The Nevada System of Higher Education (NSHE) risk management/worker s

Transcription

1 NEVADA SYSTEM OF HIGHER EDUCATION BUSINESS CENTER NORTH RISK MANAGEMENT/WORKER S COMPENSATION Internal Audit Report July 1, 2008 through December 31, 2009 GENERAL OVERVIEW The Nevada System of Higher Education (NSHE) risk management/worker s compensation function is a self-insured program. As such, each campus contributes a percentage of the first $36,000 earned by employees to the fund. The NSHE Risk Management Office is responsible for overseeing the fund and distributing monies back to the campuses based on institutional budget requests submitted to NSHE at the beginning of each fiscal year. These distributions, as well as the expenditures that are paid from the funds, are monitored by the campuses through accounts established in the financial accounting system. The Business Center North (BCN) Risk Management/Worker s Compensation Office has one account that is used for this purpose. SCOPE OF AUDIT The Internal Audit Department has completed a review of the BCN Risk Management/Worker s Compensation Office for the period of July 1, 2008 to December 31, The scope of our review included tests of the accounting records and other auditing procedures, as we considered necessary. The tests included, but were not necessarily limited to these areas. 1. Reviewing expenditures paid from the BCN Risk Management/Worker s Compensation account to determine whether the transactions were for related activities. This included (AUDIT COMMITTEE 06/03/10) Ref. A-4, Page 1 of 6

2 an examination of the employee job descriptions for employees paid from the account to ensure their job duties were relevant. 2. Reviewing the BCN Risk Management/Worker s Compensation account to ensure the balance of funds is not excessive. Based on this review, we can be reasonably assured that the BCN Risk Management/Worker s Compensation Office is spending funds in an appropriate manner. Implementation of the following recommendations, however, would further improve this process. EXPENDITURES The Internal Audit Department generated a report of all transactions that were posted to the BCN Risk Management/Worker s Compensation account during the audit period. A sample of 27 transactions was selected to determine whether the expenditures related to the risk management/worker s compensation function. In general, the transactions were reasonable except for the items addressed in the Other section of this report for which a conclusive determination could not be made under the current guidelines that are available. The following exceptions, involving procedures that were not in compliance, were also noted. 1. Purchasing procedures were not followed for three transactions. One of these involved a transaction in excess of $2,000 for which a purchase order was not completed. The transaction was processed on a Request for Payment form. For the other two transactions, purchase orders were completed after the fact, that is, after an invoice for services was received. We recommend purchase orders be completed, as required. Institution Response (response by UNR) (AUDIT COMMITTEE 06/03/10) Ref. A-4, Page 2 of 6

3 Correction: A process has been put in place that requires the Program Officer to document each request for service to the applicable vendor and the vendor will be required to respond in writing with a quote for service. Upon review of the quote, a requisition will be initiated by the Program Officer if the quote for the service is $2000 or greater. Each requisition will be reviewed and approved by the Risk Manager and submitted to BCN Purchasing for issuance of a purchase order prior to initiating the service. Prevention and Monitoring: The rules and guidelines for purchase orders were reviewed jointly by the Program Officer and Risk Manager. In addition, in December and June of each year, the Risk Manager will review all transactions in excess of $2,000 to ensure that a purchase order was completed. 2. One transaction was for the payment of a cellular telephone bill. The bill was not signed and dated to indicate it was reviewed for personal calls. We recommend telephone billings be reviewed in accordance with university and NSHE procedures. Institution Response (response by UNR) Correction: The cell phone bill is now printed out by the Program Officer upon notification of the availability of the monthly bill. The bill is reviewed jointly by the Program Officer and the Risk Manager. If personal calls are identified, any applicable charges are calculated and reimbursement collected, if indicated. Both the Program Officer and the Risk Manager document their review by signing and dating the monthly bill, scanning the document and saving it on the Shared G Drive. Prevention and Monitoring: The Program Officer is electronically filing the monthly phone bills with review signatures on the G drive under the Budget Folder. Beginning in April 2010, the Risk Manager s telephone bill is reviewed, signed and dated by the Employee Relations Manager. OTHER The following issue was noted during this review; however, it is not the responsibility of the BCN Risk Management/Worker s Compensation Office. WORKERS COMPENSATION POLICY (AUDIT COMMITTEE 06/03/10) Ref. A-4, Page 3 of 6

4 The System s risk management/worker s compensation policy is contained in the NSHE Procedures and Guidelines Manual. We reviewed the policy and noted the following observations. 1. The policy does not address the worker s compensation component of the program. 2. The policy does not address how the funds allocated to the campuses should be spent and whether the funds can be used for operating type expenditures incurred by the institutional offices that administer them. For example, of the 27 expenditures reviewed from the BCN Risk Management and Worker s Compensation Office, five were purchases of goods and services related to the operation of the office. The purchases consisted of an office computer, office furniture, cellular telephone services, campus parking passes, and maintenance services performed on a department vehicle. Although it could be reasoned that such expenditures are reasonable and should be allowed, guidance should be provided in the policy. We recommend the NSHE Finance Department and the institutional Business Officers develop general policies that address these areas. In developing the spending policy, we recommend a determination be made as to whether a portion of the funds allocated to the campuses can be used to support the offices that administer the funds, as mentioned above, or whether the funds can only be used for expenses directly related to the risk management/worker s compensation program. We recommend the amount or percentage of funds, if any, that may be used to support the offices be included in the policy. We also recommend that all policy revisions be included in the NSHE Procedures and Guidelines Manual. Institution Response (response by NSHE Interim Vice Chancellor for Finance) (AUDIT COMMITTEE 06/03/10) Ref. A-4, Page 4 of 6

5 We concur with these recommendations. A discussion on administrative changes to the risk management program, including this section of the Procedures Manual, is on the agenda for the June 2010 and September 2010 Business Officers Council meetings. Recommendations from this audit, as well as the subsequent audits of this function at other institutions that will be going to the Audit Committee in September 2010 will be fully incorporated into the revisions. It is expected that the revisions to the risk management program will be presented to the Cabinet in the fall of 2010 for inclusion in the Procedures and Guidelines Manual. The Internal Audit Department appreciates the cooperation and assistance received from the BCN Worker s Compensation/Risk Management Office during this review. Reno, Nevada March 25, 2010 Scott Anderson Internal Audit Manager Sandra K. Cardinal Assistant Vice Chancellor for Internal Audit and Risk Management (AUDIT COMMITTEE 06/03/10) Ref. A-4, Page 5 of 6

6 Business and Finance University of Nevada, Reno/1124 Reno, Nevada Telephone: (775) Fax: (775) Memorandum To: From: Sandi Cardinal, Assistant Vice Chancellor for Internal Audit and Risk Management, Nevada System of Higher Education Tom Judy Date: April 23, 2010 Subject: Response to the Audit of BCN Risk Management/Worker s Compensation The purpose of this memorandum is to transmit a response from the Business Center North Risk Management Office for the audit of risk management and worker s compensation covering the period July 1, 2008 through December 31, I have reviewed and concur with all responses. Attachments (2) cc: Milton Glick, President Ron Zurek, Vice President, Administration and Finance Tim McFarling, Assistant Vice President, Human Resources (AUDIT COMMITTEE 06/03/10) Ref. A-4, Page 6 of 6