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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 Material Information
Title: University of Florida Office of Audit and Compliance Review Annual Report
Physical Description: Serial
Creator: University of Florida Office of Audit and Compliance Review
Publication Date: 2010
 Record Information
Bibliographic ID: UF00072255
Volume ID: VID00008
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.

Full Text





Of ic-fAdi&CmlaneRve
tr a

.Oea 4 Fiacil Co piac Audit
--8: 4 a.

M rT n1 T7A C I D



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A I ''D

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Message from the Chief Audit Executive


Audits and Other
Planned Reviews

Audit Report

Advisory Services



Other Activities

Reports Issued

2 Brian Mikell, CPA
Fiscal year 2009-2010 marked my first complete
year as Chief Audit Executive. I consider it an
7 honor to serve my alma mater in this capacity
and have sought to ensure that the Office of
Audit and Compliance Review (OACR) has re-
13 mained true to its mission of always adding value
through provision of audit, advisory and investi-
gative services.
15 We have been successful in our main goal of
retaining our capable and professional staff and I
16 remain committed to increasing OACR's value
to the university through their further profes-
17 sional development. We are here to serve and

I encourage all employees and units of the
University of Florida to contact OACR when-
ever we can be of assistance.


The mission of the Office of Audit and Compli-
ance Review is to provide independent, objective
assurance and consulting services, using a risk-
based approach, to add value and improve the
operations of the University of Florida and its
affiliated organizations. OACR serves as a cen-
tral point for the coordination of and oversight
for activities that promote accountability, integ-
rity, and efficiency for the University of Florida.
The scope of our work included determining
whether the university's network of risk manage-
ment control and governance processes, as de-
signed and represented by management, was
adequate and functioned in an effective and

efficient manner.
In the 2009-2010 fiscal year, the OACR staff
continued to provide effective service to the
university community, including internal audit
support for the major direct support organiza-
tions, the UF Foundation and the University
Athletic Association.

OACR's expectations, as we move into fiscal
year 2010-2011, are to continue providing proac-
tive assistance in strengthening internal controls
in the university's decentralized environment, as
well as conducting audits to promote good busi-
ness practices.

Weaeloae of-capsi


Page 2 Audit & Compliance Review Annual Report 2009-2010


Goals and Objectives

A key operational objective for the period was
the completion of the final 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.
The OACR continued various ongoing initia-
tives from prior periods, including the manage-
ment of the compliance hotline and co-
facilitation, along with the University Control-
ler's Office, of the Internal Controls at UF training
class. This class is part of the certification in
fiscal management for employees. With the
assistance of Human Resources, an on-line ver-
sion of the class was developed and training was
provided, through live and on-line sessions, for
171 employees. The OACR continued to be
responsive to requests for assistance and ad-
dressed the needs of campus through advisory
and consulting engagements as well as investiga-
tive reviews.


The Chief Audit Executive (CAE) is appointed
by and operates under the general oversight of
the university president. The CAE reports func-
tionally to the Board of Trustees through its
audit committee and administratively to the sen-
ior vice president for administration and busi-

Support Audit
Staff ut

OACI Joe Cannella, Roger Frank, Brian
Mikell, Jeff Capehart, Marilyn Velez, Stan
Anders, Shirley Lampotang, Suzanne Newman,
Choi Choi, Craig Reed, Vito Hite, Lily Reinhart

ness ventures. This reporting relationship pro-
motes independence and assures adequate con-
sideration of audit findings and planned actions.
OACR staff reports to the CAE, as shown in the
Organization Chart as ofJune 30, 2010:




We:/ plllromoted~ a seio-ri'E]

auitor to mageana

K^-- 1

Audit Audit
Directors Managers

Page 2

Audit & Compliance Review

Annual Report 2009-2010



Vito Hit



Audit & Compliance Review Annual Report 2009-2010 Page 3

Staffing and Other Resources

During the 2009-2010 fiscal year, OACR enjoyed
stability with no turnover in our full-time staff.
The internal organization chart was adjusted
through the promotion of a Senior Auditor to
the position of Audit Manager, Investigative Ser-
vices, and the promotion of an IT Staff Auditor
to an IT Senior Auditor. As a result of budget
reductions over the last few years, we have two
vacant positions at staff auditor and one vacant
senior auditor position. As the fiscal year came
to a close, the OACR was prepared to fill one of
the vacant staff auditor positions.

The OACR continued to enjoy our off-campus
home in the Human Resource Services building
at 903 West University Avenue. Through a rota-
tional equipment replacement policy, we main-
tained our commitment to ensure that the OACR
staff was equipped with the appropriate tools to
efficiently perform their required duties. We are

Staff Training

The Institute of Internal Auditors' (IIA) Interna-
tional Standards for the Professional Practice of
Internal Auditing, Section 1230, states that
"Internal auditors must enhance their knowledge,
skills, and other competencies through continu-
ing professional development." OACR places a
premium on quality continuing professional edu-
cation through participation in our local IIA

also committed to ensure that all necessary
software is current and up-to-date. The OACR
continued to utilize electronic media to issue
audit reports when feasible, and to document
and store our supporting working papers.

University management continued to demon-
strate its commitment to the internal audit
function by adequately funding the OACR,
considering the budget reductions previously
noted. For some years, a funding model had
been utilized that effectively aligned audit re-
sources with the university units expecting and
supporting audit effort. During the year, we
submitted a funding request for the 2010-2011
fiscal year under the new Responsibility Center
Management budget model. We anticipate
similar funding support from the university
through this new budget model.

OACR student '. Auditor/
grad student Sarah Mann
(Accounting), Front ( Assistant
Max Pankow (Finance) and T '
Auditor /grad student Kevin Li
(Information Systems and Operations

chapter seminars, promoting attendance to
professional conferences and taking advantage
of relevant training opportunities through the
university and other entities.

The following table provides a list of staff par-
ticipation in formal training programs during
the 2009-2010 fiscal year:

Local IIA Chapter Training

The Institute of
Internal Auditors

The IIA- North Central Florida Chapter 241 11

The Institute of Internal Auditors 113 11

Association of Colleges and University Auditors 90 4

University of Florida 33 11

Florida Department of Justice 18 9

Association of Healthcare Internal Auditors 17 1

Thomson Reuters 13 2

Miscellaneous 9 3

Jefferson Wells 6 3

Audit & Compliance Review

Annual Report 2009-2010

Page 3

Expenditure Analysis

S The OACR expenditures by category are illus-
S treated in the following table. Our primary budget-
ary commitment remains professional staff sala-
ries. Overall, expenditures moderately increased
from the prior year as we began to recover from
the budget reductions of recent years. The de-
crease in OPS expenditures resulted from partially
funding salaries from Federal Work Study funds,

which are not part of OACR budget, and a
reduction in student staff. Fixed asset expendi-
tures increased due to IT equipment purchases
that were deferred in 2008-2009 due to budget
cuts. Approximately 55% of OACR operating
expenses resulted from telephone/postage,
office supplies, travel and personnel-related

Analysis of Expenditures

Salaries $1,137,914 $1,152,300
Other Personal Services (OPS) 16,068 5,749
Fixed Assets -- 13,397
Operating Expenses 16,952 14,761
Training 10,469 12,705
Compliance Hotline 13,650 9,500
Toita*!3 $1 ,19505 -$1,208,41

Operating Expenses

" Office Supplies
* Personnel Expenses
" Telephone/Postage
" Dues/Subscriptions
" Maintenance
N ComputerSupplies
M4 Printing
W4 Travel


Time Analysis

The table below provides a comparison between
time available as planned and actual time available
for projects. Actual hours lost due to position
vacancies and actual hours used for training, leave
and administration were 917 hours less than the
amounts planned, having a positive impact on

project progress and completion. This positive
impact was further enhanced by the 518 hours of
overtime generated by OACR staff, ultimately
resulting in available hours for the period exceed-
ing planned hours by 11%.

Planned/Actual Hours

Time Available (9.75 x 2040) 19,890 19,890

Less: Adjustment for Position Vacancies
Training/ Leave Use/ Operational Support
Excess hours worked





TimeAvalabe fo Prjecs 1,05014,85 ,43

Page 4

Audit & Compliance Review

Annual Report 2009-2010

Time Allocation Time Planned vs. Actual
This chart compares, by indirect and direct categories, the allocation of total planned available time with actual effort expended. While
actual time by category did not vary significantly from the plan, actual hours charged to indirect and audit categories were less than
planned, with investigations and management advisory services primarily using these hours.

Training/Leave Use/Op Supp

Follow Up




. 31%



0% 10%

20% 30% 40% 50%

U Actual U Planned

Time Comparison Prior vs. Current Year

This chart compares, for direct project categories and operational support, the actual time used during the prior year with the current
year allocation. The allocation of time spent on follow up and operational support remained relatively constant. In 2009-2010, we
saw a decrease in available time allocated to audits with a corresponding increase in available time allocated to investigations and man-
agement advisory services. This shift in time reflects an increase in requests from campus for advisory services as well as hotline and
other complaints.

Operational Support


Follow Up






0% 20% 40% 60% 80%

U 2009-2010 U 2008-2009

Audit & Compliance Review

Annual Report 2009-2010

Page 5

Office Direct Time

Direct time percentages are established as a produc-
tivity goal for each professional position and at 72%
for the office as a whole. Direct time is generally
defined as time spent on projects and it excludes
time charged to administration, service support,
leave and training. This chart compares direct time

percentages, by quarter and in total, for the last two
fiscal years. With a strong 3rd and 4th quarter, OACR
was able to finish the year at 71% direct time, slightly
under our goal but fairly consistent with the previous
year. OACR continues to stress efficient and effec-
tive use of our time resources.

Office Direct Time by Fiscal Years

100% 0





76% 72%





76% 80%





Total Year

S2008-2009 M 2009-2010 Goal 72%

Audits and Other Planned Reviews

Trend Analysis

The table below reflects a three-year analysis of
projects planned and completed. Internal au-
dits and management advisory services (MAS)
were planned based on an institutional risk
assessment, which included input from univer-

2010 sity management. Planned projects shown in
the table include audits and advisory reviews
* 2008- that should result in a report, and the original
2009 planned projects are derived from OACR's

S2007- three-year work plan. Each year's work plan is
2008 formally revised and approved by the audit
committee midway through the year. As risks

Trend Analysis of Projects Planned/Completei

and resources change, projects may be added,
deleted or deferred to future periods. Not all
completed projects were planned.

Over the last three years, a total of 65 projects
were planned and 68 were completed. During
fiscal year 2009-2010, 59% (9,478 hours) of
available time was used on audit projects and
12% (1,969 hours) was used on MAS projects.
An additional 14% (2,257 hours) was used for
investigative projects, and is not reflected in the
reported projects.

2008-2009 26 21 14 6 20

2009-2010 23 20 15 8 23

TOTALS 76 65 45 23 68^^^^^^^^^^^^^^^^

Total Projects

0 2009-

Planned Completed

Page 6

Audit & Compliance Review

Annual Report 2009-2010

Audit & Compliance Review Annual Report 2009-2010 Page 7

Client Surveys

Client Surveys
(11 Responses)

In an effort to ensure continued high
quality of OACR services, input from
clients is requested at the conclusion of
each audit engagement. Feedback is
obtained via client surveys on the overall
performance of the audit engagement,
the quality and usefulness of the audit
report, and the conduct of the audit
team. Results of our client surveys dur-
ing the year indicated that, for the most
part, OACR services were well received.
Overall, 96% of survey responses to indi-
vidual questions in all three categories
indicated ratings of either good or excel-

Audit Performance

Audit Report

Audit Team

Client surveys
continue to
indicate that,
overall, services
were well received
in 2009-2010.



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

* Poor 0 Fair 0 Good 0 Excellent

Audit Report Summaries

This summary of audit reports issued profiles audit engagements completed during this fiscal year. The subjects of our reports illustrate a
commitment to balanced, proactive and significant coverage. Audits performed included system-wide fiscal processes, system-wide con-
tract and grant processes, major areas under the purview of student affairs, university auxiliary units and departments within the Institute
of Food and Agricultural Sciences (IFAS). 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 audits and working with their
audit committees.

Purchasing Card (PCard) Program

The PCard program provides an effective and convenient way to purchase commodities. University policy requires all faculty or staff to
be authorized by their dean, director, or department chair and to complete web-based training prior to issuance of a PCard. As of Febru-
ary 28, 2009, there were approximately 4,900 active University of Florida PCards for 341 business units. For the period January 1, 2005
through December 31, 2008, approved PCard transactions totaled over $303 million as shown in the accompanying chart:

PCard purchases do not require traditional
Approved PCard Transactions controls such as purchase requisitions, pur-
chase orders, and receiving reports. Therefore,
S1 77.4 77.8 for the achievement of accountability objec-
o 7, 80 76.1
J ties, established control procedures must be
S= 75 71.3 followed both at the unit level and at PCard
/ administration. This audit was conducted as of
I- 70 t
. 70 --February 28, 2009 with the objective to evalu-
w 65 ate the effectiveness of controls in place at the
unit level to determine whether PCard usage
2005 2006 2007 2008
was appropriate, including approval of PCard
transactions and compliance with the PCard
use guidelines.

Audit & Compliance Review

Annual Report 2009-2010

Page 7



Alumni Association Gator Clubs


cooperation among the graduates, former students
and friends of the University of Florida.

As of May 15, 2009, there were ninety-eight Gator
Clubs. Thirty-eight clubs were located in the state of
Florida, fifty clubs were located outside the state of
Florida, and ten clubs were located internationally.
This audit was conducted as of March 31, 2009 with
the objective to evaluate the key controls in place to
promote efficient and effective management of Ga-
tor Clubs and to determine if the Gator Clubs are in
compliance with University of Florida Alumni Asso-
ciation guidelines and procedures.

The Gator Clubs exist as nonprofit organizations
under the corporate umbrella of the University of
Florida Alumni Association and are subject to the
regulations and restrictions of the Alumni Associa-
tion. The term "Gator Club" is a registered trade-
mark of the University of Florida Alumni Associa-
tion. Gator Clubs are organizations of alumni,
parents and friends of the University of Florida,
organized to operate exclusively for educational
and charitable purposes. They advance and pro-
mote the general welfare and interests of the Uni-
versity of Florida as an educational institution.
Their goal is to foster a spirit of loyalty, unity and

UFF Restricted Gifts
The UFF was established to support and enhance
the university by encouraging private donations.
The foundation's policy is to honor the donor's
stated purpose for the use of the specified gift.
Restricted gift funds are established within the
foundation and administered by specific university

During the calendar year 2008, the UFF transferred
to the university endowed restricted funds totaling
approximately $32.2 million to be used for scholar-

UAA Student-Athlete Academic Eligibility

Compliance with the National Collegiate Athletic
Association (NCAA), Southeastern Conference
(SEC), and university rules related to student-
athlete academic eligibility is the responsibility of
the UAA athletic director, and is a joint process
conducted by the UAA's Compliance Office and
Office of Student Life, and by the university's Of-
fice of Admissions and Office of the University
Registrar. During the 2008-2009 academic year,
there were 492 eligible individual student-athletes
identified on the squad lists, including 152 fresh-


University Payroll Services is a unit of the Univer-
sity Controller's Office and is responsible for proc-
essing the University of Florida's payroll. The
payroll process creates pay checks and electronic
funds transfers (direct deposits) for employees. It
also creates payments of employee benefits and
payroll deductions for payroll vendors. The uni-
versity used a biweekly schedule for processing
payroll. During calendar year 2007, there were 26

men. This population of eligible student-athletes
was approximately 60% male (292) and 40% female
This audit was conducted as of June 30, 2009 with
the objective to evaluate the key controls designed to
promote compliance with the NCAA and SEC re-
quirements for student-athlete academic eligibility.
Specifically, we reviewed initial academic eligibility
for incoming freshmen and transfers, and continuing
academic eligibility including degree progress re-

scheduled pay days with total payroll disbursements
of approximately $1.15 billion.
Payroll control procedures must be in place both at
the unit level and at central Payroll Services. This
audit was conducted as of August 31, 2009 with the
objective to evaluate key controls over payroll proc-
esses, both at the central and unit level, for ensuring
the propriety and effectiveness of university payroll.


Page 8

Audit & Compliance Review

Annual Report 2009-2010

ships, fellowships, professorships, eminent scholar
chairs, and research. During the same period, the
university disbursed approximately $23.7 million
from endowed restricted funds for salaries and bene-
fits, scholarships, fellowships, travel, materials and
supplies, and contractual services. This audit was
conducted for the calendar year 2008 with the objec-
tive to evaluate controls designed to ensure that re-
stricted funds were used in accordance with donor

Audit & Compliance Review Annual Report 2009-2010 Page 9

Recreational Sports Department (RSD)

The RSD operated within the Office of the Vice
President, Student Affairs, and was responsible
for developing sports programs and services for
students, faculty and staff. These programs and
services included aquatics, fitness, intramural
sports, sports clubs and other recreational activi-
ties. The RSD managed several on-campus rec-
reation facilities including three fitness centers,
nine fields, two pools, six outdoor court facili-
ties, and a gym. Lake Wauburg, located eight
miles south of campus, was also managed by the
RSD and included activities such as boat-
ing, swimming, volleyball, a team development
course and a climbing wall.

The RSD had 27 permanent employees and over

600 OPS and student employees. Approxi-
mately 90% of funding was provided by Student
Government through allocation of Student Ac-
tivity and Service fees. Additional revenue was
realized from fees charged for membership,
personal training, event registrations, and facility
rentals. The RSD's total budget for the fiscal
years 2009 and 2010 was $5 and $5.3 million,
respectively. This audit was conducted as of July
31, 2009 with the objective to evaluate key con-
trols over the RSD's administrative processes
including fiscal monitoring, collections, payroll
and personnel, disbursements, memberships,
facility access and safety, programs offered and
management of assets.

Transportation and Parking Services (TAPS)

TAPS was a self-supporting auxiliary unit, oper-
ated within the Business Services Division, re-
porting to the Vice President for Business Af-
fairs. TAPS was responsible for parking admini
station for the university including, among
other things, decals sales, parking fees, the Zip-
car program, fiscal and administrative oversight
over the mass transit contract, parking enforce-
ment and the Student Traffic Court. TAPS
maintained a full and part-time staff of approxi-
mately of 55 employees.

TAPS derived its operating resources from a

mandatory transportation fee paid by matriculat-
ing students (42% in FY 2009), decal sales
(32%), parking fees (12%), and fines and penal-
ties (12%). Total operating revenue for the fis-
cal years ended 2007, 2008, and 2009 was $16.1,
$17.5 and $19.1 million, respectively. Opera-
tional expenses totaled $17.4 million for the
fiscal year ended June 30, 2009. This audit was
conducted as of October 31, 2009 with the ob-
jective to evaluate the control environment and
key controls over the administrative processes of

University of Florida Investment Corporation (UFICO)

The UFICO was created by the Board of Trus-
tees of the University of Florida in June 2004 to
oversee the investments of the University of
Florida. As of June 30, 2009, the UFICO man-
aged an investment portfolio of $1.6 billion.
The portfolio consisted of assets from the Uni-
versity of Florida Foundation, the University of
Florida Research Foundation, the University
Athletic Association and the University of

The UFICO was governed by a separate Board
of Directors appointed by the University's Board
of Trustees. The UFICO's Board of Directors
approved the investment policies, objectives and

broad asset allocations for the various invest-
ment pools. The UFICO staff was charged with
overseeing the day-to-day operational invest-
ment activities subject to policies established by
their Board, which included performing due
diligence procedures on current and prospective
investment managers and retaining or dismiss-
ing investment managers, custodians and service
providers. This audit was conducted as of June
30, 2009 with the objective to identify and
evaluate the UFICO's control procedures in
place relative to the selection and review of
prospective investment managers, and the
assessment of current investment managers.

Audit & Compliance Review

Annual Report 2009-2010

Page 9

Page 10 Audit & Compliance Review Annual Report 2009-2010

UFF Human Resources and Payroll

UFF Human Resources (HR) provided services
to foundation employees in the areas of benefits
administration, compensation, employment
practice, policy and procedure, payroll admini-
stration, recruitment and retention, safety, train-
ing and development, and wellness. Foundation
payroll was processed through either the Univer-
sity of Florida's accounting system, myUFL, or
outsourced to Automatic Data Processing, Inc.
(ADP). The foundation began processing
payroll through myUFL on June 18, 2004 and

ceased adding new employees to the ADP
system in May 2008.

As of June 19, 2009, there were 176 foundation
employees processed through myUFL and 105
processed through ADP. Total payroll expenses
for the foundation totaled $28,518,737 during
fiscal year 2008-2009. This audit was conducted
as of October 31, 2009 with the objective to as-
sess the adequacy of internal controls in place
over foundation human resource management
and payroll processes.

UFF Risk Management and Insurance

The UFF is a direct support organization of the
University of Florida whose mission is to
promote, receive and administer private support
for the University of Florida. The foundation
employed a multifaceted approach for managing
its mission-related risks, including the use of an
independent risk management and insurance
consulting firm.

Cost Sharing

Cost sharing is a term used to describe circum-
stances where a granting agency does not fully
fund all of the allowable costs associated with a
specific project, with the university funding the
difference from other revenue sources. Cost
sharing may take the following forms:

Mandatory cost sharing is re-
quired by statute or the agency
states that cost sharing is a require-
ment of the award, and is generally
reported to the sponsoring agency
through financial reports.

Voluntary committed cost shar-
ing is proposed by the university
when none is required. When the
sponsor accepted the proposal, the
proposed cost sharing became a

This audit was conducted as of September 30,
2009 with the objective to assess the adequacy of
internal controls over foundation risk manage-
ment and insurance processes. Specifically re-
viewed were the foundation's processes in place
for risk assessment and planning; procurement
and monitoring of insurance activities; managing
workers' compensation; and complying with fed-
eral, state and university regulations.

condition of the award. Voluntary
committed is generally not required to
be reported to the sponsor.

When an award was accepted that included cost
sharing, the university agreed to provide the
stated cost for the performance of the project.
To ensure compliance with cost sharing commit-
ments, the university had developed an informa-
tion system contained within myUFL to monitor
its commitments and the associated expenses.
Committed cost sharing had averaged approxi-
mately $21.5 million per year over the last three
years. This audit was conducted as of July 31,
2009 with the objective to evaluate and deter-
mine whether existing controls provided reason-
able assurance that cost sharing commitments
were in compliance with applicable policies, laws
and regulations.

Page 10

Audit & Compliance Review

Annual Report 2009-2010


Contracts and Grants Billing and Reporting
The university derives a major portion of its op- Agricultural Sciences, the College of Engineer-
erating revenues from contracts and grants ($574 ing and the rest of the university) to provide
million for the fiscal year endingJune 30, 2009). additional oversight and support. The C&G
Federal sponsors have been the largest contribu- offices were primarily responsible for post-
tors to the university's research programs with award financial administration. After approval -
the National Institute of Health providing the of an award by the DSR, the C&G offices
largest portion of federal support '.2 million established the award accounts and released
for the fiscal year endingJune 30, 2009). initial budget amounts, processed and submitted
invoices, submitted financial reports, and per-
Administration of contracts and grants was a .
,. formed penodic reconciliation of the award
team effort consisting of the Principal Investiga-
.+<- (DTh ,A +- A +4. -J +accounts in the university's accounting system.
t~J PI ) t ht dt~l L t1Itll ltl d~llll [i i UtJII

oLr 11 ) gmlu uLmL1 U1L11ln anl eu11 LI I nraLlon,
the Division of Sponsored Research (DSR), and
the university's appropriate fiscal office. The PIs
were ultimately responsible for ensuring compli-
ance in the use of funds awarded to sponsored
projects. Departmental fiscal personnel assisted
the PIs with the fiscal management of their pro-
jects. Three contracts and grants central adminis-
trative offices (C&G) exist (Institute of Food and

This audit was conducted as of August 1, 2009
with the objective to evaluate the adequacy and
effectiveness of key controls over billing and
reporting. The audit specifically focused on the
control environment, account set up, billing,
collections, cash management, reporting to
sponsors and closeout processes.

Check Processing and Disbursements

University Purchasing and Disbursement Ser-
vices (PDS) was a unit of the University Control-
ler's Office. The PDS disbursements office had
the responsibility to review and approve vouch-
ers for vendor payment, distribute checks, image
supporting documentation for financial transac-
tions, and disseminate and interpret information
relative to the invoice payment process.

In the myUFL system, vouchers were allowed to
be manually approved or pre-approved for pay-
ment. Manually approved vouchers were entered
at the unit level and supporting documentation
was faxed to the central imaging system for re-
view and approval by one of the five core ap-

proval offices. Pre-approved vouchers were the
result of purchases from designated vendors or
when PDS allowed select units to have their
own review and approval process outside of
myUFL for operational efficiency purposes.

During the 2008-2009 fiscal year, the university
processed 972,408 vouchers through myUFL
(excluding payroll related transactions) resulting
in disbursements of approximately $635 million.
This audit was conducted as of January 31, 2010
with the objective to evaluate the adequacy and
effectiveness of key controls over voucher proc-
essing and disbursements, including check pro-

IFAS Gulf Coast Research and Education Center

The Center consisted of two campuses located in
Hillsborough County. The Balm campus was
located in Wimauma, Florida and included 475
acres, 16 labs, and 22 faculty devoted to conduct-
ing research on small fruits, vegetables, and
ornamental crops. Research and teaching
included programmatic areas in genetics, plant
breeding, integrated biological, chemical and cul-
tural pest management, plant p irl ..._ soil and
water science, and natural resource conservation.
The Center also offered teaching programs with
bachelor and masters level courses at the Plant
City campus of Hillsborough Community


At the time of our review the Center had ap-
proximately 100 employees, $3.4 million in
equipment at both locations, and approximately
$5.9 million in annual expenditures. This audit
was conducted as of February 28, 2010 with the
objective to evaluate key controls over the ad-
ministrative processes of the Center including,
payroll and personnel administration, fiscal
monitoring, collections, disbursements, asset
management and general compliance with appli-
cable rules and regulations.

Gulj Coast Research & Education Center

Audit & Compliance Review

Annual Report 2009-2010

Page 11

IFAS Southwest Florida Research and Education Center

The Center was located in Immokalee, Florida
and had 320 acres, of which approximately 30
acres were vegetables, 70 acres were citrus and
the remainder was natural range scrub. The
facilities included 17,000 square feet of admin-
istrative and laboratory space, research green-
houses, and maintenance facilities. Research
and teaching programs included horticulture,
physiology, entomology, plant irl.... ecol-
ogy, soil science, and water resources specifi-
cally related to production of vegetables and

At the time of our review the Center had approxi-
mately 80 employees, $2.4 million in equipment,
and approximately $4.5 million in annual expendi-
tures. This audit was conducted as of February 28,
2010 with the objective to evaluate key controls
over the administrative processes of the Center
including, payroll and personnel administration,
fiscal monitoring, collections, disbursements, asset
management and general compliance with applica-
ble rules and regulations.

J. Wayne Reity Student Union (JWRU)

The JWRU was operated as an auxiliary enter-
prise within the Office of the Vice President,
Student Affairs. The mission of the JWRU
was to create diverse interactions and environ-
ments to cultivate personal development and
enhance the university experience for students
and the greater university community. The
JWRU Board of Managers was a standing
advisory committee of the University of
Florida and was appointed annually by the
university president, subject to the authority of
the Vice President for Student Affairs. The
board addressed issues pertaining to facility
usage and programming, long range plans for
development and renovation of facilities,
sustainability initiatives, marketing and promo-

tion functions, financial policies, operating budgets,
facility use rates, and building space allocation.

The JWRU was managed by an executive director
who oversees the operational functions and
approximately 90 full-time staff and 258 part-time
student employees. Operational funding for the
JWRU originated from the Activity and Service
fees, allocated by Student Government
(approximately 60%), and from internally generated
revenues of its auxiliary operations (approximately
40%). This audit was conducted as of February 28,
2010 with the objective to evaluate the adequacy
and effectiveness of key control procedures in place
for managing the JWRU.

UAA Ticket Office

The mission of the UAA Ticket Office was to
provide equal, honest and quality service to
athletic ticket subscribers, Gator Boosters and
peers within the ticket industry. The UAA sold
tickets through different venues and methods,
including Ticketmaster's website (Host), the
UAA website, the main window at the Ticket
Office, over the phone, and on game days,
through the different stadiums' windows.
During the 2008-2009 fiscal year, the Ticket
Office implemented Archtics, a new ticketing
system from Ticketmaster. The Ticket Office
utilized Archtics to sell tickets, store customer
information, account for revenues and generate
reports. The system had an online application
(Account Manager) that allowed customers to

purchase tickets through the UAA website and
manage their accounts.

At the time of our review, the Ticket Office
employed approximately 10 full-time staff and 35
part-time employees. Game revenues generated
through ticket sales during the 2008-2009 fiscal
year totaled $17,722,000 from football, '1 5. '..)'
from men's basketball, and -1' ',000 from the
other sports. This audit was conducted as of
December 31, 2009 with the objectives to evaluate
the adequacy and effectiveness of key controls
over ticket sales revenue; ticket security;
Ticketmaster contract compliance; and,
compliance with SEC and NCAA rules regarding
complimentary tickets.

J. Wayne Reitz Student Union

Page 12

Audit & Compliance Review

Annual Report 2009-2010

Management Advisory Services

The Institute of Internal Auditors defines "consulting from various management levels throughout the 1p -r,
services" as university. OACR actively provides advisory :

Advisog and related client service activities...intended
to add value and improve an organization's govern-
ance, risk management, and controlprocesses without
the internal auditor assuming management responsibil-
ity. Examples include counsel, advice, facilitation, and
OACR is committed to providing proactive, preven-
tive advice on internal controls, operations and com-
pliance through management advisory services
(MAS). Such engagements may be performed as part
of our risk-based work plan, or as a result of a request

reviews, consulting assistance, training and train-
ing tools, and post-audit assistance with the goal
to assist management in decision making and
operational improvements. MAS engagement
results and recommendations are communicated
to management and stakeholders in the most
appropriate manner which may be orally or
through a letter or more formal report format.
The following chart illustrates the distribution of
effort performed on the various types of MAS

AS Effort Distribution


* General University Services and Support
q DSO Services
* Other

E University Governance and Publications
4 Consultation and Advisory

During fiscal year 2009-2010, 1,969 hours were
spent on MAS, which represented 12% of available
hours. A significant portion of MAS effort (85%)
was expended on consultation and advisory
reviews, and general university service and support.
Following are summaries of MAS projects
completed and significant service/ support efforts
during the year:

President's Reimbursable Expenses

The objective of this annual review is to evaluate
the effectiveness of processing controls over the
president's expenses and evaluate their propriety
and compliance with established policies and

IFAS European Union Project Review

This MAS was an audit of eligible costs declared in
the final financial reports prepared by the
University of Florida to be presented to the
Commission of the European Communities under
the contract "Building trust for quality assurance in

emerging markets for food chains." The
objective of the review was to provide
reasonable assurance that the financial
statements accurately and fairly represented
allowable costs under that contract.

Zipcar Contract Review

Included in the objectives of our audit of
Transportation and Parking Services was a
review of controls over the administration of
the Zipcar program. It was noted that the
Zipcar contract was pending with an effective
date of January 3, 2010. Due to the timing of
the renewal of the Zipcar contract, we
determined that we could provide more value
through an MAS review of the proposed
contract terms of the new Zipcar contract. The
objective of this MAS was to review the key
contract terms of the contract, benchmark with
peer institutions utilizing the Zipcar program,
and to review key administrative processes over
the Zipcar program.



Audit & Compliance Review

Annual Report 2009-2010

Page 13

Page 14 Audit & Compliance Review Annual Report 2009-2010

Management Advisory Services-cont'd

Curtis M. Phillips Center
for the Arts

University of Florida Performing Arts
(UFPA) Charitable Ticket Donation Out-
reach Program

The purpose of the UFPA's Charitable Ticket
Donation Outreach Program (Program) was to
distribute tickets to local non-profit charitable
organizations while simultaneously enriching the
community through the performing arts, making
it a culturally vibrant and desirable place to live.
The objective of this MAS was to understand the
program and provide best practices and recom-
mendations in the context of existing rules and

Export Control Compliance Program

The United States Government has implemented
a series of export control laws and federal execu-
tive orders to provide for the legal export of cer-
tain technologies, and to administer and enforce
economic and trade sanctions based on U.S. for-
eign policy. This MAS was conducted to evalu-
ate the Export Control Compliance Program
Guidelines and to identify opportunities to
strengthen existing practices.

Lenel Electronic Access Control System

The Lenel Electronic Access Control System was
an electronic locking system that was imple-
mented prior to 2004 as a replacement for keys
and locks in numerous locations. The system
also allowed for the time control remote opening
and closing of exterior doors. The objective of
this MAS was to gain an understanding of the
Physical Plant Division's role in managing the
Lenel system and to determine the reliability and
security of the system.

Internal Control Training

PRO 303 Internal Controls at UF is a course de-
signed to help university administrative staff un-
derstand internal control concepts and learn how
to apply them to their everyday business proc-
esses. OACR has continued to present, in con-
junction with the University Controller's office,
live sessions of this internal control training
course. Human Resources Training and Organ-
izational Development office, with the assistance
of OACR and the University Controller's office,

developed an online version of this training
course to provide more accessibility and flexibil-
ity for campus administrative staff. The online
course was implemented during the 2009-2010
fiscal year.

During the year 171 employees participated in
the internal control training 77 in the live ses-
sions and 94 participated in on-line training.
The feedback on the training program contin-
ued to be positive and it will be continued into
the 2010-2011 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 Chief Information Officer's
office, the Chief Financial Officer's office, the
Physical Plant Division, and the Vice President
for Research.


Quarterly newsletters were distributed campus-
wide with regular features that include highlights
from projects and campus-wide issues. Elec-
tronic copies are maintained at:
; *iit .. .., l ,l, ,,l i ,. ii, r.html

Other MAS Projects

The OACR also participates in projects and
initiatives that do not result in a released report.
Examples of such projects during the 2009-
2010 fiscal year includes:

* Role Security
* IT Advisory Services
* Research Compliance
* Data Security
* Effort Reporting
* DSO Financial Reporting and Governance

Each year, we survey all affiliated organizations
to obtain information 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.


Page 14

Audit & Compliance Review

Annual Report 2009-2010


The OACR receives complaints and allegations of fiscal impro-
prieties from a variety of internal and external sources, including
direct 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 compliance hotline. The
OACR has contracted with an independent third party, The Net-
work, to manage the compliance hotline. The Network is a tech-
nology-based company 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 environment with the core attributes of honesty and
integrity. We strive to maintain the utmost objectivity and inde-
pendence in all reviews by strictly following professional stan-

In 2010, the OACR received a total of 43 complaints and allega-
tions via the following methods:

indication of merit to any allegation or complaint, a project
number is assigned and a full scale investigative review is initiated.

Of the 43 complaints received in 2010, the assessments,
preliminary and full scale reviews performed resulted in the
following classifications or breakdown of review activities:

Disposition of

PI 16 Referred
* 14 Preliminary Assessment
* 13 Full Review

Complaints and
Allegations Received

n 21 UF Compliance Hotline
* 4-E-Mail
* 4 Telephone / Fax
* 14 Referral / Letter / Other

When complaints and allegations are received by the OACR, they
are assessed to determine the most appropriate method for re-
sponse. In some instances, the initial assessment indicates that
the allegations are not of a fiscal nature and that other university
departments would be the more appropriate body to perform a
review of the reported concerns. In cases where a fiscal concern
or impropriety may be present, the OACR will initiate its review

The review process begins with a preliminary review of the facts
and information contained in the allegation and, if there is any

For fiscal year 2010, the total number of hours related to
investigative efforts increased by 5% over the prior years' hours
due to the complexity of several large investigations performed. A
total of 2,257 hours, or 14% of available hours, were committed to
investigative efforts. Not all investigative reviews conducted by
OACR result in findings that require communication to
Management. When appropriate, results are communicated to
management and may include recommendations for improvements
of internal controls that will be monitored for implementation.

The significant issues addressed with OACR's investigative reviews
are listed in the following table:

Purchasing Card Misuse 2
Research Funds Misuse 2
Inappropriate Outside Activities/
Conflict of Interest 1
Theft of Property/Resources 1
Financial Mismanagement 2
Improper Use of Equipment/Email 2

Audit & Compliance Review

Annual Report 2009-2010

Page 15

Audit & Compliance Review


Section 2500, International Standards for the Professional Practice of Inter-
nalAuditing, promulgated by the Institute of Internal Auditors,
requires that the internal auditor must establish and maintain a
system to monitor the disposition of results communicated to
management and ensure that management actions have been effec-
tively implemented or that senior management has accepted the
risk of not taking action.

OACR audit reports include auditor's comments and planned ac-
tions developed and agreed to by the audit team and management
and the estimated time for their implementation. Reports issued
by external auditors, including the Office of Auditor General, con-
tain recommendations for which university management may also
provide a corrective implementation plan. OACR conducted quar-
terly follow-up procedures throughout the year on action

1 Academic Affair:
2 Business Affairs

plans from internal audit reports and comments from external and
other audit reports. Results of these follow-up procedures were
communicated to university management and the Board of Trus-
tees Audit and Operations Review Committee. For the 2009-2010
fiscal year, the OACR staff expended 783 hours, or 5% of avail-
able hours, for follow-up activities.
As reflected by the summarized information, management gener-
ally reacted in an effective manner to implement audit recommen-
dations and planned actions. The caption "in process" included
action plans that were not fully implemented during our follow-up
review process for the 2009-2010 fiscal year. The caption "not to
be implemented" generally indicated that actions were not fully
implemented after our follow-up review procedures were com-
pleted, or that changing conditions rendered the plan obsolete.

Planned Action Implementation Percentage










1 2 3 4 5 6 7 8 9

SImplemented U Not implemented


3 CFO 27 20 4 3 74% N/A
4 Health Affairs 6 6 100% 75%
5 Human Resources 4 3 0 1 75% 33%
6- IFAS 17 14 3 82% 100%
7 Student Affairs 7 7 100% N/A
8 UAA 4 4 100% 50%
9-UFF 17 13 1 3 76% 96%
-otals -2 -4 -0% -7%

Page 16

Annual Report 2009-2010

Audit & Compliance Review Annual Report 2009-2010 Page 17

Other Activities


OACR staff participated in various national ini-
tiatives, training and organizations including:

* Member Association for College and Univer-
sity Auditors (ACUA)

* Member Institute of Internal Auditors (IIA)

* Member Association of Healthcare Internal
Auditors (AHIA)

* Member American Institute of Certified Pub-
lic Accountants (AICPA)

* Member Florida Institute of Certified Public
Accountants (FICPA)

* Member Association of Certified Fraud Ex-
aminers (ACFE)

* Member IIA North Central Florida Chapter

* Treasurer IIA North Central Florida Chapter

* Secretary IIA North Central Florida Chapter

* Board Member IIA North Central Florida

* Membership Chair IIA North Central Flor-
ida Chapter

* Web Master IIA North Central Florida

* Program Committee IIA North Central Flor-
ida Chapter

* Member State University Auditors Consor-
tium (SUAC)

* Technology Committee Association of
Healthcare Internal Auditors (AHIA)

* Member Information Systems Audit and
Control Association (ISACA)

* Member Florida AutoAudit Users Group

* Member Chartered Accountants in England
and Wales (ICAEW)

University Service
During fiscal year 2009-2010, OACR staff par-
ticipated in various university-wide initiatives
and assignments including:

* Liaison Board of Trustees Audit and Opera-
tions Review Committee

* Direct Support Organization Audit Commit-
tee Coordination (UAA, UFF & Gator

* Audit Coordination (External)

* Member Information Security Officer Search

* Member Research Accounting and Effort
Reporting Project Steering Committee

* Member Information Security and Compli-
ance Committee

* Member University Information Technology
Advisory Committee Information Security

* Member University Information Technology
Advisory Committee Data Infrastructure

* Member University Information Technology
Advisory Committee -- Network Infrastruc-

* Member Auxiliary Review Committee

* Member Research Compliance Committee

* Member University of Florida Communica-
tions Network

* Presenter Division of Sponsored Research -
Research Administration Training Series

* PresenterPRO3 Series Internal Controls at

* Presenter Academic Administrators Leader-
ship Series

* Building Emergency Coordinator

* Coordinator University of Florida Green


The Institute of
Internal Auditors


Audit & Compliance Review

Annual Report 2009-2010

Page 17

Audit & Compliance Review

Reports Issued

Reports Issued 2009-10

Purchasing Card Program As of 2/28/09 7/24/09 UF-09-560-22 Audit

President's Reimbursable Expenses 7/1/08- 6/30/09 8/24/09 72.2009.05 MAS

Alumni Association Gator Clubs As of 3/31/09 9/2/09 UF-09-543-05 Audit

UFF Restricted Gifts 1/1/08 12/31/08 9/2/09 UF-09-545-07 Audit
UAA Student Athlete
As of 6/30/09 9/22/09 UF-09-561-23 Audit
Academic Eligibility
Payroll As of 8/31/09 10/8/09 UF-08-514-06 Audit

Recreational Sports Department As of 7/31/09 11/23/09 UF-10-563-02 Audit

IFAS EU Project Review As of 10/31/07, 08 & 09 11/24/09 71.2010.02 MAS

Zipcar Contract Review As of 12/18/09 12/18/09 71.2010.08 MAS

Transportation & Parking Services As of 10/31/09 2/22/10 UF-10-568-07 Audit

UFPA Charitable Ticket Donation
As of 2/22/10 2/22/10 72.2010-09 MAS
Outreach Program
University of Florida
As of 6/30/09 2/25/10 UF-08-517-09 Audit
Investment Corporation
UFF Human Resources & Payroll As of 10/31/09 3/4/10 UF-10-565-04 Audit
UFF Risk Management
As of 9/30/09 3/4/10 UF-10-569-08 Audit
and Insurance

Export Control Compliance Program As of 2/28/10 4/9/10 72.2009-10 MAS

Cost Sharing As of 7/31/09 4/28/10 UF-10-567-06 Audit
Contracts and Grants
As of 8/1/09 4/28/10 UF-10-564-03 Audit
Billing and Reporting
Lenel Electronic Access
As of 10/1/09 5/11/10 UF-72.2010-02 MAS
Control System
Check Processing and
As of 1/31/10 6/3/10 UF-10-571-10 Audit
IFAS Gulf Coast Research
and Education Center As of 2/28/10 6/14/10 UF-10-577-16.1 Audit
IFAS Southwest Florida Research
As of 2/28/10 6/14/10 UF-10-577-16.2 Audit
and Education Center
J. Wayne Reitz Student Union As of 2/28/10 6/21/10 UF-10-574-13 Audit

*UAA Ticket Office As of 12/31/09 8/13/10 UF-10-562-01 Audit

Substantially completed as of June 30, 2010

Page 18

Annual Report 2009-2010

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