Internal Controls
We will ensure that internal controls are established, properly documented, and maintained for activities within our jurisdictions-
This means that each member of the campus community to whom this standard applies
- Ensures adequate internal controls over business processes are established, properly documented, and maintained
Perspective: A Real World Illustration
A December 2005 Denver Post newspaper article reported on a state audit of a public university located in Colorado. The audit report described loose spending that included more than $10,000 in gifts for coaches and their wives, a lack of accounting for thousands of dollars flowing through football camps and alleged violations of NCAA rules and federal tax law.
The report on the university's troubled football program focused on cash moving through a former coach's football camps for youngsters.
It also included 15 recommendations to reform the university's policies on accounting, courtesy-car agreements for coaches and spending on travel to football bowl games.
The state auditor called the audit "very troubling," and lawmakers on the Legislative Audit Committee said it was another embarrassing report for a university that has been plagued by scandal for two years.
The university president pointed out that it has a new president, chancellor, vice president of finance and athletic director. He headed off some criticism in the audit last week by announcing an overhaul of the university's accounting system that calls for stricter, more centralized controls. About 20 pages of the 70-page audit focused on the university's football camps, where 8- to 18-year-olds learn from university coaches. There was such an "absence of controls over cash receipts and disbursements" that it was impossible for auditors to determine whether camp spending violated any laws, the audit said.
"We found that the available camp records were in disarray and basic documentation supporting all revenue and expenses was not maintained," the audit said.
Until last summer, the university paid $200,000 to the former coach's private company to run the camps. The university took over all athletic camps except the men's basketball camp, in part because of allegations of poor accounting. It plans to take control of the basketball camp. Accounting improved when the university took over the camps, but auditors still found problems last summer.
Of the $753,900 in football-camp cash receipts for 2002 through 2004, auditors could verify the source of funding for only $425,900. About $6,000 in checks were made out to cash with no records, including a check for $180 during recruiting season.
The university violated NCAA rules because coaches underreported $68,000 in income from football camps, the audit said.
Auditors also criticized spending more than $10,000 for spouses and children to attend football bowl games and $10,700 on 68 fleece jackets, 40 faux-leather briefcases, women's shoes and videogame equipment.
A final section of the audit criticized the university's procurement-services center, which is responsible for purchases over $4,500. The audit found there was not always sufficient documentation to ensure that expenses, including first-class airline tickets and luxury cars, "are reasonable and for university business."
The president said the university's accounting practices are reforming a sloppy system in which recommendations from an internal audit six years ago were never implemented. "That sloppiness is an invitation to mismanagement," he said.
Last Revised 5/23/2006