MnSCU Institution Audits

1
MnSCU Institution Audits

• Presentation to the MnSCU Audit Committee
• September 18, 2002
• by Jim Riebe, Audit Manager
• Office of the Legislative Auditor

2
Todays Agenda

• Discuss 12 college and university audit reports
  performed under MnSCU contract
• Overview by institution of the number of findings
  and internal audit classification
• Generally discuss types of findings
• Discuss OLA assurance work to support MnSCU
  individual college and university and system-wide
  financial statements

3
Audit Scope and Objectives

• Audit Objectives
• Internal control
• Legal compliance
• Audit Scope
• Generally for the three years ended June 30, 2001
• Material financial activities
• Financial management, tuition and fees, payroll,
  bookstore operations, administrative expenditures

4
Todays Audit Reports

• Central Lakes College
• Century College
• Hennepin Technical College
• Itasca Community College
• Mesabi Range Community and Technical College
• Metropolitan State University

5
Todays Audit Reports (Cont.)

• Minneapolis Community and Technical College
• Minnesota West Community and Technical College
• Normandale Community College
• Northeast Services Unit
• Office of the Chancellor
• Vermilion Community College

6
Comparison of Audit Results
7
Century College
8
Central Lakes College
9
Hennepin Technical College
10
Itasca Community College
11
Mesabi Range C TC
12
Vermilion Community College
13
Metropolitan State University
14
Minneapolis CTC
15
Minnesota West CTC
16
Northeast Services Unit
17
Normandale Community College
18
Office of the Chancellor
19
Financial Mgmt. Concerns (1)

• Unnecessary or incompatible access to computer
  systems (7 institutions)
• Untimely bank reconciliations and/or unused bank
  accounts (4 institutions)
• Insufficient collateral for bank balances (4
  institutions)
• Lack of procedures and controls to manage shared
  databases and financial reporting between two
  institutions

20
Financial Mgmt. Concerns (2)

• Not calculating the indirect costs of operating
  the bookstore, and not analyzing inventory usage
  (2 institutions)
• Foundations
• Foundation administered certain grants
• Part-time faculty/administrators serve on board
  as voting members

21
Receipt Processing Concerns

• Inadequate control over tuition waivers,
  backdated registration cancellations, voided
  transactions (6 institutions)
• Inadequate separation of duties over tuition,
  food service receipts, or unsecured receipts
• Untimely tuition, bookstore, or computer store
  deposits (3 institutions)

22
Payroll Concerns (1)

• Not adjusting payroll clearing account to reduce
  inflated cash and revenue (4 institutions)
• Erroneous severance payments (110,000, recovered
  82,000)
• Lack of reconciliation of states payroll system
  to MnSCUs payroll system, or lack of independent
  review of payroll transactions (2 institutions)

23
Payroll Concerns (2)

• Inadequate monitoring of faculty and excluded
  administrator leave

24
Expenditure Concerns (1)

• Inadequate separation of duties for bookstore or
  other administrative expenses (3 institutions)
• Lack of formal contracts for business
  arrangements, not encumbering funds, paying
  vendors in advance, not monitoring contract terms
  (3 institutions)
• Incorrect recording of liabilities (occurrence
  dates) (2 institutions)

25
Expenditure Concerns (2)

• Employees relative compensated for lodging
• Inadequate documentation (2 institutions)
• that expenditures were authorized
• that expenditures complied with legal provisions
• evidence of required bids

26
Financial St. Assurances (1)

• Work performed to support MnSCUs institution and
  system-wide financial statement audits
• OLA Report on States Payroll System
• Adequate controls to ensure classified employees
  are paid at proper rates
• Adequate controls to ensure payroll is accurately
  processed and recorded in the states accounting
  system
• Controls protect the integrity of payroll and
  personnel data

27
Financial St. Assurances (2)

• States payroll system (Cont.)
• Some information technology professionals had
  excess security clearances
• Some interface files not secured
• MnSCU cash, investments, investment income, and
  securities lending detail
• MnSCU state treasurers cash
• Revenue Bond Fund
• Winona State University
• Supplemental Retirement Fund

28
Financial St. Assurances (3)

• Workers compensation
• Dollar amount of liability by institution
• Compensated absences
• Dollar amount of liability for classified
  employees by institution