• TABLE OF CONTENTS
HIDE
 Front Cover
 Table of Contents
 Introduction
 Organization chart
 Operations
 Budget and expense analysis
 Audits and other planned revie...
 Audit report summaries
 Management advisory services
 Special advisory reviews
 Investigations
 Follow-up
 Other activities
 Contacts and resources






Group Title: University of Florida Office of Audit and Compliance Review annual report
Title: University of Florida Office of Audit and Compliance Review Annual Report
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Full Citation
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Permanent Link: http://ufdc.ufl.edu/UF00072255/00003
 Material Information
Title: University of Florida Office of Audit and Compliance Review Annual Report
Series Title: University of Florida Office of Audit and Compliance Review Annual Report. 2004-2005.
Physical Description: Serial
Language: English
Creator: University of Florida Office of Audit and Compliance Review
Affiliation: University of Florida -- College of Liberal Arts and Sciences
Publisher: University of Florida
Publication Date: 2005
 Subjects
Subject: University of Florida.   ( lcsh )
Spatial Coverage: North America -- United States of America -- Florida
 Record Information
Bibliographic ID: UF00072255
Volume ID: VID00003
Source Institution: University of Florida
Holding Location: George A. Smathers Libraries, University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida

Table of Contents
    Front Cover
        Front cover
    Table of Contents
        Page 1
    Introduction
        Page 2 (MULTIPLE)
    Organization chart
        Page 3
    Operations
        Page 3
    Budget and expense analysis
        Page 4
        Page 5
    Audits and other planned reviews
        Page 6
    Audit report summaries
        Page 7
        Page 8
        Page 9
    Management advisory services
        Page 10
    Special advisory reviews
        Page 11
    Investigations
        Page 12
    Follow-up
        Page 13
    Other activities
        Page 14
        Page 15
    Contacts and resources
        Page 16
Full Text






Fiaci Co pac A 3 *


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TiMessagegert Hall


CONTENTS
Introduction ........................................2
Operations ..................................... ......2
Goals & Audit Executivbjectives
taffng and, havingstather Resources

Organization Chart
Staff Training
Budget and Expense Analysis
Time Analysis and Time Allocation
Audits and Otpositionsher Planned Reviews ...ofudit ad Coplia........6

Trend Analysis
Client urveys) con s to b ositio
Audit Report ummariescant contributions ..............................7

Management Advisory
ervices ....-dsig busiss procsss of Un.............................rs10
apecial Advisory Reviews

Newsletter
Post-Audit Assistance
nvestigationstabilization .........fforts bind, l conduct ........................12

Summary of Significant Issues
Follow-Up ..................................... 13
Follow-Up Statistics
Other Activities ..........tio rovi roaciv consu.......................ltn14
Contacs and Resources ............at all s..................16



Annual Report 2004-2005
Annual Report 2004-2005











OPERATIONS


Goals and Objectives

A key operational objective for the period was
recruitment and training of new staff. We directed
additional emphasis and resources to the University's
direct support and affiliated organizations and
Sfollowed closely the trends and developments in the
Siapplication of Sarbanes-Oxley accountability measures
to not-for-profit organizations and universities in
particular.

As we started a new two year audit cycle, we initiated
comprehensive risk assessment procedures to generate
OACR STAFF back row: Elizabeth Tang, Joe Cannella, an audiplan significantly addressing University an
Lily Reinhart, Murat Telli, Marilyn Velez, Vito Hite, Nur its affiliates' operational, financial reporting and
Erenguc. Front row: JeffCapehart, Chris Bunn, Al Moon, compliance risks and control systems. The 2005-2007
Brecka Anderson, Laura Kurtz, Suzanne Newman, Craig work plan will provide broad coverage and emphasize
Reed, Carole Silverman Brian Mikell (not pictured: Kayla post Bridges implementation and business processes.
Spellman)
Staffing and Other Resources
INTRODUCTION
NT RO D C N During 2004-2005 OACR hired six full-time staff and
The Office of Audit and Compliance Review (OACR) two part-time graduate assistants. Five were hired as
The Office of Audit and Compliance Review (OACR)
replacements for position vacancies and one was an
provides a central point for the coordination of and eplaceents fo positiod o
responsibility for activities that promote added position. We successfully recruited two audit
accountability, integrity, and efficiency for the managers, two senior auditors and two staff auditors.
However, one audit manager was on parental leave for
a significant portion of the year. To accommodate
Sadditional staff, we opened a satellite office in Yon Hall
Fiscal year 2004-2005 was the first full year of the
PeopleSoft Enterprise Resource Planning System
(Bridges Project) implementation. As a result, the
Bridges Project was OACR's primary focus for 2004-
2005. We completed audits and provided
significant management advisory assistance by
assigning six staff to four areas for part of the year.
We expect to continue providing proactive
assistance as well as performing post
implementation audits to promote good business
procedures together with a reasonable level of
controls.

Another unique aspect of this period was extended
audit coverage focusing on the University of Florida
Foundation and University Athletic Association.
The 2004-2005 period also reflected a major change
in the operational environment of the OACR. We
hired and trained new staff, purchased an auditing
software package and revised audit procedures in
alignment with COSO framework. Yon Hall



2 Annual Report













Organization Chart




Suzanne Newman Nur Erenguc
rAdministratoive L R Nur Eenruc
Administratfive ChiefoAudit Executive
Coordina to e


Brian Mikell
Director, Audit &
Managment Carole Silverman
Advisory Services Senior Audit Mgr
I__nvestigations


Kayla Spellman J nnlla Chris Bunn
Audit Manager IT Audit Manager
Audit Maonalger Health Sciencei



Al Moon Craig Reed Jeff Capehart Marilyn Velez Vito Hite
Senior Auditor II Senior Auditor I Senior Auditor II Senior Auditor I Senior Auditor II



TBA Brecka Anderson Lily Reinhart Graduate
Staff Auditor Staff Auditor Staff Auditor Studts
Staff Auditor







To better align audit resources with the University
units expecting and supporting audit effort, we
implemented a funding methodology necessary to Table 1-Staff Training
meet this need and expectation. We expect to hire
two additional auditors in the coming year so, n, In. 4
when fully staffed at 14.5 auditor positions, the
OACR will favorably benchmark with its peer Institute of Internal Auditors 286 14
organizations and meet the internal audit needs of
Paisley Consulting 145 15
the University and its support organizations.
Price Waterhouse Coopers 36 12
Staff Training Association of College and 123 5
University Auditors
Continuing professional education is highly valued
and attendance at relevant conferences and Florida Institute of CPAs 16 2
seminars is promoted. Since cost-effective training Purvis Gray and Company 16 2
of new staff was a priority, we initiated two days of
IIA-sponsored training in Gainesville as well as a Association of Certified 14 1
half-day seminar on Sarbanes-Oxley legislation. Fraud Examiners
Audit staff from other organizations participated in Florida Audit Forum 6 1
this training. Table 1 reflects a listing of staff
participation in formal training programs in 2004- Canaudit, Inc. 40 1
2005.






2004-2005 3













Organization Chart




Suzanne Newman Nur Erenguc
rAdministratoive L R Nur Eenruc
Administratfive ChiefoAudit Executive
Coordina to e


Brian Mikell
Director, Audit &
Managment Carole Silverman
Advisory Services Senior Audit Mgr
I__nvestigations


Kayla Spellman J nnlla Chris Bunn
Audit Manager IT Audit Manager
Audit Maonalger Health Sciencei



Al Moon Craig Reed Jeff Capehart Marilyn Velez Vito Hite
Senior Auditor II Senior Auditor I Senior Auditor II Senior Auditor I Senior Auditor II



TBA Brecka Anderson Lily Reinhart Graduate
Staff Auditor Staff Auditor Staff Auditor Studts
Staff Auditor







To better align audit resources with the University
units expecting and supporting audit effort, we
implemented a funding methodology necessary to Table 1-Staff Training
meet this need and expectation. We expect to hire
two additional auditors in the coming year so, n, In. 4
when fully staffed at 14.5 auditor positions, the
OACR will favorably benchmark with its peer Institute of Internal Auditors 286 14
organizations and meet the internal audit needs of
Paisley Consulting 145 15
the University and its support organizations.
Price Waterhouse Coopers 36 12
Staff Training Association of College and 123 5
University Auditors
Continuing professional education is highly valued
and attendance at relevant conferences and Florida Institute of CPAs 16 2
seminars is promoted. Since cost-effective training Purvis Gray and Company 16 2
of new staff was a priority, we initiated two days of
IIA-sponsored training in Gainesville as well as a Association of Certified 14 1
half-day seminar on Sarbanes-Oxley legislation. Fraud Examiners
Audit staff from other organizations participated in Florida Audit Forum 6 1
this training. Table 1 reflects a listing of staff
participation in formal training programs in 2004- Canaudit, Inc. 40 1
2005.






2004-2005 3











Budget and Expenditure Analysisperating Expenses
Operating Expenses
The OACR expenditures by category are illustrated in
Table 2. Professional staff salaries remain our 8% 14%
predominant commitment representing 92% of total 10%
expenditures. The increase in total salary and OPS 12%
expenditures is attributable to additional positions
as the OACR moves towards appropriate staffing to
address the needs of a growing and more complex
structure of the University. Miscellaneous office
supplies and travel represented the largest 22% 34%
percentage of operating expense. After operating
Ji Office Supplies Telephone/Postage
expenses, training represented the largest ] Dues/Subscriptions E Maintenance
expenditure for the year. E Computer Supplies D Travel/Other




Table 2-Analysis of Expenditures

Salaries $750,647 $929,524
Other Personal Services (OPS) 8,506 24,204
Fixed Assets 11,800 12,502
Operating Expenses 18,935 20,673
Trainin 11,480 18,627





Time Analysis

Table 3 provides a comparison between time 28% less than planned due to unanticipated
available as planned and actual time available for position vacancies, family leave use and training.
projects. Actual project time available, including This had a signficant impact on project progress
240 hours worked in excess of normal hours, was and completion.




Table 3 Planned/Actual Hours


Time Available (8x2,040)+(6x1360) 24,480 24,480
Less: Adjustment for Position Vacancies (3,206) 3,206
Training/Leave Use/Operational Support (7,344) (9,210) 1,866
Total (12,416)
Excess hours worked 240 (240)



4 Annual Report


4 Annual Report













Time Allocation
Direct time percentages are established as a
Chart A represents the planned activity mix for time productivity goal for each professional position
available for projects and actual effort expended, and for the office as a whole. Direct time
and Chart B provides a comparison between prior excludes administration, service support, leave
year and current allocation of time available for and training.
projects. In comparison with budgeted, the actual
hours allocated to audits was lower due to the Chart C compares direct time achieved in the
cancellation of post implementation Bridges audits. last two fiscal years. Holidays and leave were
The systems were being stablized and advisory removed from total available time before
support was prioritized. In comparison with the calculating the direct time for FY 04-05. The
prior year, actual hours spent for training/leave and increase in new staff leading to increased
operational support is reflective of extensive operational support kept direct times lower for
recruitment and new staffing. FY 04-05.



Chart A-Allocation of Total Time Chart B-Allocation of Time Available
Available for Projects
Planned vs. Actual Prior vs. Current Year
Training/Leave %
Use/Operational Operational i
Support
Support 72%

Follow Up F
Follow Up


Investigations Investigations



MAS MAS

Audits
Audits
0% 10% 20%0 % % 40% 50% 60%

0% 10% 20% 30% 40% 50% U 2003-2004 U 2004-2005
U Planned U Actual



Chart C-Office Direct Time by Fiscal Years

100%

80% 7 76% o
60%

40%
20%

0%
Quarterl Quarter2 Quarter3 Quarter4 Total Office

FY 03-04 M FY 04-05 Goal 72%




2004-2005 5












AUDITS AND OTHER PLANNED TrendAnalysisofProjects
REVIE WS Planned/Completed

Trend Analysis 70

Table 4 reflects a three-year analysis of projects 60 57
planned and completed. The work plan includes
planned audits and advisory reviews. 50

Over the last three years, 57 projects were planned 40 [D 2004-2005
and 60 were completed. The upward trend in projects 2003-2004
planned and completed is attributable to the 30 2002
continued growth in OACR staff size.2002-2003

During 2004-2005, 47% of available time, or 7,722 20
hours, was spent on audits. Internal audits were
planned based on evaluation of risk and included 10
input from university management.

Planned Completed



Table 4-Trend Analysis of Projects Planned/Completed




2002-2003 16 16 14 3 17
2003-2004 21 20 15 7 22
2004-2005 27 21 17 4 21

1 Table 6 lists reports issued this period.

Client Surveys
(5 Responses)

Audit
Client Surveys Performance

Client surveys completed at the conclusion of each
engagement reflect that OACR services are well
received. One-hundred percent of survey responses u epor
indicated ratings of either good or excellent in all 9
categories, an improvement over last year's 95%.
The most notable improvement was in the 'Audit
Report' category. Aut


0% 20% 40% 60% 80% 100%
Excellent Good D Fair D Poor



6 Annual Report











AUDIT REPORT SUMMARIES implementation of the applications would ensure
the integrity and reliability of system data.
Controls over the processes were generally
The summary of audits issued profiles major adequate to ensure appropriate segregation of
engagements completed during the fiscal year. The duties, authorization of transactions and data
subjeds of the reports illustrate the commitment to integrity. Audit concerns included design of bank
proactive and diverse coverage. We conducted reconciliation functionality and procedures and
Bridges audits of customer relations design and development of policies to ensure appropriate
contract management. We performed an segregation of duties when assigning and
information technology audit of individual remote distributing user security roles.
access to the University of Florida network. An
audit of the Purchasing Card Program was Intercollegiate Athletics Continuing
conducted as well as an audit of the Upward Bound Academic Eligibility
Program. The internal controls over material and
supply fees charged to students were evaluated. The primary objective of this audit was to evaluate
Finally, in our expanded coverage of Direct Support the effectiveness of policies and procedures in place
Organizations (DSO), we performed audits of the to ensure student-athlete continuing academic
University of Florida Foundation, University eligibility, for the 2003-2004 academic year based
Athletic Association and Florida Foundation Seed on National Collegiate Athletic Association (NCAA)
Producers, an Institute of Food & Agricultural and Southeastern Conference (SEC) requirements.
Sciences DSO. The University Athletic Association, Inc. (UAA) is
responsible for the intercollegiate athletics
Privately Funded Restricted Programs programs at the University of Florida. Key controls
over the function of certifying that student-athletes
This audit, requested by the University of Florida mee continuing academic eligibility guidelines
Foundation, Inc. (Foundation), complemented the were adequate and ensured compliance with these
financial audit performed by the Foundation's guidelines for the 2003-2004 academic period. The
external auditors, KPMG, for fiscal year 2002-2003. University established an appropriate
The primary objective was to determine whether organizational structure and procedures for
the use of endowed funds established by the continuing academic eligibility.
University units was in accordance with donor
restrictions and intent. The audit covered nine Upward Bound Program
endowed funds established within the Foundation
and administered by a spedfic university The University of Florida Upward Bound Program,
department, school college or Student Financial established in 1971, is a US Department of
Affairs. During 2002-2003 total Foundation Education funded program that promotes projects
disbursements to the University from the selected designed to facilitate the development of academic
funds was $3,434,034. All funds under review were skills and motivation necessary for completing high
deposited intact to University of Florida accounts. school and entering the post-secondary institution
Generally, their use by University units was in of the partidpant's choice. For the 2003-2004 fiscal
compliance with donor intent and restrictions.
Controls to assure such compliance were generally
satisfactory.

Customer Relations Design
Implementation Bridges Project

The UF Bridges group was charged with the
implementation of modules purchased from
PeopleSoft including the Customer Relations Design
Implementation (CR) applications. CR includes
cash receipting, accounts receivable and banking
applications. The primary objective of this audit
was to evaluate whether the design and Computer Science Engineering


2004-2005 7











period, the Program received Federal Funding of
$343,269 and served approximately 60 to 80
participants. The primary objective of this audit
was to evaluate the adequacy of support and
documentation for program activities; compliance
with program participation criteria and fund use;
and compliance with established University
procedures. The Program was generally
administered in compliance with Federal program
guidelines; however we identified significant
opportunities for the improvement of controls in
the management of Program funds.

UF Bridges Contract Management

Significant contracts were made to purchase CNS Data Center Bryant Hall
software and consulting expertise as part of the
Bridges implementation effort. Payments to University of Florida Network Remote
contract vendors during fiscal year 2003 and 2004 Access
were 62% of the $24.5 million capitalized
disbursements. The primary objective of this audit The objective of this audit was to determine the
was to assess the internal controls in place for adequacy of internal controls over individual
contract management. Although contracts were remote access to the University of Florida network.
negotiated, authorized and reviewed appropriately, Accessing the University of Florida network
monitoring contract compliance and remotely allows authorized students, faculty and
disbursements could be improved through the staff the ability to perform computer activities from
development of procedures ensuring documented off campus. Individual remote access to the
authorization and receipt of goods and services. University network is used by more than 5,000
students, faculty and staff. Remote access to the
University Purchasing Card Program University network can be performed using virtual
The University's Purchasing Card (PCard) private network (VPN) or dial-in access. Remote



cardholders. access is managed by Network servies, aa
Program, initiated in April 2004, is administered by access is managed by Network Services, a
the Assistant Director of Purchasing. The PCard department within the Office of Information
s k is W hova ad eate the adeqacy Technology (OIT) and Computing and Network


issucancellation, or revocation, bank is Wahoviareconciliation and the redit cardi.
ivung Services (CNS). Internal controls were found to be
vendor paid for purchase transactions is IPrBNA. AsInc.






and budgetary controls, and procurement
of December 2004, the University had 4,173 active eeie iounti and S poicies and rceres



~~~Thewere adequate, however controlfor improvement we(Producers), located north of Marianna, Florida is a
cardholders. The primary objective of this audit ner
was to evaluate the adequacy of the Program's appcable o logical security and change
internal controls. We reviewed card issuance, use,nate pde t F da amere alredy derw for
cancellation, or revocation, bank reconciliation and ee a nu rou
processing for payments, purchase authorization Florida Foundation Seed Producers, Inc.
and budgetary controls, and procurement
economies. Key controls over the PCard Program Florida Foundation Seed Producers, Inc.
were adequate, however control improvement (Producers), located north of Marianna, Florida is a
opportunities included more specific guidance Direct Support Organization of the University of
related to PCard purchases, notification of the Florida. Producers was incorporated in 1943 to
PCard team when cardholders terminate provide to Florida farmers and producers of crop
employment, card cancellation and re-training for seed and nursery stock, the foundation seed stock of
units not following program guidelines, elimination the best known varieties adaptable to Florida
of certain merchant category codes, and vouchers climate and soils in cooperation with the
that fail budget checking. University of Florida's Institute of Food and
Agricultural Sciences. Producers had over 400
contracts for the production, harvesting, bagging,


8 Annual Report











buying, selling, and storing of seed and nursery
stock during fiscal 2004. Producers' gross royalty
income for 2004 was $1,298,339 and income from
sales of seed was $1,023,413. The primary objective
of this audit was to evaluate the control procedures
in place to account for those revenues. Key controls
over the business transactions were adequate,
except that reports available for managerial
monitoring of royalty receivables and verification
of accuracy of amounts received needed
improvement.

Material & Supply Lab Fees
he p ar objeive of this aud s to Ben Hill Griffin Stadium at Florida Field
The primary objective of this audit was to
determine if Material and Supply (M&S) fees are
established, disbursed and managed in compliance regulations, there were significant opportunities
established, din thsed ean maged int c nenwhere controls and procedures could be improved.
with University policies. M&S Fees offset the cost of where controls and procedures could be improved.
materials or supplies consumed in the course of the Gator Boosters, Inc. Internal Controls
student's instruction. Registration is managed by
the University Registrar and fees are assessed by The primary objective of this audit was to evaluate
University Financial Services. Academic Gator Boosters' fund-raising policies and
departments are responsible for fee disbursements procedures; to identify revenue sources and control
and maintaining records, for each course, of the fee procedures for their accounting and safeguarding,
collections and disbursements. As of Spring 2005, and to evaluate controls for procurement and
nearly 1,200 course fees were established and the disbursements. Gator Boosters is a Direct Support
cash balances available for these courses totaled Organization of the University of Florida. Its
nearly $1 million. There was opportunity for mission is to strengthen the University's athletics
improvement in the establishment, disbursement program by encouraging private giving and
and management of M&S fees to ensure that volunteer leadership. Fundraising policies and
complete, accurate and consistent fee data is procedures were in support of Gator Boosters
available for use in the establishment, assessment, mission and goals. Revenues were properly
collection and allocation of M&S fees. accounted and disbursements were in compliance
with applicable rules and regulations, although we
University of Florida Athletic Association
niverity of Fia Athetic A noted significant opportunities where controls and
Ticket Ofe procedures could be improved.
The primary objective of this audit was to assess
the adequacy of internal controls over revenues myUFL Systems Information Technology
from ticket sales and for compliance with Controls




events including managig ticket prionties for s a t E
boosters, alumni, faculty and staff, students and the tenal contos were f ound to be generlly
general public. In fiscal year 2003-2004,
general In fisl 20effective in the s reas of network security, datbase
approximately 86% of total revenues carne from the ectie i te of netork serity, aaa
sale of season and single game tickets for football, security compuer operaons, and sial
12% from men's basketball and 2% from other environmental security. Opportunities for
Srts lo etict r improvement were noted in the areas of platform
sports. Although revenues and ticket stocks were and application security, system development and
botrand application secumty, systefu developafent and
materially accounted for and operations were change management, and contingency planning.
generay in co c wh a e change management, and contingency planning.
generally in compliance with applicable



2004-2005 9











myUFL System Enterprise Reporting were deposited intact to University accounts.
Generally, fund use by University units was in
The primary objective of this audit was to compliance with donor intent and restrictions
determine the adequacy of information technology including that of Eminent Scholar and
and data integrity controls over the Enterprise Professorship. The current accounting for
Reporting system. Employing Cognos Business restricted funds created an integrated information
Intelligence tools, Enterprise Reporting is the base providing greater opportunity for donor
system used to obtain information from the intent communication and use monitoring.
University's financial and human resources
information systems as well as student and other MANAGEMENT ADVISORY
management information. The reporting system
contains both delivered reports and dynamically SERVICES
generated reports. As of August 2005, 4,920 users
have access to the Enterprise Reporting system. OACR is committed to providing proactive,
Internal controls were generally effective in the preventive advice on internal controls, operations
area of computer operations; however and compliance. Requests for management
opportunities for improvement were identified advisory services (MAS) usually come from various
applicable to data integrity, system availability, management levels throughout the university. The
effectiveness of reports and change management. information provided through these services
Foundation Diburements Proce ed assists management in decision making and in
Foundation Disbursements Processed
through the University improving operations. Results of these types of
through the University
services are usually communicated through
The University of Florida Foundation, Inc. management letters.
(Foundation) is a direct-support organization of the O R p a r
OACR provides advisory reviews, consulting
University. Its mission is to promote, receive and a ri t
assistance, training and training tools, and post-
administer private support for the University. assistan, ainn an ing tools, and pos -
Beginning July 1, 2004, a disbursemens of audit assistance. The following chart illustrates the
Beginning July 1, 2004, all disbursements of tm
MAS performed and the percentage of time
Foundation funds for the benefit of the University erord ad
associated.
were made by transfer to and processed through
the University's accounting system. Through
January 31, 2005, Foundation transfers to the Effort Distribution
University totaled $41,804,647. The objectives of 7% 8%
this audit were to evaluate the effectiveness and 7% 8%
efficiency of this process and the adequacy of
controls to ensure compliance with University and
Foundation requirements. We noted opportunities
for improvement in the controls and processes, and
identified tools and practices that, when
implemented by Foundation and University
personnel, should improve the effectiveness of 70%
funds transfers and disbursement monitoring. E ERP-Business Reengineering

Donor Intent Compliance E Governance/Publications
El DSO and Committee Service
The primary objective of this audit was to D Consultations and Advisory Reviews
determine whether restricted funds established D Other
within the University of Florida Foundation, Inc.
(Foundation) and administered by University units
were used in accordance with donor restrictions During fiscal year 2004-2005, 3,166 hours were
and intent. The respective University school, spent on MAS. This represented 19% of available
college or department oversees the administration hours. The majority of MAS effort was expended on
and proper use of these funds. Foundation funds advisory reviews and consultations. Following are
were appropriately established and disbursements summaries of major MAS projects.


10 Annual Report











Role Security Management on August 14, 2004. Certain functions required for
operation of the Exhibit are provided by a
The objective was to evaluate PeopleSoft role Contractor and certain other functions by Museum
security management. This review involved the staff.
heavy use of queries to identify conflicting roles in
the financials and human resources modules. As of February 28, 2005, there were significant
Conflicting roles were identified and differences in the financial information and
communicated to appropriate departments. operational results generated by the Contractor and
Departments, along with the Bridges Security by the Museum management. The differences were
Team, initiated actions to clean-up conflicting identified and communicated to all parties.
assigned roles. Recommendations were made to further improve
accountability and allow for better information
Payroll Issues generation and communication with regards to

The major objective of this project was to work operational results.
with the Payroll Office to investigate and Gainesville HSC Billing Compliance
determine the causes and impact of over-payments
to employees in PeopleSoft HRMS Payroll. For the The UF College of Medicine has established an
time period July 1 through December 22, 2004, internal billing compliance office in Gainesville and
University Payroll collected 1,011 wage refunds engaged external auditors to perform an annual
totaling $1,496,725. While causes of overpayments review of their compliance adivities. As part of our
varied, OACR assisted Payroll in identifying review of this compliance program we met with the
potential methods for detecting and preventing external review team, reviewed the report, and
wage overpayments in the future. discussed their findings and conclusions with the
Associate Director of Billing Compliance. The
Treasury Management Issues external auditor did not have any recommendations

The primary objective of this project was to of significance.
develop a process to reconcile bank account Jacksonville HSC Billing Compliance
information with University accounting records -
all the way to the General Ledger (GL). The The primary objective was to evaluate the adequacy
University has seven bank accounts. Due to errors and effectiveness of the Jacksonville Health Science
and timing differences, subsystems were not in Center billing compliance program and identify
agreement with the GL. OACR assisted University opportunities to strengthen existing practices. We
Treasury Management in developing a process to obtained an understanding of the organizational
perform these reconciliations. structure, mission, and responsibilities of the
compliance program as well as relevant policies.
Contracts and Grants Issues The engagement consisted of a review of operational
procedures, on-site examination, analysis of reports
The primary objective of this project was to work procedures, on-sie examinaion, analysis of repor
with University Contracts and Grants (C&G) to and meeting correspondence, interviews with key
assist with the implementation of the PeopleSoft personnel and identification of established internal
and external rules and regulations. We did not
billing function. The primary problems related to and exernal rules and regulaions. We did no
identify any significant issues or opportunities
billing issues were conversion of historical data, idenify any significan issues or opporuniies
and the inability to create accurate bills for active impacing the effeciveness of this program.
contracts. OACR assisted C&G in identifying and
correcting problems on a grant-by-grant basis.

Florida Museum of Natural History
Butterfly Exhibit

The primary objective of this project was to
identify and evaluate the operating results and
reported variances of the Butterfly Rainforest
Exhibit (Exhibit). The Exhibit opened to the public


2004-2005 11











UF Privacy Office HIPAA Compliance During the year, in connection with prior period
investigative reviews, $120,500 was restituted. An
The primary objective was to evaluate the additional amount in excess of $150,000 is expected
adequacy and effectiveness of the UF Privacy to be restituted.
Offices in Gainesville and Jacksonville, and identify
opportunities to strengthen existing practices. The Significant issues from these reviews are
UF Privacy Office directs programs to respond to summarized below.
the Medical Privacy Rule of the Health Insurance
and Portability Act of 1996 (HIPAA). These Embezzlement
programs include training, monitoring and
programs incude raining, mniring and OACR was alerted to the misappropriation of
response to privacy complaints and concerns. We $280 Co g Medical Ecarion fn
$28,000 Continuing Medical Education funds
obtained an understanding of the organizational h h eronal endsemen and d Th
through personal endorsement and deposit. The
structure, mission, and responsibilities of the n, g o
extent of the misappropriation, which occurred
Privacy Office as well as relevant policies. The ex ohe misappropria which occu
from February 2003 through June 2004, was
engagement consisted of a review of operational 2
t consised of a reie of operaional identified as $123,500. The Associate Dean resigned
procedures, on-site examination, analysis of reports
prcdue *effective January 20, 2005. After a criminal
and meeting correspondence, interviews with keyy n
personnel and identification of established internal investigation by he Federal Bureau of
and exernal rules and regulaions. We did no Investigation, the Associate Dean pled guilty to a
and external rules and regulations. We did not
identify any significant issues or opportunities single count of wire fraud and is currently awaiting
identify any significant issues or opportunities & Hdvienio$ ,0
sentencing. He provided restitution of $120,500 to
impacting the effectiveness of this program.
i i Continuing Medical Education. Recommendations
Newsletter related to improved check log maintenance,
Continuing Medical Education program approvals
Quarterly newsletters were distributed campus- and contract monitoring were made.
wide with regular features that include highlights
from projects and campus-wide issues. Copies are Resource Misuse
available at htt://lloacr.ufl.edu.
Concerns were expressed to OACR of more than
Post-Audit Assistance $23,000 in long distance telephone calls made by
a teaching assistant in the College of Liberal Arts
OACR routinely provides support and guidance on and Sciences. Duties as a teaching assistant did
the implementation of planned actions. not necessitate making long distance phone calls.
Total long distance charges were identified as
$23,821.75. Criminal charges were filed and
INVESTIGATIONS legal proceedings are continuing.
Recommendations were made to limit telephone
The OACR receives complaints and allegations of lines with long distance service access and to
fiscal improprieties from a variety of internal and review monthly the telecommunication invoices
external sources, including hotline calls, direct and transaction detail.
correspondence, and referrals from other
correspondence, and referrals from oer Two cash deposits totaling $1,545 from Surplus
university offices and state agencies. The P y O e A n s
Property Online Auction sales, University
investigative reviews conducted by OACR have Properes,
Property Services, had not been received by
dual objectives of responding to facts of allegations U er Services and were
University Financial Services and were
and addressing relevant fiscal and administrative cd s Uy P e
c o ws W r considered stolen. University Police Department
control weaknesses. Where appropriate,
control weaknesses. Where appropriate, investigated and concluded that no charges
recommendations for improvements of internal i and cnud h n charges
recommendations for improvements of internal could be filed and considered the case closed due
controls are communicated to management and are l r o p i iii
to lack of controls to provide individual
monitored for implementation. accountability. An internal control review

In total, 951 hours, or 6% of available hours were identified deficiencies in the cash collection
committed to investigative efforts. policy, transfer of cash receipts and timeliness of
management review. These issues have been
appropriately addressed.


12 Annual Report













FOLLOW-UP

Audit reports include auditor's comments and Quarterly follow-up procedures were conducted
planned actions developed and agreed to by the throughout the year and their results were
audit team and management and the estimated communicated to University management and the
time for their implementation. Reports issued Board of Trustees Audit Committee. For the report
by the external auditors, including the Office of period, the OACR staff expended 613 hours or 4% of
Auditor General, contain recommendations for available hours for follow-up reviews.
which university management also provides a
corrective implementation plan. Table 5 summarizes the results of our follow-up
activities as of June 30, 2005.
Standard 2500, Standardsfor the Professional Practice
ofInternal Auditing, promulgated by the Institute of The reduced implementation percentage was
Internal Auditors, requires that the internal reflective of Bridges implementation stabilization
auditor determine that management has taken efforts which at times took priority over audit
appropriate action regarding reported audit implementation plans.
comments.

Table 5 Follow-Up Activities




1 Academic Affairs 26 18 8 0 69% 67%
2 Finance & Administration 17 14 3 0 82% 71%
3 Health Affairs 22 15 7 0 68% 60%
4 UAA 16 8 8 0 50% N/A
5-UFF 7 6 1 0 86% 100%
6-Bridges 2 1 1 0 50% N/A
7-IFAS 1 0 0 1 0% 81%




The planned action "not to be implemented" generally reflects changing conditions that renderthe plan obsolete.



Planned Action Implementation Percentage

30

1 Academic Affairs 25
2 Finance & Administration
3 Health Affairs 20
4 Athletic Association
5 UF Foundation 15
6 Bridges
7 Institute of Food & 10
Agricultural Sciences 5
50% o0
0
1 2 3 4 5 6 7





2004-2005 13













OTHER ACTIVITIES

Professional Activities University Service

OACR staff participated in various national During 2004-2005, OACR members participated in
initiatives, training and organizations including: various university-wide initiatives and
assignments including:

Board Member Association of College and Member Auxiliary Review Committee
University Auditors (ACUA)
Instructor Department Security Administrator
Member Institute of Internal Auditors (IIA) Training

Member Association of Healthcare Internal Member University Information Technology
Auditors (AHIA) Advisory Committee Information Security
Management (ITAC-ISM)
Member American Institute of Certified Public
Accountants (AICPA) Member University Hurricane/Disaster
Committee
Member Florida Institute of Certified Public
Accountants (FICPA) Presenter Performance Auditing -School of
Accounting graduate accounting course
Member Association of Certified Fraud
Examiners (ACFE) Participant Search Committee, Senior
Associate Controller
Member IIA North Central Florida Chapter
Participant Search Committee, Vice President
Program Committee IIA North Central Florida for Human Resources
Chapter

Board Member IIA North Central Florida
Chapter

Webmaster IIA North Central Florida Chapter

Volunteer Instructor IIA

Session Facilitator Large campus audit
directors roundtable, Association of College and
University Auditors

Member State University Auditors
Consortium (SUAC)

Participant Florida Audit Forum

President-Elect IIA Leadership Conference











14 Annual Report













Table 6-Reports Issued 2004-05



Privately Funded Restricted
7/1/02 6/30/03 10/22/04 UF-04-398-02 Intemal Audit
Programs
Customer Relations Bridges As of 6/18/04 11/15/04 UF-04-410-14 Internal Audit
UAA Continuing Academic As of 9/1/04 12/15/04 UF-04-411-15 Intemal Audit
Eligibility
Payroll 12/1/04-1/31/05 1/31/05 71.200503 MAS

Role Security Management 11/1/04 1/31/05 1/31/05 71.200506 MAS

Upward Bound Program 7/1/03 6/30/04 2/16/05 UF-05-422-01 Intemal Audit

Contracts & Grants 12/1/04 3/15/05 2/23/05 71.200504 MAS

Treasury Management 11/22/04 2/28/05 2/23/05 71.200505 MAS

Contract Management Bridges As of 8/31/04 3/4/05 UF-04-413-17 Intemal Audit
Florida Museum of Natural 3/29/05 4/18/05 5/9/05 72.200502 MAS
History Butterfly Exhibit
Purchasing Card 7/1/04 12/31/04 5/27/05 UF-05-442-21 Intemal Audit

Remote Access As of 5/13/05 6/8/05 UF-05-425-04 Intemal Audit

Foundation Seed Producers, Inc. As of 12/31/04 6/8/05 UF-05-445-24 Intemal Audit

Material & Supply Lab Fees As of Spring 2005 6/9/05 UF-05-445-25 Intemal Audit

UAA Ticket Office As of 12/31/04 6/29/05 UF-05-437-16 Intemal Audit

Gator Boosters Intemal Controls As of 12/31/04 6/30/05 UF-05-426-05 Intemal Audit

*President's Travel & Expense 7/1/04 5/6/05 8/9/05 72.200504 MAS
*myUFL Eiterprise Reporting As of 5/31/05 8/24/05 UF-05-423-02 Internal Audit

*myUFL IT Controls As of 5/31/05 8/24/05 UF-05-438-17 Intemal Audit

*UFF Doior Compliance 7/1/03 12/31/04 9/05 UF-05-436-15 Internal Audit

*UFF Other Expenses As of 2/28/05 9/05 UF-05-447-26 Intemal Audit
*Healfi Ceter Billing& 71.200501 AS
Compliaice
*HIPAA Compliance 9/05 71.200502 MAS
*Substantially completed as of June 30, 2005







2004-2005 15











CONTACTS & RESOURCES Equal Opportunity Programs Office
http://www.aa.ufl.edu/aa/affact/
The Office of Audit & Compliance Review works (352) 392-6004
collaboratively and cooperatively with many other
offices. Below is a partial listing of the contacts and Ombudsman
resources used frequently. http://www.ombudsman.ufl.edu/
resources used frequently. -
(352) 392-1308
State Auditor General
http://www.state.fl.us/audgen/ Unversity Genera Counsel
Gainesville Office: (352) 334-1740 http://www.generalcounsel.ufl.edu/
Campus Office: (352) 392-5255 (352) 392-1358

Department of Financial Services University Police Department
Consumer Helpline: 1-800-342-2762 http://www.police.ufl.edu/
Get Lean Hotline: 1-800-GET LEAN (352) 392-1111

University Controller's Office Shands Auditing
http://fa.ufl.edu/ (352) 265-7969
(352) 392-1321 University Vice President for Human Resources

Florida Department of Education http://www.hr.ufl.edu/
http://www.fldcu.org/ (352) 392-1075

UF Board of Trustees University Vice-President for Finance &
Administration
http://www.trustees.ufl.edu/ Administration
http://www.admin.ufl.edu/
Health Science Center Compliance (352) 392-1336
http://www.med.ufl.edu/complian/
(352) 265-8359

Division of Sponsored Research
http://rgp.ufl.edu/research/
(352) 392-1582

Institutional Review Board
http://irb.ufl.edu/

UF Contracts & Grants
http://fa.ufl.edu/cg/
(352) 392-1235

IFAS Sponsored Programs
http://grants.ifas.ufl.edu
(352) 392-2356

Engineering Contract & Grants
http://www.eng.ufl.edu/home/cng/
(352) 392-6626

University Athletic Association
http://www.uaa.ufl.edu/
(352) 375-4683






16 Annual Report




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