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Internal Auditor's Role in a Large State Fund

 

By Jerry Bonham, Texas Mutual Insurance Company

Every organization in AASCIF, regardless of its size, should have some type of internal control system or process. In many places this will include an internal auditing process. My colleague in Kentucky is writing to you about the role he plays as a staff of one. Since things are always bigger in Texas, I am pleased to share the role of my internal audit staff at the Texas Mutual Insurance Company.

The Board of Directors, to whom I report, and management believe that the Texas Mutual Insurance Company is best served by a fully resourced and professionally competent internal audit staff that provides value-added services and improves the organization's operations. My staff consists of four Financial & Operational auditors and three Information Technology auditors. This larger staff size allows for more breadth of services. During the past year, our services have included the following:

  • Traditional auditing in areas such as compliance with organizational procedures, laws and regulations; economic and efficient use of resources; safeguarding of assets; accomplishments of established objectives; responses to assertions of fraud; and reliability and integrity of financial information.
  • Facilitation of Control Self-Assessments (CSA).
  • External auditor support (annually we provide 500 hours of direct assistance to our external audit firm and share the results of our audit activities).
  • Educating and orienting personnel on risk assessment and internal control concepts.
  • Consultation and special projects on numerous topics ranging from computer security, systems evaluation, corporate governance matters, and responses to new legislation.

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As you can see, our role is more than the traditional activities of reviewing compliance, assuring safeguards and recommending controls. At the Texas Mutual Insurance Company one of our roles is a facilitator, primarily through CSAs. This powerful self-governance tool was adopted by the Texas Mutual Insurance Company in 1997 as an alternative method of evaluating internal control systems. CSA utilizes the traditional audit concepts of risk and control; however, these concepts are combined with a quality-focused workshop to make the evaluation of controls a collaborative effort. CSA has become so successful and routine we are frequently approached by management to facilitate a workshop.

Our role is also one of educator, as is highlighted in our Board's Policy on Internal Audit Matters. Recently, we have played this role through the design of a 90-minute class on risk and control. Management has asked us to teach this class throughout the company. In 2001 we will conduct approximately 20 separate classes in the corporate and regional offices for all departments.

Another role is consultant. In this role our primary objective is to provide advice and counsel on business matters. The purpose of a consultation may include providing additional resources to research subject matters, explore opportunities, address a need, or assist in solving problems. An example in the past year was in the area of corporate governance. We were asked by the Chairman of the Board to research the recommendations of the SEC's Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees and make suggestions to improve the Board's audit committee activities.

An internal audit unit with in-staff professionals with CPA, CISA and CFE credentials enables us to broaden our services and serve many roles. Facilitator, educator, consultant, coach, reporter, explorer, analyst, and listener! It's all in a day's work.

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