An Audit Report on Financial Management Processes at the Higher Education Coordinating Board
Report Number 15-028
The Higher Education Coordinating Board (Agency) has financial management processes to help ensure that it complies with applicable statutes, rules, and Agency policies for creating its annual trusteed budget, making revisions to that budget, and disbursing funds to higher education institutions. In addition, the Agency has implemented processes to help ensure that its financial data is reliable, accurate, and consistent.
However, the Agency did not have written procedures for certain financial management processes, and it did not maintain documentation to support some of the calculations it made to determine the amount of financial aid to allocate to higher education institutions. In addition, auditors could not recalculate some of those financial aid allocations based on the methodology that the Agency described.
The Agency created its trusteed budgets in fiscal years 2014 and 2015, including transfers to its operating budget for administrative costs, in accordance with the General Appropriations Act and the Texas Education Code. However, the Agency did not fully comply with Agency policies when it made transfers to revise its budgets.
The Agency accurately disbursed funds to higher education institutions. For example:
- The Agency disbursed appropriated funds to community colleges in accordance with the General Appropriations Act and reviewed and approved the disbursement of those funds.
- The Agency awarded and disbursed institutional (non-financial aid) grants to eligible higher education institutions. In addition, the Agency reviewed and approved those disbursements before payment and maintained adequate support for those disbursements.
However, the Agency did not consistently comply with its policy to segregate duties when making adjustments to the Uniform Statewide Accounting System (USAS) or its internal accounting system.
The Agency has information technology controls over its financial data to help ensure that data is reliable, accurate, and consistent. The Agency protects access to its information systems by (1) requiring passwords that comply with password rules and (2) conducting user access reviews. In addition, system interfaces accurately post transactions from the Agency's payment processing system and loan management system to its accounting system and USAS. However, the Agency did not accurately compile expenditure information for two loan programs in one of the financial management reports tested.
Auditors communicated other, less significant issues related to the Agency's financial management processes to Agency management separately in writing.
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