Attachment I

TEXAS STATE UNIVERSITY-SAN MARCOS INTERNAL AUDIT CHARTER

1. PURPOSE

Internal auditing is an independent appraisal function established within Texas State to examine its activities as a service to the University, the Board of Regents of the Texas State University System, and the TSUS Office. The objectives of the Office of Audit and Compliance are:

· to assist University staff in the effective discharge of their responsibilities; and

· to provide management and the Board of Regents with information about the adequacy and effectiveness of the University's system of internal control and the quality of performance.

The Office of Audit and Compliance furnishes management with analyses, appraisals, recommendations, counsel, and information concerning the activities reviewed.

2. AUTHORITY

The Director of Audit and Compliance reports directly to the Finance Committee of the TSUS Board of Regents through the System's Director of Audits and Analysis. The Finance Committee has oversight of the internal audit function in the System. This includes reviewing and approving annual audit plans, reviewing audit reports, and meeting annually with the Director to discuss areas of audit concerns.

The Director of Audit and Compliance reports administratively to the President. The independence achieved through this organizational status permits the Director of Audit and Compliance to render impartial and unbiased judgments essential for the proper conduct of audits.

The Director of Audit and Compliance will use risk analysis techniques to compile an annual audit plan. The Director will submit the audit plan to the President, System Office, and Finance Committee of the Board of Regents for approval by August 31.

After management has had the opportunity to respond to audit issues and recommendations, all final drafts of formal internal audit reports shall be sent to the TSUS Director of Audits and Analysis for final review and approval. After approval, all final audit reports will be sent to the President, appropriate Texas State management and the TSUS Director of Audits and Analysis who in turn will send copies to the Governor's Office of Budget and Planning, the Legislative Budget Board, and the State Auditor's Office. Reports classified as Category I according to criteria established by the TSUS Rules and Regulations, III.5(15)2(4) will be sent directly to the Chair of the TSUS Board of Regents Finance Committee. If management's responses are warranted but not included in the audit report, they should be sent to the parties named above as well as the Director of Audit and Compliance.

The Office of Audit and Compliance is unrestricted in its scope and is authorized to full, free access to all records, personnel, and physical properties relevant to the performance of audits for all University and foundation accounts.

3. RESPONSIBILITY

The scope of the internal auditing involves primarily the examination and the evaluation of:

1. The reliability and integrity of financial and operating information;

2. Compliance with policies, plans, procedures, laws and regulations;

3. The safeguarding and verification of assets;

4. The economical and efficient use of resources; and

5. The accomplishment of established objectives for operations and programs.

Internal auditors assume no operating responsibilities. The assumption of operating responsibilities impairs independence and objectivity.

4. INTERNAL AUDIT STANDARDS

The Office of Audit and Compliance shall conform to the Standards for the Professional Practice of Internal Auditing, the Certified Internal Audit Code of Professional Ethics, and the Statement of Responsibilities of Internal Auditing as promulgated by the Institute of Internal Auditors.