Washington County Health System, Inc

Washington County Health System, Inc.

Internal Audit Charter

Internal Audit at Washington County Health System, Inc. (the “Health System”) is an independent appraisal activity established for the review of accounting, financial, and operating activities as a service to management and the Audit and Business Integrity Committee (the “Committee”) of the Health System Board. It is the policy of the Health System to maintain an internal audit function as an integral component of the internal control environment. This charter sets forth Internal Audit’s purpose, authority, and responsibilities, as approved by the Committee.

I. Purpose

To assist management in the effective discharge of its responsibilities by providing impartial analyses, appraisals, recommendations, and pertinent comments on:

A.  The adequacy of accounting, financial and operating controls.

B.  The efficiency and effectiveness of uses of the Health System’s resources.

C.  The reliability of information provided to management.

D.  Compliance with established policies and procedures.

E.  The presence of or possibility of potential matters of business risk, fraud, theft, mismanagement and other similar matters.

F.  Other matters at the direction of management and the Committee when and as they arise.

II.  Authority

The Internal Auditor is accountable, functionally, directly to the Committee of the Board of Trustees and administratively, directly to the President and Chief Executive Officer of the Health System. All areas and phases of the Health System’s business and that of its subsidiaries, to include all documents, papers and records pertinent thereto, without exception, are subject to examination by the Internal Auditor. The Internal Auditor is authorized complete and unrestricted access to all records, personnel and properties of the Health System and its subsidiaries relevant to the performance of audits. However, Internal Audit has no authority over or responsibility for, the activities they audit. Employees of the Health System may not restrict the activities of the Internal Auditor in any manner.

III.  Independence

Independence and objectivity are essential to the effectiveness of the Internal Audit function. Internal Audit is a staff function and as such does not exercise direct authority over other persons and departments whose work is reviewed. While the Internal Auditor is free to review and appraise polices, plans, procedures, and resources, the auditor’s review does not in any way relieve other persons in the organization of the responsibilities assigned to them.

The Internal Auditor’s objectivity is not adversely affected, nor is the department requesting it negatively viewed, when the auditor recommends internal controls or reviews procedures before they are implemented. Moreover, Internal Audit has the responsibility and authority to recommend necessary improvements and to follow auditee’s progress toward implementing appropriate improvements.

IV.  Responsibilities

The establishment and maintenance of acceptable business practices and adequate and effective internal controls is the responsibility of management. To assist management in carrying out this responsibility, Internal Audit reviews and evaluates business practices and systems of internal control, reports to management any identified weaknesses together with recommendations for improvements, and follows the progress of corrective actions.

The internal audit activity has responsibility to:

A.  Develop flexible long-range and annual audit plans based on an assessment of risks and special requests by management and/or the Committee, and submit that plan to the Committee for review and approval as well as periodic updates

B.  Implement the annual audit plan, as approved, including as appropriate any special tasks or projects requested by management and the Committee.

C.  Report to the Committee quarterly or more often if necessary, to summarize audits conducted during the previous quarter and to discuss the audit plans and priorities for the ensuing quarter.

D.  Keep the Committee informed of emerging trends and successful practices in internal auditing.

E.  Provide a list of significant measurement goals and results to the Committee.

F.  Assist in the investigation of significant suspected fraudulent activities within the organization and notify management and the Audit Committee of the results.

G.  Consider the scope of work of the external auditors and regulators, as appropriate, for the purpose of providing optimal audit coverage to the organization at a reasonable overall cost.

V.  Audit Standards and Ethics

Audit work shall be performed in accordance with Generally Accepted Auditing Standards as advocated by the Institute of Internal Auditors in Standards for the Professional Practice of Internal Auditing and the American Institute of Certified Public Accountants in Statements on Auditing Standards.

The Internal Auditor has the responsibility to maintain high standards of conduct, independence and character to carry on proper and meaningful internal auditing within the Health System. In addition, the Internal Auditor’s activities and conduct shall be consistent with the policies of the Health System.

VI.  Approval Section

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Internal Auditor Date

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President/CEO Date

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Audit Committee Chair Date

11/24/2003 1