Internal Audit Update
University of Minnesota Regents Audit Committee
February 9, 2012
This report includes:
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Audit Observations/Information/Status of Critical Measures/Other Items
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Status of “Essential” Recommendations & Bar Charts Showing Progress Made
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Audit Activity Report
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Audit Reports Issued Since September 2011
Details for any of the items in this report are available on request. Individual reports were sent to the President, Provost, Vice Presidents, and Chancellors about these internal audit issues.
Audit Observations/Information
Status of Critical Measures
As part of our on-going efforts to provide the Audit Committee with critical information in as
concise a format as possible, we have developed the following three charts to present a “snapshot”
status report on work performed by the Office of Internal Audit.
The first chart, “Essential Recommendation Implementation”, provides our overall assessment
of the success University departments had during the last quarter in implementing our essential
recommendations. Readings in the yellow or red indicate implementation percentages less
than, or significantly less than, our expected University-wide rate of 40%. Detailed information
on this topic, both institution-wide and for each individual unit, is contained in the next section of
this Update Report.
The second chart, entitled “Progress Towards Annual Audit Plan Completion”, is our
assessment of how we are progressing towards completion of the FY 2012 Annual Audit Plan.
Readings less than green could be influenced by a variety of factors (i.e. insufficient staff
resources; increased time spent on non-scheduled audits or investigations).
The final chart, “Time Spent on Investigative Activities”, provides a status report on the amount
of time consumed by investigative activities. Our annual plan provided an estimated budget for
this type of work, and the chart will indicate if we expect that budget to be sufficient. Continued
readings in the yellow or red may result in seeking Audit Committee approval for modifying the
Annual Audit Plan.
Essential Recommendation
Implementation
Implementation
rates were 67% for
the period, which is
much higher than
our expected rate
of 40%.
Progress Towards Annual Audit Plan Completion

Time spent to date
on the FY 2012
audit plan is about
what was expected
and budgeted.
Time Spent on Investigative
Activities

Time spent on
investigative activities
and special projects is
slightly less than what
was expected and
budgeted for the year
to date.
Overall Implementation of “Essential” Recommendations
During this reporting period University units invested substantial efforts to resolve outstanding
audit recommendations and the results of that effort have been impressive. While 67% of all
recommendations receiving follow-up were implemented, particularly noteworthy is the fact that
71% of the outstanding recommendations with an information technology component have been
brought to closure. This closure rate of information technology related recommendations is
materially higher than any period in the last 15 years. All but one of the outstanding
recommendations in reports addressed to a central OIT unit/leader were resolved during this
period.
The high implementation rate of outstanding recommendations has resulted in reducing by 55%
the audit reports needing further follow-up. There has not been another period in the last 15
years when so many audit reports have been brought to closure. During the current reporting
period 13 of the 18 reports with an outstanding information technology related finding were
closed.
Changes to the “Essential” Recommendations Spreadsheet
To provide the Audit Committee with enhanced information related to the recommendations we
rated as “essential” we have made the following changes to this document:
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We inserted a column titled “Original Report Control Rating” that includes our
assessment from the audit report of the state of controls in the unit audited. The
available ratings include “Good”, “Adequate” and “Needs Improvement”.
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For recommendations considered “Partially Implemented” or “Not Implemented” we
inserted columns to identify whether or not the recommendation was past the original
target date specified by management.
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We deleted a column that identified audits having issues where management was
making less than satisfactory progress. These items are still flagged on the spreadsheet
and comprehensive footnotes are provided when necessary.
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To better differentiate the length of time an audit has been outstanding the listing of
audits on the spreadsheet has been divided into three segments: “Audits > 2 years old”,
“Audits < 2 years old; have received prior follow-up”, and “Audits receiving first-time
follow-up”.
Additional Update on a Previous Audit
In 2009 we evaluated control systems in place for the AHC database “Time and Study
Collection System” (TASCS), which was then being modified to support and assist in managing
the clinical trial budgeting and billing process. Accurate and compliant billing for the medical
procedures associated with research activities requires the coordination of information among
the University, University of Minnesota Physicians (UMP) and Fairview Health Services. The
TASCS system provides the platform to facilitate this coordination. Research Administration
considers the information communicated in TASCS as the primary source supporting the
accuracy of clinical billing.
The 2009 audit concluded the TASCS system provided a platform for establishing a more
consistent and efficient research budgeting and billing process, but the controls in TASCS
needed to be improved for management to claim the integrity of the process and have
substantial confidence in the research billing process. AHC management consequently took
steps to improve the TASCS system and associated business processes that in some cases
involved Fairview and UMP.
A recent Research Billing Audit Report issued by Fairview’s Corporate Compliance function has
provided additional validation that the actions taken to improve TACSCS were effective. The
audit:
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Evaluated accuracy of charge routing to either insurance or clinical trial as per the
established billing grid for the study; and
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Determined if the right charges based on CPT code and documentation were assigned.
The testing results reported in Fairview’s audit report were very positive. The Research
Administration System Director at Fairview indicated the improvement made to TASCS was an
important contributing factor for the success reported.