3.9 Property Audits
Property management systems, policies, and processes are routinely reviewed and audited to determine whether established performance standards and acceptable levels of compliance are being met.
Audits provide a systemic check or assessment, review, and evaluation of Stanford’s property control system. Results serve as a basis to confirm effectiveness and identify areas for potential improvement and risk management. The key to an acceptable property management system and a successful audit is timely, verifiable, accurate, and complete record keeping that are in compliance with all established policies, procedures, and standards.
Satisfactory audit results are critical. Compliance with University and Sponsor requirements help ensure ongoing availability of assets and maximize the benefits and support to University instruction, research, and administration. Departments are responsible for facilitating ongoing property awareness and enabling compliance with established policies and procedures.
1. Key Policy Statements
- Property Management Office (PMO) is the primary liaison for property related audits.
- Departments are responsible for facilitating ongoing property awareness and enabling compliance with established policies and procedures.
- All external property audits must be coordinated through PMO or Internal Audit.
- Departments should notify PMO if they are directly contacted by an external auditor for a property related audit.
- Departments are responsible for providing and maintaining documentation as necessary for audit support.
- A Department Property Administrator (DPA) should attend all relevant ongoing training to remain aware of property compliance requirements.
2. Auditing Organizations
Various organizations, both internal and external, perform or participate in the performance of property audits at Stanford. These include but are not limited to:
- Stanford Internal Audit Department
- Office of Naval Research (ONR)
- Defense Contract Audit Agency (DCAA)
- Price Waterhouse Coopers (PWC), Stanford’s independent auditor
- PMO Self-Assessment
PMO assumes the role of primary liaison between the University and the departments for property-related audits. If an outside agency contacts a DPA or other department personnel directly regarding an audit, refer the auditor to your Property Programs Manager (PPM) within PMO for coordination.
When audits are scheduled, PMO will provide advance notification to departments when possible. The DPA should be actively involved and may be requested to participate as an escort. They must be able to locate and identify property as requested by auditors and be able to provide supporting documentation upon request. If the DPA cannot provide these services, it is important that they inform the audit liaison of someone that can, such as a technical representative.
3. External Audits
The government and Stanford’s independent auditor, PwC, conduct broad procedural audits on a regular basis. These audits may be property-specific or include property-related transactions as part of other system audits.
The ONR is delegated administrative and contractual oversight for the majority of federal awards received by Stanford. They are the primary external auditing agency, which conducts the Property Control Systems Analysis (PCSA) reviews on behalf of the government at Stanford. In addition, there may be other sponsors, such as Department of Energy (DoE) and National Institute of Health (NIH), who also conduct property audits. The DCAA also performs audits involving property management. PwC is responsible for the financial systems audits per the Uniform Guidance requirements.
The purpose of these audits is to determine whether the policies and procedures which reflect government, other sponsor and Stanford requirements are documented, and established standards are met. Successful completion of these audits is critical to ensure appropriate systems controls are in place to mitigate financial or compliance risk as well as continued approval of Stanford's property management system.
4. Internal Audit by Stanford
As a proactive measure, Stanford’s Internal Audit Department is responsible for conducting audits to ensure system-wide database integrity and training efficacy as well as to confirm that detailed transactions are accurate and timely. Internal Audit, from an institutional compliance perspective, ensures that laws, regulations and contractual requirements are being met at all levels within the University.
The PMO conducts periodic self-assessments. Self-assessments are necessary in order to determine whether PMO and the departments meet established standards for management of property; results are provided as part of the supporting documentation requested by external auditors. For more information and general guidance about property audits contact the PMO.
5. Property Audit Scope
Property management audits review business process associated with all the facets of the asset life cycle. The scope and audit methodology are determined by the auditing team and is dependent on the purpose for which the audit is being performed. Within the scope of an audit, compliance with any or all of the following areas may be examined:
- Property management policies and procedures
- Property awareness and compliance with procedures and standards
- Pre-purchase screening and approvals
- Acquisition and procurement practices
- Receiving and identification
- Record completeness, accuracy and timeliness
- Subcontract management
- Physical inventory
- Utilization of property
- Property reports
- Excess property disposal process
- Award closeout
- Availability and completeness of supporting documentation and records retention
- Other facets of property management (i.e. maintenance of equipment and subcontractor property control, system and property security)
6. Audit Results
Throughout an audit, close interaction should occur between the auditor(s) and the designated Stanford liaison. Audit results are provided in writing and include a detailed report of the audit activity.
The Office of the Chief Risk Officer’s audit activities are coordinated directly with department management, usually with a courtesy copy to PMO. They provide copies to PMO of audit results and requests for implementation of corrective actions that are related to property.
Audit findings and recommendations may require changes in policies and procedures or departmental practices. Responses are prepared by the PMO. A copy is provided to Internal Audit. Creation and oversight of corrective action plans, where needed, are the responsibility of PMO. Departments having audit findings are notified and participation by key personnel is required to ensure satisfactory identification and implementation of corrective actions.
Key personnel, DPAs and their supervisors are informed of general changes via Property forums, training events, email notifications and information posted on the PMO Website.
7. Record Retention
It is important that physical or electronic copies of essential property documents are saved and readily available to support audits and self-assessment or other types of reviews. See chapter 3.3- Records, for additional information on record retention policies.
8. Audit Impact
Satisfactory audit results are critical. Audits confirm effective stewardship and financial responsibility. Compliance with University and Sponsor requirements facilitate the ongoing availability of assets for instruction, research, and administration. Effective controls and processes help ensure that research and education continue unimpeded and that potential liability is minimized.