Education Code Section 89045, enacted by Chapter 1406 of the Statutes of 1969, provided for the establishment of
an internal auditing function reporting directly to the Trustees of the California State University (CSU).
Subsection (b) of the Code states that the duties of this function/internal audit staff shall include, but not be
limited to, auditing, reviewing, cost and system analysis, analyzing and recommending operating procedures for the
CSU. Subsection (c) of the Code states that management audits shall be made to determine the effectiveness and
efficiency of the organization, operation, and procedures of each state university, each auxiliary organization,
and the Office of the Chancellor. Subsection (d) of the Code states that audit staff shall perform audits, at
least once every five years, of certain procurement and contracting activities, motor vehicle inspections, and
real and personal property transactions pursuant to specified Sections of the Code.
In 1991, the Department of Finance (DOF) determined that it no longer had the staff resources required to perform
internal control reviews of the CSU, as required by the Financial Integrity and State Manager's Accountability Act
(FISMA) of 1983. Audit and Advisory Services (A&AS) began performing these reviews on all campuses once every two
years. Beginning in calendar year 2010, cyclical audits of internal controls were reevaluated and discontinued due
to a change in the A&AS audit risk assessment methodology and updated guidance from the DOF. Using the new
procedure, A&AS works with CSU campuses and Office of the Chancellor executive management to identify high-risk
areas within the CSU system, and creates an annual audit plan using a risk assessment methodology.
In 1999, the Trustees' Committee on Audit took action at the January meeting of the Board, which required A&AS to
perform an internal compliance/internal control review of each auxiliary organization. A&AS performs these reviews
at all auxiliary organizations once every three years.
At its January 2008 meeting, the Trustees’ Committee on Audit directed A&AS to continue its annual review of
construction activity. Construction auditing had been performed by an external public accounting firm since fiscal
year 1997/98 with coordination from A&AS. In fiscal year 2008/09, A&AS began performing construction audits.
In 2013, the Trustees' Committee on Audit took action at the January meeting of the Board to approve the addition
of advisory services to the annual audit plan.