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Agenda

UMBC Audit Update April 28, 2017 Presented by Management Advisory Services Terry Cook, Sr. AVP for Admin. Svcs. Sharon Doherty-Ritter, Director David Sohns, Management Analyst. Agenda. Welcome/Introductions USM OIA Legislative Audit Follow Up Other USM OIA Audits External Audits Update

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Agenda

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  1. UMBC Audit UpdateApril 28, 2017Presented byManagement Advisory ServicesTerry Cook, Sr. AVP for Admin. Svcs.Sharon Doherty-Ritter, DirectorDavid Sohns, Management Analyst

  2. Agenda • Welcome/Introductions • USM OIA Legislative Audit Follow Up • Other USM OIA Audits • External Audits Update • UMBC/USM Case Studies • P-card News and Reminders • Questions/Comments

  3. USM Legislative Audit Follow-Up

  4. USM Legislative Audit Follow-up • USM OIA Legislative Audit Follow-up audit recently concluded. • 7 compliance findings; 14 recommendations. • Follow-up Audit found 12 recommendations were fully implemented (FI). • 2 recommendations not fully implemented (NFI).

  5. USM Legislative Audit Follow-Up • Finding 1: Student Residency- FI • Finding 2: Payroll (multiple agency)- NFI • Finding 3: Payroll (PS Access)- FI • Finding 4: Network Security- FI • Finding 5: Financial Aid- FI • Finding 6: Purchasing Cards- NFI • Finding 7: Disbursements- FI

  6. USM Legislative Audit Follow-Up Finding 2: Payroll (multiple agency)- NFI Recommendation: Monitor departments to ensure that investigations of employees on multiple payrolls are completed timely.

  7. USM Legislative Audit Follow-Up Finding 2: Payroll (multiple agency)- NFI • Follow-up Results: Payroll is monitoring for dual employment but verification not completed timely. • UMBC Response: We will work to ensure verifications are completed timely.

  8. USM Legislative Audit Follow-Up Finding 6: Purchasing Cards- NFI Recommendation: UMBC should consolidate procurement of similar goods to maximize buying power, when possible, and ensure procurements comply with USM Procurement Policies and Procedures.

  9. USM Legislative Audit Follow-Up Finding 6: Purchasing Cards- NFI • Follow-up Results: UMBC conducted a procurement and awarded a contract for the goods/services identified in the original report. • UMBC implemented informal procedure to seek competition when aggregate purchase level exceeds $50,000.

  10. USM/Legislative Audit When will they be back? • USM will return to follow-up on Legislative Audit Follow-Up (6 -12 months from now). • Interval for next legislative audit will range from 3-4 years. • MAS anticipates our next Legislative audit in 2019-2020.

  11. USM Office of Internal Audit

  12. Other USM OIA Audits • Campus Traffic Safety Project Follow-Up (issued with recommendations fully implemented) • Affiliated Foundations (issued with 2 areas for improvement identified and recommendations subsequently implemented) • Campus Card Operations (issued with 4 areas for improvement identified and implementation of recommendations in process) • Research & Technology Park - Follow-Up (TBD)

  13. USM OIA Audits • Security Policy Development (TBD) • Division of Professional Studies Systems – Logical Access (In process) • Contracts and Grants – Follow-Up (in process) • Child Care Center (YMCA) (in process)

  14. External Audits Update

  15. External Audits Update US Department of Education Financial Aid Review (Title IV, HEA Programs) • Report issued in December 2016. • 4 areas of non-compliance (minor). • Corrective actions implemented. • UMBC response accepted by Department of Education on 3/28/17.

  16. External Audits Update Maryland State Retirement Agency (MSRA) Compliance Audit • Draft Report to be issued in April 2017. • 2 areas of noncompliance. • UMBC will respond to the areas of noncompliance.

  17. Case Studiesand Lessons Learned

  18. “Sometimes in life, your situation will keep repeating itself until you learn your lesson.”~ Brigitte Nicole

  19. Case Study 1Laboratory Theft • Tip to UMBC legal counsel. • Unauthorized purchase and misuse of a controlled substance. • Breakdown in basic internal controls.

  20. Case Study 1Laboratory Theft • Investigation resulted in the discovery of fraud and termination and prosecution of a trusted long-term UMBC employee. • UMBC had to return federal funds to awarding agency.

  21. Case Study 1 Lessons Learned • Placing trust in individuals does not supersede following proper internal controls. • Proper internal controls protect both the individuals and the institution.

  22. Case Study 2Payroll Fraud • Anonymous tip to USM Fraud Hotline • Employee abusing time/leave usage.

  23. Case Study 2Payroll Fraud • Review found: • Pay approved without timesheets over 5-year period. • No leave usage for 5 years, while social media revealed extensive travel. • Resulted in the termination of one employee and the retirement of another – both were long-term employees.

  24. Case Study 2 Lessons Learned • “It’s how we’ve always done it” is not an appropriate answer. • Departmental culture of “indifference” is not acceptable. • Verification! Timekeeper trusted-but did not verify- that the employee was fulfilling duties. Trust but verify!

  25. Case Study 2 Lessons Learned • Implementation of electronic time sheets has improved the tracking of employee time/leave. • Social media can be a valuable tool in investigating fraud.

  26. Case Study 3 Misappropriation of Federal Grant Funds • USM Institution self-reported fiscal irregularities. • Student paychecks inappropriately cashed by Program Coordinator.

  27. Case Study 3 Misappropriation of Federal Grant Funds • Employee resigned. • Employee being charged with theft and multiple counts of forgery. • Incident led to the implementation of improved controls over student stipends. • Funds returned to granting agency.

  28. USM Case Study 3 Lessons Learned • Background checks can be an important resource - employee had extensive criminal record. • Importance of controls over paycheck distribution process.

  29. Common Reasons for Unethical Behavior • Pressure: To succeed, to get ahead, to meet deadlines, to fit in with co-workers or the organization, environment/culture • Not sure what is the right thing to do: complex, complicated, gray areas • Self-interest, Personal Gain, Ambition • Misguided loyalty • Apathy: Don’t know or care about ethics

  30. P-Card News and Reminders

  31. P-card Online Training • MAS and Instructional Technology in conjunction with Procurement developing online training for all P-card holders and Supervisors, including new cardholders. • Training will be via CourseArc- a web-based content authoring tool for creating online courses. • Online training will mitigate scheduling constraints of face-to-face training sessions.

  32. P-Card Transaction Log • GAD granted UMBC permission to utilize PeopleSoft-based electronic P-Card logs. • MAS and Procurement, in conjunction with DoIT, developed template. • New transaction log opened to campus on April 12.

  33. Any Questions/Comments?

  34. UMBC Audit Update MeetingMAS Staff • Sharon Doherty-Ritter (5-1620) • Dave Sohns (5-6257)

  35. UMBC Audit UpdateApril 28, 2017Presented byManagement Advisory ServicesTerry Cook, Sr. AVP for Admin. Svcs.Sharon Doherty-Ritter, DirectorDavid Sohns, Management Analyst

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