A Review of State Agency, University, and Community College District Compliance with the Public Funds Investment Act and Investment Reporting Requirements
April 2010
Report Number 10-027
Overall Conclusion
Most state agencies, universities, and community college districts fully complied with the Public Funds Investment Act (Act) in fiscal year 2009. Additionally, most universities and community college districts fully or substantially complied with higher education investment reporting requirements mandated by Rider 5, page III-237, the General Appropriations Act (81st Legislature).
With nearly $51 billion in investments as of August 31, 2009, it is important that these organizations comply with statutes and investment reporting requirements designed to help the Legislature, the organizations' boards, and the public ensure that these organizations manage and disclose their investments appropriately. The following describes compliance by type of organization for fiscal year 2009:
- Agencies. Ten of the 12 agencies subject to the Act were in full compliance with the Act. The School for the Blind and Visually Impaired did not obtain a compliance audit before the statutory deadline and it did not submit the required audit report to the State Auditor's Office within the required time frame. The report was submitted on April 9, 2010; therefore, the School for the Blind and Visually Impaired was noncompliant with the Act. The Texas Equal Access to Justice Foundation was only substantially compliant because it did not specify a contract termination date with its investment management firm.
- Universities. Eleven of the 15 universities subject to the Act were in full compliance with the Act. Sul Ross State University did not obtain a compliance audit before the statutory deadline, and it did not submit its audit report to the State Auditor's Office within the required time frame. The report was submitted on February 25, 2010; therefore, Sul Ross State University was noncompliant with the Act. Texas State University - San Marcos was noncompliant with the Act because it did not submit an acceptable compliance audit report. Texas Southern University was minimally compliant with the Act and Stephen F. Austin State University was only substantially compliant with the Act because they did not comply with certain requirements for their investment policies, reporting, reviewing, or contracting.
In addition, all 15 universities were in full compliance with the higher education investment reporting requirements.
- Community college districts. Of the 50 community college districts subject to the Act, 48 were in full compliance with the Act. Texarkana College was minimally compliant with the Act because it did not review its investment policy and its investment officer did not receive required training. Western Texas College was only substantially compliant with the Act, because its investment officer did not receive required training.
In addition, 49 of the 50 community college districts were in full or substantial compliance with the higher education investment reporting requirements. Texarkana College did not post its current quarterly investment reports and investment policies on its Web site and, therefore, was minimally compliant.
- Universities not subject to the Act but still subject to the higher education investment reporting requirements. Four university systems are not subject to the Act but are still subject to the higher education investment reporting requirements. Those four university systems fully complied with the higher education investment reporting requirements.
In reviewing universities and community college districts for compliance with the higher education investment reporting requirements, auditors determined that the majority of these organizations had not fully complied by the initial due date of January 1, 2010. However, after auditors contacted them and established a new due date of February 23, 2010, to allow them to achieve compliance, these organizations posted most of the required information on their Web sites.
This project was a review and, therefore, the information in this report was not subjected to the tests and confirmations that would be performed in an audit. However, the information in this report was subject to certain quality control procedures to help ensure accuracy.
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