FINDINGS,
CONCLUSIONS AND RECOMMENDATIONS
FEDERAL DIRECT LOAN PROGRAM PROCEDURES INADEQUATE
The University’s procedures for the Federal Direct Loan Program were
inadequate. Testing of the University’s Federal Direct Loan Program for 40 student
accounts disclosed the following procedural problems:
- Three disbursements to students were not in agreement with signed promissory notes. The
disbursements exceeded the amounts recorded on the notes by $1,689.
- Promissory notes documenting the loans were stored in a general file room with
unrestricted access.
- No monthly reconciliations of the entire Federal Direct Loan Program were completed.
Due to these deficiencies, program cost of $5,141,933 were classified as questioned
costs, and the auditors’ opinion on compliance with requirements applicable to major
federal programs was qualified. (Finding 98-1, pages 20-22) This finding has been
repeated since 1996.
We recommended the University implement procedures to ensure compliance with federal
regulations. University officials agreed with our finding and recommendation and stated,
in part, that procedures are in place to ensure monthly reconciliations. (For previous
agency responses, see Digest Footnote 1)
FAILURE TO COMPLETE INTERNAL AUDITS
The University did not complete internal audits for several major control areas
within two years as required by statute. Specifically, internal audits of: 1) grant
administration, 2) revenues and receivables, and 3) property and equipment were not
completed. In addition, the special operational audit of the Federal Direct Loan Program
was not completed.
The Fiscal Control and Internal Audit Act requires all major systems be reviewed at
least once every two years. This finding has been repeated since 1997. (Finding
98-2, page 23)
University officials agreed with our recommendation to complete internal audits for all
major control areas every two years as required by statute. (For previous agency
responses, see Digest Footnote 2)
INADEQUATE CONTROLS OVER LIBRARY BOOKS
The University’s controls over library books were inadequate. During testing
of the library’s physical security system, we noted that it was not adequate to
safeguard library books from loss or theft. Although the University has an alarm system
that was installed at the entrance/exit to the library, it did not always detect books
that had not been properly checked out. Library books are carried at a cost of $8,737,867
on the University’s balance sheet. (Finding 98-4, page 26) This finding has been
repeated since 1995.
We recommended that the University improve the adequacy of the security systems to
deter the theft or loss of library books. University officials stated the FY 99 budget
includes funds for replacing the sensitize/desensitize stations in the library security
system. (For previous agency responses, see Digest Footnote 3)
INACCURATE LOCALLY HELD FUND REPORTS
Three of the four (75%) quarterly locally held fund reports of receipts,
disbursements and cash balances filed with the Office of the Comptroller were inaccurate.
Cash balances in the current, student activity, agency, and loan funds as of June 30, 1998
totaled $2,348,417.
Also, the University did not file any of its required quarterly reports of receipts and
disbursements for the income fund, which became a locally held fund in September, 1996.
(Finding 98-5, pages 26-27)
We recommended the University establish internal controls and procedures to ensure that
all locally-held funds reporting is consistent and accurate.
University officials stated that beginning with the second quarter of FY 99, they will
include the income fund in the quarterly report to the Comptroller on local funds.
OTHER FINDINGS
The remaining findings and recommendations were less significant and have been
given appropriate attention by University management. We will review progress toward
implementation of our recommendations during our next audit. University responses were
provided by Mr. Timothy Arr, Director of Business Operations.
AUDITORS' OPINION
Our auditors stated the University’s financial statements at June 30, 1998
are fairly presented except for the effects of such adjustments, if any, as might have
been determined to be necessary had they been able to examine evidence regarding year 2000
disclosures.
_____________________________________
WILLIAM G. HOLLAND, Auditor General
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SPECIAL ASSISTANT AUDITORS
Our special assistant auditors for this audit were De Raimo, Eisen & Fey.
DIGEST FOOTNOTES
#1 FEDERAL DIRECT LOAN PROGRAM QUESTIONED COSTS
1997: "The University will implement the recommendation."
1996: "The University agrees with the finding and has implemented the
recommendation.
The Financial Aid Office is now sufficiently staffed to minimize federal noncompliance.
As of November 1996, work with the U.S Department of Education and its direct loan
servicer has rectified 90 percent of the data problems."
#2 FAILURE TO COMPLETE INTERNAL AUDITS
1997: "The University will implement the recommendation."
# 3 INADEQUATE CONTROLS OVER LIBRARY BOOKS
1997: "The University will arrange for the manufacturer to check the alarm
system to assure it is operating properly. Library staff, particularly those assigned to
the circulation desk, will receive additional security training."
1996: "The library security system upgrade equipment is on order and the upgrade
will be completed in fiscal year 1997."
1995: "The review and upgrade of library security systems has been addressed as
part of the library’s five-year strategic plan."
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