3.1 Internal auditors are responsible for reviewing, evaluating, and reporting on the institution's system of internal administrative and accounting controls and the efficiency and effectiveness of the operations when compared with established standards. The internal auditors are to have no authority or responsibility for the activities they audit. The objective of internal auditing is to assist the component president in the effective discharge of his or her responsibilities by furnishing objective analyses, appraisals and recommendations concerning the activities reviewed. To accomplish these objectives, the internal auditor is authorized to have full, free and unrestricted access to all property, personnel and records. The examination of patient medical records must serve a genuine audit need; and individual patients should not be identified in any audit report. The Texas Internal Auditing Act, the Standards for the Professional Practice of Internal Auditing published by the Institute of Internal Auditors, Inc. and "College and University Business Administration" published by the National Association of College and University Business Officers shall serve as guidelines for internal audit activities.

3.2 Each institution is expected to maintain an internal audit staff unless otherwise exempt from this requirement by the Chancellor. The institutional internal auditor reports to the institutional president or the institutional audit committee. The institutional internal auditor submits an annual audit plan for approval by the president and forwards a copy to the appropriate Executive Vice Chancellor and the System Director of Audits.

3.3 The System Director of Audits shall seek input into the System-wide audit plan from the institutional internal auditors. The implementation of the System-wide internal audit plan will be coordinated with the institutional internal audit plans to insure major risks are addressed yet duplication of effort is minimized.

3.4 The State Auditor's Office, as part of the legislative branch of state government, is the external independent auditor of The University of Texas System. The State Auditor's Office conducts financial and performance audits and makes recommendations for improving financial and management controls within The University of Texas System. The State Auditor's Office reviews The University of Texas System's internal control structure and operations to determine the scope of the examination and reliability of the entity's financial and nonfinancial data. The internal audit function is considered a part of the internal control structure of The University of Texas System.

The Chancellor, as chief executive officer of the System, is responsible for ensuring the implementation of appropriate audit procedures for the System. Accordingly, the System Director of Audits prepares an executive summary of all internal audit activity by the System internal auditors and the institutional internal auditors for the Chancellor. 3.31 System Director of Audits.

The System Director of Audits is responsible for coordinating the effective auditing of the System as set out in Subparagraph 3.312 of this Chapter. The System Director of Audits provides audit assistance to the Chancellor, the Executive Vice Chancellors and the Vice Chancellors in the exercise of their responsibilities. The Chancellor, as chief executive officer of the System, is responsible or insuring the implementation of appropriate audit procedures for the System. Accordingly, the System Director of Audits prepares a summary of all internal audit activity by the System internal auditors and the institutional internal auditors for the Chancellor, Internal Audit Committee, Business Affairs and Audit Committee and the Office of the Governor.

3.311 Appointment and Tenure.

The System Director of Audits shall be appointed by the Board after nomination by the Chancellor. The System Director of Audits shall hold office without fixed term, subject to the pleasure of the Chancellor. The Chancellor's actions regarding the System Director of Audits are subject to review and approval by the Board.

3.312 Duties and Responsibilities.

The primary responsibilities of the System Director of Audits include:

3.3121 Developing a System-wide internal audit plan based on a System-wide risk assessment and coordinating the implementation of this plan with the institutional internal auditors. This System-wide audit plan is submitted to the Business Affairs and Audit Committee for approval after the Chancellor's review and approval. 3.3122 Conducting audits of the System including the revenue produced from the Permanent University Fund lands.3.3123 Formulating policies for the internal audit activity at each component institution.

3.32 The System internal auditors are the internal auditors for the System and augment the audit work of the institutional internal auditor and the State Auditors at the component institutions.

Last updated 11/6/01