer the daily operations of the Department and employ persons, firms, partnerships, or corporations deemed necessary by the Audit Committee.

      2. The Director shall develop an annual Audit Plan using appropriate risk-based methodology, including any risks or control concerns identified by management, and submit this Plan to the Audit Committee for review and approval.

      3. Any subsequent changes to the Audit Plan and special audit requests requiring more than 40 hours to complete shall be submitted to the Audit Committee for approval. The Director has the authority to investigate matters requiring less than 40 hours to complete.

      4. The Director shall submit to the Audit Committee for review and approval an annual Internal Audit Department budget, which will then be incorporated into the Agency's total budget for review and approval by the Board.

      5. The Director shall establish a quality assurance and improvement program to ensure the activities of the Department comply with the Standards for the Professional Practice of Internal Auditing.

      6. The Director shall attend meetings of the Audit Committee and furnish full reports, analyses, recommendations, advice, and/or summary information on a regular basis concerning the activities reviewed. Specific findings and recommendations of a significant nature are also to be reported in a timely fashion, as well as comments on the status of previous recommendations, as required.

      7. Audit observations and action plans should receive concurrence from management. Where there is a disagreement of the risk and materiality of the finding it should be brought up through the organization for a resolution. All significant observations and management action plans, or acceptance of the risk by management, shall be included in the audit report for presentation to the Audit Committee and issuance to the Full Board.

      8. The Director shall attend appropriate management, Committee and Board meetings.

    2. Exigent Circumstances

      1. The Director of Internal Audit may learn information or be apprised of a situation, circumstance or issue involving a possible violation of statutory law, regulation or policy that, in the Director's determination, is of sufficient seriousness to DART that immediate attention is required. In such an emergency, the Director may initiate an investigation, and report to the Audit Committee at the next regularly scheduled meeting.

      2. DART provides an ethics hotline to facilitate reporting of financial concerns, suspected wrongdoing or fraud. A Public Integrity Committee (PIC) composed of the President/Executive Director, General Counsel, and Director of Internal Audit will initiate investigations of such activity and report the result of significant activities to the Audit Committee.
  2. The Staff

    1. Internal Auditors perform their duties in accordance with the Government Auditing Standards and Standards for the Professional Practice of Internal Auditing. Auditors must cooperate with and be responsive to the needs of executive management, yet remain independent and objective when assessing management's performance of its responsibilities.

    2. Auditors review various departments at appropriate intervals to determine whether the departments are functioning efficiently and effectively, in accordance with management instructions, policies and procedures, and in a manner consistent with both Board policies and objectives and the high standards of administrative practice. Internal Auditors shall have the following responsibilities.

      1. Determine how efficiently and effectively the departments are carrying out their functions of planning, organizing, directing and controlling.

      2. Determine the reliability and integrity of financial information and the means used to identify, measure, classify and report such information.

      3. Determine the adequacy and effectiveness of the systems of internal accounting and operating controls.

      4. Review established systems to ensure compliance with those laws regulations, policies, plans and procedures, which could have a significant impact on operations and reports, and determine whether the organization is in compliance.

      5. Suggest policy where required.

      6. Review the means of safeguarding assets and, as appropriate, verify the existence of such assets.

      7. Appraise the economy and efficiency, with which resources are employed, identify opportunities to improve operating performance, eliminate waste and duplication, and recommend solution to problems where appropriate.

      8. Investigate potential or suspended fraud or other irregularities to correct wrongdoing.

      9. Review operations and programs to ascertain whether results are consistent with established objectives and goals and whether the operations or programs are being carried out as planned.

      10. Perform consulting services, beyond internal auditing assurance services, to assist management in meeting its objectives. These may include facilitation, process design, training, and advisory services.

      11. Coordinate Internal Audit efforts with those of the Board's external auditors and government auditors.

      12. Participate in the planning, design, development, implementation and operation of major computer-based systems to determine whether (a) adequate controls are incorporated in the systems, (b) thorough system testing is performed at appropriate stages, (c) system documentation is complete and accurate, and (d) the needs of user departments are met. Conduct post-installation evaluations of major data processing systems to determine whether these systems meet their intended purposes and objectives.

      13. Review compliance with the Board's guidelines for ethical business conduct and ensure that the highest standards of personal performance are met.

      14. Provide the President/Executive Director the opportunity to prepare a management action plan for each audit observation to be submitted to the Audit Committee for review along with the Audit Department report and observation. Management's action plan will indicate specific actions regarding findings and recommendations. Target dates or, if appropriate, a timetable for completion of these actions should be included in the action plan.

      15. Maintain regular contact with the President/Executive Director to share concerns, problems and/or opportunities identified in the audit reports to facilitate timely remedial or other action.

      16. Report to the Audit Committee and those members of management who should be informed, or who would take corrective action, the results of audit examinations, the opinions formed, and the recommendations made.

      17. Evaluate any plans or actions taken to correct reported conditions for satisfactory disposition of audit findings. If the corrective action is considered unsatisfactory, hold further discussions to achieve acceptable disposition.

      18. Provide adequate follow-up to make certain appropriate corrective action is taken and that it is effective.

      19. Conduct quality assurance peer reviews.

      20. Perform special projects at the request of the Audit Committee and executive management.

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