CS 3.10.3 Control of Finances Recommendation from …sjgc.famu.edu/m/assets/File/CS 3 10 3 Narrative.pdf · · 2013-09-18Recommendation from SACSCOC January 15, 2013 Probation Sanction

FAMU – August 26, 2013 First Monitoring Report on December 2012 SACSCOC Probation Sanction (CS 3.10.3)

CS 3.10.3 Control of Finances

The institution exercise appropriate control over its financial resources.

Recommendation from SACSCOC January 15, 2013 Probation Sanction Letter [1]:

CS 3.10.3 Control of Finances

The institution has not presented evidence that it has exercised appropriate control over all its

financial resources. In addition to the internal audit concerns already cited, materials provided

showed irregularities in the financial control of the band program. While new policies and

procedures have been put into place, there is insufficient evidence that the new controls have

solved the internal control and internal audit problems. The institution should demonstrate that it

exercises appropriate control over its financial resources. Additionally, it is recommended that

the institution provide evidence attesting to the functionality of the internal control environment,

as well as the adequacy of internal audits. This should include a discussion of findings, if any, in

the 2013 audit management letter.

FAMU’s Response

Florida A&M University (FAMU) exercises appropriate control over its financial resources and is

in compliance with Comprehensive Standard 3.10.3. The bases for financial controls within

FAMU include Florida Statutes [2]; FAMU Board of Trustees (BOT) policies [3], which includes

the Guiding Principles for Fiscal Affairs [4]; and Florida Board of Governors regulations and

guidelines [5]. It is important to note that the University continuously reviews, evaluates, revises

and develops policies and procedures, as needed, to enhance the internal control of its

finances.

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The following narrative and corresponding documentation demonstrate that the University has

appropriate control of its financial resources and that it has implemented measures to

adequately address the specific issues and concerns that were raised regarding the University’s

internal control environment and internal audit function. These actions include: (a) strengthening

the system of internal controls governing the finances of the band program, group travel, and

the purchasing card program; and (b) overhauling the internal audit function to ensure that it

consistently operates with integrity and in accordance with professional standards, and that it is

sufficiently staffed to carry out its function. The narrative for Comprehensive Standard 3.10.3 is

organized as follows:

I. Division of Administrative and Financial Services (DAFS) A. Administrative Units and Internal Controls B. Internal Control Enhancements C. Qualifications of Key Personnel

II. Internal Control Environment A. Internal Audit Function B. Board of Trustees C. Board of Governors of the State University System of Florida D. Financial Audits (State of Florida) E. Operational Audits (State of Florida)

III. Internal Controls of Band Program A. Oversight of Band Travel

IV. Conclusion

I. Division of Administrative and Financial Services (DAFS)

The Vice President for Administrative Affairs (CFO) (VPAA) reports to the President and has

primary responsibility for ensuring that the University exercises appropriate control of its

finances. The VPAA manages the Division of Administrative and Financial Services (DAFS),

which provides fiscal and administrative oversight in support of the academic, research and

service mission of the University. The DAFS is responsible for enforcing the policies and

procedures of all financial aspects of the University, including operations, financial accounting,

student business services, accounts receivable/payable, budget and resource planning, human

resources, procurement services, payroll, property management, travel and auxiliary services.

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The VPAA has eight direct reports as described below and illustrated in the DAFS organization

chart.

DAFS is staffed with qualified persons who possess the requisite competence, credentials and

professional experiences to facilitate the effective management of the various administrative

units within the division. The guiding principles for how DAFS carries out its function are outlined

in FAMU BOT Policy No. 2006-03, Guiding Principles for Fiscal Affairs [4]. In addition, DAFS

and its constituent units are governed by specific FAMU BOT Policies and Regulations [6] [7].

The DAFS units also operate in accordance with internal operating procedures and guidelines

that help to enhance the overall function of DAFS, as well as to ensure that the appropriate

internal controls are in place. The key internal standard operating procedures are listed below.

• Travel and Expense Manual [8]

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• Cash Collections and Controls Manual [9]

• Accounts Payable Procedures [10]

• Bank Reconciliation Procedures [11]

• Procedures for Check Deposits [12]

• Special Purpose Investment Account Procedures [13]

• Investment Procedures [14]

• Bank Signature Update Procedures [15]

• Purchasing Card (P-Card) Manual [16]

• Purchasing Manual [17]

• Contract Management Manual [18]

• Facilities Planning and Construction Procedures Manuals

o Project Manager’s Procedure Manual [19]

o Service Guide for Design and Construction Professionals [20]

o Design Standards for Professionals [21]

• Budget Office Policies and Procedures [22]

• Document Management [23]

DAFS has the appropriate internal controls in place to ensure that its business operations are

carried out effectively, and in accordance with University and state guidelines. Internal controls

are the cornerstone of the Division’s ability to effectively fulfill its mission and achieve its goals,

while providing the appropriate safeguards to protect the University's resources. Each unit and

corresponding departments within DAFS utilize internal controls that are appropriate for the

business processes managed by the respective unit. The section below includes a brief

description of DAFS units with corresponding lists of their internal controls provided as

supporting documentation.

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A. Administrative Units and Internal Controls

1. Financial Planning Services - This unit is responsible for promoting the efficient and

effective operations of the Division’s financial planning, financial compliance, financial

reporting, and business decisions. This unit was created in June 2013 and serves as a

critical component of the DAFS internal control environment. A list of internal controls

used by this unit is included as supporting documentation [24].

2. Administrative Services Assistance Program (ASAP) – This unit is responsible for

resolving departmental fiscal and administrative issues by serving as the liaison between

the departments and University's centralized business units. It enhances the University‘s

overall internal control environment by assisting the University’s various colleges/schools

and administrative units to effectively perform various administrative and fiscal functions.

A list of internal controls used by this unit is included as supporting documentation [25].

3. Controller’s Office – This unit is responsible for establishing and implementing policies

and procedures that are necessary to ensure the proper and efficient use of the

University’s financial resources. In addition, the Controller's Office ensures the financial

records of the University are in compliance with statements of the Governmental

Accounting Standards Board; FAMU BOT and Florida BOG regulations and guidelines,

procedures and regulations; and pertinent Florida and federal regulations. The

Controller’s Office maintains the University’s accounting and financial reporting systems,

including the property, travel, student financial services, and accounts receivable

subsystems. A list of internal controls used by this unit is included as supporting

documentation [26].

a. Student Financial Services

i. Student Accounts – This unit is responsible for the maintenance of

student accounts receivable sub-system.

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ii. Cash Management – This unit is responsible for receiving, depositing

investing, and safeguarding cash collections.

b. General Accounting Reporting & Analysis – This unit is responsible for providing

financial data and analysis, including annual financial statements, on behalf of

the University to both internal and external entities.

c. Asset Management –This unit is responsible for maintaining physical inventory of

all University property.

d. Taxes and Payroll Accounting – This unit is responsible for the accurate and

timely reporting and payment of taxes and employee benefit deductions to the

appropriate State and Federal authorities. In addition, the Taxes and Payroll

Accounting unit is responsible for the accurate recording of payroll in the general

ledger.

e. Disbursements, Warrant Distribution, Imaging (Accounts Payable)

i. Accounts Payable – This unit is responsible for processing vendor

invoices on behalf of the University in payment of goods and services

provided to FAMU by external vendors.

ii. Warrant Distribution – This unit is responsible for disbursing payments

processed by the Accounts Payable unit.

iii. Travel – This unit is responsible for administering the travel process,

including auditing and processing expense reports and receipts submitted

for reimbursement, registrations and cash advances.

f. Reconciliation and Quality Assurance – This unit is responsible for reviewing

sub-module financial activity and reconciling accounts of original entry.

4. University Budgets – This unit is responsible for developing the University’s annual

Operating Budget, monitoring revenue and expenditures, providing accurate information

to facilitate effective decision making, and ensuring that funds are allocated in

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accordance with legislative mandates and regulations. A list of internal controls used by

this unit is included as supporting documentation [27].

5. Business and Auxiliary Services, and Procurement – This unit is responsible for the

oversight and management of the offices of Procurement Services and Business and

Auxiliary Services. A list of internal controls used by this unit is included as supporting

documentation [28].

a. Business and Auxiliary Services – This unit is responsible for offering a variety of

services that offer conveniences to students, faculty, staff, alumni, and visitors.

These services include the University Bookstore, Copy Center, Dining Services,

Meal Plan Program, Rattler Card (FAMU ID card), University Post Office,

Beverage and Snack Vending, Laundry Services and Parking Services.

b. Procurement Services – This unit is responsible for providing assistance to the

University by facilitating the acquisition of supplies, materials, equipment,

maintenance services, contractual services, lease of space, construction

services, and the development and maintenance of a vendor listing.

6. Construction and Facilities Management – This unit is responsible for managing the

University’s facilities planning, design, and construction operations; overseeing the

construction of buildings; maintaining and repairing the infrastructure throughout the

campus; and, developing, overseeing, and managing of environmental health and safety

programs that protect the environment by providing safe and healthy conditions for work

and study. A list of internal controls used by this unit is included as supporting

documentation [29].

a. Facilities Planning and Construction – This unit is responsible for managing the

University’s facilities planning, design, and construction operations.

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b. Plant Operations and Maintenance – This unit is responsible for overseeing the

maintenance and repairs to the buildings and infrastructure throughout the

campus.

c. Environmental Health and Safety – This unit is responsible for ensuring a safe

campus environment for work and study, and establishing and maintaining

compliance with federal, state and local environmental laws, rules, and

regulations.

d. Multi-Purpose Facilities – This unit is responsible for managing the set up and

production of events held in campus multi-purpose facilities.

7. Human Resources – This unit is responsible for providing human resources and

personnel related services to the University, which include employee recruitment,

employee appointments and status changes, payroll, employee benefits, payroll

operations, records management and workforce administration. A list of internal controls

used by this unit is included as supporting documentation [30].

a. Organizational Development & Training – This unit is responsible for providing

university-wide human resource development and training programs.

8. Operations Analysis – This unit is responsible for analyzing business processes to

increase operational efficiency, as well as the implementation, project management, and

administration of the University’s electronic workflow and document management

system. A list of internal controls used by this unit is included as supporting

documentation [31].

B. Internal Control Enhancements

The University has implemented several internal controls to enhance the oversight,

management, and compliance with policies/procedures as well as to strengthen its internal

control of financial resources as described in the table shown below. Some of the

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enhancements included below have been implemented to address specific issues (e.g.

Purchasing Card, band cash management, group travel) that were brought to light as a result of

the hazing incident in 2011, and the resulting investigations by the Florida Department of Law

Enforcement and the Florida Board of Governors.

Purchasing Card (P-Card) Procedures

• Instituted Mandatory P-Card training for all P-Card holders at least once per year or when needed.

• In June 2013, the FAMU BOT approved the revised P-Card policies and procedures, to include the following language to strengthen oversight and management of P-Cards:

o Requests for P-Cards are approved by respective program Vice President when application is submitted to the P-Card Administrator.

o All P-Card limits, including those for single transactions greater than $1,000 are established at the time of approval by the P-Card Administrator and the Vice President for Administrative and Financial Services.

• The University revised the P-Card Reconciliation form to include justification of purchase, description of item purchased, travel authorization number, amount and date of purchase, cardholder and supervisor’s signature.

• The Controller’s Office instituted cross-referencing procedures to strengthen and enhance the oversight of P-Card travel expenses against travel reimbursements (expense report) to ensure or eliminate overpayments, and to detect duplicate payments.

o The Travel Office is provided a copy of all travel related expenses submitted for P-Card reimbursement.

Band Cash Management Procedures

• The role of the recently hired Music Compliance Officer is included in the approval process of band and music ensemble travel.

• Implemented use of pre-paid debit cards for distribution of meal payments to band members (replaces former practice of issuing cash).

• Require band members to sign a roster and present student identification at secured location to receive pre-paid debit card.

• Require band members to show student identification and pre-paid debit card before boarding bus.

• Implemented reconciliation process to verify pre-paid debit cards received, issued, and returned.

Cash Management Oversight

• The University Cashier’s Office provided training regarding cash management to the Rattler Card Office (FAMU ID), University Post Office and the University Copy Center staff. The purpose of the training was to ensure that these certified cash collection sites are aware, knowledgeable and apply the principles delineated in the Cash Collections Manual.

• On July 21, 2013, a certified financial planner provided training for the Office of

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Auxiliary Services, Parking Services, University Post Office and the Rattler Card Office on cash management. Specific areas covered in the training were safeguarding cash, cash collections (counterfeit dollars, fraudulent money order/cashier’s checks, altered checks) issuance of receipts, deposits, and separation of duties.

Group travel • Revised Travel and Expense policies and procedures manual. • Revised Group Travel Roster to clearly identify authorized travelers. • Each Group Travel Roster must contain student or participant name and

identification number. • Each Group Travel Roster must note classification of traveler: student,

employee or non-employee. Training on new and enhanced Travel processes

(conducted by Administrative Services Assistance Program (ASAP) and Oracle) • ASAP provides periodic travel “refresher” training to include specific training on

group travel. The specific topics are determined by the ASAP representative in collaboration with the department.

• ASAP offers new user training on the Travel (Oracle) module and its policies. Additionally, one-on-one assistance is offered twice a month on entering travel transactions.

• ASAP provides guidance to the University community on the application of all travel-related policies (on a day-to-day basis). This is vital in that it provides a quick and single point of contact to the departments.

• The University hired Oracle, in February 2013, to provide training on the Travel and Expense Module. This training provided an enhanced understanding of the system features to all pertinent University staff.

Electronic Funds Transfer (EFT) policy • EFT policy was revised to include detailed procedures as required by Florida

Statute. • Provided staff training to ensure procedures are properly implemented.

Bank Signature Card Procedure • Designed bank signature card procedures to formalize process. • List of authorized signers are reviewed semi-annually and updated as

necessary to reflect any change in personnel. Policies and Procedures for Construction Management

• The FAMU BOT approved Construction Procedures Manuals Policy, Policy No. 2013-02, to strengthen the proper stewardship of University buildings and other facilities. The Manuals, include the following:

o Developed the “ Project Manager’s Procedure Manual” to address the roles and responsibilities of the University’s project managers with respect to planning, design, and construction of University facilities; the selection of professional services; and overall design and construction management and administration.

o Developed the “Service Guide for Design and Construction Professionals” to address the specific duties and responsibilities of design and construction professionals conducting business with the University; informs design and construction professionals of the University’s general design philosophy and standards; and informs design and construction professionals how FAMU manages its

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construction projects. o Developed the “Design Standards for Professionals” to address FAMU’S

technical design standards; specific areas of design concern including historic preservation, sustainability, existing utilities, codes and ordinances, automated controls, signage, environmental health and safety, materials and equipment; design deliverables; and submittal requirements.

Red-flag Rule Training • An Identity Theft Prevention Policy was implemented and approved by the

FAMU BOT in 2009. However, at that time, no formalized training was provided to staff. Training has been conducted to educate staff in critical departments how best to identify activities commonly associated with identity theft. The training will help prevent the likelihood of identity theft occurring, thus protecting student identifying information.

Payroll Training (July 23-24, 2013) • Developed New and Continuing Other Personal Services (OPS) Appointment

and Payroll Manual and made accessible University-wide on the University’s website.

• Reinforced methods, techniques and timelines for the accuracy and submission of documents to HR for OPS employees include:

o Departmental Role in the OPS hiring process o Responsibilities of the Employee and Supervisor o Responsibilities of the Time & Labor & Payroll Representative o Corrective Action(s) for Non-Compliance with payroll procedures o Departmental Role for Resignations & Terminations of OPS Employees o Defined terms of employment actions related to OPS Employees o Revised Graduate Assistant and OPS Personnel Action Appointment

forms o Revised Notice of Cessation of Employment form for OPS o Revised Notice of Cessation of Employment Clearance form o Revised Recommendation for Graduate Assistant Appointment form

New Employee Orientation • New Employee Orientation was enhanced by adding information related to the

University’s policies and procedures on Anti-hazing. Recruitment & Classification

• Reinforced methods, techniques and timelines for the accuracy and submission of employment documents to HR for A&P and USPS employees.

C. Qualifications of Key Personnel

The qualifications of key personnel who have responsibility for managing their departments and

administrative units within DAFS are described below. All of the individuals possess the

appropriate set of professional experiences and credentials for managing the respective

business operations and for ensuring that the University exercises appropriate control of its

financial resources.

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1. Vice President for Administrative Affairs (CFO) (Interim): Joseph Bakker (M.B.A.,

P.E.) has served as Interim Vice President for Administrative Affairs (CFO) since

September 2012 [32]. Prior to his current appointment, Interim Vice President Bakker

served from 2004 to 2012 as FAMU’s Associate Vice President within the Division of

Administrative and Financial Services with financial, managerial, and administrative

oversight for the departments of facilities planning and construction, plant operations

and maintenance, environmental health and safety, parking and university events.

During this period, he handled project assignments in Purchasing, Housing, the

Controller’s Office, the Budget Office, Business Auxiliary Offices, and Human

Resources. Interim Vice President Bakker has 39 years of financial, engineering,

management, and administrative experience in industry, government and higher

education, including preparing and administering annual budgets; justifying capital and

expense expenditures; predictive modeling of financial and cost impacts; conducting

bankable technical and economic feasibility studies; preparing business plans; and

developing, conducting and implementing efficiency and productivity studies. Prior to

joining FAMU, Interim Vice President Bakker served from 1984 to 2004 as Bureau

Chief/Professional Engineering Administrator with the Florida Bureau of Mine

Reclamation, where he had the responsibility for directing and administering the

Bureau’s $48 million budget and supervising a staff comprised of engineers, geologists,

accountants, biologists, computer analysts and administrative personnel. His nearly 40

years of professional administrative, managerial, and financial experiences qualify him

to serve as Interim Vice President for Administrative Affairs (CFO).

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Minimum Qualifications for the Position: Master's degree in an appropriate area of

specialization and eight years of appropriate experience; or a bachelor's degree in an

appropriate area of specialization and ten years of appropriate experience [33].

2. Associate Vice President for Construction and Facilities Maintenance (Interim):

Kendall Jones (B.S. in Technology) has served as Interim Associate Vice President for

Construction and Facilities Maintenance in the Division of Financial and Administrative

Services since September 2012 [34]. Mr. Jones served from 1999 to 2012 as FAMU’s

Director of Plant Operations and Maintenance, where he was responsible for the

management and accountability of resources in excess of $16 million; maintenance and

upkeep of over three million gross square feet of building space; management of sub-

contracts for electrical, mechanical and building services; and the review of construction

and architectural documents and drawings. Additionally, he served from 1998 to 1999

as Interim Director of Physical Plant, from 1997 to 1998 as Coordinator of Physical

Plant, and from 1992 to 1997 as Coordinator of Computer Applications in FAMU’s

Physical Plant department. He has direct supervision and accountability for the areas

of Plant Operations & Maintenance, Facilities Planning & Construction, Environmental

Health & Safety, and Moving & Set-Ups.


specialization and seven years of appropriate experience; or a bachelor's degree in an

appropriate area of specialization and nine years of appropriate experience [35].

3. Assistant Vice President for Financial Planning: Angela Poole (Master of

Accounting, CPA, CGMA) has served as Assistant Vice President for Financial

Planning since June 2013 [36]. Ms. Poole has over 18 years of experience in

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accounting, internal and external auditing and training. She has served in several

capacities by providing audit, tax, outsourced controllership and consulting services to

state and local governmental entities, higher education foundations, healthcare, and

not-for-profit organizations. Ms. Poole is responsible for providing assistance and

advice to the Vice President in areas of strategic and financial planning, conducts

research and coordinates special projects as needed to improve efficiency and

organizational effectiveness, efficiency, and internal control within the Division.


specialization and six years of appropriate experience; or a bachelor's degree in an

appropriate area of specialization and eight years of appropriate experience [37].

4. Assistant Vice President/University Controller: William Featherstone (Ed.D. in

Higher Education Management, CPA) has served as Assistant Vice President of

Administrative and Financial Services/University Controller since September 2011 [38].

Dr. Featherstone has over 23 years of experience in higher education administration

and finance. He has served in several capacities including Associate Director of Internal

Audit, Assistant Controller, Executive Director of Accounting and Financial Services,

and Vice President at various institutions. Prior to his employment in higher education,

Dr. Featherstone worked eight years in public accounting as a Certified Public

Accountant. Dr. Featherstone is responsible for the day-to-day operations of the

Controller's office including Student Financial Services, Cash Management, General

Accounting and Analysis/Reporting, Accounts Payable, Payroll Accounting and

Taxation, Asset Management, and Reconciliations and Quality Assurance.

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5. Assistant Vice President for Administrative Affairs (Interim): Rebecca Brown

(M.B.A.) has served as Interim Assistant Vice President for Administrative Affairs since

July 2013 [40]. Prior to this appointment, Ms. Brown served as Director of the

Administrative Services Assistance Program (ASAP). Ms. Brown has over 20 of

experience in tax auditing, tax collections, operational auditing, compliance auditing,

performance auditing, management advisory services, internal investigations, contract

management, strategic planning, data analysis, business process reengineering, project

team management, system implementation, and policy/procedure development. Ms.

Brown is responsible for managing the Office of Business, Financial and Auxiliary

Services and the Office of Procurement.




6. Assistant Vice President, Human Resources (Interim): Sherrye Earst (B.S. in

Business Administration) has served as Interim Assistant Vice President for Human

Resources since December 2012 [42]. Prior to this appointment, Ms. Earst served as

Associate Director of Human Resources from 2003-2012. Ms. Earst has more than 37

years of progressively responsible governmental and State University System human

resource management and development experience. She began her career in

personnel relations at Florida State University where she served for a number of years

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before transitioning into several administrative level positions within other State

agencies including Bureau Chief of Personnel Relations, Chief of Organizational and

Employee Development, Leadership Development Administrator, Chief of Training and

Technical Support, and Human Resource Manager. Ms. Earst is responsible for

planning, developing, and implementing human resources related policies and

procedures, and directing and coordinating activities related to recruitment,

employment, compensation and classification, employee/employer relations, employee

benefits, payroll, workforce administration, training and development.




7. Director, University Budgets: Ronica Mathis (M.S. in Public Administration, B.S. in

Accounting) has served as Director of University Budgets since December 2012 [44].

Additionally, from 2009 to 2011, she served as the University’s Director of University

Budgets. She has 28 years of state government experience and more than 20 years of

government accounting experience with general ledger, budget and reporting, and

accounts payable. She has worked in the Florida Legislature and Governor's Office

preparing State University System budgets. Additionally, Ms. Mathis has many years of

experience in the design, development, and implementation of the PeopleSoft

Financials and Human Capital Management systems. She is responsible for the

management and oversight of the University’s budget process among divisions, schools

and departments.

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8. Director, Administrative Services Assistance Program (ASAP) (Interim): Laureatte

Scott (B.S., Accounting) has served as Interim Director of the Administrative Services

Assistance Program (ASAP) since July 2013 [46]. She has 25 years of experience in

accounting, office management, budgeting and administrative processes. Ms. Scott

manages the operations of ASAP, which provides a catalog of administrative and fiscal

services to all colleges, schools and administrative departments. Ms. Scott serves as

the lead liaison between ASAP and University central units to include HR, Budget,

Controller’s Office and Purchasing to ensure continuous Administrative and Financial

process improvement.


specialization and four years of appropriate experience; or a bachelor's degree in an

appropriate area of specialization and six years of appropriate experience [47].

9. Associate Director, Operations Analysis: Jacqueline Dowdy (M.B.A) has served as

Associate Director of Operational Analysis since July 2013 [48]. She has over 20 years

of direct and diversified experience in the public, private and non-profit sectors with

specialization in accounting, budgeting, financial reporting, strategic planning and

organizational management. She has worked extensively in project management,

planning, business operations analysis, and change management. Ms. Dowdy is

responsible for analyzing the University’s business processes; and increasing

operational efficiency through the implementation and management of the document

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management and workflow system for human resources, accounts payable, budget,

travel, sponsored programs, academic affairs, financial aid, registrar, and admissions

offices.


specialization and four years of appropriate experience; or a bachelor's degree in an

appropriate area of specialization and six years of appropriate experience [49].

10. Director, Procurement Services: Stephany Fall (M.S. in Public Administration with

emphasis in Governmental contracts) has served as Chief Procurement Officer since

December 2008 [50]. Ms. Fall has over 25 years of public purchasing experience. She

is responsible for administering the University’s procurement program.




II. Internal Control Environment

The University has an effectively functioning internal control environment that helps to ensure

that the University’s finances are consistently managed in an effective and responsible manner.

Key components of the internal control environment include the Division of Administrative and

Financial Services (described above in Section I), the Division of Audit and Compliance, the

FAMU BOT, The Florida Board of Governors, and the State of Florida’s Office of the Auditor

General. All of these components work collaboratively to ensure that the University’s finances

are procured, budgeted, and expended in accordance with the appropriate policies and

procedures and governed with the appropriate internal controls. The University regularly

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evaluates the effectiveness of its internal control environment and takes a proactive approach to

ensuring that the appropriate best practices, policies, and procedures are in use.

A. Internal Audit Function

The narrative for Principle 1.1 of this Monitoring Report contains a detailed description of the

University’s internal audit function [52]. That narrative includes information and supporting

documentation to demonstrate that the internal audit function operates in accordance with the

appropriate professional standards, and that it is staffed with sufficiently qualified personnel.

The information below provides details about the effectiveness of the University’s internal

control environment.

The University maintains an internal audit function, the Division of Audit and Compliance (DAC)

that is an integral component of the University’s internal control environment. DAC provides

independent, objective assurance and consulting services designed to add value and improve

the University’s operations. DAC serves as a proactive business partner with the University's

management by evaluating business processes, controls, compliance mechanisms and

technologies to ensure the following:

• Business risks are appropriately identified and managed;

• Assets and resources are properly controlled;

• Operational, financial, and managerial information are accurate and reliable;

• University actions are in compliance with policies, procedures, standards, and state

and federal laws and regulations;

• Effective coordination and cooperation are provided to external auditors to avoid

duplication of effort;

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• Allegations of fraud, waste, abuse, and complaints received from the Chief Inspector

General (IG) and Board of Governors are appropriately investigated; and

• Quality and continuous improvement are fostered in the University’s control process.

The DAC conducts an annual risk assessment, which serves as the basis for the development

of the annual audit plan. The risk assessment involves a review of the University’s business

operations, including those managed by DAFS, in an effort to identify any potential risks related

to the control of finances. As a result of the annual risk assessment, DAC conducted audits of

three business units within DAFS during the 2012-13 year, as identified in the table shown

below [53]. A summary of three of the audits (cash collections, Voyager Card, Life Gets Better)

and follow-up work done by DAC (as of July 2013) were presented to the FAMU BOT at its

August 2013 meeting [54]. Below is the list of audits conducted in 2012-13 and the list of the

audits that are scheduled for the 2013-14 year [55]; four of which involve DAFS.

Audits Conducted in 2012-13

Audit Campus Unit Audit Status/ Follow-Up Action

Dormitory Construction (Added to Audit Plan after FAMU BOT approval in August 2012)

DAFS (Construction & Facilities Management)

DAC audit report issued October 2012 (56). DAC follow-up work to begin September 2013.

Decentralized Cash Collections

DAFS/Controller, Academic Affairs (Auxiliary Services, Journalism, Library)

DAC audit report issued March 2013 (57). DAC follow-up work in progress.

Voyager Card Program (Added to Audit Plan after FAMU BOT approval in April 2012)

DAFS (Facilities and Construction and Administrative Services)

DAC audit report issued March June 2013 (58). DAC follow-up work in progress.

Life Gets Better Scholarship Program (Added to Audit Plan after FAMU BOT approval in April 2012)

Student Affairs, University Advancement

DAC audit report issued July 2013 (59). DAC follow-up work in progress.

Grade Change Process Academic Affairs (Registrar) Work in progress. Estimated completion in September 2013

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Audits Scheduled for 2013-14

Audit Campus Unit Accounts Payable Review DAFS (Controller) Cash Forecasting and Budgeting Review DAFS (Budget/Controller) Administrative Services Assistance Program (ASAP)

DAFS (ASAP)

Assessment of Compliance with 2012 Florida Statute 1009.24

Academic Affairs/DAFS

ACE Academic Support Services Review Athletics Financial Aid Process Review Student Affairs (Financial Aid) Contracts and Grants Review Division of Sponsored Research (Office of

Contracts & Grants Management) Research Compliance Assessment Division of Sponsored Research (Division of

Research) Information Technology General Controls Assessment

Information Technology

Information Technology Automated Controls Assessment

Information Technology

Department of Campus Safety and Security Review

Student Affairs (Office of Vice President)

SACS Follow-up Projects Various Policies and Procedures Review Various

B. Board of Trustees

The FAMU Board of Trustees (BOT) is the active policy-making body for the University and is

ultimately responsible for ensuring that FAMU’s financial resources and operations are properly

managed and accounted for as specified in Section 1001.73, Florida Statutes [60]; and BOG

Regulation 1.001 on BOT powers [61]. The FAMU BOT monitors and reviews the financial

status and internal controls of the University through the Budget and Finance Committee and

the Audit and Compliance Committee [62]. These committees are responsible for the financial

management of the University as well as the establishment and monitoring of internal controls

[62]. The FAMU BOT has taken definitive steps to improve the University’s internal control

environment since the issues with the internal audit function came to light in 2011. As described

in the narrative for Principle 1.1 of this Monitoring Report [52], the FAMU BOT has significantly

enhanced its oversight of the internal audit function and has ensured that the internal audit

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function operates in accordance with the appropriate professional standards through its Budget

and Finance Committee and Audit and Compliance Committee.

1. FAMU BOT Budget and Finance Committee

The FAMU BOT Budget and Finance Committee is responsible for oversight of all

policies relating to the financial affairs of the University. It reviews and considers the

annual budget and requests for appropriation of funds for the University as prepared by

the President; policies relating to the external financing of projects; and the schedule of

tuition, fees, and other student charges. Additionally, it makes recommendations to the

full BOT on these and other matters referred to it by the full BOT. This Committee also

monitors the University’s financial operations, debt level and investment performance [63]

[64]. The VPAA, who serves as the University’s key point of contact with the Committee,

provides updates and submits requests to the Committee during Committee meetings.

The Committee subsequently provides reports and requests to the full BOT during

regularly scheduled meetings [65].

2. FAMU BOT Audit and Compliance Committee

The FAMU BOT Audit and Compliance Committee (ACC) is responsible for reviewing and

recommending to the FAMU BOT policies affecting internal controls, accountability and

audit. The ACC has access to internal and external auditors to assess their performance,

the scope of audit activities, and the adequacy of the system of internal accounting

controls to ensure compliance with state and federal laws, regulations and requirements.

The ACC makes reports to the FAMU BOT. The ACC’s specific responsibilities and duties

with respect to oversight of the internal audit function include:

• Reviewing and approving the annual internal audit plan, ensuring that it addresses

key areas of risk [66];

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• Approving and periodically reviewing the charter, staffing, and activities of the

internal audit function to ensure they comply with professional standards and

address emerging audit issues [67];

• Reviewing a summary of significant findings and recommendations of completed

internal audits, including management’s response and time frame for corrective

action, to ensure appropriateness of actions taken [54];

• Obtaining a periodic progress report on the status of executing the internal audit

plan and approve changes or deviations from the approved audit plan [68];

• Determining the degree of implementation of past audit recommendations and the

sufficiency of corrective actions taken in addressing those recommendations [69];

• Ensuring there are no unjustified restrictions or limitations, and concurring with

appointment, replacement, or dismissal of the Vice President of Audit and

Compliance [70];

• Discussing with the VPAC any difficulties encountered in the course of audits and

investigations, including restrictions on the scope of work or access to required

information, and any lack of cooperation [71];

• Reviewing the results of the quality assurance program [72];

• Identifying areas warranting improvements, if any, and make policy

recommendations to the FAMU BOT [54];

• Meeting with the VPAC regularly to discuss confidential matters; and

• Proposing adequate controls and guidelines for receiving complaints regarding

accounting controls and reports of financial fraud [73].

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C. Board of Governors of the State University System of Florida

In November 2002, Florida voters approved an amendment to Article IX, Section 7, of the

Florida Constitution, creating a Board of Governors (BOG) to oversee the State University

System (SUS) [74], of which FAMU is a member. The BOG has established several standing

committees to assist in the management and oversight of each university in the SUS. As

outlined in the BOG Operating Procedures [75], the BOG Budget and Finance Committee

reviews provide oversight and direction in relation to the fiscal affairs for each SUS University.

Specific activities of the committee include reviewing university legislative budget requests,

operating budget requests, and annual financial statements.

The BOG has collaborated with FAMU over the past several months to develop a Corrective

Action Plan [76] for addressing the issues that came to light in 2011 that involved the

University’s internal audit function, anti-hazing program, and control of finances [76]. With

respect to FAMU’s control of finances, the Corrective Action Plan outlines specific actions for:

(a) enhancing FAMU’s banking procedures; (b) enhancing procedures governing revenue

collections associated with athletic events; (c) reviewing internal controls for issuing travel

reimbursements; and (d) establishing procedures to govern the expenditures of student fees.

The University has implemented corrective actions to address each of these issues as part of its

overall continuous improvement effort. The VPAA provides monthly updates to the BOG on the

progress of implementing the corrective actions.

D. Financial Audits (State of Florida)

In addition to the internal controls listed above, the State of Florida’s Office of the Auditor

General annually conducts a financial audit of FAMU's accounts and records for the fiscal year

ending June 30. The Office of the State of Florida Auditor General conducts the audits pursuant

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to Section 11.45, Florida Statutes [77] and applicable standards contained in Government

Auditing Standards issued by the Comptroller General of the United States.

1. 2012 Fiscal Year

The 2012 fiscal year financial audit for the University was issued in March 2013 [78]. The

University received an unqualified opinion from the Auditor General’s Office [78]. The

University has received unqualified financial audits for the previous four fiscal years as

well [79]. The audit objectives and scope were to determine if the University and its

officers with administrative and stewardship responsibilities for FAMU's operations had

done the following:

• Presented the University’s basic financial statements in accordance with generally

accepted accounting principles;

• Established and implemented internal control over financial reporting and

compliance with requirements that could have a direct and material effect on the

financial statements; and

• Complied with the various provisions of laws, rules, regulations, contracts, and

grant agreements that are material to the financial statements.

2. 2013 Fiscal Year

The University participated in an on-campus entrance conference with the Auditor General

on August 21, 2013, to discuss the schedule by which FAMU’s 2013 fiscal year audits

would be completed. The University requested the Auditor General to complete the

financial audit as quickly as possible. The Auditor General informed the University during

the meeting that the 2013 Financial Statement is scheduled to be issued in December

2013.

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E. Operational Audits (State of Florida)

Florida’s Office of the Auditor General is required to conduct an operational audit of each

university in the SUS at least every three years [77]. FAMU’s most recent operational audit was

conducted for the fiscal year ending June 30, 2012, and was issued in February 2013 [80]. The

audit contained 24 findings and recommendations. The University has developed and

implemented corrective actions for each audit finding. A table summarizing the audit findings,

recommendations, and the corrective actions that have been implemented by the University is

included as supporting documentation [81]. Additionally, the University has hired an external

professional services firm (Accretive Solutions) to provide a review (independent, third party) of

the design and effectiveness of the corrective actions to address adequately each finding

described in the table. Accretive Solutions will provide the University with a final report in mid-

September 2013 and a copy of the report will be provided to the members of the SACSCOC

Special Committee during the campus visit in September 2013.

III. Internal Controls of Band Program

The University has implemented several corrective actions and enhancements to address

weaknesses and irregularities that were identified in the financial controls of the band program.

The University described these corrective actions in its previous communication to SACSCOC

in September 2012. However, at that time, some of the corrective actions were not fully

implemented, namely those that were related to the role of the Music Compliance Officer. The

sections below describe the corrective actions that have been implemented in recent months to

ensure that the appropriate financial controls of the band finances are in place.

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A. Oversight of Band Travel

1. Music Compliance Officer

As described in the narratives for CS 3.2.8 and CS 3.11.2 of this Monitoring Report, the

University created a new position, Music Compliance Officer, to strengthen the internal

controls of the band program. This position reports directly to the Special Assistant to the

President for Anti-Hazing and is physically housed in the Music Department. The

Compliance Officer began work on May 13, 2013, and is responsible for ensuring the

overall compliance of the Music department, specifically bands and ensembles, with

University policies and procedures and Music Department guidelines specified in approved

handbooks. The Compliance Officer’s scope of work includes, but is not limited to,

monitoring compliance with the provisions of the University Regulations to include anti-

hazing and University imposed sanctions; academic eligibility requirements; meetings and

practice limitations; travel; designation and collection of fees; and training and certification

of faculty, staff and students. The Compliance Officer reports any issues to the Special

Assistant to the President, Dean, Music Department Chair, and Directors, as appropriate.

2. Approval Process of Band Members

The approval process for determining the eligibility of band members to travel with the

band has been significantly enhanced to ensure that all individuals participating in band

travel activities meet the established eligibility guidelines. The Band Director has the

responsibility for providing a roster of band participants to the Music Department Chair and

Compliance Officer. Following completion of the University registration process each

semester, the Compliance Officer verifies that the students: (a) are properly enrolled in the

required band course; (b) are full-time students; (c) have the required grade-point average

(GPA); and (d) meet the time limit for participation [82]. Upon completion of the student’s

verification of eligibility to participate in the band, the Compliance Officer provides the

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roster of eligible participants to the Director, Music Department Chair, Dean and other

appropriate administrators as deemed necessary.

The Compliance Officer regularly monitors the approved roster of band students to ensure

compliance. Once a student is found to not be in compliance, immediate written

notification by the Compliance Officer is sent to the student, and the student’s name is

removed from the roster of eligibility. The student is no longer allowed to travel with the

band or continue to participate in the marching band related activities. All appropriate

university administrators (i.e., Band Director, Chair, Dean, Special Assistant to the

President, etc.) are copied and notified.

3. Approval for Non-Employee Travel with Band

The Dean, Band Director, Music Department Chair and Compliance Officer are

responsible for approving band-related travel of all non-employees in accordance with

Section 4.0 of the University’s travel procedures manual [83] and Section 112.0612(2)(e),

Florida Statutes [84].

The Compliance Officer submits the approved Travel Roster form [85] listing all eligible

(verified as compliant to travel) band students, staff and/or other pre-approved individuals

for travel to the travel office for processing. The roster contains the names of students,

employees, and approved non-employees; unique student/employee identification

numbers; the category of the person traveling (i.e., student, employee, non-employee);

travel dates; and the requested per diem amounts.

4. Per-Diem Approval for Band Members

The internal controls for providing per diem/meal payments to band members have been

significantly enhanced via: (a) the inclusion of the newly hired Compliance Officer in the

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approval process; (b) implementation of an enhanced process for group travel, which

includes the use of a revised Travel Roster form [86]; and (c) the use of prepaid debit

cards for providing per diem/meal payments directly to approved band members. The

specific steps involved in the process are outlined in the supporting documentation [87].

IV. Conclusion

The University has appropriate control of its finances and is in compliance with Comprehensive

Standard 3.10.3. As noted herein, the University has implemented the necessary corrective

actions and enhancements to address the concerns that were raised regarding the internal

control of its finances and the functionality of its internal audit function. Through its ongoing

improvement process, the University continues to review its internal policies, procedures, and

system of internal controls to ensure compliance with State, University, and SACSCOC

standards in order to demonstrate that its financial resources are consistently managed in a

responsible, effective manner.

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DOCUMENTATION 1 Probation Sanction Letter 2 Florida Statutes Chapter 1010, Financial Matters

http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=1000-1099/1010/1010ContentsIndex.html&StatuteYear=2013&Title=%2D%3E2013%2D%3EChapter%201010

3 FAMU Board of Trustees Website on Polocies http://www.famu.edu/index.cfm?BOT&Policies

4 FAMU BOT Policy 2006-03 – Guiding Principles 5 Florida Board of Governors Website on Regulations and Guidelines

http://www.flbog.edu/about/regulations/regulations.php 6 FAMU BOT Policies 7 FAMU BOT Regulations 8 Travel and Expense Manual 9 Cash Collections and Controls Manual 10 Accounts Payable Procedures 11 Bank Reconciliation Procedures 12 Procedures for Check Deposits 13 Special Purpose Investment Account Procedures 14 Investment Procedures 15 Bank Signature Update Procedures 16 Purchasing Card (P-Card) Manual 17 Purchasing Manual 18 Contract Management Manual 19 Project Manager’s Procedure Manual 20 Service Guide for Design and Construction Professionals 21 Design Standards for Professionals 22 Budget Office Policies and Procedures 23 Document Management 24 Financial Planning Services Internal Controls 25 Administrative Services Assistance Program (ASAP) Internal Controls 26 Controller’s Office Internal Controls 27 University Budgets Internal Controls Internal Controls 28 Business and Auxiliary Services, and Procurement Internal Controls 29 Construction and Facilities Management Internal Controls 30 Human Resources Internal Controls 31 Operations Analysis Internal Controls 32 Joseph Bakker, Interim Vice President, Administrative Affairs 33 Vice President, Administrative Affairs – Minimum Qualifications 34 Kendall Jones, Interim Associate Vice President, Construction and Facilities Maintenance 35 Associate Vice President, Construction and Facilities Maintenance – Minimum

Qualifications 36 Angela Poole, Assistant Vice President for Financial Planning 37 Assistant Vice President for Financial Planning – Minimum Qualifications 38 William Featherstone, Assistant Vice President/University Controller 39 Assistant Vice President/University Controller – Minimum Qualifications 40 Rebecca Brown, Interim Assistant Vice President for Administrative Affairs 41 Assistant Vice President for Administrative Affairs – Minimum Qualifications 42 Sherrye Earst, Interim Assistant Vice President, Human Resources

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http://www.famu.edu/index.cfm?BOT&Policies

http://www.flbog.edu/about/regulations/regulations.php


43 Assistant Vice President, Human Resources – Minimum Qualifications 44 Ronica Mathis, Director, University Budgets 45 Director, University Budgets – Minimum Qualifications 46 Laureatte Scott, Interim Director, Administrative Services Assistance Program (ASAP) 47 Director, Administrative Services Assistance Program (ASAP) – Minimum Qualifications 48 Jacqueline Dowdy – Associate Director, Operations Analysis 49 Associate Director, Operations Analysis – Minimum Qualifications 50 Stephany Fall, Director, Procurement Services 51 Director, Procurement Services – Minimum Qualifications 52 Sections from Narrative on Principle 1.1 53 2012-13 Risk Assessment /Audit Plan 54 DAC August 2013 BOT presentation 55 2013-14 Risk Assessment/Audit Plan 56 Dormitory Construction 57 Decentralized Cash Collections 58 Voyager Card Program 59 Life Gets Better Scholarship Program 60 Florida Statutes, Section 1001.73 61 BOG 1.001 Resolution of BOT Powers 62 FAMU BOT Operating Procedures 63 BOT Policy 2005-02 64 BOT April 2013 Budget and Finance Committee, Financial Health 65 BOT Meetings, February, April, June 2013 66 FAMU BOT Audit Committee April 2013 minutes 67 BOT Agenda and Minutes June 2012 Summary - AC Charter 68 DAC Report to BOT Audit Committee - ASAP - August 2013 69 BOT Minutes April 2013 70 BOT Agenda and Minutes June 2012 - Richard Givens 71 BOT Meeting, February 2012 72 DAC Report to BOT Audit Committee - August 2013 73 BOT Audit Minutes - February 2013 revised 74 Florida Constitution, Section 7 75 BOG Operating Procedures 76 BOG FAMU Report in March 2013 77 Florida Statutes, Section 11.45, Florida Statutes 78 FY 2012 Financial Statement 79 FY 2008-2011 Financial Statements 80 2011-12 Operational Audit 81 2011-12 Operational Audit Corrective Actions 82 Music Department Handbook 83 FAMU Travel procedures 84 Section 112.0612(2)(e), Florida Statutes 85 September 1, 2013 Game Travel Roster 86 Group Travel Roster Form

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87 Debit card distribution process

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Documents

CS 3.10.3 Control of Finances Recommendation from …sjgc.famu.edu/m/assets/File/CS 3 10 3 Narrative.pdf · · 2013-09-18Recommendation from SACSCOC January 15, 2013 Probation Sanction