Internal Audit Purpose

1. The purpose of the USNH Internal Audit Department is to assist the Board of Trustees and management in establishing and maintaining policy and procedures that adequately protect the assets of USNH, and to provide the Board of Trustees and management an objective appraisal of compliance with, and adequacy of, existing internal controls.

Internal Audit Function

1. The internal auditing function is an objective appraisal activity within USNH's overall organizational structure. The Internal Audit Department is specifically authorized and directed to:

2. Have full, free, and unrestricted access, consistent with all applicable laws, to all USNH functions, files, records, property, and personnel.

3. Determine whether management's policies, procedures and instructions are followed in a manner consistent with USNH's objectives.

4. Evaluate any matter that comes to its attention that, in the judgment of the Internal Audit Director, would require a change in policy, procedure, or instruction in order to safeguard USNH assets.

5. Issue reports to members of management who should be informed or who should take appropriate action, showing the results of the internal audit review and offering recommendations for required improvements. The Internal Audit Director will ensure that all formal audit reports are delivered to each member of the Audit Committee of the Board of Trustees.

6. Obtain and evaluate plans or actions taken to implement audit recommendations from internal or external auditors and recommend further plans or actions if appropriate.

Internal Audit Operations

1. The Internal Audit Director will prepare a proposed audit budget for the next year. The audit budget will outline the scope and objectives of audit programs, projects and other activities, and resources necessary to perform them. The Chancellor's Office is responsible for providing the Internal Audit Department with adequate resources to perform the scope of its responsibilities. The Chancellor, through the Vice Chancellor for Financial Affairs, will direct the performance of the Internal Audit Department.

Audit Committee Function

1. The Board of Trustees' Audit Committee has the responsibility for reviewing the activities of the Internal Audit Department to make certain that it operates in accordance with this policy.

Audit Committee Operations

1. The Audit Committee will meet with USNH management and the Internal Audit Director at least annually and will:

   1. Discuss with management the plans and annual budget for the Internal Audit Department to ensure that it is performing in accordance with policy.

   2. Review and discuss the Internal Audit Department budget, as approved by management.

   3. Discuss with the Internal Audit Director any issues which might prevent him/her from performing the scope of his/her responsibilities. Should any such issue exist, the Audit Committee will take such action as is necessary to permit the Internal Audit Department to properly perform its function. Should the Internal Audit Director feel that he/she is hindered in complying with this policy, he/she has the responsibility to request a joint meeting with the Audit Committee and USNH management to propose to the Audit Committee necessary actions to permit him/her to perform in accordance with this policy.

   4. Review the reports issued by the Internal Audit Department.

   5. Discuss with the Board of Trustees' Financial Affairs Committee the plans and performance of the Internal Audit Department.

   6. Provide the Financial Affairs Committee with a report of each meeting of the Audit Committee.