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ADMINISTRATIVE PROCEDURE MANUALSECTION TITLE NUMBER PAGE

INTERNAL AUDIT 02-0601 1 OF 5BASED ON BOARD OF TRUSTEES RULE AND TITLE DATE ADOPTED

6Hx7-2.2 Internal Organizati n !e"te#$er 1%& 1''2

(UR(O!E

T)e "*r" +e , t)i+ +e ti n i+ t e+ta$li+) t)e "*r" +e& a*t) rit & re+" n+i$ilit an/ "r e/*re+ , r t)eInternal A*/it De"art#ent.

I!!ION

Internal A*/iting i+ an in/e"en/ent a""rai+al ,*n ti n e+ta$li+)e/ it)in an rganizati n t exa#ine an/e al*ate it+ a ti itie+ a+ a +er i e t t)e rganizati n. T)e $3e ti e , internal a*/iting i+ t a++i+t#anage#ent an/ t)e 4 ar/ in t)e e,,e ti e /i+ )arge , t)eir /*tie+. It i+ t)e 4 ar/ + re+" n+i$ilit t +et

" li ie+& an/ t)e a*/it r + r le t in/e"en/entl an/ $3e ti el anal ze& re ie & an/ e al*ate exi+ting

"r e/*re+ an/ a ti itie+& t re" rt n n/iti n+& an/ t re ##en/ )ange+ , r n+i/erati n. T t)i+en/& internal a*/iting ,*rni+)e+ anal +e+& a""rai+al+& re ##en/ati n+& *n+el& an/ in, r#ati n n erningt)e a ti itie+ re ie e/.

HAR E! AND RE!(ON!I4ILITIE! OF INTERNAL AUDIT8

1. De el " an a*/it "lan t e al*ate t)e in+tit*ti n + ,inan ial& "erati nal an/ ED( ntr l+.

2. A++e++ t)e e n #i al an/ e,,i ient *+e , re+ *r e+.

9. Deter#ine t)e le el , #"lian e it) e+ta$li+)e/ la +& r*le+& " li ie+ an/ "r e/*re+.

%. Re ##en/ a/ "ti n , /e+ira$le " li ie+ r )ange+ t exi+ting " li ie+.

5. F ll -*" n t)e a/e:*a , rre ti e a ti n+.

6. n/* t +"e ial "r 3e t+ at t)e re:*e+t , t)e 4 ar/.

7. In e+tigate a+e+ , #i+a""r "riati n& #i+ n/* t& ,ra*/.

;. E+ta$li+) an/ #aintain "r ,e++i nal ra"" rt it) external a*/it r+ an/ #anage#ent.

'.

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arr ing *t t)e $3e ti e+ , an a*/it.

2. All 4 ar/ #e#$er+ )a e *nre+tri te/ a e++ t t)e Internal A*/it r. T)e Internal A*/it r )a+*nre+tri te/ a e++ t all 4 ar/ #e#$er+. T)i+ "r # te+ in/e"en/en e. =!ee A( 01-0109, r "r e/*re+ n erning t)e A*/it ##ittee , t)e 4 ar/.>

9. T)e Internal A*/it r +)all /e el " an a*/it "lan , r re ie an/ a""r al $ t)e A*/it##ittee. T)e a*/it "lan +)all $e a""r e/ ann*all . T)e a*/it "lan i+ $a+e/ n a*/it ri+?

area+ i/enti,ie/ $ 4 ar/ #e#$er+& t " #anage#ent& external a*/it re+*lt+& an/ internala*/it r ex"erien e. T)e Internal A*/it r ill /e el " a*/it $3e ti e+ an/ + "e+ , r ea )a*/it n t)e a""r e/ a*/it "lan , r t)e "re+i/ent + re ie an/ t)e A*/it ##ittee + re ie

an/ a""r al. T)e a*/it "lan i+ +*,,i ientl ,lexi$le t er *nanti i"ate/ /e#an/+ n t)eInternal A*/it r gi en t)e )anging llege en ir n#ent& e.g.& *nanti i"ate/ internal a*/itarea+ #a +*r,a e /*e t external a*/it re+*lt+& r e i/en e , ,ra*/ #a +*r,a e t)at re:*ire+i##e/iate Internal A*/it r attenti n. T)e A*/it ##ittee +)all re ie an/ a""r e a

)ange in t)e a*/it "lan.

%. T)e Internal A*/it r +)all n ti, t)e /e"art#ent $eing a*/ite/ , t)e $3e ti e an/ + "e ,t)e a*/it an/ t)e ti#eta$le , r #"leti n , t)e a*/it.

5. T)e Internal A*/it r +)all "er, r# a*/it+ in a r/an e it) generall a e"te/ a*/iting+tan/ar/+.

6. T)e Internal A*/it r #a "er, r# /i,,erent t "e+ , a*/it+8

a. F*ll A*/it - N r#all & ,*ll a*/it+ are re:*ire/ )en an area )a+ ne er $een a*/ite/ $e, re& r +igni,i ant )ange+ )a e *rre/ +*$+e:*ent t t)e la+t a*/it. A ,*ll a*/itre:*ire+ #"leti n , all , t)e , ll ing ")a+e+8

1. (reli#inar !*r e an/ (lanning2. ! +te# D *#entati n9. Internal ntr l E al*ati n%. A*/it (r gra#5. A*/it Te+ting6. Re" rt+ an/ n,eren e+

$. eneral A*/it - A general a*/it *+*all / e+ n t re:*ire t)e #"leti n , all t)e ")a+e+, a ,*ll a*/it. T)e t "i + are *+*all n/* te/ ear a,ter ear an/ ten/ t re:*ire t)e

+a#e te+ting. T)ere i+ n nee/ t ,*ll / *#ent t)e + +te# an/ n+i/er t)e i#"a t ,internal ntr l+ again - it i+ nl ne e++ar t en+*re t)at t)e + +te# )a+ n t /ra+ti all

)ange/ +in e t)e "ri r a*/it.

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. !" t A*/it - A +" t a*/it i+ a "eri /i a*/it , a "arti *lar tran+a ti n at a "arti *lar " int in ti#e )i ) gi e+ rea+ na$le a++*ran e t)at ntr l+ in "la e are +till r?ing.Re+*lt+ , +" t a*/it+ #a )el" /eter#ine i, a ,*ll a*/it +) *l/ $e + )e/*le/. Exa#"le+are8 an in ent r l ati n te+t& a +*r"ri+e a+) *nt& r an *nann *n e/ "a r ll/i+tri$*ti n.

/. !it*ati nal A*/it - A +it*ati nal a*/it i+ narr er in + "e t)an a ,*ll a*/it. It+ i+*+*all an *nanti i"ate/ "r 3e t t)at #a ta?e "ri rit er a "lanne/ a*/it. T)e , *+i+ *+*all $a+e/ n a "re i *+l i/enti,ie/ +"e i,i ntr l ea?ne++& r t)e li?eli) /t)at a ea?ne++ n t rea/il i/enti,ia$le exi+t+. Exa#"le+ are8 a #anage#ent r 4 ar/re:*e+te/ +"e ial "r 3e t& an integrit r ,ra*/ relate/ i++*e.

e. F ll -*" A*/it - T)e , *+ , a , ll -*" a*/it i+ t nta t t)e a*/ite/ /e"art#entt /eter#ine i, "re i *+l agree/ t re ##en/ati n+ )a e $een i#"le#ente/. T)e, ll -*" a*/it #a re:*ire a//iti nal te+ting t en+*re t)at ntr l+ are r?ing an/e,,e ti e a+ anti i"ate/. An atte#"t +) *l/ $e #a/e t n/* t a ti#el , ll -*" a*/iti, a "re i *+ a*/it *n ere/ +eri *+ ntr l i++*e+.

,. O"ini n - An "ini n #a $e re:*ire/ regar/ing a +"e i,i i++*e& "r e/*re& r ta+?. Iti+ "art , Internal A*/it + re+" n+i$ilitie+ t "r i/e *n+el t #anage#ent. (r i/inga "r ,e++i nal "ini n re:*ire+ ,a t-,in/ing re+ear ) +* ) a+ rea/ing a*t) ritati e text+&) l/ing /i+ *++i n+ it) ?e +ta,,& an/ re ie ing re+*lt+ , "re i *+ a*/it+ a+

a""li a$le.7. T)e Internal A*/it r ill ##*ni ate re+*lt+ , t)e a*/it. A,ter t)e a*/it ,iel/ r? i+

#"lete/& t)e a*/it r ill /i+ *++ t)e re+*lt+ it) a*/ite/ /e"art#ent #anage#ent. T)eInternal A*/it r ill "re"are a /ra,t =#ar?e/ , r /i+ *++i n "*r" +e+ nl > "reli#inar re" rtt $e +)are/ it) t)e a*/ite/ /e"art#ent #anage#ent. A,ter /i+ *++i n an/ re ie it) t)ea*/ite/ /e"art#ent #anage#ent a+ t ntent an/ r/ing , t)e re" rt& t)e "reli#inarre" rt i+ /ate/& +igne/ $ t)e Internal A*/it r an/ i++*e/ t t)e /e"art#ent #anage#ent. T)e

"re+i/ent +)all re ei e a " , t)e "reli#inar re" rt. T)e a*/ite/ /e"art#ent )a+ tee?+ t re+" n/ t an re ##en/ati n+ r ##ent+ ntaine/ in t)e "reli#inar re" rt.

T)e "re+i/ent an a*t) rize an exten+i n , t)e re+" n+e /*e /ate i, *nanti i"ate/ir *#+tan e+ *r it)in t)e a*/ite/ /e"art#ent. T)e re+" n+e+ +) *l/ ex"lain t)e

/e"art#ent + rre ti e a ti n+& t)e /ate+ , i#"le#entati n& r t)e rea+ n+ n rre ti ea ti n ill $e ta?en. T)e Internal A*/it r +)all /eter#ine t)e #"letene++ an/ "r "riet ,t)e re+" n+e+. I, t)e re+" n+e+ are /ee#e/ n t a""r "riate& t)e Internal A*/it r ill #eet

it) t)e a*/ite/ /e"art#ent #anage#ent t re ##en/ an alternati e re+" n+e. T)e "re+i/ent ill re ei e a " , t)e ,inal re+" n+e+. T)e Internal A*/it r ill in r" rate t)e,inal re+" n+e+ int t)e "reli#inar re" rt it)in t ee?+ , re ei"t , t)e re+" n+e+. T)e,inal re" rt& )i ) in l*/e+ #anage#ent + re+" n+e+ ill $e re ie e/ $ t)e A*/it )air , r

#"letene++. T)e ,inal re" rt ill $e /ate/& +igne/ $ t)e Internal A*/it r an/ i++*e/ t t)eA*/it ##ittee an/ t t)e "re+i/ent. T)e a*/ite/ /e"art#ent #anage#ent ill re ei e a

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INTERNAL AUDIT 02-0601 % OF 5BASED ON BOARD OF TRUSTEES RULE AND TITLE DATE ADOPTED


;. In + #e a+e+& a "reli#inar re" rt i+ n t ne e++ar $e a*+e t)e Internal A*/it r )a+ nre ##en/ati n+ , r t)e a*/ite/ /e"art#ent #anage#ent r n re+" n+e i+ ne e++ar . Int)e+e a+e+& t)ere i+ nl a ,inal re" rt. T)e /ra,t ,inal re" rt ill $e /i+ *++e/ it) t)ea*/ite/ /e"art#ent #anage#ent. A,ter /i+ *++i n an/ re ie it) t)e /e"art#ent a+ t

ntent an/ r/ing , t)e re" rt& t)e Internal

A*/it r ill , r ar/ t)e "re+i/ent a " , t)e /ra,t re" rt. T)e re" rt ill $e re ie e/ $t)e A*/it )air , r #"letene++. T)e re" rt ill $e /ate/& +igne/ $ t)e Internal A*/it r an/i++*e/ t t)e A*/it ##ittee an/ t t)e "re+i/ent. T)e a*/ite/ /e"art#ent #anage#ent illre ei e a " .

'. A*/it re" rt+ +) *l/ $e /i+tri$*te/ t t) +e ) are a$le t en+*re t)at a*/it re+*lt+ are gi en/*e n+i/erati n.

!TANDARD! FOR THE (ROFE!!IONAL (RA TI E OF INTERNAL AUDITIN 8

T)e , ll ing in, r#ati n i+ ta?en /ire tl ,r # t)e !tan/ar/+ , r t)e (r ,e++i nal (ra ti e ,Internal A*/iting "*$li+)e/ $ t)e In+tit*te , Internal A*/it r+. It i+ t)e internal a*/it r +re+" n+i$ilit t , ll t)e +tan/ar/+. !tan/ar/+ are t)e riteria $ )i ) t)e "erati n+ , aninternal a*/iting /e"art#ent are e al*ate/ an/ #ea+*re/. T)e "r e/*re+ li+te/ a$ e +) *l/ re,le tt)e i#"le#entati n , t)e +tan/ar/+.

100 In/e"en/en e - Internal a*/it r+ +) *l/ $e in/e"en/ent , t)e a ti itie+ t)e a*/it. T)i+ i+a #"li+)e/ t)r *g) rganizati nal +tat*+ =t)e /ire t re" rting relati n+)i" t t)e 4 ar/> an/

$3e ti it in "er, r#ing a*/it+.

200 (r ,e++i nal (r ,i ien - Internal a*/it+ +) *l/ $e "er, r#e/ it) "r ,i ien an/ /*e "r ,e++i nal are. Internal a*/it r+ +) *l/ #"l it) "r ,e++i nal +tan/ar/+ , n/* t@ t)e+) *l/ " ++e++ t)e ?n le/ge& +?ill+& an/ /i+ i"line+ e++ential t t)e "er, r#an e , internal a*/it+.Internal a*/it r+ +) *l/ $e +?ille/ in /ealing it) "e "le an/ in ##*ni ating e,,e ti el @ t)e+) *l/ #aintain t)eir te )ni al #"eten e t)r *g) ntin*ing e/* ati n. Internal a*/it r+ +) *l/exer i+e /*e "r ,e++i nal are in "er, r#ing a*/it+. T)i+ all+ , r t)e a""li ati n , t)e are an/+?ill ex"e te/ , a rea+ na$l "r*/ent an/ #"etent internal a*/it r in t)e +a#e r +i#ilar

ir *#+tan e+@ it i#"lie+ rea+ na$le are an/ #"eten e& n t in,alli$ilit r extra r/inar "er, r#an e.

900 ! "e , r? - T)e + "e , t)e internal a*/it +) *l/ en #"a++ t)e exa#inati n an/e al*ati n , t)e a/e:*a an/ e,,e ti ene++ , t)e rganizati n + + +te# , internal ntr l an/ t)e:*alit , "er, r#an e in arr ing *t a++igne/ re+" n+i$ilitie+. T)e $3e ti e+ , internal ntr lare8

1> T)e relia$ilit an/ integrit , in, r#ati n.

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2> #"lian e it) " li ie+& "lan+& "r e/*re+& la +& an/ reg*lati n+.

9> T)e +a,eg*ar/ing , a++et+.

%> T)e e n #i al an/ e,,i ient *+e , re+ *r e+.

5> T)e a #"li+)#ent , e+ta$li+)e/ $3e ti e+ an/ g al+ , r "erati n+ an/ "r gra#+.

%00 (er, r#an e , A*/it r? - A*/it r? +) *l/ in l*/e "lanning t)e a*/it& lle ting&anal zing& inter"reting& an/ / *#enting in, r#ati n t +*"" rt a*/it re+*lt+& ##*ni atingre+*lt+& an/ , ll ing *" t a+ ertain t)at a""r "riate a ti n i+ ta?en n re" rte/ a*/it ,in/ing+.

500 anage#ent , t)e Internal A*/it De"art#ent - T)e Dire t r , Internal A*/it =i.e.& InternalA*/it r> +) *l/ "r "erl #anage t)e /e"art#ent + t)at a*/it r? ,*l,ill+ it+ a""r e/ general

"*r" +e+ an/ re+" n+i$ilitie+ an/ t)at t)e a*/it r? n, r#+ t t)e !tan/ar/+ , r t)e (r ,e++i nal(ra ti e , Internal A*/iting.

=Fr # !tan/ar/+ , r t)e (r ,e++i nal (ra ti e , Internal A*/iting $ T)e In+tit*te , InternalA*/it r+& " rig)t 1'7; $ T)e In+tit*te , Internal A*/it r+& In .& 2%' aitlan/ A en*e&Alta# nte !"ring+& FL 92701 U!A. Re"rinte/ it) "er#i++i n.>

A/ "te/ Date8 N e#$er 2& 1';7Re i+i n Date8 !e"te#$er 1%& 1''2

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