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1.1 Purpose

The internal audit function strengthens ÇÑ×ÓÊÓƵ’s (University) ability to create, protect, and sustain value by providing the Internal Audit Committee (IAC) and management with independent, risk-based, and objective assurance, advice, insight, and foresight to enhance the University’s successful achievement of its objectives, governance, risk management and control processes, decision-making and oversight, reputation and credibility with its stakeholders, and ability to serve the public interest.

1.2 Policy Statement and Applicability

Internal Audit Mandate: The Texas Internal Auditing Act (Texas Government Code, Chapter 2102) establishes guidelines for a program of internal auditing to assist agency administrators and governing boards by furnishing independent analyses, appraisals, and recommendations about the adequacy and effectiveness of a state agency's systems of internal control policies and procedures and the quality of performance in carrying out assigned responsibilities.

1.3 Accountability

1.3.1 The Chief Audit Executive, in the discharge of duties, shall be accountable to the IAC to:

1.3.1.1 Discuss the appropriate authority, role, and responsibilities of the internal audit function;

1.3.1.2 Provide an internal audit charter, which includes the internal audit mandate and the scope and types of internal audit services. This shall be subject to the committee’s approval;

1.3.1.3 Coordinate the internal audit function's IAC communications with the Cabinet to support the committee's ability to fulfill its requirements;

1.3.1.4 Confirm the organizational independence of the internal audit function at least annually. This includes communicating incidents where independence may have been impaired and the actions or safeguards employed to address the impairment; and

1.3.1.5 Communicate the results of the internal quality assessment. The results of the external quality assessments must be reported when completed.

1.4 Independence

To provide for the independence of the internal auditing activity, the Chief Audit Executive reports directly to the IAC and must be free of all operational and management responsibilities that would impair the ability to review independently all aspects of the University per the Texas Internal Auditing Act (Texas Government Code, Chapter 2102). The Chief Audit Executive reports administratively to the President and the Executive Vice President and Chief of Staff and has an indirect reporting relationship to The University of Texas System (U.T. System) Chief Audit Executive, who has responsibility for oversight of the internal auditing activity for U.T. System as well as the reporting responsibility for all components, to the Board of Regents.

1.5 Responsibility

1.5.1 The internal audit function has the following responsibilities:

1.5.1.1 Develop a flexible annual audit plan using an appropriate risk-based methodology, including any risk or control concerns identified by management, and submit the plan to the President, IAC, and the Board of Regents for review. The IAC gives final approval of the plan, as well as any material changes (audit/project additions or deletions) made throughout the plan year;

1.5.1.2 Implement the annual audit plan as approved, including as appropriate any special projects requested by the Cabinet of the University, U.T. System officials, or the Board of Regents;

1.5.1.3 Report significant issues related to the processes for controlling the activities of the University and its affiliates, including potential improvements to those processes;

1.5.1.4 Have and maintain a professional audit staff with sufficient knowledge, skills, experience, and professional certifications to meet the requirements of the audit charter and the Texas Internal Auditing Act;

1.5.1.5 Issue quarterly reports to the President, the IAC, and the Chief Compliance and Ethics Officer, at IAC meetings summarizing results of audit activities;

1.5.1.6 Assist in the investigation of significant issues within the University and notify appropriate members of the Cabinet of the results;

1.5.1.7 Consider the scope of work of the external auditors and regulators, as appropriate, for the purpose of providing optimal audit coverage to the University;

1.5.1.8 Conduct quality assurance reviews in accordance with the Global Internal Audit Standards, the authoritative guidelines of the International Professional Practice Framework (IPPF) issued by the Institute of Internal Auditors, and the Generally Accepted Government Auditing Standards (GAGAS);

1.5.1.9 In accordance with GAGAS and the Texas Internal Auditing Act, take part in an external peer review at least once every three years;

1.5.1.10 Provide advisory services as appropriate;

1.5.1.11 Guide the University on control self-assessment by assisting management with risk self-assessment, and conducting self-audits;

1.5.1.12 Provide information to the U.T. System Chief Audit Executive as required or requested, to fulfill Systemwide audit oversight and reporting responsibilities;

1.5.1.13 Coordinate the University’s interaction with the State Auditor’s Office and other external audit entities;

1.5.1.14 File internal audit reports and related responses or action plans with the U.T. System Audit Office, Budget and Policy Division of the Governor's Office, State Auditor, and Legislative Budget Board; and

1.5.1.15 Prepare the annual report required by the Texas Internal Auditing Act and submit the report to the President, Executive Vice President and Chief of Staff, IAC, Director/Chief Compliance and Ethics Officer, U.T. System Audit Office, Budget and Policy Division of the Governor's Office, State Auditor, and Legislative Budget Board.

1.6 Authority

1.6.1 The internal audit function is authorized to:

1.6.1.1 Have full, free, and unrestricted access to all functions, activities, records, property, information systems, and personnel;

1.6.1.2 Allocate resources, set frequencies, select subjects, determine scopes of work, and apply the techniques required to accomplish audit objectives; and

1.6.1.3 Obtain the necessary assistance of personnel in units where they perform audits, as well as other specialized services from within or outside the University.

1.7 Standards of Audit Practice

The activities of the internal audit function will meet or exceed the Global Internal Audit Standards and the authoritative guidelines of the IPPF issued by the Institute of Internal Auditors. The Office of Auditing and Consulting Services (OACS) will also abide by GAGAS, the Texas Internal Auditing Act, and U.T. Systemwide Policies.

1.8 Definitions

The Internal Audit Committee (IAC) is an oversight body, which operates in accordance with the delegated authority afforded to it by U.T. System Policy 129.

Its primary responsibilities are to assist the President in the:

• Oversight and direction of the University’s internal auditing function,
• Evaluation of risks identified by management or through audit, advising management and elevating risk management and audit activities to the U.T. System, including the Audit, Compliance, and Management Review Committee (ACMRC),
• Approval of the annual audit plan and any changes to the plan,
• Approval of the Internal Audit Charter and Strategic Plan,
• Oversight of any external public accounting firms hired by the University.

Membership of the IAC is determined by the President and includes Vice Presidents, key management personnel, and three external members selected by the President. The IAC meets quarterly and as determined necessary by the President or IAC members.

1.9 References

1.10 Dates Approved or Updated

June 12, 2026

May 13, 2022

1.11 Contact Information