THINGS TO KNOW ABOUT AUDITS AT STANFORD
The Stanford Internal Audit Department has developed a protocol for dealing with audits and auditors, presented and discussed later in this Guide. To help understand the rationale behind Stanford's procedures, here is some general information about audits at Stanford :
Go back to Section 1, Terms and Concepts
- Auditors review transactions and documentation.
- An audit typically consists of a review of existing financial records and often requires additional information about the transactions being reviewed. The objectives of an audit can be accomplished by means of personal interviews with University personnel, written responses to questions posed by the auditors, or the provision of other documentation. Departmental staff are typically involved in interviews and responses to questions. Central offices (e.g., the Controller's Office, Government Cost and Rate Studies, Internal Audit) coordinate audits, sometimes attend interviews, and often prepare written responses to auditors' questions.
- Stanford management reviews draft audit reports.
- All audit reports, including those by non-Stanford auditors, are typically prepared in draft form and then submitted to Stanford for review and comment. This gives Stanford management the opportunity to correct misconceptions and to respond for the record in cases where auditors and Stanford cannot agree on the appropriateness or accuracy of a finding.
- Auditors question, but do not disallow, costs.
- If auditors identify financial transactions that they believe to be inappropriately classified, unreasonable, unallocable, or unallowable, they will question that transaction. Final decisions about the ultimate allowability of a questioned cost are made by a cognizant contracting official taking into account the auditor's report and Stanford's response. That final resolution can sometimes take a considerable amount of time. Immediate corrective action may be necessary only if Stanford concurs with the finding. You will be notified by the Controller's Office or Government Cost and Rate Studies (GCRS) if that is necessary.
- Auditors may project from a sample.
- Auditors typically select small samples of transactions for testing, and may project any errors identified to an entire population of expense, e.g., within a general ledger code or fund class. In such cases, auditors may test every transaction sampled, no matter how small or inconsequential it may appear to be. The disallowance of even a minor cost can therefore have a substantial impact.
Go ahead to Section 3, Auditors Working at Stanford
Back all the way to the Audit Survival Guide Home Page