Minnesota State Colleges and Universities. Summaries of Fiscal Year 2009 Audits and Financial Reports. November 18, 2009 Audit Committee Meeting

Transcription

1 Minnesota State Colleges and Universities Summaries of Fiscal Year 2009 Audits and Financial Reports November 18, 2009 Audit Committee Meeting

2 Minnesota State Colleges and Universities See KDV s Report on Matters Identified as a Result of the Audit of the financial Statements dated November 6, Exhibit I Significant Deficiencies contains: Systemwide Information Technology Reconciliation of Local Campus Bank Accounts See KDV s Report on Matters Identified as a Result of the Audit of the financial Statements dated November 6, Exhibit II contains accounting, administrative and other matters Exhibit III contains computer processing environment matters. Exhibit IV new accounting pronouncements. Exhibit V contains required communication Exhibit VI contains management s response Operating Margin ( Income (Loss) Before Other Revenues, /$(9.3)mil /$8.4mil /$7.1mil Expenses, Gains, or Losses ) Primary Reserve (in months of operating expense) Nine foundations were included in the report (not consolidated with the System) as component units based on an assessment of relative significance and materiality of the foundation to the related university or college. See Footnotes 1 and 17 for additional detail. Foundations Statements of Financial Position are included after the System s Statements of Net Assets and Foundations Statements of Activities are included after the System s Statements of Revenues, Expenses and Changes in Net Assets. Summary financial information is included in Footnote 14 for the Revenue Fund along with certain housing operation at Vermilion Community College and Itasca Community College. The Revenue Fund is by far the most significant segment with a reported change in net assets of $9,355k and $9,413k in fiscal years 2009 and 2008, respectively. Page 1

3 Minnesota State Colleges and Universities Significant joint ventures, alliances, etc.. See Footnote 1 descriptions of joint ventures and joint use agreements including the Project for Automated Library Services (PALS), the City of Rochester, the Internet System for Education and Employment (ISEEK), Northwest Telecommunications Region (NETS), NorthEast Alliance for Telecommunications (NEAT), Consortium of Minnesota Educational Tele-communities (COMET), Southwest/West Central Higher Education Organization (SHOT), and joint governance over Fond du Lac Tribal & Community College. Contingent liabilities from litigation Related party transactions Foundation related-part transactions are disclosed in Footnote 17. Subsequent events See Footnote 15 for significant commitments to complete capital asset projects. See Footnote 18 for information regarding state of Minnesota shortterm borrowing from the System to cover cash flow requirements and the System s share of additional state General Obligation bond sales. Page 2

4 Revenue Fund Operating Margin ( Income (Loss) Before Other Revenues, /$9.2 /$9.5 /$9.6 Expenses, Gains, or Losses ) Primary Reserve (in months of operating expense) Significant joint ventures, alliances, etc.. Contingent liabilities from litigation Related party transactions See Footnote 10. See Footnote 11 for significant commitments.

5 Bemidji State University Operating Margin ( Income (Loss) Before Other /$0.4mil /$1.1mil /$(2.5)mil Primary Reserve (in months of operating expense) Foundation included. See Footnotes 1and 17. Discreet foundation See Footnote 14 for Revenue Fund segment data. The Change in Net Assets for this segment was $ (364k) and $(817k) in fiscal years 2009 and 2008, respectively. Significant joint ventures, alliances, etc.. However, see The Supplemental Section at the back of the Annual Financial Report containing a separate presentation of the financial statements of Northwest Technical College-Bemidji and the University. Contingent liabilities from litigation Related party transactions Foundation related-party transactions are disclosed in Footnote 17. See Footnote 15 for a description of the long-term operating lease with the City of Bemidji for the Regional Events Center s hockey arena.

6 Century College Yes. Two adjusting journal entries were identified by Baker Tilly that combined increased net assets by $472k. This resulted from an internal control deficiency deemed to be a significant deficiency under professional audit standards and is cited as such in Baker Tilly s Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards as found in the annual financial report. Operating Margin ( Income (Loss) Before Other /$1.7mil /$1.7mil /$2.0mil Primary Reserve (in months of operating expense) Foundation included. See Footnotes 1 and 16. Discreet foundation See Footnote 13; the College received $4.3 million Revenue Bond proceeds from the June 2009 bond sale to be used for parking lot renovation. Significant joint ventures, alliances, etc. Contingent liabilities from litigation Related party transactions Foundation related-party transactions disclosed in Footnote 16. See Footnote 14 for significant commitments including the approximate $4 million parking lot renovation funded through Revenue Bond proceeds and $7.9 million in renovation of classrooms and other space.

7 Hennepin Technical College Operating Margin ( Income (Loss) Before Other $1.1mil $(0.4)mil /$(0.3)mil Primary Reserve (in months of operating expense) Significant joint ventures, alliances, etc. Contingent liabilities from litigation Related party transactions

8 Metropolitan State University Yes, LarsonAllen reported a significant control deficiency regarding instances of improper compensated absence (leave accrual) calculations; the financial statement impact was immaterial. See the LarsonAllen Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Audit Standards /($0.2)mil /$1.0mil /$0.8mil Operating Margin ( Income (Loss) Before Other Revenues, Expenses, Gains, or Losses ) Primary Reserve (in months of operating expense) Foundation included. See Footnotes 1 and 16. Discreet foundation See Footnote 13 for Revenue Fund segment data. The Change in Net Assets for this segment was $170k and $(139)k in fiscal years 2009 and 2008, respectively. Significant joint ventures, alliances, etc.. Contingent liabilities from litigation. Related party transactions Foundation related-party transactions -- disclosed in Footnote 16. Footnote 14 describes the co-location of Metropolitan State University s Minneapolis campus with Minneapolis Community and Technical College. See Footnote 14 for a brief description of the University s co-location agreement with Minneapolis Community and Technical College.

9 Minneapolis Community and Technical College Operating Margin ( Income (Loss) Before Other /$2.9mil /$3.2mil /$2.1mil Primary Reserve (in months of operating expense) See Footnote 13; the College received $11.5 million Revenue Bond proceeds from the June 2009 bond sale to be used for student center renovation. Significant joint ventures, alliances, etc. Contingent liabilities from litigation Related party transactions. See Footnote 16 for discussion of the co-location of Metropolitan State s Minneapolis campus at MCTC. See Footnote 14 for significant commitments including the Science and Allied Health building renovation.

10 Minnesota State Community and Technical College Operating Margin ( Income (Loss) Before Other Revenues, $0.9 $(0.6) /$(1.8) Expenses, Gains, or Losses ) Primary Reserve (in months of operating expense) Foundation included. See Footnotes 1 and 16. Discreet foundation. Significant joint ventures, alliances, etc. Contingent liabilities from litigation Related party transactions A joint lease agreement with MSU Moorhead for the Minnesota Higher Education Center is disclosed in Footnote 15. See Footnote 13 for significant commitments including initial work on a $2.5 million project for construction and renovation work on a library and trades addition at the Moorhead campus.

11 MSU, Mankato Operating Margin ( Income (Loss) Before Other /$0.9mil /$5.5mil /$4.5mil Primary Reserve (in months of operating expense) Foundation included. See Footnotes 1 and 17. Discreet foundation See Footnote 14 for Revenue Fund segment data. The Change in Net assets for this segment was $3,431k and $3,893k in fiscal years 2009 and 2008, respectively. Significant joint ventures, alliances, etc.. Contingent liabilities from litigation Related party transactions Foundation related-party transactions -- disclosed in Footnote 17 See Footnote 15 for significant capital project commitments including continued work on the $25.8 million Trafton Science Center renovation, a $4.4 million Crawford Residence Hall renovation and a $6.9 million outdoor recreation renovation.

12 MSU Moorhead Operating Margin ( Income (Loss) Before Other /$0.7 mil /$(0.6)mil /$1.1 mil Primary Reserve (in months of operating expense) Foundation included. See Footnotes 1 and 17. Discreet foundation See Footnote 14 for Revenue Fund segment data. The Change in Net assets for this segment was $2,317k and $821k in fiscal years 2009 and 2008, respectively. Significant joint ventures, alliances, etc. Contingent liabilities from litigation Related party transactions Only with the Foundation see Footnote 17 See Footnote 15 for significant commitments including work on a $13.1 million renovation of Lommen Hall and a $8.5 million Wellness Center remodeling project.

13 Rochester Community and Technical College Yes, there was an accounts payable cut-off and accrual process error that understated accounts payable by approximately $725 thousand; a correcting journal entry was made. See the LarsonAllen Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Audit Standards regarding the underlying internal control weakness cited. Yes, LarsonAllen reported a significant deficiency regarding instances of inadequate supervision and approval of the journal entry process. See the LarsonAllen Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Audit Standards Operating Margin ( Income (Loss) Before Other Revenues, Expenses, Gains, or Losses ) /$(2.5)mil /$(2.9)mil /$(1.1)mil Primary Reserve (in months of operating expense) Note: RCTC incurred $1 million of asbestos abatement expense in FY 2008, which was a significant factor contributing to the negative $2.9 million operating margin in FY Significant joint ventures, alliances, etc. Contingent liabilities from litigation Related party transactions. See Footnote 1 descriptions of joint use agreements with the City for the University Center Rochester Regional Sports Complex and facilities use and cost sharing with Winona State University and the University of Minnesota Regional Extension Office. See Footnote 13 for significant commitments including completion of Phase 2 installation of a fabric bubble over the playing field at the Rochester Regional Stadium.

14 St. Cloud State University Operating Margin ( Income (Loss) Before Other $(1.7)mil $4.6mil /$0.3mil Primary Reserve (in months of operating expense) Foundation included. See Footnotes 1 and 18. Discreet foundation See Footnote 14 for Revenue Fund segment data. The Change in Net assets for this segment was $2,082k and $3,437k in fiscal years 2009 and 2008, respectively. Significant joint ventures, alliances, etc.. Contingent liabilities from litigation One contingent liability with a potential settlement in excess of $100k was disclosed in Footnote 17. Related party transactions Foundation related-party transactions -- disclosed in Footnote 18. See Footnote 15 for significant commitments including a new longterm operating lease for residence hall space.

15 Southwest Minnesota State University Operating Margin ( Income (Loss) Before Other /$(3.1)mil /$(1.3)mil /$(1.9)mil Primary Reserve (in months of operating expense) Foundation included. See Footnotes 1 and 17. Discreet foundation See Footnote 14 for Revenue Fund segment data. The Change in Net assets for this segment was $(2,028k) and $(1,592k) in fiscal years 2009 and 2008, respectively. The SMSU Revenue Fund completed a new dormitory with initial occupancy in fall term Significant joint ventures, alliances, etc. Contingent liabilities from litigation Related party transactions Foundation related-party transactions -- disclosed in Footnote 17. See Footnote 15 for significant commitments including a property management agreement with the SMSU Foundation and a $9.2 million science and hospitality/culinology labs renovation project.

16 Winona State University Operating Margin ( Income (Loss) Before Other $(0.8) $1.3mil /$6.3mil Primary Reserve (in months of operating expense) Foundation included. See Footnotes 1 and 17. Discreet foundation See Footnote 14 for Revenue Fund segment data. - The Change in Net assets for this segment was $2,958k and $3,342k in fiscal years 2009 and 2008, respectively. Significant joint ventures, alliances, etc. Contingent liabilities from litigation Related party transactions Foundation related-party transactions -- disclosed in Footnote 17. See Footnote 15 for significant commitments including $30 million for a residence hall and $18.4 million for a wellness center.