National Internal Audit Committee
Quarterly Audits
Planning
Executing
Completing
Agenda
1. Why Audit?
2. Planning the Quarterly Audit
2. Executing the Quarterly Audit
3. Completing the Quarterly Audit
•Communication of Audit Results
•Entering Quarterly audits in the Red Zone
4. Reminders
5. Questions?
2
Annual IAR-1 ComplianceCollegiate Chapters
1. 100% of collegiate chapters reviewed by August 31
2. Approximately 98% of the collegiate chapters has errors
3. Typical Errors – omitting check signers, chapter presidents
conducting audits, errors in amount of Receipt and Expenses
reported
4. Q1 Bank Balance + Q2 Receipts – Q2 Expenses = Q2 Bank
Balance
3
Annual IAR-1 ComplianceAlumnae Chapters
1. Reviewed 100% of alumnae chapters with gross receipts in
excess of $50,000
2. Verified the proper service was performed by the CPA
3. Verified the correct document was uploaded
4. Verified the CPA had a valid license
5. Review of differences between Sum of Gross Receipts
reported each quarter vs Gross Receipts reported on AFR
(990) vs Gross Receipts reported CPA
4
Why Audit?
Purpose of an Internal Audit
An internal audit is the mechanism by which a chapter
assesses the level of compliance to chapter policies and
procedures and internal controls.
The better the control environment, the less likely unexpected
events are to adversely affect an entity's ability to execute on its
strategies and achieve its objectives.
Performing quarterly internal audits helps prevent:
 Theft
 Fraud
 Embezzlement
6
Purpose of an Internal Audit
An Internal Audit:

Increases accountability

Improves:
- ethical and professional practices
- the quality of output and supports decision-making and
performance tracking

Can be used :
- to examine and evaluate activities
- as a service to the institution promoting effective control at a
reasonable cost

Helps organizations achieve their stated objectives
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Purpose of an Internal Audit
The misappropriation of funds is due primarily to fiscal
officers not performing their duties and responsibilities.
All chapters should have fiscal policies and procedures in
place that define its internal controls for safeguarding chapter
assets.
The audit assesses whether fiscal officers are performing their
duties according to the written policies.
The audit also helps highlight potential problems that may
result in future financial losses if not corrected.
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Constitutional Requirements
Audit of Chapter Accounts
Constitution and By-Laws
Article X; Section 12.B
The books of a chapter shall be audited by a certified public accountant or
an audit committee within 30 days of the close of the fiscal year. A copy
shall be submitted to National Headquarters via the online system by
August 31.
NOTE: Failure to submit the Internal Audit Report (IAR-1) and/ or a copy
of the external audit to National Headquarters by August 31st is a
violation of the Constitution and By-Laws and may be subject to
sanctions and fines as stated in Section 5 C of the Code of Conduct.
9
Code of Conduct Penalties
Failure to submit the Internal Audit Report(IAR-1) and/ or a copy of the
external audit to National Headquarters by August 31st is a violation of
the Constitution and Bylaws and may be subject to sanctions and fines
as stated in Section 5 C of the Code of Conduct.
Failure to submit Annual Audit Report (IAR-1 Form):
 By the required deadline (August 31st)
Fine $200
 30-90 days after the required deadline
Fine $300
 More than 90 after the required deadline
Suspension for 6
Months or Fine $500
10
Selection of the
Internal Audit
Committee
Who should be on the Internal Audit Committee?
 Target sorors who have financial or audit backgrounds.
 Sorors who know about the chapter’s finances, but who
are not the current fiscal officers.
 A designated external person (Assisting Soror) can be
selected to perform the audit if the chapter’s size does
not permit the establishment of an internal audit
committee.
12
Chapter
Fiscal
Officers
Internal
Audit Key
Points
For Advisors
Assisting Soror
The Assisting Soror is the soror who conducts audits for collegiate chapters that
are not able to complete the process on their own.
 Needed when the chapter is too small to have a Chair of Internal Audit
 Appointed by a local Alumnae chapter if the chapter has < 4members
 Must NOT be an advisor (Primary or otherwise) of the collegiate chapter
 Must sign the Signature Page for uploading with the Annual IAR-1 Audit Form
Chapter Fiscal Management
13
Chapter
Fiscal
Officers
Internal Audit Key Points For Advisors
Audit Meetings
Advisors should NOT participate in the
audit
Advisors should be at the meeting
An Assisting Soror may be needed
14
Who should not be on the committee?
 Current Fiscal Officers
President, Treasurer, Financial Secretary, Assistant
Treasurer, Assistant Financial Secretary
 Members of the Budget/Finance Committee
 Chapter Advisors
NOTE: While not ideal, Immediate Past Financial officers may serve as
long as they do not audit or review transactions which they initiated or
were privy to.
15
Planning the Quarterly
Internal Audit
PLANNING THE AUDIT
Every successful audit is based on:
 Sound planning
 An atmosphere of constructive involvement
 Effective communication
17
PLANNING THE AUDIT
The Internal Audit Committee and the Chapter
Fiscal Officers should work together to complete
the internal audits by:
 Developing a process (how it will be done), and
 Agreeing to a timeframe (when it will be done)
Chapters should know that the Internal Audit Committee:
 has an active interest in ensuring internal controls are in place
and effective and
 wants to ensure that the established policies and procedures
are being followed
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Planning the Quarterly Audit
Key Audit Reporting Dates
IAR-1 Form
Quarter 1 (July 1 to September 30)
Quarter 2 (October 1 to December 31)
Quarter 3 (January 1 to March 31)
Quarter 4 (April 1 to June 30)
RED ZONE Due Date
December 1st
March 1st
June 1st
August 1st
All reports must be filed using the on-line
system in the Red Zone
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Planning the Internal Audit
Scheduling the Quarterly Audits
The chapter’s financial records shall be audited quarterly, based on the
sorority’s fiscal year (July 1 – June 30).
The audit should begin two weeks after the end of the quarter.
The schedule for the fiscal year audits is as follows:
Chapter Audit
Committee Begins
Transaction Period
Audit
Q1 July 1 - September 30
2nd week in October
Q2 October 1 - December 31
2nd week in January
Q3 January 1 - March 31
2nd week in April
Q4 April 1 - June 30
2nd week in July
Annual IAR-1
N/A
External Audit/External Review N/A
File in the
Report to Chapter by
Red Zone
2nd week in November Dec. 1
2nd week in February Mar. 1
2nd week in May
Jun. 1
Sep. Chapter meeting Aug. 1
Sep. Chapter meeting Aug. 31
Sep. Chapter meeting Aug. 31
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Documents Needed
President
Copies of emails sent from merchant and/or PayPal accounts if any
Financial Secretary
Receipt Records Register (Log)
Receipts book for the audit period
Financial reports for audit period
Membership records for the audit period (including dues transmittals)
Recording Secretary
Copies of the Chapter Minutes
Copies of the Board Minutes
21
Documents Needed – Cont’d
Treasurer:
–
–
–
–
–
–
–
–
–
–
Current Internal Control Procedures (Chapter Policies and Procedures)
Chapter Budget
Financial Reports for the audit period
Annual Financial Report (Form 990) for audit period
Disbursements Register/Log
Check Stubs or copies for all bank accounts
Bank Statements and cancelled checks for All bank accounts
Bank Reconciliation(s) for all bank accounts
Duplicate deposit slips for all bank accounts
Vouchers and supporting invoices for all disbursements during the audit
period
– Financial correspondence from banks and merchant accounts
22
Executing the Quarterly
Internal Audit
23
Receipts
Receipts represent the total funds collected from
dues, conferences, fundraising, etc.
Objectives
• Ensure that all cash/check receipts are deposited timely
(within 2 business days of receipt)
• Confirm that the receipts are recorded accurately
NOTE: Receipts do not include the movement/transfer of monies
between chapter accounts (example transfers from Operating to
Fundraising).
24
Validating Receipts
Comparison of Financial Secretary's Log to Deposits
Receipt Log (Financial Secretary's Log)
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Total
$ 4,500.00 $ 6,017.18 $ 3,951.06 $ 390.00 $ 860.00 $ 1,384.06 $ 881.09 $ 456.09 $ 18,439.48
Cumulative $ 4,500.00 $ 10,517.18 $ 14,468.24 $ 14,858.24 $ 15,718.24 $ 17,102.30 $ 17,983.39 $ 18,439.48
Deposits from Bank Statement
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Total
$ 4,500.00 $ 5,702.18 $ 3,951.06 $ 705.00 $ 860.00 $ 1,384.06 $ 881.09 $ 456.09 $ 18,439.48
Cumulative $ 4,500.00 $ 10,202.18 $ 14,153.24 $ 14,858.24 $ 15,718.24 $ 17,102.30 $ 17,983.39 $ 18,439.48
Difference
Apr
$
Cumulative $
-
May
Jun
Jul
Aug
$ 315.00 $
$ (315.00) $
$ 315.00 $ 315.00 $
$
-
Sep
$
$
Oct
-
$
$
Nov
-
$
$
-
Total
$
-
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Validating Receipts
Comparison of Financial Secretary's Log to Treasurer's Reports
Receipt Log (Financial Secretary's Log)
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Total
$ 4,500.00 $ 6,017.18 $ 3,951.06 $ 390.00 $ 860.00 $ 1,384.06 $ 881.09 $ 456.09 $ 18,439.48
Cumulative $ 4,500.00 $ 10,517.18 $ 14,468.24 $ 14,858.24 $ 15,718.24 $ 17,102.30 $ 17,983.39 $ 18,439.48
Treasurer's Report
Apr
$
Cumulative $
-
May
Jun
Jul
Aug
Sep
Oct
Nov
Total
$ 4,500.00 $ 6,437.05 $
$
$ 1,485.00 $ 1,284.06 $ 456.09 $ 14,162.20
$ 4,500.00 $ 10,937.05 $ 10,937.05 $ 10,937.05 $ 12,422.05 $ 13,706.11 $ 14,162.20
Difference
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Total
$ 4,500.00 $ 1,517.18 $ (2,485.99) $ 390.00 $ 860.00 $ (100.94) $ (402.97) $
$ 4,277.28
Cumulative $ 4,500.00 $ 6,017.18 $ 3,531.19 $ 3,921.19 $ 4,781.19 $ 4,680.25 $ 4,277.28 $ 4,277.28
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PAYPAL Transactions
• Funds may be received or withdrawn from a valid PayPal
Business Account.
• The chapter’s financial polices and procedures must
include detailed guidelines for use and management.
• The fees to use PayPal are NOT to be passed on to
individuals who use the service.
• The chapter President will be listed as “owner” ; the
Treasurer and Financial Secretary are listed as “users”.
NOTE:
A sample of 10% of the emails sent to the
primary address should be selected and tested for proper
inclusion on the relevant Treasurer’s report.
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Disbursements
Disbursements represent the total checks and
non check payments (wire transfers, etc.)
issued.
Objectives
 Ensure that all disbursements are recorded
timely.
 Disbursements are properly supported and
approved.
 Disbursements are recorded accurately.
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Validating Disbursements
Check#
Date
Check Made
Payable To:
Check
Amount
Voucher
Exists
Yes
1
2184
VOIDED
2
2203
Karen Soror
3
2276
4
2309
5
2424
6
2481
$
No
Dual
Signatures
Separation
Yes
Yes
No
No
Documentation
Yes
Comments
No
-
$ (29.19)
Delta Sigma Theta $(160.00)
Teresa Soror
Cash
Hotel California
$(282.23)
$ (30.00)
Payable to cash
$(275.50)
This is the “Disbursements” tab from the Quarterly Audit Form.
29
Member Dues
Member Dues represent the total local chapter
dues and Grand Chapter dues received.
Objectives
 Ensure that all dues are recorded timely and
accurately.
 Ensure that all Grand Chapter dues are
appropriately sent to National Headquarters
within 30 days as required.
30
Member Dues Verification
31
Dues Exceptions
Examples of Dues Exceptions

Dues which were not sent to National headquarters within 30 days

Dues that were sent prior to the soror’s check having cleared

Dues which were sent without local dues having been received

Dues that are not properly reflected in the chapter’s receipt books
and corresponding reports

Dues which were submitted in the incorrect amount

Dues whose transmittal name, dues fiscal year, fees, membership
code/type and payee amount DO NOT agree with the receipt copy
or Financial Secretary’s dues log
32
Bank Balances
The bank balances represent the amount of
cash available in the chapter’s bank accounts.
Objectives
 Ensure the chapter bank balances are accurate.
 Ensure the chapter discloses all bank accounts
and balances.
 Ensure the bank account reconciliations are
performed timely.
NOTE: The Book Balance does NOT have to equal (be the same
as) the Bank Balance. For example, there may be outstanding
checks or deposits which will cause a difference.
33
Bank Balances – Sanity Check
Q4 Bank balance
Q1 Bank balance
+ Q1 Receipts
+ Q2 Receipts
- Q1 Expenses
- Q2 Expenses
= Q1 Bank balance
= Q2 Bank balance
Q2 Bank balance
Q3 Bank balance
+ Q3 Receipts
+ Q4 Receipts
- Q3 Expenses
- Q4 Expenses
= Q3 Bank balance
= Q4 Bank balance
34
Communication of Audit
Results
Internal Audit Communication
The culmination of the internal audit is the audit
report.
The audit report should be designed to assist chapter
leadership in measuring its own performance - particularly with
respect to the reliability and soundness of established internal
controls.
The Internal Audit Committee should report any audit findings
and recommendations to the chapter after each audit.
The results of the internal audit are confidential and should only
be discussed through the formal communications mechanisms
set forth in the chapter’s policies and procedures.
36
Audit Communication
Summary Report
Summary Audit reports have three major objectives:
1. Inform
2. Persuade
3. Obtain results
The Summary Audit report should contain:
 Heading, including chapter name, period, and type of report
 A high level overview of the scope including the period under
review
 A summary of the findings, and
 An opinion of the overall state of the records
37
Audit Communication
Detailed Audit Report
The Detailed Audit Report contains the comprehensive results of the
audit testing which supports the information in the Summary Audit
report.
Ensure that the report:






Is clear, concise, and free of unnecessary detail
Is consistent in any conclusions expressed
Summarizes operating policies and procedures referenced
Is easily understood, presented logically, and is to the point
Is constructive and balanced throughout
Use graphics or attachments, as appropriate, which help to
convey points or provide additional information
 DOES NOT contain any personal information
38
Drafting The Audit Report
 List recommendations and relate back to findings
 Refer to Delta reference documents as necessary
(2014 Audit Manual, Constitution & By-Laws, Chapter
Management Handbook, Finance Manual, Chapter
Policies and Procedures, etc.)
 The Audit Reports are to be filed with the recording
Secretary and made available for review at both
Executive Board and Chapter meetings only
39
Completing the
Quarterly Internal Audit
How to Enter
Quarterly IAR-1 Results
into
The Red Zone
IAR-1 Quarterly Form Input
• The IAR-1 Form should be input by the chapter’s
current Internal Audit Chair. When all input is
complete the current Internal Audit Chair will
electronically sign the form.
• The current chapter president reviews the data
input by the current Internal Audit Chair and
then electronically signs the form.
42
IAR-1 Quarterly Form Input
Log into the Red Zone
43
IAR-1 Quarterly Form Input
44
IAR-1 Quarterly Form Input
Click on Actions Forms and then Audit Reports
45
IAR-1 Quarterly Form Input
Use your Sisters Portal logon and password
here to enter the Financial Forms area
46
IAR-1 Quarterly Form Input
Select Quarterly Forms from the menu
on the left side of the screen
47
IAR-1 Quarterly Form Input
Select Start a New Report from the
menu on the right side of the screen
48
IAR-1 Quarterly Form Input
Obtain these
amounts
from the
audit work
papers
which were
completed
prior to
coming into
the Red
Zone.
Ensure that
the correct
quarter and
year are
selected.
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IAR-1 Quarterly Form Input
50
IAR-1 Quarterly Form Input
Chapter information
will be prepopulated.
Obtain the Expenses
and Gross Receipts
information from the
audit work papers.
51
IAR-1 Quarterly Form Input
52
IAR-1 Quarterly Form Input
Add accounts as
necessary.
NOTE: The
e
Checkbook
balance is the
balance as per
the Treasurer’s
Report as of the
quarter end.
53
IAR-1 Quarterly Form Input
Note: The
prepopulated
amount was
entered when the
form was started.
Click “ADD
DISBURSEMENT”
to enter result of
the test.
54
IAR-1 Quarterly Form Input
Enter the
information
from the
Audit Form
which was
completed
in advance.
.
55
IAR-1 Quarterly Form Input
Note: The
prepopulated
amount was
entered when
the form was
started.
.
56
IAR-1 Quarterly Form Input
Enter the
information
from the
Audit Form
which was
completed
in advance.
.
57
IAR-1 Quarterly Form Input
Note: Check
Signers information
is required.
.
The Bonded Members
information will be
prepopulated based on
the information in the
Red Zone at the time
the form is being
completed.
58
IAR-1 Quarterly Form Input
Note: The
prepopulated
amount was
entered when
the form was
started.
Enter the Dues
Exceptions
ONLY !!!
59
IAR-1 Quarterly Form Input
60
IAR-1 Quarterly Form Input
Select an Overall Finding
61
IAR-1 Quarterly Form Input
The Chair of Internal Audit signs the form after entering the
results of the audit.
She then lets the Chapter President know the form is ready for
her review and signature.
62
Quarterly Audit
REMINDERS
63
Quarterly IAR-1 Reminders
•
Complete the Excel Audit form & Worksheets before input to the Quarterly IAR-1.
The Audit Form (which includes worksheets) can be found on the National website
under National Committees - Internal Audit.
•
Ensure that the Gross Receipts and Expenses for each quarter agree with the
Treasurer’s reports to identify differences early.
•
Verify that the Chapter President has signed the IAR-1 especially if a new
President is coming into office
•
All worksheets and schedules of the IAR-1 must be completed. I.e.
– Cash receipts worksheet
– Disbursements worksheet
– Member dues worksheet
Collegiate Chapters –
•
May need to contact the National Internal Audit Committee for a Secondary
Signature if the chapter does not have a Chair, Internal Audit
•
If there was no activity for a particular quarter, request an exemption from the
Regional Director
64
Collegiate Chapter Reminders
Quarterly IAR-1 forms must be signed by both the CURRENT chapter Internal Audit
Chair and the CURRENT chapter president to be accepted.
Collegiate Chapter Advisors must attend the audit meetings but CANNOT
prepare or sign the IAR-1 form.
If the chapter has 3 members or less and does not have an Internal Audit Chair,
the chapter president should:
1. Secure the services of an Assisting Soror to conduct the audit. (The Advisor
can assist in this process.)
2.
Obtain the completed Audit Form and Signature Page from the Assisting Soror.
3.
Log in the Red Zone and enter the required information
4.
Chapter President and Chair, Internal Audit must sign electronically in The Red
Zone.
5.
Send an email to the chapter’s NIAC Liaison if a Secondary Signature from
the Chair, NIAC is needed.
65
Delta Audit Website
Resources
The following forms and documents are available on
the Delta Website:
Log in to the Members Only area. Click on National
Committees and scroll down.
66
National Internal Audit Committee
Liaisons
•
•
•
•
•
NIAC Member
Soror Taylor Wilborn –
Soror Tiffany Addison –
Soror Myrna Phillips –
Soror Shanta Belyeu Soror Tonya Smalls -
Chapters
A,B
E, F, H
I-N
O-T
C,D,G and U-Z
67
National Internal Audit Committee
Chair
Myrna Phillips, CPA, MBA PMP
CNIACDST@gmail.com
Alumnae Members
Shanta Belyeu
Dr. Tonya Smalls
naturaldst3@gmail.com
alumnaemem.niac@gmail.com
Collegiate Members
Tiffany Addison
Taylor Wilborn
Addison.NIADST@gmail.com
Wilborn.NIADST@aol.com
Staff Liaisons
Gwendolyn Dailey
Crystal Mitchell
Terry Jones
gkdailey@deltasigmatheta.org
cmitchell@deltasigmatheta.org
tjones@deltasigmatheta.org
68
Recommendations to Improve
Collegiate Audit Experience
1. Automate the NIAC financial activity analysis
2. Allow the Primary Advisor and RD the ability to view the chapter’s submissions
3. Require the Advisor’s and Assisting Soror’s contact information be a part of each
filing
4. Send a copy of the audit submission to Primary Advisor’s and Assisting Soror
5. Require an Assisting Soror for chapters that have less than 10 members
6. Provide additional audit training
7. Conduct webinar training in Spring and in early Fall
69
Recommendations to Improve
Alumnae Audit Experience
1. Provide training on what service to request from their CPA
2. Provide training on what documents to receive back from
their CPA
3. Provide training on how to vet a CPAs status before the
Engagement Letter is signed
4. Update technology to allow documents to be deleted and
uploaded again if necessary
70
• Delete Button
• Reminder to Enter Check Signers
• Question regarding use of Debit Cards
• Automated reminder of approaching deadline
• Freeze Bonded Member info
• Approaching $50k threshold
• Date audit report presented to chapter
• Automated email that a filing was missed
• Primary Advisor and Assisting Soror contact info
• Replace “Accepted” with “Submitted”
71
QUESTIONS
All questions submitted during this
webinar will be compiled and posted
on the National Website in the near
future.
For time sensitive questions please
email your NIAC liaison.
Thank you for joining us!
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