In today's highly regulated and litigious business environment, which includes colleges and universities, it is crucial for provosts/chief academic officers to stay updated on legal matters relating to the delivery of academic programs. This includes ensuring the legal adequacy of policies, contracts, and compliance practices, as well as being proactive in identifying potential legal issues that could impact the institution. Your institution’s legal counsel is a vital partner in navigating these challenges, especially since most provosts are not lawyers, and even those who are do not function with responsibility of providing legal review/advice.

Sometimes audits are conducted by internal auditors or other offices, and often the provost is involved on the academic side.

The checklist below outlines key issues and questions to help determine when consulting with legal counsel is necessary or advisable. It also covers considerations for effectively managing external audits, whether related to sponsored programs, governmental reviews, public inquiries, or board oversight. The checklist is intended to highlight critical areas that may require legal or other colleague consultations.

Checklist: Preparing for an External Audit^[1]

Planning & Preparation

• Designate an experienced audit point person (liaison) with strong project management and communication skills.
• Send a communication to faculty and staff to notify your point person if auditors contact them directly.
• Develop a list of contacts to be kept informed of the audit progress. (President, CFO, Board of Trustees, Public Relations, etc.)
• Develop a list of people who can provide support on technical issues and gather documentation.
• Schedule and conduct general training sessions for individuals who may participate in the audit.
• Contact auditors to set up an initial conference, clarify the audit purpose, and request written audit requirements.
• Alert your internal audit department of the upcoming audit.( Board Audit Committee Chair?)
• Make necessary arrangements for the audit team: meeting rooms, preliminary interview schedules, Initial conference specifics including attendees.
• Make a list of the auditor’s contact information, including the name and number of the supervisor.

Preparing for the Initial Audit Conference

• Develop a list of questions to discuss during the Initial conference, including purpose, objectives, scope, awards, sampling techniques, timelines, and communication process
• Consider giving the auditor(s) a tour.
• Determine staffing and space requirements, including internet access for auditors during the audit process.
• Arrange for auditor on-site space and modify meeting room needs, as necessary.

During and After the Audit

• Obtain the list of requested records and develop an approach for timely information provision.
• Review records (with legal counsel) prior to submission to ensure they provide necessary support and anticipate potential questions.
• Maintain a list of all records provided to the auditor and who provided the record and when.
• Meet with auditors (at least weekly, either in person or by zoom)to discuss the audit status and potential issues.
• Verify the facts on which issues are based; perform re-calculations and review source documents if necessary.
• Communicate weekly with internal stakeholders needing status updates.
• Ensure that your point person attends meetings between faculty/non-financial staff and external auditors unless otherwise insisted.
• Set up an exit interview with the auditor and appropriate internal staff.

Preparing for the Exit Interview with the Auditor

• Request a copy of each finding or draft report prior to the exit interview – No Suprises.
• Include representatives from other groups, e.g., general counsel, internal audit, office of sponsored programs, controller’s office, public relations, Board professional etc., based on the nature of the issues.
• Agree on valid findings and negotiate where facts are not representative of any identified control weaknesses.
• Discuss with the auditor the disposition of the audit issues and the final report: verbal comments, report items, or the management letter.
• Escalate disputed issues to the appropriate supervisors (yours and theirs)

Reviewing the Audit Report

• Request the final draft report for review in advance of final acceptance of the report.
• Draft management responses and circulate to management for approval before sending your responses to the auditor.
• Understand the follow-up process.
• Perform an internal post-audit evaluation to identify weaknesses and potential improvements for future audits. Include your legal counsel in these meetings if confidentiality may be necessary.

^[1] Although the checklist is general and intended as a reminder, it provides you with information to help ensure institutional compliance and reduce risk. I hope you find the checklist helpful. And I welcome your feedback, so please let me know what I can do to strengthen this document, particularly once you have traversed the external audit process. Please be sure to consult with your legal counsel on matters requiring legal advice.

You can reach me at [email protected]

 Written by Mary E. Kennard, Esq., Senior Consultant, AcademicSearch.org