MU finds procurement benefits

By Nikki Krawitz

The University of Missouri's internal audit reports have been the subject of recent stories and an editorial in the Southeast Missourian.

The articles, which originated in the Kansas City Star, reported details of some of the internal audit findings. However, neither the articles nor the Southeast Missourian editorial mentioned the key fact that it was the university that retained a private auditing firm to conduct the internal audits in the first place. Perhaps some of the misunderstanding has to do with the purpose of internal audits.

Underscoring its commitment to fiscal accountability, the university has for several years conducted internal audits of its business operations. We conduct the audits in order to identify problems, test the clarity of administrative procedures and improve performance.

The university had its own in-house auditing function for many years. Three years ago, the university outsourced internal audits to PriceWaterhouseCoopers.

Consistent with national internal audit best practices, the university performs a risk assessment to identify areas to be audited each year. The goal is to ensure that adequate internal controls are in place, transactions are accurate and proper and assets are accounted for and safeguarded. The internal auditors then identify where the university needs to strengthen its polices and procedures.

Time and experience have proven that internal audits work. A few years ago, the university implemented the use of procurement cards by employees in order to streamline purchasing and reduce costs. Knowing that there is risk associated with any purchasing activity, university management requested that the university's auditors regularly review procurement card practices.

The Southeast Missourian editorial stated that benefits from using procurement cards are outweighed by abuses. Our experience has proven otherwise. By using internal audits, university management is strengthening procurement-card procedures and reducing further the possibility of inappropriate purchasing activity. The procurement-card program has become a more cost-effective and efficient tool for monitoring purchases than the old paper-based system it replaced. More than 300,000 transactions are now tracked annually using this system. Over the past three years, as the use of the procurement card has grown, total purchasing has declined to $288 million from $305 million.

The university is committed to using its scarce resources efficiently and effectively to carry out teaching, research, and public service for the people of Missouri. Internal-audit findings enable us to take corrective actions to minimize risk and reduce the chance of fraud. They are a positive management tool and important to effective operation of the university.

Nikki Krawitz is vice president for finance and administration of the University of Missouri.