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Office of Internal Audit Report

Operational and Compliance Audit - Basketball

May 2016

OFFICE OF INTERNAL AUDIT • REPORT 1610 • OPERATIONAL/COMPLIANCE AUDIT • MAY 2016 • PAGE 1

Operational and Compliance Audit – Men’s and Women’s Basketball

Table of Contents General ............................................................. 1

Audit Scope and Objectives ............................. 2

Conclusion ........................................................ 2

Issues and Recommendations ......................... 4

Coaching Staff Limits & Contracts ............... 4

Booster Groups & Enhancement Fund ....... 5

Complimentary Admissions ......................... 6

Playing & Practice Seasons ........................ 7

Athletic Equipment & Apparel ...................... 9

Camps & Clinics .......................................... 10

Financial Review ......................................... 11

Violations Reporting ................................... 13

Audit Recommendation Rating System ............ 14

Management Action Plans ................................ 15

General The mission of Intercollegiate Athletics states, “Transforming Gopher Athletics by impacting the lives of our student-athletes, enhancing the reputation of the University and bringing pride to all Minnesotans.” Intercollegiate Athletics’ vision states “Invest, Lead and Win and do so with values of Integrity, Teamwork and Commitment.”

Intercollegiate Athletics Administration oversees the 25 sports, 725 student-athletes, the department’s more than 300 staff members and an annual budget of more than $100 million. Men’s Basketball employs a head coach, three assistant coaches, three operations managers, one assistant to the head coach, two graduate managers, and two student workers. Similarly, Women’s Basketball employs a head coach, one associate head coach, two assistant coaches, two operations managers, one assistant to the head coach, and one intern. The Office of Athletic Compliance oversees the department’s 25 sports and 725 student-athletes to ensure compliance with National Collegiate Athletic Association (NCAA) bylaws. The Office of Athletic Compliance, which reports to the Office of the General Counsel, currently includes the Director of Athletic Compliance


position, one Associate Director/Scholarship Coordinator, one Associate Director, two Assistant Directors, and one Financial Aid Coordinator.

Audit Scope and Objectives Sport operational and compliance audits are conducted at the request and in conjunction with the Office of Athletic Compliance. Our audit included an analysis of operational, financial, and compliance procedures and controls in place within the men’s and women’s basketball programs at the time of our review. This analysis involved interviews with Compliance Office staff, Men’s and Women’s Basketball coaches, staff and student athletes, completion of diagnostic review questionnaires, and tests of controls over various processes. Tests of compliance activity focused on the period from July 1, 2014 through June 30, 2015. Testing of financial activity was expanded outside of this time period due to recent concerns in Athletics. Our tests and procedures covered the following topics:

• Athletic Equipment & Apparel • Academic Progress Rate • Award Limitations • Booster Groups and Enhancement Fund • Camps and Clinics • Certificate of Compliance • Coaching Staff Limits and Contracts • Complimentary Admissions • Financial Aid • Student Athlete and Staff Interview • Playing and Practice Seasons • Recruitment of Student Athletes • Rules and Education Programs • Student Athlete Eligibility • Team Travel • Financial Review • Violations History

Conclusion From the results of the audit work performed, we believe the Athletic Department and Office of Athletic Compliance have developed a control environment and a system of internal control that address most major business and compliance risks. In addition, our review showed no issues related to academic processes including financial aid, eligibility, and academic progress rate. Some financial issues identified in this audit were also noted in the Athletics Administration audit report issued December 2015. However, the focus of this audit was on the activities of the Men’s and Women’s Basketball programs as well as the oversight provided by the Office of Athletic Compliance and Athletics Administration. The identification of similar issues within sport offices indicates the previously reported issues are broader than just Athletic Administration. Due to the timing of this audit we recognize a similar timeframe of data was analyzed and there has not been sufficient time since the issuance of our previous report to implement substantial changes to departmental processes.

The audit resulted in seven issues considered “essential” to minimizing existing operational and compliance risks:

• Contract limitations are not appropriately monitored (Recommendation 1)


• Athletics Human Resources contract retention procedures need improvement (Recommendation 2a) • Enhancement funds were used to pay for expenses not allowed by University policy (Recommendation

4a) • Athletics student workers are not being taxed appropriately when receiving awards or gifts

(Recommendation 5) • Complimentary admission ticket disbursement to a high school coach resulted in an NCAA bylaw

violation (Recommendation 6a) • Student athlete perception and understanding of practice log review and approval needs improvement

(Recommendation 8a) • The Men’s and Women’s Basketball staff are not consistently following University travel and expense

policies (Recommendation 14a)

We defer to the Office of Athletic Compliance to determine whether any of these issues require self-reporting to the NCAA.

The following chart illustrates the various areas reviewed during the audit, and our assessment of the adequacy and effectiveness of the related controls.

The Office of Athletic Compliance combined with Intercollegiate Athletics has developed a management action plan and timelines for implementation of the recommendations.

Sincerely,

Gail L. Klatt, CIA Associate Vice President – Office of Internal Audit May 4, 2016

Operational and Compliance Audit - Basketball Control Evaluation

Adequate Control Significant Control Issue(s) Critical Control Issue(s)


Unit Leadership Report Distribution Beth Goetz Board of Regents Karen Hanson Tom McGinnis Board of Regents Office Michael Volna Richard Pitino Eric Kaler Deloitte & Touche Marlene Stollings Richard Pfutzenreuter Legislative Auditor’s Office Jeremiah Carter William Donohue

Issues and Recommendations

Coaching Staff Limits and Contracts 1. Contract limitations are not appropriately monitored.

The Men’s Basketball Head Coach has a contract stipulation allowing for the use of a private jet for up to $50,000 per year on trips that are over 200 miles from campus. A review of fiscal years 2014, 2015, and 2016 revealed these stipulations are not being monitored and resulted in limits being exceeded. In fiscal year 2014, a total of $116,041 was spent on private jet usage by the head coach; exceeding the allowable limit by $66,041. In fiscal year 2015, a total of $156,440 was spent on private jet usage by the head coach; exceeding the allowable limit by $106,440. As of February 16, 2016 (fiscal year 2016), a total of $53,388 has been spent on private jet usage; exceeding the allowable limit by $3,388. From June 2014 through February 2016, a total of $325,870 has been spent on private jet usage. This exceeds the allowable limit of $150,000 for that time period by $175,870. In addition, two trips were deemed unallowable due to the destination being less than 200 miles from campus.

Recommendation 1. Athletic Department administration should develop procedures and staff assignments to monitor

expenditures related to contract stipulations.

Rating: Essential

2. Athletics Human Resources contract retention procedures need improvement. During a review of Women’s Basketball contracts and limitations Athletic department Human Resources (HR) personnel could not produce a signed copy for the contract of a Women’s Basketball assistant coach. For this particular assistant coach an original contract signed by the Athletic Director was presented, but there was no signature from the coach on the appropriate line.

Recommendations 2a. The Athletics HR department should obtain an appropriate signature from the Women’s

Basketball assistant coach in order to fully execute the contract on file.

Rating: Essential

2b. The Athletics HR department should revisit all coaches’ contracts to ensure all contracts are on file and are appropriately signed and fully executed.

Rating: Significant


3. A Men’s Basketball support staff member appointment documentation does not contain language regarding violation of NCAA legislation.

Men’s Basketball employs eight staff members, including coaches and support staff, one support staff member did not have NCAA language, addressing potential action taken for violation of NCAA rules and legislation included in employment documentation.

Per NCAA Bylaw 11.1.1, Responsibility for Violations of NCAA Regulations, “Institutional staff members found in violation of NCAA regulations shall be subject to disciplinary or corrective action as set forth in Bylaw 19.9, whether such violations occurred at the certifying institution or during the individual’s previous employment at another member institution.”

Per NCAA Bylaw 11.2.1, Stipulation that NCAA Enforcement Provisions Apply, “Contractual agreements or appointments between a coach and an institution shall include the stipulation that a coach who is found in violation of NCAA regulations shall be subject to disciplinary or corrective action as set forth in the provisions of the NCAA infractions process, including suspension without pay or termination of employment for significant or repetitive violations.”

NCAA Bylaws do not require the inclusion of language addressing NCAA violation in the contracts of support staff, but the NCAA holds the University responsible for staff actions. If Men’s Basketball support staff contracts do not include language regarding violation of NCAA rules and regulations, the University’s position on NCAA compliance is not as strong and the University may be more limited as to steps it can take to rectify a situation of noncompliance with a staff member.

Recommendations 3. The Athletic Department and Office of Athletic Compliance should consider including NCAA

language similar to Bylaw 11.2.1 in support staff appointment documentation.

Rating: Significant

Booster Groups and Enhancement Fund 4. Enhancement Funds were used to pay for expenses not allowed by University policy.

Our testing of Women’s Basketball Enhancement fund use identified the purchase of a meal, for a cost of $501, for the team during a 2014 holiday party. In addition, $18 was spent on birthday party decorations. The meal and decorations were charged to a University of Minnesota Foundation fund, Women’s Basketball Enhancement Fund, which has donor intent of “will be used for special team travel trips, non-allowable expenses per University policy, promotional items, program enhancement at the coach’s discretion.”

Per University Hospitality, Alcohol, and Other Special Expenses Allowability Grid, holiday and birthday parties are not allowable expenses on any University funds.

Recommendations 4a. The Athletic Department Business Office should work with the University of Minnesota

Foundation to revisit the donor intent for the Women’s Basketball Enhancement Fund to ensure it only allows for expenditures that are compliant with University policies.

Rating: Essential


Auditor’s Note: This financial issue was identified and reported in the December 2015 Athletics Administration audit. Athletic leadership has begun addressing these types of issues as detailed in the Management Action Plan. 4b. Athletic administration should remind the Women’s Basketball staff of the inappropriateness of

these expenses and further expenses related to holiday and birthday parties should not be reimbursed.

Rating: Significant

5. Athletic Department student workers are not being taxed appropriately when receiving awards or gifts.

The Athletic Department employs student workers in many capacities. Two student workers were identified as receiving a gift, valued at $280, of a championship ring after the Men’s Basketball team won the 2013 NIT National Championship. In addition, one individual identified as a student worker by Women’s Basketball was provided with a gift, in recognition of performance, of clothing with an approximate value of $125. Per conversation with a Senior Associate Athletic Director it was determined the Athletic Department has never reported these types of gifts as taxable income for student workers.

Per University policy, University Employee Recognition Awards, “Gift of personal property with value more than $100” are taxable and “departments offering taxable awards will assume responsibility for ensuring accurate income tax reporting to their employees and will assume the risk of fines and penalties for any failure to report taxable income.”

Recommendation 5. The Athletic Department should discuss their current taxable income processes with the Tax

Management Office and Central Payroll to better ensure all taxable benefits are properly recorded and reported as well as correct any issues resulting from inaccurate taxation of income and fringe benefits.

Rating: Essential

Complimentary Admissions 6. Complimentary admission ticket disbursement to a high school coach resulted in an NCAA bylaw

violation.

In the review of Men’s Basketball complimentary ticket processes and the disbursement of tickets to high school coaches it was discovered one coach received two complimentary tickets and one ticket reserved for purchase. Coaches are allowed a maximum of two complimentary tickets per home game. Per the Men’s Basketball ticket manager, a high school coach called prior to game day stating he and his wife would be attending the game and he would like to also bring his 2.5 year old child. The ticket office set aside an “infant voucher” for the child. The ticket office practice is to provide an “infant voucher” to children 2 and under to attend the game for free. However, the ticket office formal policies state that all children 2 and over must pay for a ticket to attend a game. Due to this discrepancy between formal policy and actual practice the ticket office provided the high school coach with an additional complimentary ticket.


Per NCAA Bylaw 13.8.1.4, Purchase of Game Tickets, “An institution may not reserve tickets (in addition to the permissible complimentary admissions) to be purchased by high school, preparatory, or two-year college coaches (or individuals accompanying them) to attend an institution’s athletics contest. Tickets may be purchased only in the same manner as any other member of the general public.”

Recommendations 6a. The Office of Athletic Compliance office should report the violation of Bylaw 13.8.1.4 to the NCAA

in a timely manner.

Rating: Essential 6b. The Athletic Ticket Office should review their policies to ensure all current practices match

policies. If practices and policies do not match, then practices should be adjusted accordingly, where appropriate.

Rating: Significant

7. Complimentary ticket issuance procedures for Men’s and Women’s Basketball needs improvement.

In the review of Men’s and Women’s Basketball complimentary admissions processes it was determined ticket office employees were having student athlete guests sign a card in which stubbed complimentary tickets are attached on game day rather than a comprehensive pass list.

Per NCAA Bylaw 16.2.1.1, Institutional Events in the Student-Athlete’s Sport, “An institution may provide four complimentary admissions per home or away intercollegiate athletics event to a student-athlete in the sport in which the individual participates (either practices or competes), regardless of whether the student-athlete competes in the contest.” In addition, the issuance should follow NCAA Bylaw 16.2.1.2.1, Issuance Procedures, which states, “The individual using the complimentary admission must present identification to the person supervising the use of the pass list at the admission gate. The individual then shall be provided a ticket stub or other identification of a specified reserved seat or seating area or treated as a general-admission ticket holder.”

Obtaining signatures of student athlete guests is a step in achieving control over the process of who receives complimentary admission to a contest. In addition, obtaining student athlete complimentary admission guests signatures on a comprehensive pass list provides an efficient and all-encompassing method for verification of appropriate guests and retention of records.

Recommendation 7. The Athletic Ticket Office should revisit its current practice of signing cards and consider

implementing the process of signing a comprehensive pass list.

Rating: Significant

Playing and Practice Seasons 8. Student athlete perception and understanding of practice log review and approval needs

improvement.

During interviews and surveys of Men’s and Women’s basketball student athletes, the following issues were noted:


• One Women’s basketball student-athlete noted that in the off-season the team spends more hours in the weight room than is allowed by NCAA regulations.

• One Women’s basketball student-athlete stated that while she does approve practice logs on occasion, she does not review the hours input to the log prior to approving.

• Two Men’s basketball student-athletes stated that while they had never, to their knowledge, been required to review or approve a practice log, they do not know where to find the practice logs or how to approve them. In addition, one Men’s basketball student athlete stated if they were required to approve practice logs they would likely not review the hours entered prior to approval.

Per NCAA Bylaw 17.1.7.1 Daily and Weekly Hour Limitations-Playing Season, “A student-athlete’s participation in countable athletically related activities (see Bylaw 17.02.1) shall be limited to a maximum of four hours per day and 20 hours per week.”

Per NCAA Bylaw 17.1.7.2(a) Weekly Hour Limitations – Outside the Playing Season (Sports Other Than Football), “Outside of the playing season, from the institution’s first day of classes of the academic year or September 15, whichever occurs earlier, to one week prior to the beginning of the institution’s final examination period at the conclusion of the academic year, only a student-athlete’s participation in required weight training, conditioning and skill-related instruction shall be permitted. A student-athlete’s participation in such activities per Bylaw 17.02.1 shall be limited to a maximum of eight hours per week with not more than two hours per week spent on skill-related workouts.”

Compliance Office’s policies and procedures surrounding the submission, review, and approval of practice logs provides assurance NCAA bylaws are being met.

Recommendations 8a. The Office of Athletic Compliance should work with the Women’s basketball team, as well as the

strength and conditioning staff members, to determine if a violation of NCAA bylaws has occurred regarding off season workouts.

Rating: Essential 8b. The Office of Athletic Compliance should provide student athletes with additional information on

the importance of reviewing and approving practice logs appropriately.

Rating: Significant

9. Processes surrounding practice log submission and approvals for Men’s and Women’s Basketball need improvement.

Two months of in-season practice logs and one month of off-season practice logs were selected for review, resulting in a total of 12 practice logs being tested for Men’s and Women’s Basketball. Of the 12 Men’s Basketball practice logs tested, 6 were not submitted by the coaching staff in a timely manner. In addition, there were 2 instances were student athletes did not review and approve the submitted practice log within 30 days. One practice log was not available for review through JumpForward, a software package used by the Compliance Office to aid in monitoring and upholding NCAA bylaws.

Of the 12 Women’s Basketball practice logs tested, 8 were not submitted by the coaching staff in a timely manner. In addition, there were 7 instances where student athletes did not review and approve the submitted practice log within 30 days. One practice log was never reviewed and/or approved by a student athlete. One practice log was not available for review through JumpForward.


Once practice logs are submitted they are reviewed for NCAA violations. After being reviewed and approved by the Compliance Office, student athletes are sent notifications to review and approve the practice logs. Logs are left open for a minimum of 30 days in JumpForward. After at least one student athlete approves the log it is formally approved and closed by the Compliance Office. During this review, it was noted all 12 of the submitted practice logs, for Men’s and Women’s Basketball, were not formally approved by the Compliance Office in a timely manner; many formal approvals happened almost a year after the log was submitted. This formal approval closes the practice log and moves the practice log in JumpForward from the section labeled “Practice Logs Sent to Student Athletes” to the “Approved Practice Logs” section.

Recommendations 9a. The Office of Athletic Compliance, along with the Men’s and Women’s Basketball staff members,

should emphasize the importance of timely review and approval of practice logs to student athletes. In addition, the Compliance Office should establish formalized deadlines for the practice log submission and approval process.

Rating: Significant 9b. The Compliance Office should review their process for formal approval of practice logs in order to

ensure they are approved in a timely manner and the proper controls are in place if a violation would occur.

Rating: Significant 9c. The Compliance Office should review their process for determining all practice logs are submitted

by coaching staff members.

Rating: Significant

Athletic Equipment and Apparel 10. Athletic equipment rooms do not track apparel and equipment on a continual basis.

The Men’s and Women’s Basketball equipment rooms do not use a perpetual inventory record. Since the basketball squad sizes are a manageable number, not using a perpetual inventory system may be reasonable provided the equipment managers have a formal method for tracking issuance of equipment and apparel. The equipment room tracks the initial issue of apparel and equipment, but little documentation is kept as items are exchanged or new items are issued. The equipment room manager relies mostly on memory as to what was issued, returned, and remaining. A formalized perpetual inventory system would ensure ordering is not excessive and provide better control through accurate and real time inventories.

Recommendation 10. Consideration should be given to establishing a perpetual inventory system showing all

purchases, issuances, retrieval, donations and disposals of equipment and apparel. Consideration may be given to not inventorying small disposable items. In addition, formal apparel and equipment inventory policies and procedures should be documented.

Rating: Significant


Camps and Clinics 11. Submission procedures for Men’s and Women’s Basketball camp documentation should be

revised for more timely review.

The 2015 Women’s Basketball camps occurred between June 15th and June 21st. The 2015 Men’s Basketball camps occurred between June 22nd and June 28th. However, camp documentation was not available for our review prior to completion of audit testing (February 2016). Currently, the Compliance Office does not require documentation and forms associated with camps and clinics to be submitted by a specific deadline. The documentation is typically submitted throughout the year, most often during the second semester.

Recommendation 11. The Compliance Office should revisit their procedures regarding the submission of camp

information and establish a more timely submission deadline.

Rating: Significant

12. Men’s and Women’s Basketball programs were not in compliance with University policies related to vacation usage and use of institutional marks.

The 2015 Women’s Basketball camps occurred between June 15th and June 21st; 2015 Men’s Basketball camps occurred between June 22nd and June 28th. Per review of absence entry in PeopleSoft between 5/1/15 and 8/1/15 we identified no Women’s Basketball or Men’s Basketball support staff members (not classified as Administrative Professionals) who reported vacation for the time period in which camps occurred. Per discussions with camp administrators, these staff members were compensated for time worked for the external camps. Due to the basketball camps being run by an outside entity, not reporting vacation time for camps worked is inappropriate and results in payment for time not worked for the University.

Institutional marks used for advertising athletic camps are limited. The Women’s Basketball camp brochure tested for compliance with University policy regarding proper use of institutional marks and logos was found to contain an unallowable phrase. The brochure included a camp inappropriately named “Little Gopher Camp.” In addition, the camp brochure reviewed did obtain proper approval from licensing, compliance, and the business office; however, none of these offices identified the use of “Gopher” as inappropriate.

As a part of the approval form, it was noted the Women’s Basketball camps needed to remove a University provided cell phone as a contact number for camps from the brochure. However, this number was also listed as the contact number for camps on the camp website. As of the completion of our audit, the same University provided cell phone number is listed as the contact number for the camp.

Recommendations 12a. The Athletic Department should develop further education and communication on when

employees are required to report vacation time. In addition, the department should require affected employees to submit vacation time for work they performed for camps during 2015.

Rating: Significant

12b. The Director of Licensing and Athletic Properties should review their processes surrounding camp approvals to ensure all inappropriate phrasing is identified prior to camp brochures being


published. In addition, Women’s Basketball camps should remove the term “Gopher” and the University issued cell phone number from its camp website.

Rating: Significant

13. One Women’s Basketball support staff member did not appropriately report camp activities on a Report of External Professional Activities (REPA).

During interviews of Women’s Basketball staff members it was determined the assistant director of operations did not accurately report their anticipated outside commitment on their REPA. Per conversations with the Director of Operations and the Assistant Director of Operations, this individual worked at the external camp “5 or 6 days”, each day lasting “10 or 11 hours.” The Assistant Director of Operations did not report any anticipated outside commitments for the time period. The REPA was filed in June 2015, with the outside commitment also occurring within June 2015.

Per University Policy, Outside Consulting and Commitments by Intercollegiate Athletics staff, all eligible staff members must report outside commitments that exceed three days for the past year and also report any anticipated activity for the next year. In addition, per NCAA Bylaw 11.2.2, Athletically Related Income, “Contractual agreements, including letters of appointment between a full-time or part-time athletics department staff member (excluding secretarial or clerical personnel) and an institution shall include the stipulation that the staff member is required to provide a written detailed account annually to the president or chancellor for all athletically related income and benefits shall be consistent with the institution’s policy related to outside income and benefits applicable to all full-time or part-time employees.”

Recommendations 13a. All eligible Women’s Basketball staff who are employed by outside camps should be educated on

the process to file a REPA and reminded of the importance of accurately filing.

Rating: Significant 13b. The Athletic Department should consult with the Office of Institutional Compliance to determine

whether coaching staff members should continue to be required to report anticipated activity for the next year based on reasonable knowledge.

Rating: Significant

Financial Review 14. The Men’s and Women’s Basketball staff are not consistently following University travel and

expense policies.

During our review of expense reimbursement transactions for Men’s Basketball we determined for seven expense reimbursements to the head coach, the maximum allowable lodging limit was exceeded by a total of $1,296. Lodging limits were regularly exceeded by between $30 and $250 per night. In two instances, valet parking charges were also incurred when other parking options were available. In addition, one instance was identified in which reimbursement of $30 was provided for food expenses in Bloomington, MN while the employee was not in travel status. During our review of expense reimbursement transactions for Women’s Basketball we determined for eight expense reimbursements to the head coach, the maximum allowable lodging limit was exceeded by a total of $1,535. Lodging limits were regularly exceeded by between $19 and $167 per night. In four instances, valet parking


charges were also incurred when other parking options were available. Women’s Basketball also incurred the following unallowable purchases; two holiday/birthday party expenses, totaling $125 and an employee only meal at a cost of $68.

Expenses incurred by the Men’s Basketball head coach were deemed unreasonable including; private car service while on University business for a cost of $116, a $134 parking charge incurred at the airport even though a bus had been purchased to transport the team, and multiple instances of refueling charges resulting from returning a rental vehicle to an airport without refueling. Additionally, 7 expenses incurred by Women’s Basketball were deemed unreasonable including; one $53 gift basket to an athletic department employee, one expedited shipping cost of $112, and five instances of using a private car service for employee transportation.

Auditor’s Note: This financial issue was identified and reported in the December 2015 Athletics Administration audit. Athletic leadership has begun addressing these types of issues as detailed in the Management Action Plan. Recommendations 14a. The Athletic Department should seek reimbursement for the unallowable expenses.

Rating: Essential 14b. Men’s and Women’s Basketball employees should be educated on policies and procedures related

to purchasing goods and services and traveling on university business.

Rating: Significant

15. Expense oversight and tracking processes need improvement.

During testing of transactions including vouchers, procurement card purchases, and expense reimbursements the following issues related to the Athletic Department expense tracking and oversight were noted:

• Four purchases from the bookstore totaling $696 were made during the period under review. When sport offices make purchases from the bookstore they provide their unique chartstring number and the charge is made directly to the chartstring. However, sport offices do not provide adequate justification and documentation of purchases. This does not allow for appropriate oversight by the Athletic Department finance office.

• Expenses incurred by Men’s Basketball staff that resulted in personal benefits for the employee were not appropriately tracked by the Athletic Department and reported to Central Payroll as taxable income. These expenses include purchases of clothing and shoes.

Recommendations 15a. The Athletic Department Administration should evaluate the value provided by sport offices being

able to make purchases directly from the bookstore. If this process remains, a method of oversight should be developed to ensure all purchases are appropriate per University policy.

Rating: Significant 15b. The Athletic Department should develop appropriate methods to identify, track, and report all

personal benefits to employees that qualify as taxable income.

Rating: Significant


Violations Reporting 16. The Compliance Office does not have established timeline expectations for reporting NCAA

violations.

During review of award limitations it was determined an NCAA violation had previously been identified, by the Office of Athletic Compliance, in which a student athlete was provided an award gift in excess of the allowable limit. Per discussion with the Compliance Office, it is likely this form was submitted in June 2015. However, when the identified violation was discussed with the Compliance office in the Fall of 2015 this violation had not yet been reported. The violation has since been reported and was resolved in January 2016.

In discussion with the Compliance Office it was determined there are no standards related to the expectation of how much time may pass between when a violation is discovered and when it is reported.

Recommendations 16. The Compliance Office should develop timeline expectations of when violations should be

reported.

Rating: Significant


Audit Recommendation Rating System This audit incorporates a rating system developed to enable the reader to determine the relative importance of the recommendations made. The rating for each recommendation is shown directly after the recommendation. Recommendations are rated as follows:

Rating: Essential Resolution would help avoid a potentially critical negative impact involving loss of material assets, reputation, critical financial information, or ability to comply with the most important laws, policies, or procedures.

Rating: Significant Resolution would help avoid a potentially significant negative impact on the unit's assets, financial information, or ability to comply with important laws, policies, or procedures.

Rating: Useful Resolution would help improve controls and avoid problems in the unit's operations. These issues are often handled verbally with the unit audited.

The Office of Internal Audit will do follow-up three times per year on all “essential” recommendations to determine the progress made on implementation. The current status of these items is reported to the Audit Committee of the Board of Regents.

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Date: 3/21/2016 To: Tom Eggenberger Audit Manager, Office of Internal Audit From: Jeremiah Carter

Director of Athletic Compliance Subject: Management Action Plan Complimentary Admissions 6. Complimentary admission ticket disbursement to a high school coach resulted in an

NCAA bylaw violation. Recommendation

6a. The Office of Athletic Compliance office should report the violation of Bylaw 13.8.1.4 to the

NCAA in a timely manner. Rating: Essential Audit Plan/Response: In reviewing the violation, the Office of Athletic Compliance, determined that this was an inadvertent NCAA rules violation due to the practice of the ticket office (allowing all individuals with children 2 and younger to enter free with an infant voucher) not matching the written policy (infant vouchers permitted for those under the age of two). The Office of Athletic Compliance will submit a violation of NCAA Bylaw 13.8.1.4 and provide education to the ticket office regarding complimentary admissions to high school coaches. Person Responsible: Jeremiah Carter Expected Completion Date: April 1, 2016 (violation submission), February 8, 2016 (education). 8. Student athlete perception and understanding of practice log review and approval

needs improvement. Recommendations 8a. The Office of Athletic Compliance should work with the Women’s basketball team, as well as

the strength and conditioning staff members, to determine if a violation of NCAA bylaws has occurred regarding off season workouts.

Rating: Essential Audit Plan/Response: The Office of Athletic Compliance will conduct an investigation to determine whether any violation of NCAA bylaws have occurred.

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Person Responsible: Jeremiah Carter Expected Completion Date: Interviews with the student-athletes will occur at the conclusion of the

women’s basketball season (April 2, 2016 or sooner depending on results). 8b. The Office of Athletic Compliance should provide student athletes with additional

information on the importance of reviewing and approving practice logs appropriately. Rating: Significant Audit Plan/Response: The Office of Athletic Compliance currently educates all student-athletes on the practice log approval process at the beginning of year meeting, walking through the specific steps which need to be taken to review the logs. In addition, it is stressed that this is their opportunity to ensure that their team is staying within compliance of NCAA rules and that the process is confidential. The staff also reviews practice log approvals and stresses the importance of review with the Student-Athlete Advisory Committee (SAAC) which includes representatives from every team. Beginning with the 2016-17 academic year, the staff will begin to conduct an additional in-person educational effort regarding practice log approvals on a team-by-team basis prior to the start of each team’s 2016-17 season. Person Responsible: Compliance staff member with oversight of the sport program. Expected Completion Date: Each meeting will occur prior to the first date of competition in each

sport during the 2016-17 academic year. 9. Processes surrounding practice log submission and approvals for Men’s and Women’s

Basketball need improvement. Recommendations 9a. The Office of Athletic Compliance, along with the Men’s and Women’s Basketball staff

members, should emphasize the importance of timely review and approval of practice logs to student athletes. In addition, the Compliance Office should establish formalized deadlines for the practice log submission and approval process.

Rating: Significant Audit Plan/Response: Beginning with the 2015-16 academic year, the Office of Athletic Compliance began a new secondary tracking system (outside of JumpForward) to ensure that all practice logs are submitted within JumpForward as well as assigning one staff member with responsibility to review all practice logs. Coaching staffs are sent monthly reminders regarding practice logs, and provided updates regarding which practice logs are missing. At the conclusion of the 2015-16 academic year the Athletic Compliance Office will review the new process put in place to determine what if any specific deadline for practice log submission should be implemented. Person Responsible: Assistant Director or Coordinator of Athletic Compliance with responsibility for audits and monitoring. Expected Completion Date: Began with the 2015-16 academic year. 9b. The Compliance Office should review their process for formal approval of practice logs in

order to ensure they are approved in a timely manner and the proper controls are in place if a violation would occur.

Rating: Significant

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Audit Plan/Response: The Office of Athletic Compliance has reviewed the process for formal approval of practice logs beginning with the 2015-16 academic year and has determined that the timing of the “final approval” of the log does not have a material bearing on a review of potential NCAA rules violations. The current process, which requires the Athletic Compliance Office to first review the log when it is submitted by the coaching staff is generally completed in less than one week from the date that it is submitted. From the time of that initial approval, the student-athletes have the opportunity for review of the logs. Anytime that a student-athlete makes a written comment in the system (i.e., does anything but approve the practice logs) the Compliance Staff is notified automatically via email by the JumpForward system. Any potential NCAA rules violations would either be determined at the time of original approval (which occurs in a timely fashion) or would be investigated after the staff is notified via email of a student-athlete comment. Based on this information, the Compliance Office staff does not believe that the current process for review as implemented in the 2015-16 academic year needs additional adjustment, nor is there any increased or decreased risk of discovery of an NCAA rules violation based on the timing of the “final” sign-off of practice logs. Person Responsible: Jeremiah Carter Expected Completion Date: 2015-16 Academic Year. 9c. The Compliance Office should review their process for determining all practice logs are

submitted by coaching staff members. Rating: Significant Audit Plan/Response: Beginning with the 2015-16 academic year, the Office of Athletic Compliance began a new secondary tracking system (outside of JumpForward) to ensure that all practice logs are submitted within JumpForward as well as assigning one staff member with responsibility to review all practice logs. Coaching staffs are sent monthly reminders regarding practice logs, and provided updates regarding which practice logs are missing. Person Responsible: Assistant Director or Coordinator of Athletic Compliance with responsibility for audits and monitoring. Expected Completion Date: Began with the 2015-16 academic year. Camps and Clinics 11. Submission procedures for Men’s and Women’s Basketball camp documentation

should be revised for more timely review. Recommendation 11. The Compliance Office should revisit their procedures regarding the submission of camp

information and establish a more timely submission deadline. Rating: Significant Audit Plan/Response: The Office of Athletic Compliance will begin a new process for camp documentation reminders and establish a deadline for submission of camp documentation for the 2016-17 academic year. Specifically, the staff will send the first reminder to the camp director on the day following the end of the sport’s camp. The deadline for submission will be October 1, to provide the camp director

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adequate time to gather all documentation. Monthly reminders will be sent to the camp director until the documentation has been submitted. Person Responsible: Compliance Office staff member with sport oversight. Expected Completion Date: October 1, 2016. Violations Reporting 16. The Compliance Office does not have established timeline expectations for reporting

NCAA violations. Recommendation 16. The Compliance Office should develop timeline expectations of when violations should be

reported. Rating: Essential Audit Plan/Response: The Compliance Office staff will submit violations to the NCAA and Big Ten Conference as soon as possible from the time that the violation investigation is considered “complete”. Staff noted that there are many factors which can lead to a delay in submitting a violation to the NCAA, even after a violation has been initially determined. Due to this, it is not possible to place a specific timeline regarding reporting (e.g., 14 days), however, the Compliance Office staff recognizes the importance of reporting violations in a timely manner. Person Responsible: Jeremiah Carter Expected Completion Date: Immediate.

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Documents

Office of Internal Audit Report Operational and Compliance Audit - Basketball …kstp.com/kstpImages/repository/cs/files/1610 Operation… · · 2016-05-12Office of Internal Audit