MEETING OF THE
AUDIT COMMITTEE
OF THE BOARD OF TRUSTEES
HOUSTON COMMUNITY COLLEGE
November 10, 2011
Minutes
The Audit Committee of the Board of Trustees of Houston Community College held a
meeting on Thursday November 10, 2011, at the HCC Administration Building, 3100 Main,
2nd Floor, Seminar Room A, Houston, Texas.
COMMITTEE MEMBERS PRESENT
Neeta Sane, Committee Chair
Bruce Austin, Committee Member
Sandie Mullins
Mary Ann Perez
Richard Schechter
ADMINISTRATION
Mary S. Spangler, Chancellor
Art Tyler, Deputy Chancellor/COO
Renee Byas, General Counsel
Shantay Grays, Interim Executive Assistant to the Chancellor
Diana Pino, Vice Chancellor, Student Success
Daniel Seymour, Vice Chancellor, Planning and Institution Effectiveness
Warren Hurd for Margaret Ford Fisher, President, Northeast College
Fena Garza, President, Southwest College
Michael Edwards for Betty Young, President, Coleman College
Willie Williams, Jr., Chief Human Resources Officer
OTHERS PRESENT
Jarvis Hollingsworth, Board Counsel, Bracewell & Giuliani
Thomas Urban, President, Faculty Senate
Michelle Barry, Gainer Donnelly & Desroches
Leslie Berardo, Gainer Donnelly & Desroches
Alyssa Hill, Gainer Donnelly & Desroches
Other administrators, citizens and representatives from the news media
CALL TO ORDER
Mrs. Sane called the meeting to order at 2:13 p.m. and declared the Committee convened
to consider matters pertaining to Houston Community College as listed on the duly posted
Meeting Notice.
ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED AUGUST 31, 2011
Dr. Tyler apprised that by law the college is required to have an external audit completed
annually. He noted that the audit was completed by Gainer Donnelly & Desroches. Dr.
Tyler introduced the external auditor team for presentation to the Committee.
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Audit Committee – November 10, 2011 - Page 2
Ms. Alyssa Hill provided an overview of the external audit. She noted that the college
received an unqualified opinion which is the best opinion regarding the financial statement.
She noted that there were new standards required to adopt and all accounting policies are
in accordance with Generally Accepted Accounting Principles (GAAP) and the
Governmental Accounting Standards Board (GASB). She noted that the financial statement
follows the guidelines in accordance to the Texas Coordinating Board and that there was
compliance in the financial management area as well as the compliance reports. Ms. Hill
apprised that the fiscal year was positive in that there was an increase in net assets and
the college has a healthy cash position.
Ms. Hill noted that the second part of the audit conducted is a single audit or compliance in
accordance to the federal and state audit regarding risk programs. She noted that due to
Recovery Act Funding, there is an audit requirement in this area as well as financial aid.
She noted that there was a finding in financial aid that they were required to report and
noted that the finding is listed on pages 95-96 of the audit. Ms. Hill apprised that the finding
relates to federal awards and noted that it is important to mention that no monies are due to
the Department of Education from the college. She noted that the College is required to
verify students’ attendance before funds are disbursed. She informed that the original
amount to be reviewed was $4 million; however, approximately $1.8 million was reconciled
and billed to the Department of Education, of which $1.2 million has already been collected.
Mr. Austin inquired of the exposure to the college. Ms. Hill informed that the college’s
exposure is $1.9 million and that this represents 1439 students for spring and fall.
(Ms. Mullins arrived at 2:23 p.m.)
Dr. Pino apprised that the issue is how soon can the students receive the funds and at the
same time limit the potential exposure for the college. She noted that secure measures
have been implemented to address the issue. Dr. Tyler noted that the error rate has been
corrected by the external audit finding. Mr. Austin inquired if it was a mechanism requiring
IT to address. Dr. Pino informed that it was a procedural issue.
(Mr. Schechter arrived at 2:24 p.m.)
Dr. Pino apprised that the process requires that funds be disbursed at the end of the
session. Dr. Tyler noted that there will be more complaints from students because of the
revised process.
Dr. Spangler apprised that the key is to inform the students of what they should expect. Mr.
Austin noted that there should be an explanation to students.
Mrs. Sane inquired if there should be additional staffing in the financial aid area. Dr.
Spangler noted that Dr. Pino has inquired of additional financial aid staff especially during
peak periods.
Ms. Hill noted that the management letter is separate from the audit report and is
addressed to the Board of Trustees and Management. She informed that specific
recommendations are identified to further strengthen the controls and segregation of duties
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Audit Committee – November 10, 2011 - Page 3
identified by administration. She noted that there are planned corrective actions for each
action mentioned and apprised that some of the action will take some time for
implementation; however, some issues have been addressed and corrected.
Mr. Austin inquired if internal audit was reviewed as a component of the entity. Ms. Michelle
Barry informed that internal audit reports are provided to assist in the auditing process.
Mr. Austin inquired if the internal audit is completed according to SAS 112. Ms. Leslie
Berardo informed that SAS 114 requires the external audit to report to the Board however,
SAS 115 replaces the management letter.
Dr. Tyler apprised that there is a recommendation that the internal auditor has IT internal
controls knowledge to support IT related areas of the auditing process.
Mrs. Sane referenced that the management letter states that the report is not to highlight all
of the deficiencies and inquired how all deficiencies are identified. Ms. Hill noted that one
item discussed is securities and apprised that the process should require reviewing the
appropriate access to monitor activity. She informed that the deficiency may not be
identified currently but may emerge in the future. She noted that there are no significant
deficiencies.
Ms. Hill explained that there is no way to guarantee 100% efficiency as there will always be
some form of deficiencies.
Motion – Mr. Austin moved and Mrs. Sane seconded. The motion passed with a vote of 20.
ADJOURNMENT
With no further business, the meeting adjourned at 2:40 p.m.
Recorded, transcribed and submitted by:
Sharon R. Wright, Manager, Board Services
Minutes Approved: