B.1.2 Audit Services

B.1.2.1 Board Audit Committee

Responsible Department: Audit

Date Approved/Amended: December 2, 2010

The Board may form an audit committee to assist the Board in exercising its oversight responsibilities for fair presentation of HCC's annual financial statement audit and other audit engagements.

B.1.2.2 Annual Audit Report

Responsible Department: Audit

Date Approved/Amended: December 2, 2010

The Board must approve an annual audit report for the fiscal year. This report shall be filed with the Texas Higher Education Coordinating Board prior to January 1 next following the close of the fiscal year for which the audit was made. Three copies of the audit shall be submitted to the Coordinating Board and required copies submitted to other governmental agencies.

B.1.2.3 Internal Audits

Responsible Department: Audit

Date Approved/Amended: December 2, 2010

The Internal Auditor shall provide advice to the Chancellor and the Board, and shall work under the day to day supervision of the Chancellor. The Internal Auditor shall be selected by the Board from candidates approved and provided by the Chancellor. The Chancellor shall recommend three (3) names to the Board as the finalists, each with a minimum of 10 years of experience as a full-time Auditor. The Internal Auditor shall be evaluated by the Chancellor after consultation with the Audit Committee and may only be dismissed by the Chancellor after obtaining approval of the Board. Duties of the Internal Auditor are to:

  1. Coordinate audit efforts with those of the External Auditor.
  2. Perform all duties in accordance with the Standards for the Professional Practice of Internal Auditing, the Code of Ethics, the Statements on Internal Auditing Standards, and the Statement of Responsibilities of Internal Auditing, each as established by the Institute of Internal Auditors.
  3. Meet regularly with the Board and the Audit Committee to review audits performed, audits in progress, and future audits.
  4. Conduct independent, protective and constructive audits so as to review effectiveness of controls, financial records, and operations.
  5. Analyze data obtained for evidence of deficiencies in controls, duplication of effort, or lack of compliance with College policies and procedures.
  6. Prepare reports and make recommendations on findings to the Chancellor and the Board.
  7. Provide audit education and Internal Control training.
  8. Offer advisory services, Control Self-Assessment (CSA) services, and workshops.
  1. Investigation Responsibilities

The internal audit department is responsible for the initial factual investigation of College audit issues and shall promptly notify the General Counsel and the Chancellor within 24 hours of the initiation of the review. The Chancellor shall immediately notify the Chair of the Board. If any person who would otherwise be notified is a fact witness in the investigation, he or she shall not be involved in the administrative oversight or reporting of the investigation. Once a factual investigation establishes fraud, or a violation of law, the General Counsel shall communicate it to the Chancellor, and the Chancellor, in turn, shall immediately communicate the findings to the Board. The Board will determine whether to initiate an external investigation.

Decisions to or to turn the matter over to law enforcement authorities and/or regulatory agencies for independent investigation, and all final decisions regarding the disposition of the case, shall be made by the Chancellor, in consultation with the Board.

  1. Non-Retaliation

Any employee or student who reports suspected fraudulent activity, in good faith, shall be protected against any retaliation for making such a report. The reporting member of the campus community shall refrain from confrontation with the suspect, further examination of the incident, or further discussion of the incident with anyone other than the employee's or student's supervisor or others involved in the resulting review or investigation. Persons found to be making frivolous claims under this Policy will be disciplined, up to and including discharge of employment for an employee, or expulsion for a student.

  1. Confidentiality

The Director of Internal Audit may accept and initiate an investigation, on a confidential basis, from an HCC employee or student who suspects dishonest or fraudulent activity. Results of investigations conducted by the internal audit department shall be disclosed to and discussed with only the Chancellor and those persons associated with HCC who have a legitimate need to know based on the performance of their job duties and responsibilities.

  1. Fraud

The College prohibits fraud and financial impropriety in the actions of its trustees, employees, vendors, contractors, consultants, volunteers, and others seeking or maintaining a business relationship with the College.

B.1.2.4 External Auditor

Responsible Department: Audit

Date Approved/Amended: December 2, 2010

The External Auditor shall be an independent and objective party to provide advice to the Board. The External Auditor shall be appointed by the Board, upon the recommendation of the Chancellor, and shall report directly to the Board, with access to the Chancellor. The Board will periodically evaluate the performance of the External Auditor and may dismiss or assign a new External Auditor at any time with or without cause. All engagement letters with the External Auditor shall be signed by the Board Chair. The Board shall select an auditing firm for a designated period, not to exceed five (5) years, and shall rotate External Auditors every five (5) years.

  1. An auditing firm selected by the Board as External Auditor is not eligible to submit a proposal immediately following any period during which it was engaged by the Board as External Auditor. The selected External Auditor may not serve simultaneously as the Internal Auditor.
  2. The Board shall outline its expectations regarding the annual financial statement audit and performance audit, if requested, and as may be directed by the Board. The Board also may arrange for self-requested audits to perform specific audit services. The External Auditor shall evaluate all financial operations of the College and prepare reports to the Board. Among the duties of the External Auditor are:
  1. to perform audit activities necessary to assure that College resources are being properly managed and accounted for, that the College has effective and adequate internal controls, and that internal operating colleges are reliable.
  2. to assure that the College is complying with approved policies and statutory requirements.
  3. to develop an annual audit plan for the College to present to the Chancellor and the Audit Committee of the Board for approval.
  4. to perform all duties in accordance with the Standards for the Professional Practice of Internal Auditing, the Code of Ethics, the Statements on Internal Auditing Standards, and the Statement of Responsibilities of Internal Auditing, each as established by the Institute of Internal Auditors.
  5. to meet regularly with the Board to review audits performed, audits in progress, and future audits, as requested by the Board.