Board will oversee audits

Talk about it

FARGO — Internal auditors at North Dakota State University and the University of North Dakota will no longer report to presidents at the campuses they audit.

It’s one change the state Board of Higher Education recently made in response to recommendations from the state auditor’s office.

The internal auditors will report to the board’s Budget, Audit and Finance Committee to ensure their independence.

They will still report to campus officials for day-to-day administrative oversight, but hiring and firing decisions will be made by the committee. The committee also will review audit plans and reports.

“That’s the way business does it, and that’s the way it should be here,” said committee member Duaine Espegard.

A former NDSU internal auditor who says he was asked to resign when Joseph Chapman was president said this reporting structure is essential so an auditor can’t be asked to resign “at the whim of the management.”

Barry Miller, who was NDSU’s internal auditor from 2006 to 2008, e-mailed board members this month, urging them to change how internal auditors report so they have the flexibility to perform meaningful audits.

Miller said in the e-mail he believes he was asked to resign because he pointed out policy violations of management.

“During my tenure at NDSU it was becoming apparent that certain people were expected to abide by policies while others were not held to the same standards,” Miller wrote.

However, a longtime internal auditor at UND says reporting directly to the president works just fine.

Tim Rerick, director of auditing who has worked for UND for 28 years, said none of the four presidents he’s served under ever pressured him.

“None of them has ever compromised my independence, not in the least,” Rerick said.

State auditors made the recommendation to change the reporting structure in their annual audit of the North Dakota University System.

“Their objectivity and independence is eroded and the potential scope of their audit work is diminished by not reporting to the (state board),” the audit states.

Bruce Bollinger, NDSU’s new vice president for finance and administration, thinks the change is an important step.

“That’ll allow the Budget, Audit and Finance Committee members to review audit plans and reports more on a timely basis and be comfortable with the internal controls that we have here on the NDSU campus,” Bollinger said.

State auditors also have recommended that NDSU and UND increase the number of internal auditors and the system add internal auditing staff for the other nine campuses.

The board previously passed on this recommendation, primarily because of the cost involved.

The North Dakota University System office estimated it would cost $900,000 to $1.2 million per biennium to add the necessary auditors.

Board members will continue discussing ways to improve internal auditing without asking for more money from the state, said Jon Backes, chairman of the Budget, Audit and Finance Committee.

Rather than have the system pay for more internal auditors, perhaps campuses should reallocate money from their budgets to pay for them, Backes said.

“I think we need to do a better job of monitoring and I think we need to do that in a cost-effective manner,” Backes said.

Amy Dalrymple is a reporter at The Forum of Fargo-Moorhead, which is owned by Forum Communications Co.

Tags: north dakota, news, university, audit