NEVADA SYSTEM OF HIGHER EDUCATION HOSTING Internal Audit Report July 1, 2007 through June 30, 2008

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1 NEVADA SYSTEM OF HIGHER EDUCATION HOSTING Internal Audit Report July 1, 2007 through June 30, 2008 GENERAL OVERVIEW The Board of Regents Handbook requires the Nevada System of Higher Education (NSHE) Internal Audit Department to conduct annual reviews of institutional hosting expenses. The reviews are intended to determine the extent to which institutions are complying with established hosting policies. The testing contained in this report was limited to northern Nevada institutions, with the exception of Great Basin College (GBC). Host expenditures for GBC and the southern Nevada institutions will be conducted for the fiscal year. SCOPE OF AUDIT The Internal Audit Department has completed a review of hosting expenditures for all of the northern institutions within the Nevada System of Higher Education (NSHE). These institutions include the University of Nevada, Reno (UNR), Truckee Meadows Community College (TMCC), Western Nevada College (WNC), Desert Research Institute (DRI) and System Administration for the period of July 1, 2007 through June 30, The scope of our review included testing expenditures for reasonableness, supporting documentation, proper signature approval and compliance with the hosting policies provided in the Board of Regents Handbook, the NSHE Procedures and Guidelines Manual and the institutional administrative manuals. (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 1 of 27

2 In our opinion, hosting expenses are generally handled in a satisfactory manner; however, a number of exceptions were noted. Implementation of the following recommendations would improve compliance with system host policies. UNIVERSITY OF NEVADA, RENO (responses from UNR) A sample of 50 host expenditures was tested. Of these, no exceptions were noted with 28. The following exceptions were noted with the remaining 22 expenditures. 1. On one occasion, a gift card was purchased for an employee with a purchasing card. Gift cards are considered income to employees for federal income tax purposes and should not be acquired with purchasing cards. Payments to employees should only be processed through the BCN Payroll Department. The university s purchasing card policies were revised after this transaction occurred and no longer allow gift cards to be acquired with purchasing cards. We recommend the above transaction be reported to the payroll department so the employee s form W-2 can be amended to reflect the value of the gift card. Correction In May 2009 the employee s 2007 W-2 was amended by BCN Payroll to reflect the $75 gift received. The purchasing card policy prohibiting purchase of gift cards for employees went into effect in February 2008 and is included in the purchasing card manual which is available online. Purchasing card auditors review all purchasing card statements and require repayment from the purchaser if this type of transaction occurs. 2 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 2 of 27

3 2. On two occasions, a Host Expense Documentation and Approval form was not completed and approved for host expenditures. 3. On two occasions, the Host Expense Documentation and Approval form was incomplete in that the names of the individuals or groups that were hosted or attended an event was not documented, or was incorrectly documented, on the forms. Although other expense documentation included with the host forms identified the nature of the hosting activities, host forms should be completed in their entirety and should identify the business relationship of the persons or groups that were hosted. For items two and three above, we recommend host expense forms be completed, as required, for all host expenses and that the forms be completed in their entirety. Purchasing card auditors and the accounts payable auditor were reminded on May 15, 2009, that the Host Expense Documentation form must be completed for all hosting transactions and that all sections of the form need to be completed, especially the attendees section, even when the name of the event appears to describe the attendees (football alumni tailgates). This was also discussed with college fiscal officers on June 10, On one occasion, a transaction for over $2,000 was processed on a purchasing card rather than a purchase order. 5. On three occasions, purchase orders were issued "after-the-fact", that is, after hosting services had already been ordered. For items four and five above, we recommend that purchase orders be completed for transactions of $2,000 and above and that they be completed in advance as required by NSHE purchasing policies. 3 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 3 of 27

4 For item #4, the associate vice president for business and finance met with the president s office staff on May 8, 2009 to discuss purchasing and hosting policies. The staff was instructed to issue purchase orders for all future events off campus where the total event cost exceeds $2,000. For item #5, two of the purchase orders listed were to the contracted campus catering vendors that UNR departments are required to use for on-campus events. On May 5, 2009 the controller notified the purchasing director that purchase orders are not required for the contracted food service vendors. Also, the UNR Request for Payment form was revised to allow for payments to these vendors. In addition, for all purchase orders issued after the fact the department and its dean/director receive a purchasing violation letter from purchasing that indicates that future purchases must follow purchasing policy which requires purchase requisitions to be submitted before goods or services are ordered. 6. Four expenditures appear to have been participant funded activities which are not considered hosting expenses. We recommend that participant funded activities be charged to the correct expense category. The controller notified the departments involved in the purchases referenced that events funded from participant fees are not considered hosting and should be charged to operating expense using object 30-PP. Proper coding of hosting and participant paid expenses was also discussed with college fiscal officers on June 3, Item #1 was coded to which is hosting-participant paid. The controller notified the purchasing card manager and purchasing director on May 4, 2009, that object code should no longer be used, rather 30-PP should be used if documentation shows participant payments covered the food costs. Effective July 1, 2009 the object code will be disabled. 7. On one occasion, host funds were used to provide water service for employees. NSHE policy states that hosting must provide a benefit to the System or institution through the 4 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 4 of 27

5 establishment of good will, promotion of programs, or creation of opportunities for meetings in which the mission of the System or NSHE institution may be advanced. We recommend that host funds be used in accordance with this policy. This water service was discontinued in July 2007 when the university hosting policy was revised to disallow such purchases. Purchasing card auditors have been advised to make sure all hosting purchases comply with policy. 8. Three transactions were charged to a hosting expense category that should not have been considered hosting expenses. The purchases consisted of membership dues, batteries, and a small refrigerator. We recommend greater care be taken to ensure transactions are charged to the correct expense category. University purchasing card auditors were reminded on May 15, 2009, to check all expenses for appropriate object codes and to process journal vouchers to make corrections, if necessary. 9. On three occasions, the supporting documentation for business meals did not include an itemized receipt. An itemized receipt was not provided for one other transaction at the ASUN Bookstore. As a result, it could not be determined what was purchased. We recommend that itemized receipts be provided for all transactions. University hosting policy was revised in October 2007 to require itemized receipts for hosting transactions. Purchasing card auditors have been reminded that itemized receipts are required for all transactions. 5 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 5 of 27

6 10. Nevada sales tax was paid on three transactions all of which were paid with purchasing cards. We recommend employees be reminded that vendors should not be charging sales tax on purchases. If the payment of sales tax cannot be avoided at the time a purchase is made or is not noticed until a later date, employees should request a credit from the vendor and provide an explanation on the supporting documentation. When sales tax is paid cardholders receive a notice from purchasing card auditors indicating that the university is tax exempt and the cardholder should contact the vendor and attempt to get the sales tax refunded. A reminder notice was sent to all purchasing card users on August 1, 2008, reminding them that we are exempt from Nevada sales tax, including tax on meals served at restaurants. Reminders will continue to be sent to purchasing card users periodically. 11. Three expenditures were charged to the incorrect hosting expense category. We recommend that greater care be taken to ensure host transactions are charged to the correct hosting expense category. University purchasing card auditors and the accounts payable auditor were reminded on May 15, 2009, to check that hosting object codes charged on payment documents match hosting object codes listed on the Host Expense Documentation and Approval Form. 12. On three occasions, payment documentation was not approved by an authorized signer, within the financial accounting system, on the account that was charged. We recommend that payment documentation be approved by an authorized signer. 6 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 6 of 27

7 The associate vice president for business and finance met with the president s office staff on May 8, 2009 to discuss purchasing and hosting policies. The office staff was instructed to obtain an authorized account signature on payment forms prior to sending the documents to the chancellor s office for approval of the president s hosting. TRUCKEE MEADOWS COMMUNITY COLLEGE (responses from TMCC) A sample of 35 host expenditures was tested. Of these, no exceptions were noted with 16. The following exceptions were noted with the remaining 19 expenditures. 1. Six transactions were charged to accounts that were not approved for hosting activity according to a list of authorized host accounts that was provided by the college. We recommend host expenditures be charged to authorized accounts only. : Correction: The approved roster of approved host accounts that was furnished to the Controller s Office did not include the Associated Student Government accounts or agency accounts. The approved roster has been corrected to include these accounts. : The approved roster of accounts has been updated to include all accounts authorized to incur host expenses. If an expense reimbursement is received in the Controller s office, and the account is not on the approved roster, the forms will be returned to the requestor to correct. 2. On two occasions, the Host Expense Documentation and Approval form was incomplete in that the name of all the individuals that were hosted or attended an event was not documented on the forms. Host forms should be completed in their entirety and should identify the business relationship of the persons or groups that were hosted. We recommend that host forms be completed in their entirety. 7 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 7 of 27

8 Correction: A training review session was held with the Dean and Vice President s office that authorized these expenditures emphasizing the need for a sign in roster when large groups of individuals are being provided refreshments from host funds. Again, the emphasis is on completing all required records. : TMCC s account managers are reviewing all host documentation and only approve expenditures that have included the required documentation. 3. On two occasions, the Host Expense Documentation and Approval form was not signed by an authorized employee. NSHE policy states that the signature authority for hosting expenditures may not be delegated below the level of vice president, deans or direct reports to the President. Both of the forms noted were signed by employees below this level. We recommend that proper signatures be obtained on host forms. Correction: One of the instances was again an agency fund provided for the recognition of Classified employees. The President of the College is the authorizing signature on this account. This fund is now being listed on the roster of authorized host accounts. The other instance was an associated student government account and event. As stated above, these are also being listed on the authorized host account roster. : Operating procedures manuals have been updated to reflect the most up-to-date NSHE hosting expenditure guidelines. These procedures have been reviewed with Deans and direct reports to the President and the appropriate Dean will reviewed the procedures with the incoming student body officers. 8 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 8 of 27

9 4. On one occasion, the business purpose of a hosting expenditure was not documented on either the Host Expense Documentation and Approval form or other supporting documentation as required. We recommend that a business purpose be documented for all hosting transactions. Correction: The business purpose was identified on the Host Expense Documentation and Approval Form. The auditor s position was that the purpose was not clearly stated. All authorized persons with host accounts have been reminded to clearly identify the business purpose on all host documents. : All authorized persons with host accounts have been reminded to clearly identify the business purposes when submitting any host account documents. Additionally, the Controller s office will review the hosting form and related documentation for NSHE policy compliance. 5. On one occasion, a purchase order completed for a hosting expenditure was issued "after-the-fact", that is, after catering services for an event had already been ordered. We recommend that purchase orders be completed in advance as required by NSHE purchasing guidelines. Correction: Account managers for the student government association self reported the above mentioned infraction. Proper training has been provided to student government leaders and advisors regarding hosting expenditure requirements as require by NSHE purchasing guidelines. A repeat infraction has not occurred. The Student Government advisors will carefully review all student government host documents to ensure compliance. : 9 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 9 of 27

10 The student government association has updated their operating procedures manual to reflect the most up-to-date NSHE hosting expenditure guidelines. The student government association advisor reviews and updated the student government operating procedures manual annually to assure that NSHE hosting expenditures guidelines posted are up-to-date. 6. On four occasions, hosted meals were provided at meetings which appear to have been attended by college employees only. An agenda of the meetings was not provided. NSHE policy states in part that when only institutional employees are present, host expenditures are allowable if it is a business meeting or workshop, scheduled for a specific agenda that runs through normal meal or break times. For hosted meetings at which only college employees are present, we recommend an agenda be prepared that includes the time the meeting was held. Correction: The first and third citations were both orientation meetings for new employees. The first citation of the events was a continental breakfast for all new employees where a brief orientation on the college was provided. The host documents clearly stated the purpose of the event and was properly processed and signed. A sign in sheet was not prepared, only the statement that this was an orientation for new employees. The third citation was the same type event, except this was an orientation for new part time faculty. In the future the College will include a sign in sheet for participants. The second and fourth citations were for Professional Development activities. These were coded as host expenditures but Title 4, Chapter 10, Section 21, Paragraph 1 states that employee professional development expenditures are NOT a host expense. This exclusion has been reviewed with the manager of the Professional Development program. : The above citations have been reviewed with the individuals responsible for the appropriate use of host funds. Also, the Controller s Office will not accept reimbursement requests if the agenda and other appropriate documentation is not provided. 10 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 10 of 27

11 7. On two occasions, expenditures for non-hosting items were charged as hosting expenses. The purchases consisted of table decorations, a toaster, and other miscellaneous supplies. We recommend greater care be taken to ensure transactions are charged to the correct expense category. Correction: Reaffirm to account managers and support staff the importance of separating nonhosting expenses from hosting expenses on single transactions. : The requirement to separate goods and services from host expenditures has been reviewed with those responsible for host accounts The account managers must adhere to this NSHE policy requirement. The Controller s Office will not process payments that do not meet the hosting requirements. 8. The expense documentation for one transaction did not include an itemized receipt. We recommend that itemized receipts be provided for all transactions. Correction: A receipt was provided but the establishment did not provide receipts with detailed itemization. Reaffirm to all account managers the requirement that they must collect an itemized receipt for expenditures, even if it is a hand written receipt. : Account managers must adhere to this requirement. The Controller s Office will not process payments without itemized receipts for expenditures. 9. Nevada sales tax was paid on one transaction which was paid with a purchasing card. 11 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 11 of 27

12 We recommend employees be reminded that vendors should not be charging sales tax on purchases. If the payment of sales tax cannot be avoided at the time a purchase is made or is not noticed until a later date, employees should request a credit from the vendor and provide an explanation on the supporting documentation. Correction: The sales tax exempt form is provided to the employee with the purchasing card. Credits have been requested from the vendor(s) with little success as the vendor is usually a small local vendor and recently more than one has gone out of business. The State will not allow TMCC to claim the tax. All persons with authority for a host account have been reminded of the sales tax exemption for the College. : All persons with authority for a host account have been reminded of the sales tax exemption for the College. If sales tax is charged, account managers must request a refund from the vendor in a timely manner. WESTERN NEVADA COLLEGE (responses from WNC) A sample of 15 host expenditures was tested. Of these, no exceptions were noted with 10. The following exceptions were noted with the five remaining expenditures. 1. The supporting documentation for two hosting expenditures did not indicate all of the expense substantiation requirements specified in the NSHE Procedures and Guidelines Manual. One of the transactions did not include the location of a hosting activity or the business relationship of the persons in attendance. The other transaction did not include the location, time, or persons in attendance. We recommend hosting expenditures be documented in accordance with established policy. To assist in this process, we recommend that college administration consider the 12 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 12 of 27

13 development of a hosting documentation form that would be completed when hosting transactions occur. The form would provide all of the substantiation requirements stipulated in the NSHE Procedures and Guidelines Manual. The form should also include a space for an approval signature. We agree that a revised hosting documentation form would enhance the documentation process for hosting transactions. Based on a review of forms currently used by NSHE System Office and the University of Nevada-Reno, the controller s office modified the hosting documentation form to include all required data with space for an approval signature. 2. On two occasions, hosted meals were provided at meetings which appear to have been attended by college employees only. An agenda of the meetings was not provided. NSHE policy states in part that when only institutional employees are present, host expenditures are allowable if it is a business meeting or workshop scheduled for a specific agenda that runs through normal meal or break times. For hosted meetings at which only college employees are present, we recommend an agenda be prepared that includes the time the meeting was held. The two events in this finding were a student training session and a lunch during an academic program review meeting. Both occasions meet the criteria for hosting. We located the agendas and participant lists for both events and attached them to the payments documents. Business office and the offices involved in both of these events 13 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 13 of 27

14 have been instructed on the need for appropriate documentation for host account purchases. 3. Two transactions were charged to accounts that were not approved for hosting activity according to a list of authorized host accounts provided by the college. We recommend host expenditures be charged to authorized accounts only. The hosting check list includes a check off that the account charged is an approved host account. We have also provided the departments with training that addresses this issue for future transactions. 4. The supporting documentation for one expenditure did not contain an approval signature. NSHE policy requires hosting expenditures to be approved by a vice president, dean, or a direct report to the president. We also noted a purchasing transaction request (PTR) form was not completed for the transaction and that one of the invoices included in the transaction was not paid until six months after the hosting activity occurred. We recommend that host expenditures be approved by authorized employees. We also recommend that the required payment documentation be completed for transactions and that payments be processed in a timely manner. A college department purchased snacks for an event for parents of the college child care facility. The hosting procedures have been provided to the department along with individual training on the proper procedures, including approval by authorized employees, concerning hosting expenditures. The delay in making 14 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 14 of 27

15 payment was caused by a delay from the vendor in submitting the invoice. We are no longer using this vendor. 5. On one occasion, payment documentation was not approved by an authorized signer, within the financial accounting system, on the account that was charged. We recommend that payment documentation be approved by authorized signers. We located an from the respective vice president approving this expense. A copy is attached. DESERT RESEARCH INSTITUTE (responses from DRI) A sample of 22 host expenditures was reviewed. Of these, no exceptions were noted with 14. The following exceptions were noted with the eight remaining expenditures. 1. On three occasions, host expenditure documentation did not completely list all of the persons that attended events on behalf of DRI. As a result, not all of the expense substantiation requirements specified in the NSHE Procedures and Guidelines Manual were provided. We recommend that the name and business relationship of attendees be provided, as required. We agree with this recommendation. DRI will ensure that the names of persons attending events on behalf of DRI, and the business relationships of those persons are included, as required in host expenditure documentation. On certain occasions, the names of attendees at an event are not known in advance when tickets are purchased and when the host expenditure documentation is provided to the Financial Services Office. On those occasions, the host expenditure documentation provided in advance of the event indicates that persons who will be attending the event on behalf of DRI are to be determined. In those cases, the Financial Services 15 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 15 of 27

16 Office will create a tickler file to ensure that the names of attendees are obtained prior to, or immediately after, the event. If all of the tickets purchased for an event are not used, or not all the seats at table are occupied, notes to that effect will be included in the host expenditure documentation. 2. On one occasion, a table purchase was made at another NSHE institution. According to the NSHE Procedures and Guidelines Manual, no tables are to be purchased by system institutions at events hosted by other institutions within the NSHE. We recommend that the policy be followed. We agree with this recommendation. DRI will distribute the host policy reminding staff that no table purchases at events hosted by other institutions within the NSHE are allowed. Supervisors will review table purchases for compliance with host policy, and the Financial Services Office will review the transactions prior to processing. If errors are identified, the initiating department will be contacted regarding corrections. 3. Two transactions were charged to the incorrect hosting expense category. Both of these transactions involved non-table purchase hosting expenses that were charged as table purchases. NSHE policy limits the amount of host funds that institutions may spend on table purchases. Thus, it is important that table purchases are posted correctly to the financial accounting system so these transactions can be effectively monitored. We recommend that greater care be taken to ensure host expenditures are charged to the correcting hosting expense category. We agree with this recommendation. One of the transactions was for the purchase of 20 tickets to a buffet breakfast from the Nevada Development Authority. The purchase was incorrectly coded as a table purchase. The second transaction was for the purchase of individual tickets for seats at a table fewer than those included in a table purchase for the event The transaction was also incorrectly coded as a table purchase. Departments and divisions will be notified of the need to code transactions to the correct expense category. Financial Services staff will increase 16 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 16 of 27

17 their scrutiny of documents submitted by the departments and divisions in an effort to identify errors prior to processing. If errors are identified, the initiating department will be contacted regarding corrections. 4. On one occasion, a conference registration was charged as a hosting expense. We recommend greater care be taken to ensure transactions are charged to the correct expense category. We agree with this recommendation. The conference registration fee included the cost of an individual luncheon ticket at an event for which several other luncheon tickets were also purchased by DRI. The conference fee and lunches were coded in error to the same expense category. In the coding of expenditures DRI divisions and departments will distinguish conference registration fees from purchases of individual tickets to a luncheon or dinner held in conjunction with the conference. Financial Services staff will increase their scrutiny of documents submitted by the departments and divisions in an effort to identify errors prior to processing. If errors are identified, the initiating department will be contacted regarding corrections. 5. On two occasions, the statement of account associated with purchasing card transactions was not signed by the cardholder. DRI s policy does not currently require cardholders to sign the statement of account. For proper control, the statement of account should be signed by the cardholder, in addition to a supervisor, as verification of the purchases that were made on the cards. If employees are unavailable to sign the statement, due to lengthy travel assignments or for some other reason, a notation should be made on the statement of account. We agree with this recommendation. To ensure that a cardholder actually initiated expenses which show on a purchasing card statement of account, DRI will require the signature of the cardholder in addition to the cardholder s supervisor or manager. If the cardholder is unavailable to sign the statement, a notation will be made on the statement of account, and signatures obtained by the division or 17 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 17 of 27

18 department after the fact and submitted to Financial Services as part of the purchasing card documentation. SYSTEM ADMINISTRATION (responses from System Administration) The Internal Audit Department tested a sample of 23 transactions. Of these, no exceptions were noted with 12. The following exceptions were noted with the 11 remaining expenditures. 1. On five occasions, the supporting documentation for business meals did not include an itemized receipt that indicated what was purchased. Itemized receipts should be provided for all transactions. We recommend itemized receipts be provided. : Correction: Four of the five occasions were reimbursement requests from regents, who did not submit itemized receipts. On April 14, 2009, Scott Wasserman, Chief Executive Officer of the BOR, distributed an to the regents regarding the following subject: Host account expenditures itemized receipts requested. The body of the message is as follows: Dear Regents Vice Chancellor Mike Reed has noted that some of the Regents host account meal receipts submitted for reimbursement do not contain itemized billing statements (e.g., specific meal items ordered). In the interest of uniformity and good auditing practices, Vice Chancellor Reed has requested that hosting receipts contain an itemized copy of the bill showing the food items ordered (in addition to the identification of persons hosted on the receipt). Should a particular restaurant not provide itemized receipts, your written notation on the receipt will suffice (e.g. two salads and two soft-drinks ). Please bear in mind that this information is public record, and as such we should follow best audit practices. It has been suggested that Regents follow best practices, however it is not required that they adhere to the policy requiring itemized receipts. System Administration will continue to monitor Regent reimbursement requests, to encourage that itemized receipts or written explanations are submitted. 18 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 18 of 27

19 The remaining incident involved a system employee. Since this incident, the employee has since been reminded that itemized receipts are required, and has submitted complete documentation on all subsequent reimbursement requests. The System Office will again remind Regents and employees to follow best audit practices and submit all required documents with reimbursement requests. 2. On two occasions, gratuities paid on meals exceeded the maximum allowable of twenty percent of the bill. According to the Board of Regents Handbook, gratuities are not to exceed twenty percent of the meal. We recommend that the policy be followed. Both incidents pertained to Regent hosting. It has been suggested that Regents follow best practices, however it is not required that they adhere to the 20% gratuity policy. 3. One transaction involved a reimbursement for an expense that was paid in a foreign currency. A reimbursement request was submitted for the amount that was paid in the foreign currency. A conversion was not performed to determine the reimbursement amount in United States Dollars. When these situations occur, we recommend a currency conversion be performed and submitted with the payment request. The conversion rate on August 1, 2007, of Canadian dollars to United States Dollars was With regard to above the above mentioned reimbursement, a Regent was over paid $2.71. Greater care will be taken with regard to reimbursement requests involving foreign currency. 19 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 19 of 27

20 4. One transaction involved a reimbursement to an NSHE institution for expenses associated with a hosted event. A summary of expenses was provided from the institution but vendor receipts were not made available to support the expense amounts. The amount of the reimbursement was $5,626. We recommend that receipt documentation be requested by System Administration staff when transactions such as this occur. On June 29, 2009, all backup receipts for an ACCT hosted event whose attendees included members of the Board of Regents, Chancellor s Cabinet, TMCC Cabinet members, ACCT representatives, as well as a national group of community college trustees were requested and received from TMCC, and documents are now on file in the System Office. Campuses have been reminded that events similar to the ACCT conference require in the initial submission of receipts all appropriate documents, especially vendor receipts associated with such a meeting. 5. Nevada sales tax was paid on three transactions all of which were paid with purchasing cards. We recommend employees be reminded that vendors should not be charging sales tax on purchases. If the payment of sales tax cannot be avoided at the time a purchase is made or is not noticed until a later date, employees should request a credit from the vendor and provide an explanation on the supporting documentation. The above three incidents involve MAP, EPSCoR and a Board employee. MAP and EPSCoR employees are reviewing the documents and will respond back with regard to vendor tax credit requests. The Board employee confirmed that a copy of the tax 20 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 20 of 27

21 exempt letter was previously forwarded to the vendor requesting the tax reimbursement. The vendor responded that they could not reimburse the tax. Per the employee, the vendor will not be used for any further hosting activity if sales tax is imposed. The System Office will again remind employees that vendors should not be charging sales tax on purchases. On such occasions when the payment of sales tax cannot be avoided at the time of purchase, or is not noticed until a later date, a vendor credit will be requested, and an explanation on the supporting documentation will be provided. 6. On one occasion, a reimbursement to an employee for hosting expenditures was approved by a subordinate employee. For proper internal control, we recommend reimbursements be approved by employees supervisors. At the time the reimbursement was made to an employee by a subordinate employee, the Chancellor was not available due to medical leave. Vice Chancellor Jane Nichols was delegated as signature authority (during the Chancellor s absence) per a memorandum, dated March 3, 2008, from Daniel J. Klaich. To provide clarification in the future, a copy of a memo delegating signature authority, will be attached to all such documents. OTHER The following exception was noted during this review; however, it is the responsibility of the Vice Chancellor for Finance. During this review, occasions were noted in which institutional host funds were used to pay for employees spouses to attend hosted events. NSHE policy does not currently address whether host funds may be used for this purpose. The NSHE Procedures and Guidelines Manual 21 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 21 of 27

22 states that host funds may be used to pay transportation, lodging and meal expenses for a president s or the Chancellor s spouse to attend business related events that are 50 miles or more from home. This policy, however, is directed at the use of host funds for travel expenses, rather than host expenses, and is limited to spouses of presidents and the Chancellor. On the occasions noted, none of the employees was a president or the Chancellor and none were in travel status. We recommend that the Vice Chancellor for Finance and the institutional Business Officers review this issue and make a determination as to whether there are circumstances under which host funds could be used to pay for spousal hosting expenses. Once a determination has been made, we recommend a policy be developed and that the necessary steps be taken to include the policy in the NSHE Procedures and Guideline Manual. The Vice Chancellor for Finance has sent a memo to the institutional Business Officers regarding this matter asking for their feedback and policy suggestions. A final review of campus suggestions and policy recommendations will be forthcoming from the next Business Officers Council meeting. PRIOR AUDIT A prior audit of hosting for these institutions was conducted for the period July 1, 2005 through June 30, All recommendations from that audit have been implemented, are no longer applicable or have been addressed in this report. 22 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 22 of 27

23 The Internal Audit Department appreciates the cooperation received from each of the institutions during this review. Reno, Nevada April 27, 2009 Eric Wilber Internal Auditor Sandra K. Cardinal Assistant Vice Chancellor, Internal Audit and Risk Management 23 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 23 of 27

24 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: June 29, 2009 Subject: Response to the NSHE Hosting Audit The purpose of this memorandum is to transmit responses from the university to the audit of hosting expenditures covering the period July 1, 2007 through June 30, I have reviewed and concur with all responses. Attachments cc: Milton Glick, President Ron Zurek, Vice President, Administration and Finance (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 24 of 27

25 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 25 of 27

26 (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 26 of 27

27 TMCC Hosting July 1, June 30, 2008 Status of Findings Finding Closed Open Comments 1. X 2. X 3. X 4. X 5. X 6. X 7. X 8. X 9. X (AUDIT COMMITTEE 09/17/09) Ref. A-5, Page 27 of 27