The Texas A&M University System Internal Audit Department MONTHLY AUDIT REPORT

Transcription

1 The Texas A&M University System Internal Audit Department MONTHLY AUDIT REPORT August 15, 2017

2 The Texas A&M University System Internal Audit Department August 2017 TABLE OF CONTENTS Texas A&M University System Offices Debt Service

3 System Internal Audit TEXAS A&M UNIVERSITY SYSTEM OFFICES Debt Service August 15, 2017 Charlie Hrncir, C.P.A. Chief Auditor

4 Texas A&M University System Offices: Debt Service Overall Conclusion Overall, debt service information reported in the Texas A&M University System s 2016 Annual Financial Report was reported accurately. Additionally, controls established over debt service are effective in providing reasonable assurance that the A&M System is operating in compliance with applicable laws, policies, and regulations. At August 31, 2016, outstanding bonds payable totaled approximately $3.4 billion and commercial paper and notes payable totaled approximately $181 million. Basis of Review Objective and Scope Methodology The objective of this audit was to determine if debt service information is accurately reported in the A&M System s fiscal year 2016 Annual Financial Report and determine compliance with laws, policies, and regulations. The audit focused on the following: Accuracy of bond schedules and debt related notes in the Annual Financial Report; Timeliness and accuracy of bond payments; Compliance with system policy and regulation regarding minimum debt service ratio requirements, reporting of Revenue Financing System status, and A&M System member revenue certifications; and Monitoring processes for tax implications of bond arbitrage and private use of projects financed with tax exempt debt. The audit period focused on activities from September 2015 through August Fieldwork was conducted from March to July, Our audit methodology included interviews, observation of processes, review of documentation, and testing of data using sampling as follows: The Texas A&M University System Internal Audit Department August 2017 Page 1

5 Texas A&M University System Offices: Debt Service Criteria To determine whether processes are in place to monitor private use of projects financed with tax exempt debt, auditors used professional judgment to select a nonstatistical sample of four outstanding bond issuances. To determine whether bond principal and interest payments were made timely, auditors selected the population of scheduled bond debt service payments during the audit period. To determine if member revenue certifications were submitted in compliance with A&M System regulation, the population of members with outstanding Revenue Financing System debt at the time of the 2016 certification date was selected. Our audit was based upon standards as set forth in Texas A&M University System Policies and Regulations; reporting requirements of the Texas Comptroller of Public Accounts; Texas Constitution, Article 7, Education; and other sound administrative practices. The audit was conducted in conformance with the Institute of Internal Auditors International Standards for the Professional Practice of Internal Auditing. Additionally, we conducted the audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. The Texas A&M University System Internal Audit Department Page 2 August 2017

6 Texas A&M University System Offices: Debt Service Audit Team Amanda Dotson, CPA, CIA, Director Michelle McMillin, CPA Mark Heslip, CIA Melodie Kline Distribution List Mr. John Sharp, Chancellor Mr. Billy Hamilton, Executive Vice Chancellor and Chief Financial Officer Ms. Maria Robinson, Chief Investment Officer and Treasurer Mr. Phillip Ray, Vice Chancellor, Business Affairs Mr. Joseph Duron, Executive Director, Budget and Accounting Ms. Janet Gordon, System Ethics and Compliance Officer The Texas A&M University System Internal Audit Department August 2017 Page 3