Minutes are not final until approved by the Board of Regents at the September 2011 meeting.

Transcription

1 Minutes are not final until approved by the Board of Regents at the September 2011 meeting. BOARD OF REGENTS* and its AUDIT COMMITTEE NEVADA SYSTEM OF HIGHER EDUCATION Ballrooms B & C Joe Crowley Student Union University of Nevada, Reno 87 Stadium Way, Reno June 16, 2011 Video or Telephone Conference Connection to: System Administration, Las Vegas 5550 W. Flamingo, Suite C-1, Conference Room Great Basin College, Elko 1500 College Parkway, Berg Hall Conference Room Members Present: Members Absent: Other Regents Present: Mr. Kevin J. Page, Vice Chair Dr. Andrea Anderson Mr. Robert Blakely Dr. Jack Lund Schofield Mr. Mark Alden, Chair Mr. James Dean Leavitt, Chairman Others Present: Mr. Bart Patterson, Vice Chancellor Dr. Jane Nichols, Vice Chancellor Dr. Maurizio Trevisan, Vice Chancellor Dr. Steve Zink, Vice Chancellor Ms. Sandi Cardinal, Assistant Vice Chancellor Mr. Larry Eardley, Assistant Vice Chancellor Dr. Mike Richards, President, CSN Dr. Marc Johnson, President, UNR Dr. Carol Lucey, WNC Dr. Arthur Byrd, CSN Ms. Patty Charlton, CSN Mr. Richard Hinckley, CSN Mr. Mark Morris, CSN Mr. Steven Salaber, DRI Dr. Mike McFarlane, GBC Dr. John Patrick Rice, GBC (via video) Mr. Buster Neel, NSC Ms. Crystal Abba, NSHE Mr. Jim McKinney, NSHE Mr. Brad Norman, TMCC Mr. John Tuthill, TMCC Mr. Gerry Bomotti, UNLV Mr. James Ratigan, UNLV Mr. Bill Follette, UNR Ms. Heather Hardy, UNR Mr. Tom Judy, UNR Mr. Jerry Marzcynski, UNR (AUDIT COMMITTEE 09/08/11) Ref. A-2a, Page 1 of 11

2 Audit Committee Minutes Page 2 Others Present: (Continued) Ms. Mail Stewart, UNR Mr. John Vilseck, UNR Dr. Cheryl Hug-English, UNSOM Dr. Jean Regan, UNSOM Ms. Carol Lange, WNC Mr. Dan Neverett, WNC Also present were faculty senate chairs Dr. Cecilia Maldonado, UNLV; Dr. David Ryfe, UNR; and Mr. Brad Summerhill, TMCC. Student government leaders present included Mr. Casey Stiteler, ASUN President, UNR; and Ms. Stephanie Vega, GSA President, UNR. Dr. Sondra Cosgrove, NFA and Ms. Shari Lyman, NFA were also in attendance. Vice Chair Page called the meeting to order at 9:03 a.m. with all members present except Chair Alden. 1. Approved Minutes The Committee recommended approval of the March 10, 2011, meeting minutes. (Ref. A-1 on file in the Board Office.) Regent Schofield moved approval of the March 10, 2011, meeting minutes. Regent Blakely seconded. Motion carried. (Regent Alden was absent.) (Items 2 & 3 were taken together.) 2. Approved Contract Extension, External Audit The Committee recommended approval of the results of System negotiations with Grant Thornton LLP personnel to extend the contract for the three years ending June 30, 2012, 2013, and (Ref. A-2 on file in the Board Office.) 3. Approved Engagement Letters, External Audit The Committee recommended approval of the annual engagement letters related to the external audit for the year ending June 30, a. NSHE financial statements and OMB Circular A-133. (Ref. A-3a on file in the Board Office.) b. UNSOM Practice Plans. (Ref. A-3b on file in the Board Office.) c. UNR and UNLV NCAA agreed upon procedures. (Ref. A-3c on file in the Board Office.) Ms. Cardinal stated the current contract is scheduled to expire at the completion of the June 30, 2011, financial statements. The contract was a three year contract with the option to renew for three additional years. Ms. Cardinal reported that a meeting was held with Grant Thornton personnel to negotiate fees for three additional years on the contract. They were successful with a negotiated audit fee of $615,000 for three years. The practice plan will have slight fee increases and the fees for the review of the audit department have increased dramatically. They will look at other options for the audit department review so they may not exercise that portion (AUDIT COMMITTEE 09/08/11) Ref. A-2a, Page 2 of 11

3 Audit Committee Minutes Page 3 2. Approved Contract Extension, External Audit (Continued) 3. Approved Engagement Letters, External Audit (Continued) of the contract. Grant Thornton is pleased to be able to continue their contract with the System. Regent Schofield moved approval of the External Audit contract extension and the External Audit Engagement Letters. Regent Blakely seconded. Motion carried. (Regent Alden was absent.) 4. Information Only Follow-Up: Report on Internal Control Matters, UNSOM - Assistant Vice Chancellor Sandi Cardinal presented the follow-up response to the external auditors UNSOM Report on Internal Control Matters for the year ended June 30, (Ref. A-4 on file in the Board Office.) Ms. Cardinal reported this was a follow-up from the last meeting. At the December meeting Grant Thornton presented a management letter and the Medical School presented their response. A follow-up response was presented at the March meeting and the Committee requested another follow-up at this meeting. Mr. Judy reported the items that were open at the time were related to information technology conversions and corrections. Mr. Judy stated that all but two of the three are complete today. The other two items are related to conversion that will begin on June 23, 2011, and will take approximately three to six months to complete. Ms. Cardinal reported that a follow-up will be presented at the December meeting. Mr. Jim McKinney stated the timeframe to this point was to get the infrastructure ready. If they do not run into problems it will take approximately three months. The extra three months is to allow them time if they do run into problems. 5. Information Only Follow-Up: Automotive Department, CSN - Assistant Vice Chancellor Sandi Cardinal presented the follow-up response to the audit report of the CSN Automotive Department audit for the period July 1, 2009, through June 30, (Ref. A-5 on file in the Board Office.) Ms. Cardinal reported the audit report came to the Committee in December and there was a follow-up in March. An additional follow-up was requested for this meeting. President Richards appreciated the work of the Audit Department. The financial aspects of this item are concluded and it is recommended to the Committee that this item be closed. CSN does still have managerial items that are still underway and they would be happy to report on those as necessary. Regent Page asked when the managerial items will be complete. President Richards stated that it would be hard to guess until they see what direction the review takes. They do have people in place that are helping with the process. Regent Page asked if they had thought about closing this program. President Richards stated they had found that the transportation technology components are needed in the community. (AUDIT COMMITTEE 09/08/11) Ref. A-2a, Page 3 of 11

4 Audit Committee Minutes Page 4 (Audit Summary on file in the Board Office.) 6. Approved Associated Students of the University of Nevada Bookstore, UNR The Committee recommended approval of the report and institutional response to the UNR ASUN Bookstore audit for the period July 1, 2009, through September 30, (Ref. A-6 on file in the Board Office.) Ms. Cardinal stated the last audit was performed a number of years ago and there were substantial findings. During this audit there was much improvement. They noted that each semester an external company performs a book buy back. Each day during the buyback session the company receives cash from the bookstore. The cash is logged, but the company does not sign for the cash. It was recommended that the log be modified to include a signature of the representative receiving the cash. It was also noted that the company performs a daily reconciliation of cash and textbooks, but bookstore personnel are not involved in that process nor is it documented. In addition, bookstore personnel do not complete a final reconciliation when the book buy back session ends. It was recommended that the bookstore personnel be involved in the daily reconciliation process and that they be documented. Finally they noted that cashiers are sharing cash drawers. For improved internal controls it was recommended each cashier be assigned a separate cash drawer in accordance with the UNR policy. Regent Page asked if it was normal policy that the school provides the cash to the external company. Mr. Judy stated it was the arrangement with the company that they work with. Regent Page asked why would UNR provide the cash and have that liability. Mr. Judy stated they would review the arrangement and report back. Regent Blakely moved approval of the UNR ASUN Bookstore audit for the period July 1, 2009, through September 30, Regent Schofield seconded. Motion carried. (Regent Alden was absent.) 7. Approved Campus Recreation and Wellness Department, UNR The Committee recommended approval of the report and institutional response to the UNR Campus Recreation and Wellness Department audit for the period July 1, 2009, through June 30, (Ref. A-7 on file in the Board Office.) Ms. Cardinal reported that during this audit it was noted that a reconciliation of sales activity is not performed at the end of each shift and it was recommended that a closeout process be developed and documented. It was also noted that group use fees are not documented and that there are inconsistencies in the application of these fees (different groups were charged different amounts). It was recommended that a rate schedule be developed and be consistently applied. Finally it was noted that the refund process that they use is also not documented. It was recommended that a policy be documented and be a part of the policy and procedures manual. Mr. Judy stated the department has seriously looked at these findings and they are working very hard to get them resolved. (AUDIT COMMITTEE 09/08/11) Ref. A-2a, Page 4 of 11

5 Audit Committee Minutes Page 5 7. Approved Campus Recreation and Wellness Department, UNR (Continued) Regent Anderson moved approval of the UNR Campus Recreation and Wellness Department audit for the period of July 1, 2009, through June 30, Regent Schofield seconded. Motion carried. (Regent Alden was absent.) 8. Approved Alumni Relations, UNLV The Committee recommended approval of the report and institutional response to the UNLV Alumni Relations audit for the period July 1, 2009, through December 31, (Ref. A-8 on file in the Board Office.) Ms. Cardinal reported this audit was requested by the institution. During the review they noted a lack of written policies and procedures. There has been high turnover in the area and the lack of policy and procedures has made training very difficult for new employees. It was recommended that written policy and procedures be developed. The Alumni Relations Department collects funds on behalf of the UNLV Alumni Association. It was noted that funds were being deposited on a monthly basis. It was recommended that cash practices be reviewed and more frequent deposits made. Generally, the campus makes weekly deposits and so they are asking for this process to be reviewed. It was also noted that on one travel transaction, the institutional purchasing card was used instead of the Alumni Association credit card. It was recommended that this practice be reviewed. They also noted that the reimbursement was not made in a timely manner. Mr. Bomotti stated there are a lot of items that need attention. Mr. Bomotti noted that Mr. Ratigan was also in attendance at the meeting, and he is working hard on the recommendations. Most items are in the process and expect to be finished by the end of June. Regent Anderson asked to hear the plans on streamlining this department. Mr. Ratigan stated they are not looking to reinvent the wheel. There are written policies out there and they are working cooperatively with other departments to have written policies in place. With respect to the cash handling items, they are now working with the campus to establish an agency account that allows on campus deposits in a more timely fashion. With regard to timely reimbursement, they have been able to get a number of departments on campus to bill the Alumni Association directly, as opposed to billing Alumni Relations and then having to turn around and bill the Association. Regent Page asked if they had given any thought to desktop deposits. Mr. Ratigan noted they had not, and Mr. Bomotti stated he would have to follow-up to see if that had been reviewed. Regent Blakely felt this item should be continued at the next meeting. Ms. Cardinal reported that generally the Committee would approve the report and then in three to six months there would be a follow-up response for the audit. (AUDIT COMMITTEE 09/08/11) Ref. A-2a, Page 5 of 11

6 Audit Committee Minutes Page 6 8. Approved Alumni Relations, UNLV (Continued) Regent Anderson moved approval of the UNLV Alumni Relations audit for the period July 1, 2009, through December 31, Regent Blakely seconded. Motion carried. (Regent Alden was absent.) 9. Approved Cashier s Office, NSC The Committee recommended approval of the report and institutional response to the NSC Cashier s Office audit for the period July 1, 2009, through October 31, (Ref. A-9 on file in the Board Office.) Ms. Cardinal believed this audit was also requested by the institution. NSC s process and procedures are fairly new. They are still in the development process of some of their policy and procedures. It was noted that in some of the departments that checks are not being restrictively endorsed when they are received. It was recommended the institution continue to implement policies and to follow-up with the departments so they also understand the policies. A lack of segregation of duties at the department level due to small staff size was also noted. It is not possible to get the segregation of duties with the amount of staff they have at this time. To improve the internal controls it was recommended that supervisors review deposits and account for information on a periodic basis. Mr. Neel thanked CSN, UNLV and Internal Audit for their help during this transition. For NSC s first seven years CSN did all of these functions. CSN has been very helpful in making this transition. Individuals at UNLV were also helpful in advising and providing guidance. NSC did request this audit so they could evaluate the first year of operation in this department. Overall the findings were satisfactory, but certainly improvements can be made. Many of the improvements were related to policy and all of those recommendations have taken place. In addition, they have formed a users group that meets regularly. The user group is to make sure that everyone is aware of the policies, communicated verbally, in writing and on the website. The user group will also make sure they adhere to the policies. Of the nine recommendations all have been implemented. Regent Blakely commended them for their hard work on this audit. Regent Blakely moved approval of the NSC Cashier s Office audit for the period July 1, 2009, through October 31, Regent Schofield seconded. Motion carried. (Regent Alden was absent.) 10. Approved Intercollegiate Athletics, CSN (Agenda Item #11) The Committee recommended approval of the report and institutional response to the CSN Intercollegiate Athletics audit for the period July 1, 2009, through November 3, (Ref. A-11 on file in the Board Office.) Ms. Cardinal reported during this review they observed student athletes returning textbooks at the end of the semester. Student financial services provided the (AUDIT COMMITTEE 09/08/11) Ref. A-2a, Page 6 of 11

7 Audit Committee Minutes Page Approved Intercollegiate Athletics, CSN (Agenda Item #11) (Continued) funding for the purchase of the textbooks. When they were sold back during the buy back the funds were deposited into an athletics account. There were no written procedures addressing the process and they are recommending that the practice be reviewed resulting in policy and procedures being documented. It was also noted that supported documentation and reconciliations for deposits were not always being maintained. It was recommended that greater care be taken to maintain the documentation. Deposits were also not being made in a timely manner. It was recommended that the institution s cash handling procedures be followed. Finally during the review of contracts it was noted they were not all in compliance with the System contract policy. Two of the three contracts reviewed were signed by unauthorized signers. They also noted that two of eight facility use agreements reviewed did not provide for the insurance coverage that is required. Compliance with contract requirements were recommended. President Richards stated CSN requested that this audit be extended to November 3, During this time personnel changes were being made in the program. CSN s responses to these findings were made in the time that the managerial changes were being made. Ms. Charlton reported they had been working very closely with Internal Audit particularly in Las Vegas regarding this audit. They requested the extension in order to ensure that any anomalies that may have occurred during the first several months of this fiscal year could be reviewed. They are also undergoing an external review as well. They wanted to give Mr. Mark Morris, the new Athletic Director, a clean slate to begin with. There has been specialized one on one training to Mr. Morris and his staff. CSN has a very strong Athletic Department and the administrative structure is very solid. Mr. Morris is very engaged with the administration on an ongoing basis. Regent Page stated that cash handling baffles him across the System, not just at CSN. He asked where CSN is at with the policies and procedures. Ms. Charlton noted that at CSN, there is an extensive cash handling policy. For athletics, there are actually staff from the Cashier s Office that attend the games and handle the process. At the other campuses, compliance with cash handling procedures is a part of the employee s evaluation. Regent Page asked CSN if they have looked into desktop deposits. Ms. Charlton stated they have been pursuing other options. Regent Page asked if CSN has reached out to UNR and UNLV to help build relationships and provide guidance. Dr. Byrd stated CSN does have an intercollegiate athletic committee that is structured after the model at UNLV. Mr. Morris stated he has been in contact with some of the assistant directors and he does plan on keeping up on those relationships. Regent Page asked who was reviewing the contracts. Mr. Hinckley felt that this was an education problem, and they have since been out with the athletic staff to make sure the proper signature and governance requirements are known. Regent Page asked if insurance requirements were written into the contract. Mr. Hinckley stated that they are suppose to be included, but he could not speak to whether it was (AUDIT COMMITTEE 09/08/11) Ref. A-2a, Page 7 of 11

8 Audit Committee Minutes Page Approved Intercollegiate Athletics, CSN (Agenda Item #11) (Continued) a complete absence or partial absence in the contract. Mr. Hinckley stated they would be looking at additional ways to improve their processes. Regent Blakely thought UNR was very good at their contracts and CSN might look for their consultation. Regent Schofield thought they needed to hold people accountable for their responsibility. Regent Anderson felt it was important to go back and determine who was responsible and proceed forward from there. Regent Blakely moved approval of the CSN Intercollegiate Athletics audit for the period July 1, 2009, through November 3, Regent Anderson seconded. Motion carried. (Regent Alden was absent.) 11. Workforce Development and Continuing Education, WNC (Agenda Item #12) - The Committee recommended approval of the WNC Workforce Development and Continuing Education audit for the period January 1, 2009, through May 31, (Ref. A-12 on file in the Board Office.) During the review it was noted that personnel activity reports for grants and contracts were not being completed. It was recommended that they complete the reports to be in compliance with federal circular. It was also noted that the department has policies for payments to the various instructors for the workforce development classes. In six of 13 items tested, the payment was not in compliance with the policy. It was recommended they review the policy, revise as necessary and that they comply with the policy. It was also noted that the college policy requires fingerprinting and background checks for college instructors. It was noted this procedure was not followed in reference to three individuals because they were teachers in the local school district. The policy does not state whether this type of exception should be made. It was recommended they review the policy, but also that the Board policy be reviewed and updated as necessary. The department was using a standard form agreement, which contained inaccurate or unnecessary language. It is recommended that the agreement be reviewed and updated in accordance with System contract guidelines. Finally, one agreement they used was difficult to determine from the terms used whether it was a fixed cost contract or a reimbursement contract. It was recommended that the language be clarified. Mr. Neverett stated this was the first time this department and procedures had been audited. He appreciated the time and energy that went into this audit. All issues have been addressed and policies are in place. (AUDIT COMMITTEE 09/08/11) Ref. A-2a, Page 8 of 11

9 Audit Committee Minutes Page Workforce Development and Continuing Education, WNC (Agenda Item #12) (Continued) Regent Anderson moved approval of the WNC Workforce Development and Continuing Education audit for the period January 1, 2009, through May 31, Regent Blakely seconded. Motion carried. (Regent Alden was absent.) 12. Risk Management/Worker s Compensation, WNC (Agenda Item #13) The Committee recommended approval of the report and institutional response to the WNC Risk Management/Worker s Compensation audit for the period January 1, 2010, through December 31, (Ref. A-13 on file in the Board Office.) Ms. Cardinal stated this was one in a series of audits. During this review it was noted that funds that were coming from the System office were being deposited into a state funded account. These were not state funds, so the account should have been a self-supporting account. It was recommended that they use a self-supporting account in the future and that the disposition of the prior year ending balance be determined. (Agenda items 14 through 21 were taken together.) Regent Schofield moved approval of the WNC Risk Management/Worker s Compensation audit for the period January 1, 2010, through December 31, Regent Blakely seconded. Motion carried. (Regent Alden was absent.) 13. Information Only Follow-Up: Nevada Public Health Laboratory Follow-Up Audit, UNR (Agenda Item #14) - Assistant Vice Chancellor Sandi Cardinal presented the follow-up response to the audit report of the UNR Public Health Laboratory follow-up audit for the period July 1, 2008, through December 31, (Ref. A-14 on file in the Board Office.) 14. Follow-Up: Hosting, UNR (Agenda Item #15) - Assistant Vice Chancellor Sandi Cardinal presented the follow-up response to the audit report of the UNR Hosting audit for the period July 1, 2009, through June 30, (Ref. A-15 on file in the Board Office.) 15. Follow-Up: Office of International Programs, UNLV (Agenda Item #16) - Assistant Vice Chancellor Sandi Cardinal presented the follow-up response to the audit report of the UNLV Office of International Programs audit for the period July 1, 2009, through May 31, (Ref. A-16 on file in the Board Office.) 16. Follow-Up: Purchasing Department, UNLV (Agenda Item #17) - Assistant Vice Chancellor Sandi Cardinal presented the follow-up response to the audit report of the UNLV Purchasing Department audit for the period July 1, 2009, through June 30, (Ref. A-17 on file in the Board Office.) (AUDIT COMMITTEE 09/08/11) Ref. A-2a, Page 9 of 11

10 Audit Committee Minutes Page 10 (Agenda items 14 through 21 were taken together - Continued) 17. Follow-Up: Risk Management/Worker s Compensation, UNR (Agenda Item #18) - Assistant Vice Chancellor Sandi Cardinal presented the follow-up response to the audit report of the UNR Risk Management/Worker s Compensation audit for the period July 1, 2008, through December 31, (Ref. A-18 on file in the Board Office.) 18. Follow-Up: Risk Management/Worker s Compensation, DRI (Agenda Item #19) - Assistant Vice Chancellor Sandi Cardinal presented the follow-up response to the audit report of the DRI Risk Management/Worker s Compensation audit for the period January 1, 2009, through May 31, (Ref. A-19 on file in the Board Office.) 19. Follow-Up: Risk Management/Worker s Compensation, TMCC (Agenda Item #20) - Assistant Vice Chancellor Sandi Cardinal presented the follow-up response to the audit report of the TMCC Risk Management/Worker s Compensation audit for the period January 1, 2009, through April 30, (Ref. A-20 on file in the Board Office.) 20. Follow-Up: Network Security Audit, GBC (Agenda Item #21) - Assistant Vice Chancellor Sandi Cardinal presented the follow-up response to the audit report of the GBC Network Security Audit for the period May 1, 2010, through August 31, (Ref. A-21 on file in the Board Office.) Ms. Cardinal reported that many of the findings have already been implemented when the Committee first heard the report. She believed there were only two that still have items that need to be addressed. The first one relates to the UNR Public Health Laboratory where there were four recommendations that were open; one has been completed and three remain open. The recommendations related to software that was being installed, the director s job description being updated, and that they continue to remove fees from the Nevada Administrative Code. Mr. Judy stated that at the time the update was submitted they were in the process of updating the software. He had not had the opportunity to see if that was complete. The PDQ has been revised, but then some other issues came up that needed to be reviewed. The situation with the Nevada Administrative Code is interesting because the state has to make the changes and they are not making those changes. They were willing to delegate the process to UNR to initiate the changes, but then the freeze came down and they are waiting for direction. Ms. Cardinal stated the second item that has remaining items open is the GBC Network Security audit. There were 11 recommendations in this audit and they do remain open. Generally the IT recommendations do take a bit longer to close. GBC continues to work on these and they will continue to follow-up. Dr. Rice stated they have bought the software and hardware, but the implementation process takes time. They have also drafted a number of policies that will be reviewed by the entire institution in the fall. Dr. Rice felt that everything would be closed by the end of the calendar year. He thought they would have a good report by the December meeting. (AUDIT COMMITTEE 09/08/11) Ref. A-2a, Page 10 of 11

11 Audit Committee Minutes Page 11 (Agenda items 14 through 21 were taken together - Continued) Regent Page asked if the servers were hosted somewhere else, would the host be responsible for the updates. Vice Chancellor Zink stated it would depend on the specific circumstances. 21. Information Only Bank Reconciliations (Agenda Item #22) - Assistant Vice Chancellor Sandi Cardinal presented a report on the status of institution bank reconciliations. Ms. Cardinal reported that all institutions are up to date, except for UNR who are potentially two behind. One of them was received on the 13 th, but the Banking and Investment Department has questions on $2 million in adjustments. That leaves two that are still being completed. Mr. Judy stated he has talked with the person that completes the reconciliations and she is working very hard on them. The reconciliations are very complex so when she goes on vacation, it ends up being a catch up process. Ms. Cardinal stated she would report back at the December meeting. Regent Page asked for clarification regarding there being only one person that does all of the reconciliations. Mr. Judy indicated that there is one person who is responsible, and one backup person. Regent Page felt there must be some other reason why they are behind because they have always been current to this point. Mr. Judy noted he would make sure that they catch up. Regent Blakely felt they should review this at the September meeting. 22. Information Only - Public Comment (Agenda Item #23) Mr. Patterson thanked the Chairman, Vice Chairman and staff for negotiating the contract with Grant Thornton. 23. Information Only New Business (Agenda Item #24) None. The meeting adjourned at 9:55 p.m. Prepared by: Submitted for approval by: Angela R. Palmer Program Officer I Scott G. Wasserman Chief Executive Officer and Special Counsel to the Board of Regents (AUDIT COMMITTEE 09/08/11) Ref. A-2a, Page 11 of 11