MnSCU Institution Audits
Presentation to the MnSCU Audit Committee
September 18, 2002
by Jim Riebe, Audit Manager
Office of the Legislative Auditor
Today’s Agenda
• Discuss 12 college and university audit
reports performed under MnSCU
contract
– Overview by institution of the number of
findings and internal audit classification
– Generally discuss types of findings
• Discuss OLA assurance work to support
MnSCU individual college and university
and system-wide financial statements
Audit Scope and Objectives
• Audit Objectives
– Internal control
– Legal compliance
• Audit Scope
– Generally for the three years ended June
30, 2001
– Material financial activities
• Financial management, tuition and fees,
payroll, bookstore operations, administrative
expenditures
Today’s Audit Reports
• Central Lakes College
• Century College
• Hennepin Technical College
• Itasca Community College
• Mesabi Range Community and
Technical College
• Metropolitan State University
Today’s Audit Reports (Cont.)
• Minneapolis Community and Technical
College
• Minnesota West Community and
Technical College
• Normandale Community College
• Northeast Services Unit
• Office of the Chancellor
• Vermilion Community College
Comparison of Audit Results
Current Audits
Prior Audits
Total Findings
47
97
Critical
9
27
Important
32
49
Management
Discretion
6
21
Century College
Current Audit Prior Audit
Total Findings
1
12
Critical
0
3
Important
1
5
Management
Discretion
0
4
Central Lakes College
Current Audit Prior Audit
Total Findings
1
15
Critical
0
1
Important
0
10
Management
Discretion
1
4
Hennepin Technical College
Current Audit Prior Audit
Total Findings
3
6
Critical
0
2
Important
2
3
Management
Discretion
1
1
Itasca Community College
Current Audit Prior Audit
Total Findings
6
8
Critical
1
3
Important
4
2
Management
Discretion
1
3
Mesabi Range C &TC
Current Audit
Total Findings
7
Prior Audit
(Laurentian)
6
Critical
2
2
Important
5
3
Management
Discretion
0
1
Vermilion Community College
Current Audit
Total Findings
10
Prior Audit
(Laurentian)
6
Critical
3
2
Important
7
3
Management
Discretion
0
1
Metropolitan State University
Current Audit Prior Audit
Total Findings
3
12
Critical
0
5
Important
1
5
Management
Discretion
2
2
Minneapolis C&TC
Current Audit Prior Audit
Total Findings
5
15
Critical
3
4
Important
2
9
Management
Discretion
0
2
Minnesota West C&TC
Current Audit Prior Audit
Total Findings
4
6
Critical
0
1
Important
3
5
Management
Discretion
1
0
Northeast Services Unit
Current Audit Prior Audit
Total Findings
1
1
Critical
0
0
Important
1
1
Management
Discretion
0
0
Normandale Community College
Current Audit Prior Audit
Total Findings
4
11
Critical
0
4
Important
4
3
Management
Discretion
0
4
Office of the Chancellor
Current Audit Prior Audit
Total Findings
2
5
Critical
0
2
Important
2
3
Management
Discretion
0
0
Financial Mgmt. Concerns (1)
• Unnecessary or incompatible access to
computer systems (7 institutions)
• Untimely bank reconciliations and/or
unused bank accounts (4 institutions)
• Insufficient collateral for bank balances
(4 institutions)
• Lack of procedures and controls to
manage shared databases and financial
reporting between two institutions
Financial Mgmt. Concerns (2)
• Not calculating the indirect costs of
operating the bookstore, and not
analyzing inventory usage (2
institutions)
• Foundations
– Foundation administered certain grants
– Part-time faculty/administrators serve on
board as voting members
Receipt Processing Concerns
• Inadequate control over tuition waivers,
backdated registration cancellations,
voided transactions (6 institutions)
• Inadequate separation of duties over
tuition, food service receipts, or
unsecured receipts
• Untimely tuition, bookstore, or computer
store deposits (3 institutions)
Payroll Concerns (1)
• Not adjusting payroll clearing account to
reduce inflated cash and revenue (4
institutions)
• Erroneous severance payments
($110,000, recovered $82,000)
• Lack of reconciliation of state’s payroll
system to MnSCU’s payroll system, or
lack of independent review of payroll
transactions (2 institutions)
Payroll Concerns (2)
• Inadequate monitoring of faculty and
excluded administrator leave
Expenditure Concerns (1)
• Inadequate separation of duties for
bookstore or other administrative
expenses (3 institutions)
• Lack of formal contracts for business
arrangements, not encumbering funds,
paying vendors in advance, not
monitoring contract terms (3 institutions)
• Incorrect recording of liabilities
(occurrence dates) (2 institutions)
Expenditure Concerns (2)
• Employee’s relative compensated for
lodging
• Inadequate documentation (2
institutions)
– that expenditures were authorized
– that expenditures complied with legal
provisions
• evidence of required bids
Financial St. Assurances (1)
• Work performed to support MnSCU’s
institution and system-wide financial
statement audits
• OLA Report on State’s Payroll System
– Adequate controls to ensure classified
employees are paid at proper rates
– Adequate controls to ensure payroll is
accurately processed and recorded in the
state’s accounting system
– Controls protect the integrity of payroll and
personnel data
Financial St. Assurances (2)
• State’s payroll system (Cont.)
– Some information technology professionals
had excess security clearances
– Some interface files not secured
• MnSCU cash, investments, investment
income, and securities lending detail
–
–
–
–
MnSCU state treasurer’s cash
Revenue Bond Fund
Winona State University
Supplemental Retirement Fund
Financial St. Assurances (3)
• Workers compensation
– Dollar amount of liability by institution
• Compensated absences
– Dollar amount of liability for classified
employees by institution