Sam Houston State University
An Audit Report on Management Controls at Sam Houston State University
March 1997
Report Number 97-044
Overall Conclusion:
In several areas, management controls at Sam Houston State University (University) are inadequate in design and/or implementation. These inadequacies impact the University's ability to ensure that its mission and objectives will be fully accomplished and that assets will be appropriately safeguarded.
Key Facts and Findings
The internal audit function is ineffective in addressing University risks because of executive management's limited participation in oversight and the Internal Audit Department's (Internal Audit) failure to fully follow standards. Neither executive management nor Internal Audit is proactive in using the internal audit function to reduce risk. Currently, Internal Audit has an impaired risk assessment process, does not always collect sufficient evidence and documentation to support audit conclusions, and had not received a peer review as of November 1996.
The level of executive management's involvement impacts the effectiveness of the internal audit function. The Internal Audit Department should be a key tool used by executive management to manage risk. Internal Audit should provide executive management with useful information through unbiased evaluations of control systems and programs based on statutes and professional standards.
Controls over planning and developing, as well as budgeting, in two Auxiliary Enterprises should be strengthened. Proper cost analyses have not been performed regarding building and operating the golf course ($3,010,000). Also, plans do not exist detailing the cost or implementation of the proposed recreational area, "Kat Kountry," including building the lake. Additionally, budgeting has not been realistic, causing expenditures to exceed revenues and creating deficit fund balances for the University day care center and the Twirling - Cheerleading Summer Camp Program. Consequently, other fees are being used to subsidize these accounts.
The University should improve controls to ensure that assets are safeguarded. The University recently provided a reconciliation worksheet to make adjustments for $5.8 million in property and equipment that was not reconciled as of January 1997. The Purchasing, Correspondence Course, and Administrative Accounting departments had control weaknesses which were caused by lack of established policies and procedures, not enforcing existing policies and procedures, or circumvention of existing controls.
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