AUDIT REPORT

Key Findings for 2014

SMU ASSURANCE AND ADVISORY TEAM

SMU Assurance Advisory Team Key Findings 2014

Contents
Introduction.......................................................................................2
Audit Methodology.............................................................................3
Independence....................................................................................4
Overview............................................................................................5
2014 Summaried Findings:................................................................6
Audit Findings in Detail......................................................................7
Issue 1: Asset Monitoring and Disposal..........................................7
Issue 1: Recommendation...........................................................7
Issue 2: Retention of past years club budget.................................8
Issue 2: Recommendation...........................................................8
Issue 3: EXCO handing over and selection criteria.........................9
Issue 3: Recommendation..............................................................9
Issue 4: Retention of Receipts and Claims....................................10
Issue 4: Recommendation............................................................10
Issue 5: Unclear selection criteria for trainers..............................11
Issue 5: Recommendation.........................................................11
Issue 6: Petty Cash Management.................................................12
Issue 6: Recommendation.........................................................12
Limitation of Audit Work..................................................................13
Recommendations for CBDs and other governing bodies................14
Future Initiatives of SAAT.................................................................15

SMU Assurance Advisory Team Key Findings 2014

Introduction
The SMU Assurance and Advisory Team (SAAT) is under the mandate
of Dean of Student and perform internal audit functions on the
operations and financial function of the clubs. We are advised by Mr.
Raymond Singh (Dean of Students Office) and Prof Gary Pan (School
of Accountancy); who is taking over from Ms Ng Luck Pia (School of
Accountancy).
Each year, we conduct two audit cycles covering 10-12 clubs (refer
to as auditee hereon) each. The number of auditee varies with our
assessment on the resources at hand and the expected complexity
of the auditee. We aim to cover most of the major school clubs at
least once every three years. Once the auditee are selected at
random, we will allocate them to our audit team where care is taken
to avoid the issue of conflict of interest.
SAAT is in charge of reviewing and evaluating the internal systems
and procedures of the CBDs and CCAs. It also helps to boost
efficiency and effectiveness of the processes which allows the clubs
to achieve their goals more systematically.
SAAT engages in both Operational Audit (OA) and Financial Audit
(FA). The OA involves examing the internal processes, funding
issues, recruitment matters, possible club closures and transitioning
of new changes within the clubs. It adheres to the ISO 31000 Risk
Management Framework which is shown in the below table. The FA
is performed to enhance the confidence of stakeholders by ensuring
the claims of the CBDs and CCAs are done with respect to SMUSA
Finance Guidelines.

SMU Assurance Advisory Team Key Findings 2014

Audit Methodology
Our audit follows the follow sequences modeled after the ISO 31000:
Step
:

Action

(Planning) Understand the club interview process,

documentation request

(Planning) Map out the processes in a club this will let

you know what are the key activities that the clubs are
doing and also, what are the obvious missing controls
required for the smooth operation of the activity
Example: Purchase of Item. Missing steps of
authorization.

(Planning) Initial Risk Assessment of the club based on

activities identified above this quantify the level of risk
for activities and identify what activities to audit in details
later

(Fieldwork) Conduct walkthrough with the clubs to verify if

what was mentioned in step 1 and 2 are real. Check for
supporting documents. Keep a lookout for possible
missing controls and other issues not detected during our
planning stage

(Post Fieldwork) Final Risk Assessment compare what we

have obtained in Step 4 with Step 3. What are the
differences missing steps or supporting documents?
Additional risks identified? What are the recommended
actions to mitigate these risks?

(Post Fieldwork) Prepare report based on step 5 to show

to auditee (clubs). Let them justify themselves. Collect
additional evidence to prove/disprove our findings,
prepare final report for DoS.

In 2014, we have initiated several changes:

SMU Assurance Advisory Team Key Findings 2014

1)

2)
3)

Revised audit methodology to include fieldwork and a

review on the internal controls on financial processes. This
change is made following up on advice from Ms Ng Luck
Pia and our annual review on audit findings.
In 2014, we also initiated the audit of two CBDs following
feedback from the student population.
New sharing series on top 3 audit findings across auditee
for process improvement.

SMU Assurance Advisory Team Key Findings 2014

Independence
Our policy is that the auditor, manager or director should not be
involved in the audit of any CCA they have participated in or
potentially participating in the semester.
We have a policy of mandatory disclosure and we would require our
members to update their status every semester. We would request
for interviews with our members and background checks by
enquiring with the CCA which the team is undergoing audit if only
necessary. Similarly, our managers would be alert for these
circumstances when they are undertaking the audit of various CCA
Records.
We have multiple audit teams and their associated managers and
directors. We ensure functional independence between teams and
confidentiality; they do not share any information with each other.
All conflicts of interest are resolved and audit plans approved by the
Dean of Students.

SMU Assurance Advisory Team Key Findings 2014

Overview
In 2014, we initiated a new audit schedule where two operational
audit cycles are to be conducted between January-April and AugustDecember; and a financial audit cycle in August-December. This is a
departure from the previous schedule where only one operational
audit cycle is conducted in the first half of the year and the second
half of the year is reserved for financial audit.
For the first cycle, we audited 12 clubs and the findings are
presented below. For the second cycle, we encountered numerous
issues such as EXCO handover, which results in a long delay of
responses or no responses in some cases. For our financial audit,
delays at the Finance department meant that our audit team only
received our documents in December, one week before the final
examinations.
As this is the first time we are adopting this schedule, we are
reviewing the feasibility of conducting two operational audits.

SMU Assurance Advisory Team Key Findings 2014

2014 Summaried Findings:

Issues

Details

Administrati
ve

Inadequate handover procedure

Retention of records (Budgets etc.)
Exco selection process
Incomplete or absence of assets listing
Improper procedure for writing-off of
assets
Asset Management
Petty Cash Management
Budget Monitoring
Retention of copies of receipts
Unclear selection criteria for trainers

Logistics

Finance

Training/
Operation

Number of
observatio
ns
3
2
1
4
1
1
1
1
1
1

General comments: we have audited several new clubs formed

within 2 years and noticed that common issues such as membership
retention and succession. Going forward, we recommend OSL to
consider a probation period of 1 year for new CCAs to demonstrate
their ability to gather significant interest and generate sufficient
activities to sustain club participation.
We understand that SMUSA has initiated the new standings orders
instructions for compliance by all clubs. We are in the process of
reviewing the standing orders to understand how we can assist in
the compliance review.

SMU Assurance Advisory Team Key Findings 2014

Audit Findings in Detail

The top five improvement areas that we would like to highlight are
as followed:
1)
2)
3)
4)
5)

Asset Monitoring and Disposal

Retention of past years club budget
EXCO handing over and selection criteria
Past claims record
Unclear selection criteria for trainers

Issue 1: Asset Monitoring and Disposal

We noticed several clubs with incomplete or outdated asset listing.
Asset listing should include all fixed assets owned by the club and
updated consistently to ensure a proper tracking of all assets. A
complete asset listing can help to minimize the risk of asset
misappropriation
and
assist
in
the
monitoring
and
maintenance/disposal of old equipment.
Issue 1: Recommendation
Clubs should conduct a full stock take at least one every semester
and record it in an excel sheet containing three tabs: asset listing
(legacy); asset listing (current); and asset listing (disposed). The first
tab is used for assets with unknown date of purchase. The next tab
is for assets with known date of purchase. The last tab is for assets
that have been disposed (transferred from the first two tab).
At appropriate intervals, clubs will conduct their stock take and
update the asset listing accordingly. A copy will be sent to their
supervising body and it will be compared against the previous copy.
Any changes will have to be justified.
By doing this, it allows proper tracking of all assets to minimize
possibility of asset misappropriation and to highlight assets that
need to be repaired, maintained or replaced.

SMU Assurance Advisory Team Key Findings 2014

Issue 2: Retention of past years club budget

During our audit, numerous clubs are unable to show us past years
records of their budget utilization. If clubs fail to retain the budget of
the previous years, they will not be able to effectively budget for the
current year. The previous budget serves as a tool for clubs to make
effective planning with current levels of resources. By having at
least two years of budget, clubs can also conduct variance test to
identify areas of concern for closer monitoring.
Issue 2: Recommendation
Clubs can consider retaining their budget for at least 2 years to
assist them in the analysis of variance and form a basis for their
budget forecasting. It is recommended that the clubs print out their
budget and file it properly. And this budget hardcopy folder will be
taken care by the finance director and pass on to the successors.

SMU Assurance Advisory Team Key Findings 2014

Issue 3: EXCO handing over and selection criteria

From our observation and discussion with auditees, a lack of
structured handing over procedure can result in the incoming EXCO
being unclear of the various internal processes and usually, also
result in a lost of records, contacts and learning points from previous
activities. A structured handing over procedures can help to
orientated the new EXCO and ensure a continuous process
improvement to the club.
In one club, we noted that a lack of transparency in EXCO selection
and subsequent handling of leadership position in the club has
raised tension in the club. As the EXCO is tasked with leading the
clubs activities, the selection criteria should be clear and the
election process as transparent and accountable as possible to instill
trust from the members.

Issue 3: Recommendation
Clubs can rely on SMUSAs Guideline and Standing Orders to guide
the handover procedure. Moreover, the leaving EXCO should
consider to commit at least three months to assist the new EXCOs in
familiarizing the operations and procedures of the club.
Excos should prepare guidelines and manuals in hardcopy and keep
this in the CCA room where it is accessible to the authorized
personale. CCAs are also recommended to maintain common folders
with at least the previous batch of exco through file sharing sites or
cloud platforms. The hardcopy will provide necessary documentation
on the job scope of each portfolio, experience sharing and checklist,
etc.
During the handover, CCAs are recommended to have at least one
meeting session between the outgoing committee and incoming
committee

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SMU Assurance Advisory Team Key Findings 2014

Issue 4: Retention of Receipts and Claims

During our financial audit, we noticed that many clubs do not keep
record of the receipts and claim forms that they have submitted. By
keeping the actual expenses in an orderly manner can help the club
to keep track of the actual expenses to avoid over-spending and
also this can be used as a reference for the upcoming budgeting for
the club.

Issue 4: Recommendation
Clubs can keep a photocopy of the submitted receipts and claim
forms for their own reference and keep track of the actual use of the
budget in a timely manner. Clubs are advised to keep a record of all
receipts for the current year. This will prevent any instances when a
dispute arises due to a mismatch in claims submitted and actual
amount received. When this event arisres, clubs can track the actual
amount, or if there are further issues such as lost receipts during the
process of making claims.
With the new computerized system in 2015, clubs would be able to
keep track of their claims and receipt. Clubs are also advised to
keep track of their expenditure via an excel sheet and perform
timely review of their expenditure. This will ensure that they are
able to maintain expenditure against the budgeted amount.

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SMU Assurance Advisory Team Key Findings 2014

Issue 5: Unclear selection criteria for trainers

We found out that many CCAs have unclear selection criteria for
trainers, due to the time and budget constrain. An improper trainer
will result in a poor attendance or member retention rate in the CCA
as the trainees couldnt get the training they expect it to be.
Issue 5: Recommendation
Clubs should have a guildline regarding to the selection of the
trainers. The guideline should include the trainers year of
experience, the price the trainer charged, and the available timing
of the trainer, etc. Clubs should document the trainers considered
and the rationale behind the final decision.

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SMU Assurance Advisory Team Key Findings 2014

Issue 6: Petty Cash Management

We found out that some CCAs do not keep track of the level of petty
cash they have. These petty cash are sometimes collected from the
members or exco for non-official welfare activities and small
expenses. While these are non-official uses which do not impact
SMUs finances, poor petty cash management and documentation
could result in misuse or loss of funds. This is essential in ensuring
that members have confidence and trust in supporting the clubs.
Issue 6: Recommendation
Clubs should maintain a petty cash movement list, detailing who
and when the cash has been collected from, and for which purporse
it has been disbursed or spent. The exco is recommended to review
this list at least annually. These controls will minimize any instances
of losing cash or misuse of cash as there will be proper evidence
and tracking of cash movements.

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SMU Assurance Advisory Team Key Findings 2014

Limitation of Audit Work

For the vast majority of our engagement, SAAT received sufficient
co-operation from the auditee. However, at times, we encounter
CCAs that are unresponsive.
Going forward, SAAT wish to establish a formal procedure to seek
the assistance of OSL and SMUSA to provide a passageway of
communication with such auditee if the need arise.
We would also like to point out that no reasonable and effficient
audit process is able to prevent or detect all the risks involved. Risk
management is a process for every individual club member and risk
awareness is crucial for prevention and detection of risks.

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SMU Assurance Advisory Team Key Findings 2014

Recommendations for CBDs and other governing

bodies
CBDs and other governing bodies, as bodies of authorithy, play a
crucial examplarory role in the risk management process and a key
middle man for knowledge transfer.
CBDs and other governing bodies are recommended to provide
reminders for newly appointed executive committee members on
the best practices through communications via emails or meetings.
These best practices include various compliance matters, and
internal controls, which comprises of:
Finance
- Quotation procedures
- Budget submission procedures
- Claims submission procedures
- Sponsorship procedures
Logistics
- Quotation procedures
- Asset Disposal procedures
Training
- Safety procedures
- Training and attendance of first-aid trainned personnel
Administrative
- Handover procedures
All governing bodies are recommended to provide timely reminders
for CCA for the retention of the following documents, which would
also be required for the audit process:
1.
2.
3.
4.
5.

Events (planning and execution for the year)

Finance budget for at least 2 years
Statement of income and expenses for at least 2 years
Inventory and Asset listings
Statement for Petty Cash

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SMU Assurance Advisory Team Key Findings 2014

Future Initiatives of SAAT

To aid in spreading risk awareness to the various student bodies,
SAAT would aid through publishing small snippets of write-ups of
good practices of internal controls. This write-ups would be
conveyed in the form of a series of emailers, covering a different
theme in each emailer.
This initiative is in response to a call for a greater role for SAAT to
play in the transfer of awareness and knowledge on financial
procedures. However, SAAT does not limit its scope in financials and
accounting reporting risks alone; the above intiaitve seeks to serve
as a general educational solution to aid clubs to mitigate the
plathorea of risks which different student bodies raise.
This initiative would start as a pilot program in the academic year
2015-2016, as SAAT continues to look at various platforms to
promote risk awareness in student bodies.

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