THE UNIVERSITY OF TEXAS AT TYLER

Transcription

1 THE UNIVERSITY OF TEXAS AT TYLER Internal Audit Annual Report Fiscal Year Ending August 31, 2016 The University of Texas at Tyler Office of Audit and Consulting Services 3900 University Boulevard Tyler, Texas 75799

2 Table of Contents I. Compliance with Texas Government Code, Section II. Internal Audit Plan for Fiscal Year III. Consulting Services and Nonaudit Services Completed IV. External Quality Assurance Review (Peer Review) V. Internal Audit Plan for Fiscal Year VI. External Audit Services Procured in Fiscal Year VII. Reporting Suspected Fraud and Abuse

3 Purpose of the Internal Audit Annual Report The purpose of this Internal Audit Annual Report is to provide information on the assurance services, consulting services, and other activities of the internal audit function. In addition, the annual report assists oversight agencies in their planning and coordination efforts. The Texas Internal Auditing Act, (Texas Government Code, Chapter 2102), requires that an annual report on internal audit activity be filed by November 1st of each year and submitted to the Governor, the Legislative Budget Board, the Sunset Advisory Commission, the State Auditor s Office (SAO), and the entities governing boards and chief executives. The report was prepared using the guidelines provided by the Texas State Auditor s Office. Additional information regarding the UT Tyler Office of Internal Audit can be found at the following website: I. Compliance with Texas Government Code, Section The University of Texas at Tyler (UT Tyler) Office of Audit and Consulting Services has posted the Fiscal Year (FY) 2016 Internal Audit Annual Report and Fiscal Year 2017 Annual Audit Plan, on its web site at 3

4 II. Internal Audit Plan for Fiscal Year 2016 Report Audit/Project Status Date Note Financial Audits & Projects Account Reconciliations Complete May 16 FY 2015 Annual Financial Report Complete Dec 15 FY 2016 Interim Annual Financial Report Complete ~ Procurement & Travel Card Complete Feb 16 * Student Fee Expenditures In Process ~ Purchase Order Date Consulting Review Complete ~ (A) Administrative Costs Consulting Review Complete ~ (A) Operational Audits & Projects Change in Management Consulting Complete ~ Innovation Academy Consulting Complete ~ College of Pharmacy Consulting Complete ~ Academic Misconduct and Provost Consulting Review Complete ~ Executive Travel and Entertainment Complete Aug 16 President's Office Expenses for UT System Complete ~ Executive Management Consulting Complete ~ Auxiliary Accounts Consulting Cancelled ~ (B) Student Housing (Carryforward from FY 15) Complete May 16 (A) Compliance Audits & Projects Benefits Proportionality Complete Feb 16 * Contract Administration In Process ~ Compliance Department Assistance Complete ~ University Advancement Annual Report and Consulting Complete ~ Out of State Waivers Consulting Review Complete ~ (A) Senate Bill 20 Compliance Complete Aug 16 (B) Information Technology Audits & Projects People Soft Balance Forward Complete Aug 16 PeopleSoft Implementation Assistance Complete ~ Follow-up Follow-up of Audit Recommendations Complete Aug 16 4

5 II. Internal Audit Plan for Fiscal Year (FY) 2016, Continued Report Audit/Project Status Date Projects Institutional Committees, Projects, and Events Complete ~ Internal Quality Assurance and Improvement Program Complete ~ UT System Administration, State Auditor, and External Auditor Requests, and Assistance Complete ~ FY 2017 Annual Audit Plan and Risk Assessment Complete ~ Training and Assistance Provided by Audit Services Complete ~ FY 2015 Annual Audit Report Complete ~ Software Updates Complete ~ Note Development Training and Continuing Professional Education Ongoing ~ UTS Office Initiatives Ongoing ~ Professional Organizations Ongoing ~ UTT Strategic and Quality Initiative from External Quality Assurance Review Ongoing ~ Reserve Reserve for Investigations and Additional Requests Complete ~ Explanations for Deviations from the Original Fiscal Year 2016 Audit Plan: (A) The original audit plan was amended to add the required Senate Bill 20 audit and other consulting projects as requested by executive management. (B) The Auxiliary Accounts Consulting was cancelled as it was no longer needed by executive management. *The completed all projects except the Student Fees Expenditures Audit and the Contract Administration Audit which were in process at year end. A summary table of recommendations made to address issues identified from FY 2016 engagements, the actions taken by management, and the current implementation status is included on the following pages to address HB 16 web site posting requirements. 5

6 Senate Bill 20 (84 th Legislative Session) made several modifications and additions to Texas Government Code (TGC) and Texas Education Code (TEC) related to purchasing and contracting. Effective September 1, 2015, TEC requires that, The chief auditor of an institution of higher education shall annually assess whether the institution has adopted the rules and policies required by this section and shall submit a report of findings to the state auditor. The Office of Audit and Consulting Services conducted this required assessment for fiscal year 2016, and found the following: Based on review of current institutional policy and the UT System Board of Regents Rules and Regulations, The University of Texas at Tyler has generally adopted all of the rules and policies required by TEC Review and revision of institutional and System policies is an ongoing process. These rules and policies will be assessed annually to ensure continued compliance with TEC

7 II. Summary of Fiscal Year 2016 Audit Report Issues Report Name & Date Results and Recommendations Management Action Plan Status FY 2015 Annual Financial Report Dec 2015 The monitoring plan should be updated to include controls related to monthly bank reconciliations Cash procedures should be reviewed in accordance with the monitoring plan Monitoring plan will be updated by 1/31/16 Student Business Services to conduct cash procedure reviews by 6/30/16 The QAR process should be completed on at least 25% of all departmental Budget Authorities each fiscal year Director of Compliance to complete QAR s for 25% of departmental Budget Authorities In Process Procurement and Travel Card Transactions Policies and Procedures, including information on Financial Services website, should be updated Information on Financial Services website will be updated by May 31, 2016 Feb 2016 Require supervisor approval for budget authority card transactions Policies will be revised to require a Budget Authority credit card holder to send credit card statement and supporting detail to supervisor for approval Financial Services should implement an ongoing monitoring program to review transactions for noncompliance with requirements Recommendation is under consideration and is pending training by UT System Internal Auditor In Process UT Tyler should follow state requirements to use Voyager cards for purchase of fuel and maintenance for University owned vehicles Financial Services to develop procedures and implement Voyager program by August 31, 2016 In Process 7

8 II. Summary of Fiscal Year 2016 Audit Report Issues, Continued Report Name & Date Results and Recommendations Management Action Plan Status Benefits Proportionality A revised APS11 and payment should be submitted as soon as possible A revised APS11 and payment will be submitted Feb 2016 Detailed supporting documents should be maintained to tie back to the APS 11 Recommendations will be implemented by 8/31/16 Budget and Financial Reporting Office should develop reconciling procedures that are conducted timely and approved by a supervisor in the department Recommendations will be implemented by 8/31/16 In Process Account Reconciliations May 2016 Departments should reconcile Projects as well as Cost Centers Reconciliation Report should be corrected to include Projects Budget Office sent communication to Budget Authorities Budget Office worked with UT System Shared Information Services to correct the Reconciliation Report Account Reconciliations should be completed timely Reminder s sent to Budget Authorities Student Housing No recommendations May 2016 Executive Travel and Entertainment No recommendations Aug

9 II. Summary of Fiscal Year 2016 Audit Report Issues, Continued Report Name & Date Results and Recommendations Management Action Plan Status PeopleSoft Balance Forward Aug 2016 The Budget and Financial Reporting Office should identify differences in unreconciled cost centers and record correcting entries when differences are material Budget Office has been working to correct the issue and reconciliations are scheduled to be completed by 8/31/16 The process for the balance roll forward for FY 2017 should be completed timely and should use data analytics report created by UT System First roll forward scheduled to be completed by 10/31/16 In Process The Budget and Financial Reporting Office should develop written procedures for the roll forward process Written procedures will be developed and completed by 11/30/16 In Process Senate Bill 20 Compliance No recommendations Aug

10 III. Consulting Services and Nonaudit Services Completed Project Name and Date Engagement Objectives, Results, and Recommendations Out of State Waivers October 2015 Determine if students receiving an out-of-state waiver met the qualifications. Some students received the waiver who did not meet the qualifications. Recommendation made to correct the error and develop procedures to assure waivers are only granted to qualifying students in the future. University Advancement Annual Report Determine if appropriate data is included in the Endowment Compliance Annual Report. The report included three incorrect summary counts. These were corrected and the report was re-submitted. April 2016 Academic Misconduct Consulting Review July 2016 Analyze Academic Misconduct in on-line courses compared to in-person courses. The results showed that the rate of misconduct was approximately the same regardless of course delivery method. Recommendation made to remind faculty to report instances of Academic Misconduct to the Department of Judicial Affairs for improved monitoring. Administrative Costs August 2016 Determine if UT Tyler is following the guidelines and accurately calculating the Administrative Cost Percentage. Administrative Costs for FY 2013 and FY 2014 were most likely overstated due to recording of transactions in incorrect cost centers. Recommendations were made to review assigned functions, allocations, and transactions in specific cost centers and reclass to the most appropriate function. Purchase Order Date August 2016 Analyze purchase order dates compared to delivery dates to determine if departments were following guidelines. The review identified a very small number of transactions that did not meet the guidelines. 10

11 IV. External Quality Assurance Review (Peer Review) An External Quality Assessment of the was completed by PricewaterhouseCoopers, LLP, with a report dated May 23, The summary letter is included on the following page. 11

12 May 23, 2014 Ms. Lou Ann Viergever Audit Services Director The University of Texas at Tyler 3900 University Blvd Tyler, Texas We have completed an External Quality Assessment ( EQA ) of The University of Texas at Tyler s ( UT Tyler ) ( IA ). The EQA included an assessment of the level of conformance with the Institute of Internal Auditors International Standards for the Professional Practice of Internal Auditing ( the IIA Standards ), the Generally Accepted Government Auditing Standards ( GAGAS ) as well as the relevant requirements of the Texas Internal Auditing Act ( TIAA ). Listed below are our results: IIA Standards Based on our work, overall IA generally conforms. We did identify process enhancement opportunities. GAGAS Our assessment of GAGAS was limited, based on IA s disclosure that no internal audits were performed during our assessment period under GAGAS. Based on our work, we did not identify conformance observations. We did identify process enhancement opportunities. TIAA requirements Other than the observations related to IIA Standards and GAGAS, no other observations were identified during our work. Our Services were performed and this report was developed in accordance with our contract dated February 18, 2014 and are subject to the terms and conditions included therein. Our Services were performed in accordance with the Standards for Consulting Services established by the American Institute of Certified Public Accountants ("AICPA"). Accordingly, we are providing no opinion, attestation or other form of assurance with respect to our work and we did not verify or audit any information provided to us. Our work was limited to the specific procedures and analysis described herein and was based only on the information made available through May 23, 2014, when field work was substantially completed. Accordingly, changes in circumstances after this date could affect the findings outlined in this report. This information has been prepared solely for the use and benefit of, and pursuant to a client relationship exclusively with The University of Texas System Administration. PwC disclaims any contractual or other responsibility to others based on its use and, accordingly, this information may not be relied upon by anyone other than The University of Texas System Administration and The University of Texas at Tyler. We would like to offer a sincere thank you to you and your staff, and the Internal Audit Committee and management of UT Tyler, for the time and attention they provided during this assessment. We appreciate the opportunity to serve The University of Texas System Administration on this important engagement. Very truly yours, PricewaterhouseCoopers, LLP PricewaterhouseCoopers LLP, 1201 Louisiana, Suite 2900, Houston, TX T: (713) , F: (713) , Information contained herein is for the sole benefit and use of PwC's Client

13 V. Internal Audit Plan for Fiscal Year 2017 Risk Based Audits Audit / Project Budgeted Hours Account Reconciliations 140 Alumni House Construction 200 Campus Programs for Minors 80 Change in Management: President, Physical Plant, and others not yet known 200 Financial Aid 150 Required Audits Risk Based Audits Subtotal 770 Annual Financial Report and UTS Assurance 150 Annual Financial Report External Audit 90 Annual Financial Report Interim Procedures 30 Executive Travel and Entertainment Expenses 150 Facilities Audit 80 Joint Admission Medical Program (JAMP) 60 President's Office Travel and Entertainment Expenses Audit 30 Texas Administrative Code (TAC 202) Compliance 130 Consulting Projects Required Audits Subtotal 720 Compliance Department Coordination and Assistance 120 Executive Management Consulting 250 Export Controls 100 Faculty Recruitment 100 Innovation Academy Annual Financial Audit and Board Meetings 40 International Student Recruiting Effectiveness 100 PeopleSoft Assistance and Review 100 PeopleSoft Balance Forward 80 Southern Association of Colleges and Schools Accreditation Steering Committee 50 University Advancement Annual Report 40 Investigations Consulting Subtotal 980 Investigations 100 Follow-Up Investigations Subtotal 100 Follow-Up 220 Follow Up Subtotal

14 V. Internal Audit Plan for Fiscal Year 2017 Continued General Reserve Audit / Project Budgeted Hours Carry Forward of FY 2016 Audits and Additional Requests 240 Development - Operations General Reserve Subtotal 240 Annual Audit Report as Required by the State Auditor's Office 40 Annual Risk Assessment and Audit Plan 200 Computer and Software Maintenance and Updates 100 External Quality Assessment Initiatives Implementation 20 External Quality Assessment 100 Institutional Audit Committee Meeting Preparation and Participation 200 Internal Quality Assurance and Improvement Program and Management of the Audit Department 130 State Auditor's Office and UT System Reporting, Requests and Meetings 180 Training Provided by Internal Audit to Institutional Departments and Employees 100 UT Tyler Institutional Committees and Meetings Preparation and Participation 160 Development - Initiatives and Education Development - Operations Subtotal 1,230 Auditor Training and Continuing Professional Education 240 Professional Organizations and Presentations 80 UT System Audit Office Initiatives Participation 120 Development - Initiatives and Education Subtotal 440 Total Budgeted Hours 4,700 Other High Level Risks High level risks that have been identified but are not included in the FY 2017 Audit Plan are as follows: Research and Administration Environmental Health and Safety Campus Police Auxiliary Financial Balances and Oversight International Programs Student Housing Safety 14

15 Risk Assessment Process The UT Tyler 2017 Audit Plan was prepared using a risk-based approach developed by UT System to ensure that areas and activities specific to UT Tyler with the greatest risk were identified for consideration to be audited. The goals for this risk assessment approach were to start with an awareness of critical initiatives and objectives to ensure the risks assessed were the most relevant. The risk assessment approach was based on a top-down process that included conversations and requests for input with risk collaborators, executives, and managers from the various operating areas on campus. The assessment process was standardized by creating common terms and criteria, enabling trending of risk and Systemwide comparisons. An emphasis was placed on collaboration with other functions that assess, handle, or manage risk. The risk assessment was reviewed and approved by members of executive management and the Internal Audit Committee. VI. External Audit Services Procured in Fiscal Year 2016 External Audit Services for the year ending August 31, 2016 were provided as follows: Deloitte conducted audit procedures related to the FY 2015 Annual Financial Report and interim procedures for the FY 2016 Annual Financial Report audit. Belt Harris Pechacek conducted an audit of the financial statements of The University of Texas at Tyler Innovation Academy for the fiscal year ended August 31,

16 VII. Reporting Suspected Fraud and Abuse Actions taken by The University of Texas at Tyler to comply with the following requirements are summarized below: Sec General Appropriations Act (84 th Legislature, Conference Committee Report) A state agency or institution of higher education appropriated funds by this Act, shall use appropriated funds to assist with the detection and reporting of fraud involving state funds as follows: 1) providing information on the home page of the entity's website on how to report suspected fraud, waste, and abuse involving state resources directly to the State Auditor's Office. This shall include, at a minimum, the State Auditor's Office fraud hotline information and a link to the State Auditor's Office website for fraud reporting; and 2) including in the agency or institution's policies information on how to report suspected fraud involving state funds to the State Auditor's Office. The University has a link for fraud reporting on the University s home page at which provides information on how to report suspected fraud, waste, and abuse involving state resources directly to the State Auditor s Office (SAO). This includes the SAO s fraud hotline, a link to the SAO s website, and UT Tyler s policies for reporting suspected fraud. Texas Government Code, Section Coordination of Investigations a) If the administrative head of a department or entity that is subject to audit by the state auditor has reasonable cause to believe that money received from the state by the department or entity or by a client or contractor of the department or entity may have been lost, misappropriated, or misused, or that other fraudulent or unlawful conduct has occurred in relation to the operation of the department or entity, the administrative head shall report the reason and basis for the belief to the state auditor. The state auditor may investigate the report or may monitor any investigation conducted by the department or entity. b) The state auditor, in consultation with state agencies and institutions, shall prescribe the form, content, and timing of a report required by this section. c) All records of a communication by or to the state auditor relating to a report to the state auditor under Subsection (a) are audit working papers of the state auditor. UT Tyler reports such activities to the State Auditor s Office via the following website: 16