UNIVERSITY OF SOUTH FLORIDA and RELATED ENTITIES Outstanding External Audit Findings Status Report to the BOT Finance & Audit Workgroup, May 20, 2010

Transcription

1 XI SUN DOME, Inc Audit of Internal Control over Financial Significant Deficiency Perform Periodic Counts of Property and Equipment Periodic counts of property and equipment should be performed. A control should be implemented to periodically perform physical inventory counts of fixed assets and the subsidiary and general ledger should be updated on a timely basis. Management made a year-end journal entry to properly reflect its fixed assets and accumulated depreciation balances by removing disposed assets from its fixed asset subsidiary records. The disposed assets were fully depreciated and the year-end journal entry did not have a net effect on the financial statements. Management will review its policies and procedures for the disposal of fixed assets to ensure timely recognition and accurate recognition in the fixed asset records. Brett Huebner Management has determined that year end physical inventory is adequate when assessing the cost/benefit of additional physical inventories. Management will evaluate and further develop its existing procedures for fixed asset disposals. May 31, 2010 No updates as of May 11, Reported in 2009: Journal entries were made during the Audit. Management needs to revise its fixed asset disposal policies and procedures. 1

2 2007 Federal Circular A-133 Audit, FA , , , , and Allowable Costs / Cost Principles General Expenditures The institution should enhance its procedures to maintain documentation for all charges to substantiate the validity, reasonableness, and necessity of all expenditures charged to Federal grants. The institution should calculate overcharges for travel and return any such overcharges, and the remaining questioned costs disclosed by our audit, to applicable Federal grants. USF has procedures regarding the maintenance of documentation for all expenditures. We continue to enhance our controls in response to emerging business practices; such as, the development and staffing of a purchasing card review team and expansion of our document imaging process to include purchasing card supporting documentation. Similarly, in June, 2007, USF issued a Clarification of Procedure regarding the allowability of expenditures on federal awards. Finally, all charges deemed unallowable by USF have been removed from the applicable federal awards. USF feels that the conference expenses are exempt from the per diem requirements of State law and has requested sponsor approval for this specific expenditure. Nick Trivunovich Management states that sponsor approval was received for the conference expenses disallowed by the Auditor General. However, at the time of the 2008 A-133 Audit, the auditors had not yet received the response from the Sponsor. Reported in 2009: The University has requested sponsor approval for the conference expenses that were disallowed by the Auditor General, based on university opinion that they are exempt from the per diem requirements of State law. A response has not yet been received. Fully Completed Sponsor Approval has been received and forwarded to the Auditor General 2

3 UNIVERSITY MEDICAL SERVICE ASSOCIATION, INC. (UMSA) 2009 Audit of Internal Control over Financial Material Weakness Accounting for Allowances for Doubtful Accounts and Contractual Adjustments All information technology changes should include key user tests and approvals for all significant intended uses prior to implementation. The information generated by revenue cycle operations and used by accounting personnel should be reviewed for relevance and accuracy in its application. The non-routine process of reconciling accounts receivable to the general ledger should be performed on at least a quarterly basis. Management acknowledges the complexity of the environment and the complexity of the system within which it operates to collect billings. Management also acknowledges the impact that information system s reports has on estimating the collectability of accounts and that reconciliation of accounts receivable must be thorough and consider all variables that impact receivable estimation. In working collaboratively with the external auditors, we have already implemented enhanced controls as elaborate below. To ensure accuracy of all information systems reports utilized to estimate the collectability of accounts, the reports will be validated for accuracy by key users prior to use. A retest of these same reports will be made quarterly in conjunction with the accounts receivable reconciliation process. Any proposed changes made to information system reports or the components compiled in those reports will be reviewed by the CFO, CEO, and key staff to ensure the reports accuracy and evaluate the impact the changes may have on current or future uses. The information generated by revenue cycle operations will be reviewed by the CFO prior to use by accounting personnel. The methodology utilized by revenue cycle operations to generate information will be clearly defined and approved by management. As part of the normal methodology, comparable data elements will be utilized to ensure data integrity and identify environmental changes. Once information has been generated by revenue cycle operations and reviewed by management, a final review including the CFO, revenue cycle personnel and accounting personnel will be performed. The non-routine process of reconciling accounts receivable to the general ledger will be performed quarterly. The reconciliation process will include a review of accounts receivable based on payor mix and aging and include testing of prior period estimation performance. Karen Burdash New process implemented in November The process is currently under review by UMSA Internal Audit with a report due to the UMSA Audit Committee by late February A detailed multi-step process for valuation of AR was developed. Components of the process are completed monthly while additional steps are completed quarterly. This process provides a more timely and accurate valuation of AR. Management implemented a process whereby all reports utilized for purposes of posting to the general ledger or valuation of AR require a Business Requirements document which is approved by key users. All reports are validated from other sources prior to use. February 28, 2010 The has been revised to. This will allow the UMSA Audit Committee to review the May Internal Audit report. 3

4 RESEARCH FOUNDATION, INC Audit of Internal Control over Financial Material Weakness Preventative and Monitoring Controls for Routine and Non- Routine Transactions The Company should consider the resources that may be available to them, including those from the University of South Florida, to implement controls requiring all significant accounting policies and related significant routine and non-routine transactions be reviewed timely. Routine transactions will be reviewed against established accounting policies and procedures. Anticipated nonroutine transactions will be reviewed and, if found to deviate from established policies, management will seek guidance from those with relevant expertise on the appropriate classification. Allison Madden Management is developing a policy statement to resolve the audit finding. The policy statement will be considered for approval by the Audit Committee at their next meeting, likely within the next two months. The Research Foundation has issued the Financial Transaction Review Procedure effective February 16, The procedure states that the Audit Committee will be informed of accounting classification determinations as they are made. 4

5 WUSF-FM 2009 Audit of Internal Control over Financial Material Weakness Account Reconciliations The Station should adopt a policy requiring monthly reconciliation of all balance sheet accounts to their subsidiary ledgers in order to ensure accuracy of the monthly financial statements and underlying subsidiary ledgers. This includes recording underwriting receivables, allowance for bad debts, accounts payable, net assets, etc. Balance sheet reconciliations quickly identify errors and needed corrections. If reconciliations are performed infrequently, errors and adjustments can occur, resulting in the need for significant corrections when the reconciliations are performed. Any reconciling differences should be corrected before the books are closed for the month end. These reconciliations and adjustments will ensure meaningful and accurate financial statements. The financial statements can then be used to help in the management decision-making process. WUSF is in agreement and will formally analyze and document each Balance Sheet account reconciliation on a monthly basis. David Yearwood Management has started to formally analyze and document each Balance Sheet account reconciliation, and record journal entries on a monthly basis. Management has implemented monthly account reconciliations as of January

6 WUSF-TV 2009 Audit of Internal Control over Financial Material Weakness Account Reconciliations The Station should adopt a policy requiring monthly reconciliation of all balance sheet accounts to their subsidiary ledgers in order to ensure accuracy of the monthly financial statements and underlying subsidiary ledgers. This includes recording underwriting receivables, allowance for bad debts, accounts payable, net assets, etc. Balance sheet reconciliations quickly identify errors and needed corrections. If reconciliations are performed infrequently, errors and adjustments can occur, resulting in the need for significant corrections when the reconciliations are performed. Any reconciling differences should be corrected before the books are closed for the month end. These reconciliations and adjustments will ensure meaningful and accurate financial statements. The financial statements can then be used to help in the management decision-making process. WUSF is in agreement and will formally analyze and document each Balance Sheet account reconciliation on a monthly basis. David Yearwood Management has started to formally analyze and document each Balance Sheet account reconciliation, and record journal entries on a monthly basis. Management has implemented monthly account reconciliations as of January

7 2008 Federal Circular A-133 Audit, FA , , , Noncompliance and Significant Deficiency Allowable Costs / Cost Principles General Expenditures The institution should enhance its procedures to maintain documentation for all charges to substantiate the validity, reasonableness, and necessity of all expenditures charged to Federal grants. The institution should calculate overcharges for travel and return any such overcharges, and the remaining questioned costs disclosed by our audit, to applicable 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. Terminal leave payout queries have been added to the portfolio of quarterly monitoring. Management expects the finding to be closed during the FY 2010 A-133 Audit, when the auditors verify the quarterly monitoring procedures. No updates as of May 11, Nick Trivunovich Audit, 1 Institutes and Centers 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 Academic Affairs is implementing a process to coordinate institutes and centers reporting to the BOG so that it is accurate and complete. April 30, 2010 A revised process has been established. The Office of Decision Support and Academic budgets will provide the financial data, assuring what is submitted reconciles with the university s financial reporting system. 7

8 Audit, 2 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 Management states that the response to this finding has been fully implemented. The bank account is no longer being used by FMHI. The account will remain open until March 31 st to give the final checks issued from the account 90 days to clear. March 31, 2010 FMHI bank account was closed March 31, Audit, 3 Tangible Personal Property The University should strengthen its procedures related to accountability over tangible personal property. During the audit period, University Property 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 is in the process of implementing the PeopleSoft Asset Management module and is considering the appropriate procedures to strengthen accountability over tangible personal property and revised training to incorporate new system processes. Module development is expected to be completed by June 30, 2010 with asset data loaded in two phases (July 1 and August 1). 8

9 Audit, 4 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 using the ACL product 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. Documentation providing guidance on the proper use of account codes for purchasing card transactions is in the process of being developed. April 30, 2010 Purchasing has completed this portion. Documentation providing guidance on the proper use of account codes has been distributed to users. In addition, documentation is being created to provide guidance on the use of proper account codes for P-card transactions. Jeff Mack Nick Trivunovich 9

10 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 Purchasing continues to work with University Audit and Compliance to finalize ACL scripts to be used in monitoring after the fact POs April 30, 2010 Purchasing has developed FAST query reports to monitor after the fact POs. A Communication Plan has been developed to reemphasize procedures and outline processes to ensure compliance with purchasing regulations. The plan will be distributed and implemented by June 30, 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 workgroup has been convened to address the issues of appropriate insurance coverage and accurate property values. The workgroup is currently evaluating the requirements of the Division of Risk Management and the methods used by other institutions for updating building values. Proposals from vendors have been received and are being considered to determine the most practical and costeffective means of addressing the finding. 10