UNIVERSITY OF SOUTH FLORIDA

Transcription

1 CURRENT YEAR FINDINGS and RELATED ENTITIES UNIVERSITY MEDICAL SERVICE ASSOCIATION, INC. (UMSA) 2010 Audit of Internal Control over Financial Reporting Significant Deficiency Reconciliation of Amounts Due to / from Affiliates and Other Accounts UMSA and MSSC entered into an arrangement under which UMSA reimburses MSSC for certain expenses which MSSC incurs in support of UMSA s operations. At June 30, 2010, MSSC had incurred certain expenses on behalf of UMSA which were not identified by management at the time the financial statements were initially drafted, and, as a result, the expenses were not included in UMSA s financial statements. A post closing audit adjustment was recorded to correct this error. While management had reconciled the amount reflected as due to MSSC, the reconciliation did not fully consider certain expenses recognized by MSSC. Auditors recommend that management expand its reconciliation process of the amounts due to and from UMSA and MSSC under the above arrangement. Management agrees with Grant Thornton s findings. To expand the review of the current reconciliation process, management has directed the Finance and Accounting Department to implement financial reviews of Due to / from MSSC on a monthly basis prior to finalizing financials. The process of reconciling Due To / From Other Affiliates on a more timely basis is currently being worked on as a project led by USF at a University Level with the other Direct Support Organizations (DSOs). In addition, a full Balance Sheet review on a quarterly basis will be implemented beginning quarter ending September 30, Both the Director of Finance & Accounting and Chief Financial Officer will review and sign off on all Balance Sheet reconciliations and make adjustments, if any, in the following month. Oon Soo Ung The Finance & Accounting Department is reconciling Due To/From UMSA account monthly prior to finalizing monthly financials. The Director of Finance & Accounting and CFO is performing a full review of all Balance Sheet Reconciliations (which are completed monthly) on a quarterly basis and ensuring that all reconciling items are accounted for appropriately. 1

2 CURRENT YEAR FINDINGS and RELATED ENTITIES MEDICAL SERVICES SUPPORT CORPORATION (MSSC) 2010 Audit of Internal Control over Financial Reporting Significant Deficiency Reconciliation of Amounts Due to / from Affiliates and Other Accounts MSSC and UMSA entered into an arrangement under which UMSA reimburses MSSC for certain expenses which MSSC incurs in support of UMSA s operations. At June 30, 2010, MSSC had incurred certain expenses on behalf of UMSA which were not identified by management at the time the financial statements were initially drafted, and, as a result, the contribution receivable from UMSA for the reimbursement of these expenses were not included in MSSC s financial statements. A post closing audit adjustment was recorded to correct this error. While management had reconciled the amount reflected as due from UMSA, the reconciliation did not fully consider certain expenses recognized by MSSC. Management agrees with Grant Thornton s findings. To expand the review of the current reconciliation process, management has directed the Finance and Accounting Department to implement financial reviews of Due to / from MSSC on a monthly basis prior to finalizing financials. The process of reconciling Due To / From Other Affiliates on a more timely basis is currently being worked on as a project led by USF at a University Level with the other Direct Support Organizations (DSOs). In addition, a full Balance Sheet review on a quarterly basis will be implemented beginning quarter ending September 30, Both the Director of Finance & Accounting and Chief Financial Officer will review and sign off on all Balance Sheet reconciliations and make adjustments, if any, in the following month. Oon Soo Ung The Finance & Accounting Department is reconciling Due To/From MSSC account monthly prior to finalizing monthly financials. The Director of Finance & Accounting and CFO is performing a full review of all Balance Sheet Reconciliations (which are completed monthly) on a quarterly basis and ensuring that all reconciling items are accounted for appropriately. Auditors recommend that management expand its reconciliation process of the amounts due to and from MSSC and UMSA under the above arrangement. 2

3 CURRENT YEAR FINDINGS and RELATED ENTITIES RESEARCH FOUNDATION, INC Audit of Internal Control over Financial Reporting Significant Deficiency Preventative and Monitoring Controls for Routine and Non-Routine Transactions During the period ended June 30, 2010 there were no formal procedures in place to evaluate the carrying value of a particular equity method investment. The Company also did not have documented controls to ensure the timeliness and completeness of intellectual property revenue recognition. While there were no current period effects on net assets related to these matters, the Auditors recommend that the Company develop specific policies and procedures to ensure the timely evaluation of complex accounting matters and timely and complete revenue recognition of revenue. The Company is in the process of developing additional financial reporting controls including compiling and comparing intellectual license contracts and their terms to expected revenue to ensure the timeliness and completeness of such transactions. The Company is also implementing internal controls to require a quarterly review of equity method investment valuations, including any equity method investments to ensure the timely and complete consideration of accounting for potential impairment and fair value accounting, where appropriate. Patricia Gamble Management is establishing controls and formalizing policy and procedures to insure that intellectual property revenue is recorded accurately. A formalized Internal Audit function has also been implemented by the Research Foundation. During fiscal year 2011, the Internal Audit service plan will include the audit of intellectual property revenue and Equity Method Accounting work by the Internal Auditor. 3

4 and RELATED ENTITIES 2009 Federal Circular A-133 Audit, FA , , , , , and Significant Deficiency REPEAT FINDING Allowable Costs / Cost Principles General Expenditures The institution should enhance its procedures to allow employees unused leave to be correctly allocated to the Federal grants on which the employees worked throughout their employment at the institution so that costs related to unused leave payments to former employees can be charged to the appropriate Federal grants. The University continually promotes compliance with Federal, state and sponsor regulations through the regular issuance of Clarification or Change in Procedure (CCHIP) guidance. During fiscal year , we issued a CCHIP that provided guidance on Cashing Out Unused Annual/Sick Leave Balances with Sponsored Project Funds. The CCHIP resulted in progress related to this practice. The University has quarterly procedures to monitor grant expenditures for proper approval and compliance with the cost principles prescribed in OMB Circular A-21. Commencing with fiscal year , we added terminal leave pay-out analysis to our portfolio of quarterly monitoring. DHHS has approved a terminal leave benefit rate in July 2010 and has put that process in place. Identified overcharges were removed from the awards and sponsors were reimbursed as necessary. USF continues to streamline the process and expects the timeliness to improve. In addition, USF has requested approval from the Department of Health and Human Services (DHHS) of a terminal leave benefit rate which would replace the direct charging of terminal leave to sponsored awards. We have requested an implementation date of July 1, 2010 for the benefit rate and are awaiting approval from DHHS. Linda Peterson 4

5 and RELATED ENTITIES Audit, 1 Institutes and Centers Reporting The University should enhance its review procedures to ensure that reports submitted to the Board of Governors for its institutes and centers are accurate and complete. The University will implement review procedures to validate that the data being submitted reconciles to the University s financial reporting system. Michael Moore The Office of Decision Support will now provide the financial data, assuring that data included in institute and center reporting reconciles with the University s financial reporting system. Audit, 2 REPEAT FINDING Imprest Bank Account The University should establish procedures to ensure the proper segregation of duties over cash. The University is closing the FMHI imprest bank account related to research survey participants and will make these payments through normal University processes. Dr. Junius Gonzales The FMHI imprest bank account has been closed. Audit, 3 REPEAT FINDING Tangible Personal Property The University should strengthen its procedures related to accountability over tangible personal property. Management revised the USF System Property Policies; several Property policies were consolidated into one Asset/Property Policy # The revised policy became effective September 10, The USF System Asset/Property Manual has been updated to reflect the revised policy. The Property Department will conduct USF System training on property policies, forms and processes to improve end users understanding of policy requirements. Jeff Mack The University has implemented the PeopleSoft Asset Management module to strengthen accountability over tangible personal property. Users with FASTID and asset management inquiry capability can view tangible property. 5

6 and RELATED ENTITIES Audit, 4 REPEAT FINDING Purchasing Cards The University should improve monitoring procedures over its purchasing card program to ensure compliance with the University s purchasing card guidelines and to ensure the proper accounting of these transactions. The audit covered the period of July 1, 2008 thru April 15, Since that time Purchasing has taken a number of steps to improve the P-Card Program. Purchasing has established a USF System P-Card Policy #5-026 which was effective August 20, In addition, Purchasing (with the assistance of University Audit and Compliance) developed ACL scripts that allow for a more accurate and detailed monitoring of P- Card transactions. The new monitoring process is a considerable improvement over the monitoring conducted during the audit period. Furthermore, the P-card manual and websites are in the final stage of being updated to reflect the new Policy and monitoring process and should be completed December 31, Purchasing has put into place a number of steps to improve monitoring over purchasing card transactions. The Controller s Office has published an annotated chart of accounts to provide guidance to personnel responsible for categorizing transactions. In addition, documentation is being created to provide guidance on the use of proper account codes for P-card transactions. Jeff Mack / Linda Peterson 6

7 and RELATED ENTITIES Audit, 5 Procurement of Services The University should ensure that purchase orders are used to document the approval of purchases of goods and services prior to incurring an obligation for payment. Purchasing (with the assistance of University Audit and Compliance) has developed and is currently testing new ACL scripts to monitor POs that are after the fact. If POs are determined to be after the fact, Purchasing will provide the data to the appropriate Deans, Directors, and Chairs along with recommendations on how to stop after the fact POs. Jeff Mack OPEN Partially Complete Purchasing policies and procedures have been updated and posted to the Purchasing website and COMPASS for clarity to initiators/users. The policies and procedures are emphasized in FAST requisition training. A monitoring process, including actions for non-compliance, has been developed and will be implemented upon approval by University Leadership. March 31, 2011 In addition, a query tool in ACL to increase monitoring further is being developed by UAC and is expected to be available in the near future. 7

8 and RELATED ENTITIES Audit, 6 Insurance Coverage The University should establish form risk management policies and procedures to address the level of insurance coverage to be maintained for buildings and other property and the methods to be used in determining insurable values. The University should also ensure that insurable values included on the certificates of coverage do not exceed the actual cash value as defined by the Division of Risk Management. USF will update current processes and develop a formal procedure to address the level of insurance coverage on university buildings and other property and the method by which insurable values will be determined. In addition, USF will ensure that property values listed on the certificates of coverage do not exceed the actual cash values as defined by the Division of Risk Management. All property value updates will be forwarded to the Division of Risk Management. David Smith A formal USF System procedure was developed to address the level of insurance coverage on university buildings and other property and the methods by which insurable values will be determined. The procedure has been posted to COMPASS. A commercial property appraiser was contracted to calculate updated building and contents values in accordance with the USF System procedure and the Division of Risk Management s methodology. New appraisal values have been sent to the Division of Risk Management to be reflected on the certificates of coverage. 8

9 SUMMARY OF ENTITIES REVIEWED FOR AUDIT FINDINGS and RELATED ENTITIES USF Entity University of South Florida No s No s USF Operational Audit (Next Report 2011) 6 s USF Polytechnic No s No s USF Sarasota-Manatee No s No s USF St. Petersburg No s No s State of Florida Federal Circular A-133 Not Yet Issued Significant Deficiency USF Foundation, Inc. No s No s USF Alumni Association, Inc. No s No s USF Financing Corporation and USF Property Corporation No s No s University Medical Service Association, Inc. Significant Deficiency Material Weakness USF Medical Services Support Corporation (MSSC) Significant Deficiency No s USF Health Professions Conferencing Corporation (HPCC) No s No s USF Health International Foundation (HIF) No s No s USF Health Sciences Center Self-Insurance Program (SIS) No s No s USF Health Sciences Center Insurance Co., Inc. (CIC) No s No s USF Research Foundation, Inc. Significant Deficiency Material Weakness USF Sun Dome, Inc. No s Significant Deficiency USF Intercollegiate Athletics Program Independent Accountants Report on the Application of Agreed-Upon Procedures No s No s WUSF FM, A Public Telecommunications Entity Operated by USF No s Material Weakness WUSF TV, A Public Telecommunications Entity Operated by USF No s Material Weakness 9