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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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Title: University of Florida Office of Audit and Compliance Review Annual Report
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Creator: University of Florida Office of Audit and Compliance Review
Publication Date: 2009
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Volume ID: VID00007
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Holding Location: University of Florida
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I
L


I


Annual Report


2008-2009






F | UNIVERSITY of
UF FLORIDA




^ *I Ir L ^*^9 lo


COTET


Operations


Audits and Other
Planned Reviews


Audit Report Summaries

ManagementAdvisoy
Services
Investigations

F., ,-. P


OtherActivities

Reports Issued


7


Message from the Chief

Brian Mikell, CPA

As an alumnus of the University of Florida, I
considered myself a very fortunate Gator when I
assumed the duties of the Chief Audit Executive
on February 1.


While the university's recent budgetary difficul-
12 ties have resulted in staff reductions below nor-
mal levels for the Office of Audit and Compli-
14 ance Review (OACR), our current staff is very
professional and capable of fulfilling our mission
to provide internal audit services with the goal
15 of improving the university's operations. I be-
lieve that OACR's services are well respected in
the university community and my main goals are
16
to retain and further develop our current staff,
and recover staff reductions as soon as possible,
17 to maintain and ultimately increase our service
level to the university.


Audit Executive


This 2008-2009 Annual Report provides a sum-
mary of our activities for the year and presents
data useful for benchmarking the effectiveness
of our operation.


Introduction


The mission of the Office of Audit and Compli-
ance Review (OACR) is to provide independent,
objective assurance and consulting services, us-
ing a risk-based approach, to add value and im-
prove operations of the University of Florida
and its affiliated organizations. OACR serves as
a central point for the coordination of and over-
sight for activities that promote accountability,
integrity, and efficiency for the University of
Florida.
In 2008-2009, as we were settling into our new
off-campus office space, we learned that our


Chief Audit Executive was retiring. Due to the
professionalism of the OACR staff, we did not
miss a beat and continued to provide effective
service to the university community during this
time of transition, including internal audit sup-
port for the major direct support organizations,
the UF Foundation and the University Athletic
Association. As we move into 2009-2010,
OACR's expectations are to continue providing
proactive assistance in strengthening internal
controls in the university's decentralized envi-
ronment as well as conducting audits to promote
good business practices.


We are lloae off-,



capu ] in LL' the Huma


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Bui.[ldin, 03Wetni







Annual Report 2008-2009


Operations

Goals and Objectives


A key operations objective for the period was
the completion of the second year of the 2007-
2010 audit work plan. Our work plan included
university audits as well as audits of the univer-
sity's direct support and affiliated organizations.
We continued various ongoing initiatives started
during prior periods, including management of


the compliance hotline. We co-facilitated, along
with the University Controller's Office, Internal
Controls at UF, part of the certification in fiscal
management for employees, for 154 participants.
We were responsive to requests and addressed
needs of campus through advisory and consult-
ing engagements as well as investigative reviews.


C' I S.... ....., F Frank,
Suzanne Newman, Vito Hite, Joe Can
nella, JeffCapehart, Choi Choi, Brian
Mikell, Marilyn Ve/ez, Shirley Lampotang,
Craig Reed, Lily Reinhart


Organization


The Chief Audit Executive (CAE) is appointed
by the university president. The CAE reports
administratively to the senior vice president for
administration and business ventures and func-
tionally to the Board of Trustees through its
audit committee. This reporting relationship


promotes independence and assures adequate
consideration of audit findings and planned ac-
tions. OACR staff reports to the CAE as shown
in the following organization chart as of June
30, 2009.


We |rnstine to ien:a new

promoted tw managoeors
2009 !, n r
posit ion v acant


Chief
Support Audit
Staff Ex
Executive


Audit Audit Senior
Directors Managers Auditors


aBli

Jeff
Peih^^a


Staff
Auditors


7--


Page 2


Audit & Compliance Review


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Mariy Vaan
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Annual Report 2008-2009


Staffing and Other Resources


During 2008-2009, OACR experienced the re-
tirement of its longtime Chief Audit Executive
after more than 18 years in the position. The
former audit director was appointed as the new
Chief Audit Executive. The internal organiza-
tion chart was adjusted when two audit manag-
ers were promoted to the positions of Director
of Audits and Director of Investigations and
Management Advisory Services. We also hired
one senior auditor to fill a vacant position and
have recruited two graduate student interns. In
response to continuing budget reductions, we
have left two staff auditor positions and an audit
manager position vacant. If there are no addi-
tional budget cuts in the upcoming year, we ex-
pect to fill one of the vacant staff auditor posi-
tions.


Staff Training

The Institute of Internal Auditors' (IIA) Interna-
tional Professional Practice Framework, Section
1230, states that "Internal auditors must enhance
their knowledge, skills, and other competencies
through continuing professional development."


We settled into our new off-campus home in the
Human Resource Services building, 903 West
University Avenue. To ensure the OACR staff
is equipped with the appropriate tools to effi-
ciently perform their required duties, we adopted
a rotational equipment replacement policy and
made a commitment to ensure that all necessary
software is current and up-to-date.
To better align audit resources with the univer-
sity units expecting and supporting audit effort,
we continued a funding methodology necessary
to meet this need and expectation. Our funding
method will change for 2010-2011 with the im-
plementation of the Responsibility Center Man-
agement budget model.


OACR I /grad
student Sarah Mann (Accounting), Front
S* t Max Pankow (Finance)
and IT r /grad student Kevin
Li informationn Systems and Operations
Management)


OACR places a high value on continuing profes-
sional education and attendance to relevant con-
ferences and seminars is promoted. The table
provides a list of staff participation in training
opportunities in 2008-2009.


IIA-North Central Florida Chapter 273 10

Association of Colleges and University Auditors 70 5


The Institute of Internal Auditors 52 3

City of Tallahassee 40 2


Association of Certified Fraud Examiners 20 1

Association of Healthcare Internal Auditors 18 1

Purvis Gray & Company 12 2

University of Florida 11 3

Miscellaneous 8 4

Florida Institute of Certified Public Accountants 6 2


Local lA Chapter Training


education is higly.
vaue I *, -
*at r a
an seminars is
promoted.-


Audit & Compliance Review


Page 3







Annual Report 2008-2009


Expenditure Analsis


The OACR expenditures by category are illus-
trated in the following table. Our primary budg-
etary commitment remains professional staff
salaries. Expenditures, in total and in most cate-
gories, decreased from the prior year partially as
a result of budget reductions. The most signifi-


cant decrease was in the consultant line and was
due to the fact that no audit services were pur-
chased from outside sources. Nearly 60% of
OACR operating expenses resulted from tele-
phone/postage, office supplies and personnel-
related expenses.


Operating Expenses


SOffice Supplies
I Personnel Expenses
*Telephone/Postage
* Dues/Subscriptions
* Maintenance
* Computer Supplies

* Travel


Anal sis of Expenditures

Salaries $1,174,551 $1,137,914
Other Personal Services 22,145 16,068
Fixed Assets 2,652 --
Operating Expenses 30,663 16,952
Training 16,985 10,469
Consultants 93,800 --
Compliance Hotline 9,500 13,650
-t -,5,9,195,03I


Time Anaysis


The table provides a comparison between time
available as planned and actual time available for
projects. Actual hours lost due to position va-
cancies exceeded the planned amount, having a
negative impact on project progress and comple-


tion. The impact was mitigated by the 547 hours
of overtime along with the slightly less than
planned usage of time for training, leave and
administration, resulting in available hours for
the period being only 3.8% less than planned.


Planned/Actual Hours


Time Available (11 x 2040) 22,440 22,440


Less: Adjustment tor Position vacancies
Training/ Leave Use/ Operational Support
Total
Excess hours worked


Tim 0l fo r Projects 14,956 14,390 (566


(1,000)
(6,484)


(2,bJb)
(5,962)


(7,484)


(1,b3b)
522
(1,113)
547


(8,597)
547


r O. AC li I R's p im r


Page 4


Audit & Compliance Review







Annual Report 2008-2009


Time Allocation Time Planned vs. Actual

Chart A-Allocation of Total Time


Planned vs. Actual


Training/Leave Use/Op Supp

4%
Follow Up 5%

Investigations 7%00

MAS 10%


Audits


20%


33%


S50%
44%

60%


40%


Chart A compares the allo-
cation of total planned
available time, by indirect
and direct categories, with
actual effort expended.
While actual time by cate-
gory did not vary signifi-
cantly from the plan, indi-
rect hours were less than
planned with investigations
and audits primarily bene-
fitting from these hours.


EActual UPlanned





Time Comparison Prior vs. Current Year


Chart B-Allocation of Time Available
Prior Projects vs. Current Year


Operational
Support


Follow 5%
Follow Up 4%


Investigations


MAS


Audits


1


L0%
13%





13%


10%
I 13%


62%
61%


0% 20%


40%


60%


80%


02008-2009 12007-2008


Chart B compares the
actual time used during
the prior year with the
current year allocation for
direct project categories
and operational support.
The allocation of time
spent on follow up re-
mained constant while
there was a small increase
in the time used for audit
projects. Continuing a
trend noted in the previ-
ous year, there was a shift
in time from Management
Advisory Services (MAS)
and operational support
to investigations, resulting
largely from a continued
increase in hotline and
other complaints.


The Swamp-"Where
only Gators get out
Alive"


Lake Wauburg


Audit & Compliance Review


Page 5


O-t' actual t i
iex by
caegr di o
var siniianl
fro thwr


I








Annual Report 2008-2009


Office Direct Time


Direct time percentages are established as a pro-
ductivity goal for each professional position and
for the office as a whole. Direct time excludes
administration, service support, leave and train-
ing. Chart C compares direct time percentages,
by quarter and in total, for the last two fiscal
years. Due in large part to a decrease in time


charged to administration, leave and training, we
achieved our direct time percentage goal of 72%
for the year. Continued emphasis on projects
contributed to the higher direct time, while
lower staff turnover called for less resources
devoted to training.


Chart C Office Direct Time by Fiscal Years


73% 76%


71%


Quarter


776%
71%


Quarter Quarter3 Quarter4
S2007-2008 12008-2009 Goal 72%


Audits and Other Planned Reviews



Trend Analysis


Trend Analysis of Projects
Planned/Completed




64




0 2008-2009
0 2007-2008
1 2006-2007


The trend analysis table reflects a three-year
analysis of projects planned and completed. The
work plan includes planned audits and advisory
reviews.

Over the last three years, 75 projects were
planned and 64 have been completed. Internal
audits and Management Advisory Services
(MAS) were planned based on evaluation of risk
which included input from the university man-
agement.


Many of the planned projects not completed are
in progress and are considered with the next
year's work plan. Planned MAS engagements do
not always result in a project report that would
be included in as an issued report. During 2008-
2009, 62% (10,619 hours) of available time was
spent on audits and 10% (1,743 hours) of avail-
able time was spent on MAS.


Planned Completed


ZUUb-ZUU/ 31 2J 12 / 1y

2007-2008 28 26 16 9 25

2008-2009 30 26 14 6 20


100% -
90%-
80%
70%-
60%
50% -
40%-
30%
20% -
10%
0% -


69% 72%


Total Year


Page 6


Audit & Compliance Review







Annual Report 2008-2009


Client Surveys

In an effort to ensure continued
high quality of OACR services,
input from clients is requested
at the conclusion of each en-
gagement. Feedback is ob-
tained via client surveys on
overall performance of the en-
gagement, the quality and use-
fulness of the report, and the
conduct of the audit team.
Results of our client surveys
during the year indicate, for the
most part, that OACR services
are well received. Overall, 96%
of survey responses to individ-
ual questions in all three catego-
ries indicated ranges of either
good or excellent.


Audit Performance





Audit Report





AuditTeam


Client Surveys
(13 Responses)



;5%


Audit Report Summaries


-,pL~i~ 2


This summary of audit reports issued profiles
major engagements completed during this fiscal
year. The subjects of our reports illustrate a
commitment to balanced, proactive and signifi-
cant coverage through audits of the Student
HealthCare Center, Cashiering and Collections,
Bank Reconciliations, Florida Opportunity


Scholars Program, UF Performing Arts and the
IFAS Departmental audits. We continued to
provide audit services to the university's largest
direct support organizations, the University of
Florida Foundation (UFF) and the University
Athletic Association (UAA), by performing au-
dits and working with their audit committees.


IFAS Food Science & Human Nutrition Department


The primary objective of this audit was to evalu-
ate key controls over the administrative proc-
esses of the Food Science and Human Nutrition
Department (FSHN). Specifically, we focused
on the control environment, collections, payroll
and personnel administration, disbursements,
fiscal monitoring, asset management, fuel and
vehicle usage and compliance.
FSHN is one of the world's largest combined
programs in which food science, nutritional
sciences, and dietetics are studied within one
academic department. The department has ap-
proximately 30 full-time faculty members, 80
graduate students and close to 1,000 under-
graduates. Programs were accredited by the
Institute of Food Technologists and the Ameri-
can Dietetic Association. FSHN's mission is to
provide progressive and effective programs in


teaching, research, and extension which meet
the needs of the citizens of Florida and bene-
fit the nation. At the time of our review,
FSHN had approximately 174 employees and
$5.7 million in property and equipment. Year
-to-date expenditures through February 28,
2009 totaled $7.1 million.
FSHN is involved in research in food sci-
ences, nutritional sciences, dietetics, citrus
research, and education occupying four build-
ings located on-campus and several research
laboratories in the Lake Alfred Center for
research and extension. The Southern Region
Programs-Interregional Program 4, housed
on-campus, is a federal cooperative program
established in 1963 to assist the producers of
minor crops to obtain clearances for pest
control materials.


0% 20% 40% 60% 80% 100%

Poor U Fair U Good U Excellent


Clientsurvey indic
that ov l o
srv..i-. esr were: well
rc ive in 2008o-2009.


Audit & Compliance Review


Page 7







Annual Report 2008-2009


UFF Travel and Entertainment


Development officers are key employees in help-
ing the foundation achieve its fundraising mis-
sion and frequently travel to meet with prospec-
tive donors. Foundation travel expenses totaled
$555,448 for the audit period. Development
related travel accounted for 79% -437,311) of
the total. While travel and entertainment ex-
penses composed less than 1% of total founda-
tion operating expenditures for the past three
fiscal years, they have increased by 27% between
fiscal years 2005 and 2006 and by 21% between
fiscal years 2006 and 2007. As of July 1, 2007
the foundation was integrated into the Univer-
sity of Florida's myUFL accounting system. A
July 3, 2007 Memorandum of Understanding
established guidelines for the processing of
foundation disbursements through the univer-


UF Performing Arts

The University of Florida Performing Arts
(UFPA), an auxiliary unit of the university, was
formed in September 2000 when the Curtis M.
Phillips Center and the Baughman Center were
united under common leadership. In April
2001, the University Auditorium became part of
the unit. The UFPA is managed by a director
who reports to the Provost and Senior Vice
President for Academic Affairs. For the 2007-
2008 fiscal year, UFPA revenues and expenses
totaled $4,252,475 and $4,988,184, respectively.


sity's accounting system.
The scope of this audit was limited to travel
disbursements from accounts maintained by the
foundation. The objectives of this audit were to
identify and evaluate the controls in place to
ensure:
* Travel and entertainment expenditures were
accurate, supported and appropriate pursu-
ant to applicable guidelines
* Policies and procedures were complete,
current and effectively communicated to
travelers and approvers
* Timely reimbursement to travelers
* Appropriate access to the travel & expense
module in myUFL


The UFPA has been unable to meet annual
expenses reporting a net loss of $82,858 for
2006-2007 and $735,708 for fiscal year 2007-
2008.
The primary objective of this audit was to
evaluate key controls over the business activi-
ties relating to revenues, contracts, expendi-
tures (including payroll and leave), property
and equipment, and financial reporting.


Bank Reconciliations


The primary objective of this audit was to evalu-
ate the adequacy and effectiveness of key con-
trols over the reconciliation process. Bank
reconciliations identify differences between the
bank statement balance and the corresponding
general ledger cash account balances, and adjusts
these differences so that both sets of records are
in agreement. Reconciling items may include
timing differences, errors, or irregularities.
The university has eight bank accounts through
Wachovia that are reconciled and monitored by

UAA Payroll

The primary objective of this audit was to evalu-
ate the adequacy and effectiveness of controls
over the UAA payroll processes. Specifically, we
focused our review on policies and procedures,
accuracy of payroll, termination of employees,
and system access.
The UAA executed its payroll biweekly. Time-
cards and/or leave slips were completed by em-


Treasury Management, a department within the
University Controller's Office. The total bank
account balances at August 31, 2008 totaled
$16,863,724. Treasury Management reconcilers
utilize complex queries to support the monthly
reconciliation between bank accounts and the
general ledger and subsidiary ledgers, with com-
pletion expected within 30 days of month-end
to be considered timely.


ployees, approved by supervisors and submit-
ted to Human Resources for entry into the
payroll system. For the fiscal year ended on
June 30, 2008, approximately $30.1 million was
disbursed for UAA employees' salaries and
benefits. As of the September 12, 2008 UAA
paid 400 employees via direct deposit and is-
sued warrants to 153 employees.


Curtis M. Phillips Center


Page 8


Audit & Compliance Review


z







Annual Report 2008-2009


UAA Sports Camps and Clinics


During the summer of 2008, the UAA operated
12 camps and clinics which employed approxi-
mately 612 employees. Total revenues and ex-
penditures reported as of August 31, 2008 were
$2,878,108 and $2,013,583, respectively. The
objectives of this audit were to evaluate the ade-
quacy and effectiveness of existing controls in
the UAA's sport camps and clinics relating to
revenues, disbursements and compliance with
NCAA bylaws, UAA rules, regulations, and poli-
cies and procedures.
UAA encourages head and assistant coaches to
schedule camps and clinics, provided these are
operated in a manner consistent with the phi-


Student Health Care Center

The Student Health Care Center (Center) is op-
erated as an auxiliary under the authority dele-
gated by the university president to the College
of Medicine. The Student Health Advisory
Board, composed of six staff and seven students
appointed by the Department Chair of Commu-
nity Health and Family Medicine, provides ad-
vice concerning policies and procedures for the
Center. The primary objective of this audit was
to evaluate key controls over the administrative
processes of the Center focusing on control
environment, fiscal monitoring, billing and col-
lections, payroll, purchasing and disbursements,
inventory/asset management and information
technology.
The Center is an accredited outpatient clinic

UFF Restricted Gifts

The foundation's policy is to honor the donor's
stated purpose for the use of the specified gift
through restricted funds that are established
within the foundation and administered by spe-
cific university units. The primary objectives of
our audit were to evaluate controls to determine
if:
* Restricted funds use was in accordance with
donor intent and university directives
* Donor intent was adequately communicated

* Restricted funds transfers to the university
were authorized, deposited intact and ap-
propriately processed
* Contributions received from donors were
deposited in appropriate funds


losophy and goals of the UAA, the university,
and in compliance with NCAA regulations.
UAA has established policies governing the op-
eration of camps and clinics based on the phi-
losophy of institutionally controlled administra-
tion while allowing, as appropriate, maximum
management freedom to coaches. Camp direc-
tors are entitled to the net profit of camps and
clinics. UAA provides administrative oversight
in the areas of compliance, risk management,
human resources and accounting. Insurance and
administrative fees are charged to each camp to
cover insurance premiums and the costs of ad-
ministrative services provided by the Business
Office.


with capacity to provide primary medical and
psychological care for up to 400 patients per
day. The Center's primary support, $12 million
during fiscal year 2007-08, was provided by the
mandatory student health fee. An additional $5
million was generated from other Center sales
and services, including pharmacy, laboratory, X-
ray, physical therapy, women's health, employee
assistance program, massage therapy, CPR and
immunizations. The Center maintained a full
and part-time staff of approximately 250 em-
ployees and maintains a satellite clinic for south
campus at the Health Science Center, a nurse-
staffed clinic at Santa Fe Community College
through outside contract and three limited ser-
vice clinics in campus residence halls.


Foundation endowed fund transfers to the uni-
versity during calendar year 2007 totaled ap-
proximately $33.6 million. We selected and
tested 54 endowed restricted funds established
as eminent scholar, professorship, scholarship,
fellowship, research, and "other" funds. We
reviewed 161 disbursements from these funds
and perused journal entries in search of dis-
bursements that may have been unusual consid-
ering the purpose of the fund.


Audit & Compliance Review


Page 9


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Annual Report 2008-2009


Benefits Management


The mission of Human Resource Services Benefits
Management (HRBM) was to provide leadership
in the design, delivery, and evaluation of benefits
programs, processes, and policies that enable the
university to attract, retain, and develop world
class faculty and staff. The HRBM staff was un-
der the direction of the Vice President of Human
Resource Services. Satellite office support for
benefits counseling and enrollment was located in
the College of Medicine, Health Science Center,
Institute of Food and Agricultural Science and
Physical Plant Department. Employees can elect
to participate in state-sponsored and/or university
-sponsored benefits plans. HRBM coordinated


Cashiering and Collections

The primary objective of this audit was to evaluate
the adequacy and effectiveness of key controls
over collections at the University Cashier's Office
and decentralized units, focusing on the effective-
ness of controls related to:
* Collecting, safeguarding, processing, and de-
positing cash receipts
* Recording and reconciling

* Compliance with directives, procedures and
credit card industry data security standards
The Cashier's Office operated under Treasury
Management, a unit in the Finance and Account-
ing Division of the Controller's Office, and served
as a focal point for all university collections in-

UFF Departmental Collections

Development officers are hired by the foundation
and assigned to campus units to have a major role
in identifying and soliciting gifts. All gifts solicited
in the name of and received for the benefit of the
University of Florida, by staff, faculty, or students
must be deposited with the foundation. Gifts are
recorded to funds that are associated with a unit
and have a designated fund administrator who is
ultimately accountable for the fund. From July 1
through November 30, 2008, the foundation re-
corded over 22,000 gift receipts totaling approxi-
mately $39 million. Included in these totals were
gifts initially received at the foundation and at ap-
proximately 220 campus units.
The primary objective of this audit was to assess


payroll deductions and remitted employee and
employer premiums to plan providers. Univer-
sity contributions toward employee insurance
premiums totaled $109 and $119 million for the
2007 and 2008 fiscal years, respectively.
The primary objective of this audit was to evalu-
ate the adequacy and effectiveness of key con-
trols over benefits management. Specifically,
we focused on control processes relating to
enrollment, payroll deductions and premiums,
training, information, and communications,
confidentiality of employee data, monitoring,
and IT Controls.


cluding departmental deposits, wires, and stu-
dent payments. Treasury Management was re-
sponsible for reconciling university financial
records and monitored internal controls and
established standards for cash controls over
university collections. Treasury Management
was also responsible for ensuring university
compliance with Payment Card Industry Data
Security Standards, which govern the processing
of credit card transactions. The Cashier's Office
prepared all collections for deposit to the univer-
sity bank accounts. During fiscal year 2007-08,
there were approximately $696 million in depart-
mental collections (excluding EFT/wire trans-
fers) and approximately $155 million in student
collections.


the adequacy of internal controls over the
processing of foundation gift collections re-
ceived by university units, specifically focusing
on:

* Collecting, safeguarding, and processing
cash receipts
* Recording and reconciling

* Segregation of duties
* Timeliness of deposits


HRS sponsors a benefits fair
annually during open enroll-
ment.


Page 10


Audit & Compliance Review


cIllcions totaled







Annual Report 2008-2009


Florida Opportunity Scholars Program


The Florida Opportunity Scholars Program
(FOS) began in 2006 to provide the opportunity
for first-generation college students from eco-
nomically disadvantaged backgrounds to attend
the university. Eligible FOS recipients were
guaranteed a scholarship and grant combination
for up to five years in order to fund the partici-
pant's full cost of attendance to pursue a bache-
lor's degree. Initial FOS eligibility requirements
included meeting normal university admission
standards, Florida residency, family income less
than : 4 .1111 neither parent with a bachelor's
degree, and first time student in college (no trans-
fer students). Requirements for annual renewal
of the FOS award included full-time enrollment,
meeting the income test requirements, earning at
least 24 credit hours each year, and a minimum


cumulative GPA of 2.0.
The FOS was managed by a steering commit-
tee chaired by the Director of Student Finan-
cial Affairs and included representation from
the Dean of Students Office, Student Affairs,
University Counseling Center, Career Re-
source Center, AIM Program Office, Housing
and Resident Education, and College of Lib-
eral Arts and Sciences Academic Advising.
During fiscal year 2008-2009, $5,710,963 was
disbursed to 1,078 participants. The primary
objective of this audit was to evaluate the ade-
quacy and effectiveness of key controls over
the FOS, focusing on eligibility, awards, aca-
demic and social support, and program ad-
ministration.


UFF Fundraising Event Management


Fundraising events are used to encourage alumni
and potential donors to provide private funds for
the university's benefit. The foundation Special
Events office is responsible for the oversight of
fundraising events. The mission of the founda-
tion Special Events office included maintaining
event standards for all university alumni and de-
velopment events, and serving as a resource for
foundation staff who are planning such events.
Development officers are hired by the founda-


tion and assigned to campus units to have a
major role in identifying and soliciting gifts.
The scope of our audit was limited to founda-
tion events that involved development staff.
The objective of this audit was to assess the
adequacy of internal controls in place over the
planning, conducting and administration of
foundation fundraising events.


IFAS Animal Sciences Department


The primary objective of this audit was to evalu-
ate key controls over the administrative processes
of the Animal Sciences Department. Specifically,
we focused on the control environment, collec-
tions, payroll and personnel administration, dis-
bursements, fiscal monitoring, asset management,
fuel and vehicle usage and compliance.
Animal Sciences is an academic department of
the College of Agriculture and Life Sciences, a
unit of the Institute of Food and Agricultural
Sciences (IFAS), and has programs in genetics,
management, meat science, molecular biology
and physiology, and nutrition. Animal Sciences
faculty works closely with industry groups, in-
cluding several livestock associations, to develop


educational programs for their members. At
the time of our review Animal Sciences had
approximately 124 employees (30 faculty mem-
bers and 94 staff), $7.2 million in property and
equipment, and $2 million in animals. Year-to-
date expenditures through February 28, 2009
totaled $7.9 million.
Animal Sciences conducts research on various
types of animals including horses, swine, sheep,
beef and dairy cattle. As of February 28, 2009,
the herds consisted of 4,466 animals main-
tained in nine university farm areas in and
around Gainesville, Ocala and Alachua, with
one USDA research center in Brooksville, Flor-
ida.


In its secondyear, Florida
Opportunity Scholar enrollment
retention rate was 95.-


Audit & Compliance Peview


Page 11


I~e~P







Annual Report 2008-2009


UFF Information Technology General Controls


The foundation computing department,
which consisted of 13 employees, reported
to the Chief Technology Officer and was
responsible for the security of the founda-
tion's information technology infrastructure.
Foundation computing provided support for
up to 450 users and managed the donor
database, accounting system, and traditional
IT services.
The primary objective of this audit was to
evaluate the adequacy of internal controls
over the foundation's information technol-
ogy (IT) infrastructure. Specifically, we re-


viewed controls in the following areas:
* Security Policy
* Human Resources Security
* Physical and Environmental Security
* Communications and Operations Manage
ment
* Access Control
* System Development and Maintenance
* Business Continuity Management


Management Advisory Services


OACR is committed to providing proactive,
preventive advice on internal controls, opera-
tions and compliance. Requests for manage-
ment advisory services (MAS) usually come
from various management levels throughout
the university. The information provided
through these services assists management in
decision making and in improving operations.
Results of these types of services are often
communicated through management letters.

OACR actively provides advisory reviews,
consulting assistance, training and training
tools, and post-audit assistance. The follow-
ing chart illustrates the distribution of effort
performed on the various types of MAS ser-
vices.

During fiscal year 2008-2009, 1,743 hours
were spent on MAS, which represented 13%
of available hours. A significant portion of
MAS effort was expended on advisory re-
views, consultations and general university
service and support. Following are summaries
of MAS projects and service/support:

President's Reimbursable
Expenses
The objective of this annual review is to evalu-
ate the effectiveness of processing controls
over the president's expenses and evaluate
their propriety and compliance with estab-
lished policies and procedures.


Florida Blue Key
Florida Blue Key, Inc. (FBK) is a non-profit cor-
poration managed by its officers. The FBK offi-
cers are university students elected to serve for a
one year term. The FBK produces the university's
Homecoming, including Gator Growl. Other
events organized by FBK include a high school
debate tournament and career day events for un-
dergraduate students. The objective of this project
was to review the revenue and disbursement proc-
esses of FBK and the contract between FBK and
the university for the production of Homecoming
and provide recommendations to improve internal
control processes.

Water Cost of Service Study
In response from a request from the university's
Physical Plant Division management, we reviewed
the Water Cost of Service Study (WCSS) used to
calculate the water rates charged to the university
as of October 1, 2008. The objective of our re-
view was to determine that the WCSS was accu-
rately performed and the methodology of deriving
the rates was appropriate and in compliance with
contract terms.

Master Vendor Files
The objective of this MAS was to review the re-
quirements and internal control procedures used
to establish and maintain vendors within the
myUFL master vendor file. The Purchasing and
Disbursements Services (PDS) vendor mainte-
nance team is responsible for the addition of ven-
dors, changes to existing vendor information, ob-


Page 12


Audit & Compliance Peview


OACR assists
management in
decision making and
improves operations
through consultation
services.







Annual Report 2008-2009


training and retaining required supporting docu-
mentation, and loading vendor payment infor-
mation into the database.

Internal Control Training
OACR has continued to present, in conjunction
with the University Controller's office, an inter-
nal control training course. PRO 303 Internal
Controls at UF is a course designed to help uni-
versity administrative staff understand internal
control concepts and learn how to apply them
to their everyday business processes. Five ses-
sions were conducted during the 2008-2009
fiscal year reaching nearly 154 employees. The
feedback on the training program continued to
be positive and it will be continued into the
2009-2010 fiscal year. Human Resources Train-
ing and Organizational Development office,
with the assistance of OACR and the University
Controller's office, is developing an online ver-
sion of this training course to provide more
accessibility and flexibility for campus adminis-
trative staff. The online course should be avail-
able next fiscal year.

General Consultation Services
During the fiscal year, OACR provided MAS
consulting services in response to requests from
university related persons and entities including,


among others, the University Controller's office
and Vice President for Research.

Newsletter
Quarterly newsletters were distributed campus-
wide with regular features that include highlights
from projects and campus-wide issues. Elec-
tronic copies are maintained at http://oacr.ufl.edu.


Other MAS Projects
The OACR also participates in projects and ini-
tiatives that do not result in a released report.
Examples of such projects during the 2008-2009
fiscal year includes:
Role Security
PeopleSoft Student Financials
myUFL Financial Upgrade
Campus Safety
Data Security
DSO Financial Reporting and Govern-
ance Each year, we survey all affili-
ated organizations to obtain informa-
tion related to their financial audits.
We also review all audit reports when
completed and examine for significant
findings that may require our attention
or that we may want to bring to the
audit committee's attention.


MAS Effort Distribution


I General University Service and Support
I University Governance and Publications
* DSO Service
* Consultation and Advisory Reviews
P Other


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Our quarter newsletter can be found
at


Audit & Compliance Peview


Page 13


Interna Contro
trinn wllb







Annual Report 2008-2009


Investigations


UF Compliance Hotline

Tlllaree 1486-500-3344
ww.lmwinc.conmeportfmluniversily
An anonymous 24t teprting ser ce
prwded by [ 3





For further mfoamation, please visit
http:/www.ornplianceouff.edu

UF i()T{H)iA


The OACR receives complaints and allega-
tions of fiscal improprieties from a variety of
internal and external sources, including di-
rect correspondence and referrals from
other university offices and state agencies.
The OACR also is responsible for the over-
sight of the University of Florida's compli-
ance hotline. The OACR has contracted
with an independent third party, The Net-
work, to manage the compliance hotline.
The Network is a technology-based com-
pany that aids its clients in the collection of
confidential and sensitive information. The
compliance hotline is a key component of
the compliance process for the University
and provides a mechanism for the reporting
of issues, complaints and allegations, and
other university-related concerns by either
telephone or intemet web page.
The OACR is committed to assisting the
University in sustaining an operating envi-
ronment with the core attributes of honesty
and integrity. We strive to maintain the ut-
most objectivity and independence in all
reviews by strictly following professional
standards. In 2008-2009, the OACR re-
ceived a total of 59 complaints and allega-
tions via the following methods:



Complaints and
Allegations Received

*27 UF Compliance Hotline
S7 E-Mail
5 Telephone / Fax
5 Internal Audits


S15 Referral / Letter / Other

25%

8% I


-- 12%


When complaints and allegations are re-
ceived by the OACR, they are assessed to
determine the most appropriate method for
response. In some instances, the initial as-
sessment indicates that the allegations are
not of a fiscal nature and that other univer-
sity departments would be the more appro-
priate body to perform a review of the re-
ported concerns. In cases where a fiscal
concern or impropriety may be present, the
OACR will initiate its review process.
The review process begins with a prelimi-
nary review of the facts and information
contained in the allegation and, if there is
any indication of merit to any allegation or
complaint, a project number is assigned and
a full scale investigative review is initiated.
Of the 59 complaints received in 2009, the
assessments, preliminary and full scale re-
views performed resulted in the following
classifications or breakdown of review activi-
ties.


Disposition of
Complaints/Allegations

S22 Referred

4 Preliminary Assessment

33 Full Review





56


Page 14


Audit & Compliance Review


The complianehtln
provB ides a mehaimT
for reportingK concerns
^^^^^^^^anonymously.'TPJ^


| ALI







Audit & Compliance Review


Where appropriate, recommendations for im-
provements of internal controls are communi-
cated to management and are monitored for
implementation. In 2009, the total number of
hours related to investigative efforts increased
over prior years' due to the significant increase
in allegations received (63%) including several
large investigations related to allegations brought
by a former university dean. A total of 2,132
hours, or 10% of available hours, were commit-
ted to investigative efforts. The significant is-
sues addressed with these reviews are listed in
the following table.


Follow-up

Audit reports include auditor's comments and
planned actions developed and agreed to by the
audit team and management and the estimated
time for their implementation. Reports issued
by the external auditors, including the Office of
Auditor General, contain recommendations for
which university management also provides a
corrective implementation plan.
Standard 2500, Standards for the Professional
Practice of Internal Auditing, promulgated by
the Institute of Internal Auditors, requires that


Purchasing Card Misuse 7
Research Funds Misuse 3
Inappropriate Outside Activities/Conflict of Interest 3
Theft of Property/Resources 3
Financial Mismanagement 2
Improper Use of Equipment 2


the internal auditor determine that management
has taken appropriate action regarding reported
audit comments.
Quarterly follow-up procedures were conducted
throughout the year and their results were com-
municated to university management and the
Board of Trustees Audit Committee. For the
2008-2009 fiscal year, the OACR staff expended
785 hours or 4% of available hours for follow-
up activities.


3 Health Affairs 4 3__ 1 0 "
4 Human Resources 3 1 1 2 0 _
5 IFAS 24 24 0 0 1


6 Sponsored Research
7 UAA
A I FF


-4 4-


40

35


As reflected by the summarized information,
management generally reacted in an effective
manner to implement audit recommendations
and planned actions.
The caption "in process" includes action plans
that were not fully implemented during our
follow-up review process for the year ending
June 30, 2009. The caption "not to be imple-
mented" generally reflects actions that were not
fully implemented after our follow-up review
procedures were completed, or changing condi-
tions that render the plan obsolete.


30

25

20

15

10

5


0 -


Planned Action


Implementation Package


1 nno%


1 2 3 4 5 6 7 8


1k
The Institute of
Internal Auditors
OACR determines ifmanagement has
taken appropriate action regarding
audit comments in accordance with
IIA standards.


0


71%
100%
67%
100%
50%
100%


Annual Report


2008-2009


Page 15


-







Annual Report 2008-2009


OtherActivities


Professional Activities
OACR staff participated in various national ini-
tiatives, training and organizations including:
* Member Association for College and Uni-
versity Auditors (ACUA)
* Member Institute of Internal Auditors
(IIA)
* Member Association of Healthcare Inter-
nal Auditors (AHIA)
* Member American Institute of Certified
Public Accountants (AICPA)
* Member Florida Institute of Certified
Public Accountants (FICPA)
* Member Association of Certified Fraud
Examiners (ACFE)
* Member IIA North Central Florida
Chapter
* Treasurer IIA North Central Florida
Chapter
* Secretary IIA North Central Florida
Chapter
* Program Chair IIA North Central Flor-
ida Chapter


* Membership Chair
Florida Chapter


IIA North Central


* Board Member
ida Chapter


IIA North Central Flor-


* Web Master IIA North Central Florida
Chapter
* Member State University Auditor Con-
sortium (SUAC)
* Technology Committee Association of
Health Care Internal Auditors (AHIA)

University Service
During 2008-2009, OACR members participated
in various university-wide initiatives and assign-
ments including:
* Member University Information Technol-
ogy Advisory Committee Information
Security Management
* Member University Information Tech-
nology Advisory Committee-Data Infra-
structure
* Member University Information Tech-
nology Advisory Committee-Network
Infrastructure
* Audit Coordination (External)

* Member Auxiliary Review Committee

* Member University of Florida Commu-
nications Network

* Presenter Division of Sponsored Re-
search-Research Administrators Training
Series
* Presenter PRO3 Series-Intemal Con-
trols at UF

Direct Support Organization Audit Com-
mittee Coordination (UAA, UFF and Gator
Boosters)

Coordinator Building Emergency Man-
agement Plan
* Coordinator University of Florida Green
Team


The Baughman Center on Lake Alice, UF campus, is open
daily for meditation and available for weddings, memorial
services and special events.


Page 16


Audit & Compliance Review






Annual Report 2008-2009


Reports Issued

Reports Issued 2008-09



UFF Travel and Entertainment 7/1/07-3/31/08 9/16/08 UF-08-521-13 Internal Audit
President's Reimbursable
7/1/07-6/30/08 10/8/08 72.2008.02 MAS
Expenses
UF Performing Arts As of 3/31/08 10/9/08 UF-08-513-05 Internal Audit
Master Vendor Files As of 7/24/08 10/31/08 72.2008.12 MAS
Bank Reconciliations As of 8/31/08 12/17/08 UF-09-551-13 Internal Audit
UAA Sport Camps and Clinics As of 9/31/08 1/6/09 UF-07-484-05 Internal Audit
Water Cost of Service Study As of 10/1/08 2/13/09 71.2009.02 MAS
Florida Blue Key Homecoming As of 2/20/09 2/20/09 71.2009.01 MAS
Student Health Care Center As of 9/30/08 3/6/09 UF-09-539-01 Internal Audit
UFF Restricted Gifts 1/1/07-12/31/07 3/9/09 UF-08-527-19 Internal Audit
Benefits Management As of 2/28/09 4/24/09 UF-09-552-14 Internal Audit
Cashiering and Collections As of 11/30/08 5/27/09 UF-09-553-15 Internal Audit
UAA Payroll As of 8/31/08 6/5/09 UF-09-547-09 Internal Audit
Florida Opportunity Scholars
Florida Opportunity Scholars s of 3/31/09 6,18,09 UF-09-558-20 Internal Audit
Program
UFF Fundraising Event
UFF Fundraising Event As of 10/31/08 6/30/09 UF-09-542-04 Internal Audit
Management
UFF Departmental Collections As of 11/30/08 6/30/09 UF-09-541-03 Internal Audit
UFF Information Technology
F In Ty As of 4/30/09 6/30/09 UF-09-544-06 Internal Audit
General Controls
*IFAS Animal Sciences
As of 2/28/09 7/13/09 UF-09-549-11.1 Internal Audit
Department
*IFAS Food Science & Human
FAS Food Science & Human As of 2/28/09 7/13/09 UF-09-549-11.2 Internal Audit
Nutrition Department ____ ____ __
* Substantially completed as of June 30, 2009.


Audit & Compliance Review


Page 17







































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