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Legislative Auditor blisters ULM
A recently released audit of University of Louisiana-Monroe's finances revealed numerous errors in accounting practices involving millions of university dollars.
The audit was conducted by the Louisiana Legislative Auditor's Office and released Feb. 23.
The period audited was from July 1, 2008, to June 30, 2010, when ULM was guided by former university president James Cofer.
Current ULM president Nick Bruno took over as president in November 2010.
According to the audit, during the two-year timeframe, "ULM did not compile an accurate Annual Fiscal Report requiring numerous audit adjustments."
The University also did not have "adequate controls to ensure that its bank reconciliation process was complete and accurate," according to the audit.
"A review of ULM's bank reconciliation process revealed that 63 accounts payable and four payroll checks totaling $110,426 had been voided but were still included on the outstanding checklists," the audit said.
According to the audit, ULM also did not eliminate roughly $2.2 million "of auxiliary interagency transaction during the blending process between ULM and University of Louisiana-Monroe Facilities."
ULM Facilities is a non-profit corporation created in 2004 to oversee the construction, as well as the financing, of facilities on the ULM campus. ULM Facilities also is charged with overseeing the management of the university's facilities.
An audit released in December 2010 indicated ULM Facilities' total liabilities exceeded net assets by $7.9 million during the 2010 fiscal year.
Last year, ULM Facilities had more than $67.7 million in total net assets and more than $75 million in total liabilities.
According to the recently released Legislative Auditor's report, ULM management also did not accurately report $13.9 million in Pell grant receipts.
"Management inadvertently reported Pell receipts on the statement of cash flows as federal non-operating receipts, but later determined that these receipts should have been reported as gifts and grants for 'Other than Capital Purposes' in the same section of the statement of cash flows," the audit said.
ULM management also did not thoroughly analyze its accounts payable, which resulted in an overstatement of $303,038.
Another accounting error the audit found was one where ULM management incorrectly reported roughly $4.4 million of "capital appropriations on its statement of cash flows as a capital financing activity instead of non-cash transaction."
ULM management also overstated 'Other Operating Revenues' by $1.6 million when it included electronic course fees, proceeds from cattle sales, FEMA reimbursements and principal amounts collected on Perkins and Pharmacy loans, the audit said.
Other accounting errors included management understating current cash by $110,426, and incorrectly reporting bank balances of more than $1 million, according to the audit.
According to the audit, several factors contributed to the accounting errors, including the implementation of ULM's new accounting system.
"Also, management did not analyze and adjust the accounts before closing the system, made errors in the blending of the financial information of the university and its component unit, did not strictly enforce its policies and procedures, and did not follow established reporting guidelines and requirements," the audit said.
"As a result, ULM's financial information submitted to the auditors required significant time and effort by the auditors to identify errors that should have been detected by management. Furthermore, failure to timely analyze accounts and identify errors subjects university assets to potential fraud and/or abuse," the audit said.
In a letter submitted to the Legislative Auditor's Office, Bruno said there were "extenuating circumstances" during the two years covered by the audit.
"We were implementing new application software for all major university applications (Finance, Human Resources, Payroll, Student and Financial Aid)," Bruno's letter said. "This caused double work in maintaining the old system while training, setting up and testing the new system. We spent an extreme amount of overtime to accomplish this major effort. More time was necessary to analyze accounts because data was being used from two different systems. There were also employee turnover issues, multiple budget cuts and additional reporting requirements.
"ULM management did analyze and adjust accounts prior to closing and even afterwards. However, due to the expedited audit timeline, there was little opportunity for additional management review."
ULM's Controller's Office employees will continue the process of thoroughly analyzing accounts each quarter as to allow necessary time to make corrections, according to Bruno.
"We also are in the process of making changes to the application set up which will help us to develop more useful reports and will ensure a smoother close for year end," Bruno's letter said. "This will allow more time to prepare the statements and adequate time for management review." |
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