Celine McArthur documents regarding audits of FSCJ

8/2/2019 Celine McArthur documents regarding audits of FSCJ

1/36

DAVID W. MARTIN, CPAAuDrfOR GENERAL

AUDITOR GENERALSTATE OF FLORIDAG74 Claude Pepper Building111 WestMadison Street

Tallahassee, Florida 32399-1450 PHONE: 850-488 5534FAX: 850-488~6975January 12,2012

Dr. Steven R.Wallace, PresidentFlorida State College at JacksonvilleSOl West State StreetJacksonville, Florida 32202-4030Dear President Wallace:.Attached are preliminary and tentative findings and recommendations which may be included in areport to be prepared on our audit of the Federal awards administered by the State of Florida forthe fiscal year ended June 30,2011.Pursuant to Section l1AS(4)(d), Florida Statutes, you are required to submit to me within 30 daysafter receipt of the preliminary and tentative. findings a written statement of explanationconcerning ali of the findings, including therein your actual or proposed corrective actions, agencycontact name, and estimated corrective action date. If within the 3D-day period you havequestions or desire further discussion on any of the preliminary and tentative findings, pleasecontact John Duffy, Audit Supervisor, at (904) 390-4656, Ext 10.Please e-mail [email protected] to indicate receiptof the preliminary and tentative findings. Absent such receipt, delivery of the enclosed findingsdocument is presumed, by law, to be made when it is delivered to YOut Office.

Sincerely".

David W _ MartinDWM/ggAttachment
mailto:[email protected]:[email protected]


2/36

Finding NumberCFDA NumberProg ram Title

Compliance RequirementState Educational EntityFinding Type

Finding

Criteria

Condition

U.S. DEPARTMENT OF EDUCATIONFA11~84.007, 84.063, 84.268, 84.376Student Financial Aid Cluster (SFA)Federal Supplemental Educational Opportunity Grants (FSEOG)Federal Pell Grant Program (PELL)Federal Direct Student Loans (FDSL)National Science and Mathematics Access to Retain Talent (SMART) Grant

Elfgibility - Satisfactory Academic Progress (SAP)Florida State College at JacksonviUe (FSCJ)Noncompliance and Significant DeficiencyQuestioned Costs - $128,588 (FSEOG $400; PELL $47,096; FDSL subsidized$37,421; FDSL unsubsidized $40,671; SMART $3,000)The institution's internal controls over the SAP appeals process did not providfor an appropriate level of administrative oversight, and its appeal determinationwere based primarily on academic progress rather than all elements of thFederal SAP standards. Also, student appeals were approved with inadequatdocumentation, and ineligible students were allowed to continue to receive TitIV Higher Education Opportunity Act (HEOA) aid.34 CFR 668_16 (b),(c),(e) Standards of Administrative Capability, 34 CFR 668.3Student Eligibility - General, -and 34 CFR 668.34 Satisfactory Progress; FederaStudent Aid Handbook.Fora student to be eligible for Title IV HEOA aid they must be enrolled asregular student working toward a degree or certificate in an eligible program. Tremain eligible for financial aid, a student must make SAP by maintaining a GPAof 2.0, achieving satisfactory grades in 67 percent of credit hours attempted, anmust not exceed 150 percent of credit hours required for their program of studor degree. Students may appeal their SAP failure if . it is attributable todocumented special circumstance, such as a death in the student's family orpersonal Injury or illness of the student,The institution is required to have: > Reasonable procedures when assessing SAP that must include bothgrade~based and time-related standards,} P o SpeCific procedures under which a student may appeal a determination thathe student is not making satisfactory academic progress, and

} P o Specific procedures for a student to re-establish that the student is makingsatisfactory academic progress, and, thereby, erIgible for Title IVHEOA aid.Although the institution's 2010-11 Catalog lists the basic SAP standards andaddresses the student appeal process, there were limited internal administrativepolicies or procedures on the application of SAP standards for institution staff toutilize during the appeal process, and there were no specific policies orprocedures for requiring students to re-establish their SAP status and Titfe IVHEOA eligibility.For 11 of 30 students tested, we noted exceptions to Federal regulations and theapplication of th e institution's policies related to continued eligibility despite thestudents' failure to meet SAP standards, as follows:} P o The 11 students failed SAP standards, were notified that their Title IV HEOAaid would be discontinued for the 2010-11 award year, appealed the

determination, and their appeals were subsequently approved; however,contrary to Federal requirements, the students djd not always documentspecial circumstances in support of their appeal, and institution staffevaluated appeals by looking only for evidence of academic progress instead

'" ...... ~ C I


3/36

Cause

of applying all elements of the Federal SAP standards. Typically, institutiostaff determrned the number of hours earned and remaIning in the studentcurrent Program of Study (POS) as evidence of academic progresHowever. for the 11 students, it was not apparent from institution records thFederal SAP standards were appropriately applied and used as the baSIS fgranting SAP appeals. For example:One student's appeal stated uSpotty problems aft year related to mhealth and family situation:" however, institution records did not includdocumentation supporting this statement. This student attended onpnor college and had six consecutive years of SAP failures approved athis institution. When the 2010-11 award year appeal was approvedJune 2010, this student was enrolled in a 72-hour program and haattempted 115 hours, which was greater than 150 percent of attemptedhours (108) allowed for the program. Also, the student had earned onl63.7 percent of credit hours attempted, which is below the required67 percent. The student subsequently received $7..732 in Title IV HEOAaid during the 2010-11 award year and received over $60,700 in Title tvHEOAoaid from this institution through the 2011 Spring term.

Another student's appeal stated ~Ihave ... togo through financial aidpetitions seems like every year and all documents have been providedand approved". When asked by institution staff to specify particularsemester{s) in which there were problems, the student stated "None-see attachment for reasoning;" however, institution records did noinclude documentation indicating the particular semesters. This studenattended two pnor colleges, cited problems dating back to 1991 to 2004prior to the student's 2005-06 award year enrollment at this institutionand had six consecutive years of approved SAP failures. This studenthad attempted 196 hours, which was greater than 150 percent oattempted hours (90) allowed for the 50-hour Associates of Arts degreeearned in the 2008-09 award year. When the 2010-11 award yearappeal was approved in June 2010, this student had begun work towarda 120-hour degree and had earned only 57.5 percent (less than therequired 67 percent) of 238 attempted hours, which is greOaterthan the180 attempted hours allowed for a 120-hour program to meet SAPstandards and remain eligible for Title IV HEOA aid. Twice in the pastthis student failed to meet criteria set as a condition of approvedappeals; however, the student's Title IV HEOA aid was not cancelfed.The student received $14,686 in Title IV HEOA aid during the 2010-11award year, and received a total of over $55,000 in such aid from thisinstitution through the 2011 Spring term.

Academic Deans and their staff at the institution's various campuses wereresponsible for makIng autonomous SAP appeal determinations and approvalsand, as noted above, these determinations were not always based on aUelements of the. Federal SAP standards. This decentralized process did not giveany institution financlal aid administrator direct responsibility for administeringand coordinating art aspects of the Title IV HEOA aid programs; overaff, theinstitution's SAP policies and procedures were not adequate; and the appealprocess did not establlsh adequate checks and balances in its system of internalcontrols.In the absence of proper administrative oversight, adequate internal SAP policiesand procedures, and adherence to Federal SAP regulations, ineligible studentsmay receive Titre IV HEOA aid.The institution should strengthen its SAP policies and procedures to ensureFederal regulations and guidelines are adhered to for SAP evaluations andappeal determinations, to include requiring, obtaining, and maintainingdocumentation for eligible events; and ensure that the Director of StudentFinancial Aid, or appropriate delegate, has adequate oversight authority for SAP

Effect

Recommendation


4/36

FSCJ Response andCorrective Action Plan

Estimated CorrectiveAction DateFSCJ Contact andTelephone Number

determinations and appear determinations. The institution should also reviSAP for a[1 recipients of Title IV HEOA funds for the 2010-11 award yeardetermine if other ineligible students received Title IV HEOA aid and retufunds, including the Title IV HEOA funds noted above for the 11 students,applicable, to the appropriate Federal programs.


5/36

Finding NumberCFDA NumberProgram Title

Compliance RequirementState Educational EntityFinding Type

Finding

CriteriaCondition

Cause

EffectRecommendation

FSCJ Response andCorrective Action PlanEstimated CorrectiveAction DateFSCJ Contact andTetephone Number

u.s. DEPARTMENT OF EDUCATIONFA 11-84.063Student Financial Assistance Cluster (SFA)Federal Pell Grant Program (PELL)

EligibilityFlorida State College at Jacksonville (FSCJ)Noncompliance and Significant DeficiencyQuestioned Costs s$10,699 PELLTwo of 20 students tested who had received baccalaureate degrees at thinstitution were paid $10,699 of PELL funds, after earning baccalaureatedegrees, contrary to Federal regulations.34 CFR Section .668.32(2), Student eligibilityPELL funds were paid to two students who had earned baccalaureate degreeand were therefore ineligible to receive PELL funds. PELl recipients may nohave a baccalaureate or. first professional degree, unless enrolled inpost-baccalaureate teacher certificate or licensing program. These studentwere not enrolled in an eligible program and therefore were not eligible to receivPELL funds. Subsequent to audit inquiry, on August 27, 2011, the institutionrestored $10,699 to PELL.The institution did not have adequate controls or system edits to check fopreviously awarded baccalaureate degrees to prevent ineligible students fromreceiving PELL funds.Ineligible students received PELl funds in error.The institution should establish controls to ensure that students do not receivePELL funds for which they are not eligible. Addit ionally, the institution shoulddetermine whether other ineligible students received PELL funds after alreadyreceiving baccalaureate degrees and reimburse the Federal program asapplicable.

End of Preliminary and Tentative Findings


6/36

Florida State College at JacksonvilleOffice of VicePresident. Administrative ServicesAudit Findings and Recommendations - Federal Financial Aid

1. Finding: Pell grant funds paid to 2 students who had bachelor degrees from .. FSCJ Recommendation: Institution should establish controls to ensure students donot receive Pell grant funds for which they are ineligible.Response: The College accepts the finding and has already corrected theprogramming to . prevent this from occurring again.Correction date: Completed in September 2011.

February 6, 2012

2. Finding: Title IV funds awarded to 11 students who did not meet USDept. ofEducation Satisfactory Academic Progress (SAP). Additionally, theinstitution did not have specific policies or procedures on the application ofS AP standards to use during appeal process.Recommendations:. a. Institution should strengthen its policies and procedures for SA Pand ensure Director of Financial Aid has adequate oversightauthority for S AP determinations and appeals.b. Institution should review SAP for all recipients of 201011 Title IVfederal aid and return funds as applicable to the appropriate

federal programs.Response:a. The College did strengthen its policies and procedures for SA Peffective July 1,2011, and effective Feb. 1,2010 the new positiondescription for Director of Financial Aid has had oversightresponsibility for SAP determinations and appeals. It was becauseof this oversight responsibility that the College implementedstronger policies and procedures for federal financial aid.b. The College wil1 review S AP fo r a l l recipients of2010-11 Title IVfederal aid and return funds as applicable to the appropriatefederal programs. .

Correction date: by June 3D, 2012.


7/36

Florida State Collegeat JacksonvilleOffice of VicePresident. Administrative Services

Audit Findings and Recommendations - Federal Financial Aid

Withdraw delegation to North Campus for processing SAP appeals,effective Feb. 7,20-12Hold mandatory retraining session for all campuses with deans ofStudent Success, Enrollment Services Coordinators, and financial aidstaff on US DOE S AP requirements and College policies andprocedures for SAP appeals - by end of March 2012.Establish appropriate staff and leadership accountability and takeappropriate personnel actions ~by June 30, 2U~2.Evaluate and revise, as necessary, professional requirements forfinancial aid - by June 30, 2012Strengthen monitoring role and take action as required.

Internal Plan

v.

A. Strengthen internal processes and establish accountability'

B. Review 2010-11 SAP for all students - by rune 3D,2012

Review aU 3378 SAP appeals for 2010-11 ~M. Bowles and staff.Determine which students had missing documentation; notifystudents by mail requesting missing documentation.For students without adequate extenuating circumstance and/ormissing documentation, notify students of their debt to the College forthe ineligible award.For loan students, determine from U S DOE w ha t repayments arerequired.College will repay funds awarded to ineligible students to appropriateFederal program, and post debt to College in student's' records.~ wiII be unable t o regIster for classes or request transcript.until debt ~ paid.

February 6, 2012


8/36

! T v cfFe-er T O g_ 2fl (D - I IADMINISTRATIVE PROCEDURE MANUAL

SECTION TITLE10-0606NUMBER PAGE

10F2T UD EN T A ID - S A TIS FA CTO RY A CA DEM IC PROGRESSBASED ON BOARD OF TRUSTEES' RULE .ANDTITLE6Hx7-10.6 Student Standards of ProgressAPPROVED BY:

PURPOSEInaccordance with U.S. D ep artm en t o f E du ca tio n re qu irem en ts , inorder to re ce iv e fe de ra l fin a nc ia l aid,th e C o ll eg e is requ ired to esta bl is h g uid el in es o n sa tisfa cto ry pro g ress in a d eg re e-g ra n ti ng o r ce rti fi ca teprogr am .R UL ES OF EL IG ID ILIT YA ll students must bemaintaining S a ti sfu cto ry A c a dem ic Progres s ( SAP ) , ino rder to receive Title IV funds .Academic history is rev iew ed fu r all s tu den ts a pplyin g fo r f inanc ia l a id , reg ardles s o f w hether f inancial aidb a s been previo us ly received . S tu den ts a re amy a llo wed to a ttem pt a l im ited n uin ber o f'b ou rs u nder federa lf inancial a id g u idel in es . .s tu den ts a re g iven a g ra ce perio d fo r the first 12 credits which may i nc lu de c ol leg e a n d/o r w o rkfo rce

) credits a ttempted , ei ther a t FC CJ o r t ransfer credits , (in clu din g rem ed ia l co urs es a nd remedia l ESUEAP) .. On ce the s tu den t a ttempts mo re than 12 cred its ; th e pol icy will a p p l Y fo r all c red it s a t temp ted .Financial Aid GP A - S tu den ts m us t mainta in a 2.0 Fin a nc ia l A id G P A ca lcu la ted o n a l l tra ns ferc re di ts a n d all co urses a ttem pted a t FCCl (credit type: 01 - a dva nced a n d p ro fe ss io n a l c o urs es .02 - po stseco nda ry vo ca tio na l co urses, 03 - co lleg e prepa ra to ry co urses , 05 - po stseco nda ry a du l tv o ca ti o na l c o urs es ).Forgiveness Po licy - S tu den ts may repea t a co u rse in . an attempt to im pro ve a g ra de previo us ly ea rn ed.S t ate B o a rd .R n l e 6A-14.0301limits s u ch a ttempt s to co urses w here a "n,,'"F" o r "FN" g rade w a s earned.There is n o fo rg i ve ne ss pol icy wh en c al cu la ti ng the 67 percen t a nd 150 percen t co mpletio n .67 Percent Completion ~A ca dem ic h is to ry is rev iew ed fo r all s tu den ts a pplyin g fo r f inancial a id , whethero r n ot a id wa s p re vi ou sl y reeeived, A l l s tu d en ts . must successfu lly co mplete 67 percen t o f a l l co u rses .a ttem pted, w hich in c lu des cred its o r c lo ck ho urs a ttem pted a nd all tr a n sf er c re di ts .150 Percent R ule - T he in sti tu tio n is requ ired to es ta bl ish a m axim um tim e fram e inw hich stu den ts a rerea so na bly expected to co mplete their educa tio na l o bjec tives . S tu den ts ca nn ot a ttem pt m ore than 150----.pe-rcenrofthe-rotal"credit-huurs-required-forcompletion-oftheir-degree-or-ce:rtificate-prog:ram:-:FoT'----example, a s tu den t w o rkin g tow a rd a n AA. degree may need 60 ho urs to g radua te . On ce that s tuden tattempts 90 h ou rs h e/s he is n o lo ng er el ig ib le fo r fin an cia l a id (60 ho urs x 150 percen t =90 h o u rs ),

( .:


9/36

REpORT No. 2012-073JANUARY 2012

FLORIDA STATE COLLEGE ATJACKSONVILLE

STATE OF FLORIDAAUDITOR GENERALDAVIDW. MARTlN. CPA!

. " "' or __

Operational Audit


10/36

BOARD OF TRUSTEES AND PRESfDENT

Members of the Board of Trustees and President who served during the 2010-11 fiscal year are listed below:

Dr. Linda II. ;\S;l~',\'ice Chair ro :->.11," III,Chair (rom H-IH-IO (t)

.I amt.'~ E, \lcCollulll, \'icc Chair from S114III (2)(; \\'t:l1d,-,I~'n Yarl:s. Vice C:h;llrTh()nla~ It .\ f cC ~:hc


11/36

JANUARY 2012 REpORT No. 2012-073FLORIDA STATE COlLEGE AT JACKSONVILLE

Our operational audit disclosed the following:STUDENT ENROLLMENTFinding No.1: The College had not provided data for its Continuing Workforce Education (CWE) coursesrequested by the Florida Department of Education ro determine adjustments necessary to the College'sfull-time equivalent eWE enrollment for the 2006-07 through 200910 fiscal years. As a result, the Collegemay receive State funding that it is not entitled to receive.Finding No.2: The College needed to strengthen its controls to ensure the accurate reporting ofInst:ructional contact hours for adult general education classes to the Florida Department of Education.SroDENT'ILlITION AND FEESFindingNo.3: The College needed to strengthen its procedures for assessing user fees.ADMINISTRATIVE MANAGEMENTFinding No.4; A College employee's employment with another organization doing business with theCollege may have eesulred in a conflict of interest inviolation of Section 112.313(7)(a), Florida Statutes.PERSONNEL AND PAYROLLFinding No.5; The President's employment agreement included a severance pay provision that is contraryto Section 215.425(4)(a), Florida Statutes.Finding No.6: Pursuant to the College President's employment contract, accrued sick leave wastr:ansferred to accrued vacation leave, effectively circumventing the limitation for payment of unused sickleave upon termination provided in Section 1012.865(2)(0)2., Florida Statutes.Finding No.7: 'The College had not taken action to recover sick leave overpayments totaling $87,098notedinour prior report.CONSTRUCTION ADMINISTRATIONFinding No.8: The College's procedures for the administration of construction management projectsneeded improvement. .Finding No.9: The College needed to enhance its monitoring procedures for ensuring that designprofessionals and construction managers obtain required insurance coverage.CONFlDENTIAL INFORMATIONFinding No. 10:The College did not always provide the required written notification to individuals whentheir social security numbers were collected, contrary to Section 119.071(5)(a), Florida Statutes.INFORMATION TECHNOLOGYFinding No. 11: Some Inappropriate and unnecessary information technology (IT) access privileges existed.Finding No. 12: The College had not developed a written, comprehensive IT risk assessment.Finding No. 13: The College did not retain some access control records, contrary to the requirements of theState of Florida, General Records Schedule.Finding No. 14: The College did not have written policies and procedures foe certain IT functions.Finding No. 15; The College's procedures for managing access to its telecommunications equipmentneeded improvement,Fin.d.itJgNo. 16: The College's IT security controls related to user authentication needed improvement.

1

J


12/36

JANUARY2012 REpORT No, 2012-013. -

Florida State College at Jacksonville (College) is under the general direction and control of the Florida Department ofEducation, Division of Florida Colleges, and is governed by State law and State Board of Education rules. A board oftrustees (Board) governs and operates the College. The Board constitutes a corporation and is composed of n inemembers appointed by the Governor and confirmed by the Senate. The College President serves as the executiveofficer and the corporate secretary of the Board, and is responsible foe the operation and administration of theCollege.The College has campuses located in Jacksonville, Florida, and centers located in Jacksonville and Yulee, Florida,Aclditiooally, credit and noncredit classes are offered in public- schools and other locations throughout Duval andNassau Counties. The College reported enrollment of 25,524 full time equivalent students for the 2010-11 fiscal year.The results of our financial audit of the College for the fiscal year ended June 30,2011, will be presented in a separatereport. In addition, the Federal awards administered by the College are included within the scope of OUt Statewideaudit of Federal awards administered by the State of Florida and the results of that audit. for the fiscal year endedJune 30, 2011, will be presented in a separate report.

''. - :'.

!:' -:';

Student EnrolbnentFinding No. 1; Full-Time Equivalent Enrollment Reporting - Continuing Workforce Education CoursesSection 1011.84(1)(a), Florida Statutes, requires that the Florida Department of Education (FDOE) determine theState- financial support and- the- annual apportionment to each college district th rough the College. Program Fundbased on the types of pwgnuns offered and the related costs of those prognutJS_ Section 1011.80(5)(a) (2009). FloridaStatutes, provided that for a continuing workforce education course, State funding shall equal 50 per:cent of the costof instruction, with student fees, business support, quid-response tta ining funds" or other means making up theremaining 50 percent. Sections' 1011.80(5)(d) and 1011.84(1)(t). Florida Statutes, provide that when a publiceducational institution has been fully funded by an external agency for direct instructional costs of any course orprogr-atn, the- full-time- equivalent (FIE) generated- shall not be reported- fur: State-funding. State-Board, of EducationRule 6A-14.054(7), Florida Administrative Code, provides that each board of trustees shal l have- the authority tonegotiate tuition fees for courses and programs contracted by external agencies and companies that vru:y from thetuition' fees provided for in this- rule; and such negotiated fees may exceed: the full cost of instruction; however, thecourses and programs of instruction funded from these negotiated fees shall not be reported. for State fundingpurposes.In our report No. 2010-168, we noted that the College reported 3,955 and 3,666 full-time equivalent (FTE)enrollment inthe College's continuing workforce education (CWE) ca tegory for the 2008-09 and 2007-08 fiscalyears,respectively, [DE whieh the College-also reported: revenues- from the-Navy and:ether exteroal- agencies and companiesexceeding the direct cost of instruction. We also noted that, because' the College was fully funded for directinstructional costs for these eWE programs, the College's reporting of this FI'E appeared to be contrary toSections 1011.80(5)(cl) and- 1011.84(1)(f),. Florida: Statutes; a nd State Board ..of Education Rule-6A-14.G54(7). floridaAdministrative Code. We recommended that the College consult with the mOE on the reporting of FIE for CWE

2


13/36

JANUARY 2012 REpORT No. 2012-073programs and determine the corrective action necessary to the FfE reported for CWE programs for the 2008-09 and2007-08 f is c a l y ea r s.Our current review disclosed that for the 2009-10 fiscal year the College reported FfE for its CWE programs forwhich it reported revenues from the Navy and other external agencies and companies that collectively exceeded thedirect cost of instruction, as shown in Table 1 below;

Table 1Description 2009-10

Total Nawl OtherAgreements eWEeWE

eWE Revenues (Fees and Contracts) (1) $ 18,137,864 $ 15,298.751 s 2,839,113Direct Instructional Expenses (2) 17.086,371 14,571,033 2,515,338Difference $ 1,051,493 $ 727,718 s 323,775Revenues as a Percentage of Expenses 106.15% 104.99% 112.87%eWE FTE Reported (2) 4.845 4,484 361Total FTE Reported (2) 28,808eWE PTE as a Percentage of Total FTE 16.82%Notes: (1) From the College's General Ledger.

(2) From the College's Stu~nt Enrollment and Cost Analysis Reports.Effective July I, 2010, Section 1011.80(5)(a), Florida Statutes, was revised to require that expenditures for CWEprograms provided by colleges be fully supported by fees and discontinuance of reporting enrollments in CWEcourses for: FIE fund ing purposes.In February 2011, FDOE contacted the College and indicated that the CWE FIE previously reported impacted notonly the 2007-08 and 2008-09 f iscal years' enrollment reporting, but also the 2009-10 fiscal year. roOE alsoindicated that the Florida. College System's fund ing allocation model and prior enrollment growth used to allocate theCollege's 2010-11 fiscal year funding relied heavi ly on the CWE FTE reported by the College during the 2006-07 to2009-10 fiscal years . FDOE further indicated that, as a result, the College received additional funding in the 2010-11fiscal year based, in part, on the incorrect CWE FrE previously reported and requested that the College provide thedata necessary to accurately assess the reporting of CWE FTE by February 28, 2011. We were advised by FDOE andCollege personnel that the requested data regarding the- ewE FrE reporting had not been provided to FDOE as ofNovember 15, 2011. The failure of the College to provide the accurate enrollment data. may result in the Collegereceiving State funding that it is not entitled to receive.Recommendation; Since State funding provided to the College is based partially on the FTE reported toFDOE, the College should consult with FDOE on the reporting of FTE for these programs and determinethe corrective action necessary to FTE reported for the eWE prog4arIls for the 2006-07 through 2009-10 fiscalyears.

3


14/36


15/36

J AN UARY 2 012 REPORT No. 2012-073the service. State Board of Education (SBE) Rule 6A.14.054{6), Florida Administrative Code, authorizes the Board toestablish user fees in addition to tuition fees for services that incur unusual costs. Additionally, the Florida CollegeSystem Council of Business Affairs and the Florida Department of Education, Division of Rodda Colleges, haveissued guidelines for assessing user fees. These guidelines provide that each college board establish policies for theimplementation and justification of additional user fees, defining which costs are in excess of base instructional costs,describing the documentation required to support the fees, the time period for review of such fees, and the manner ofpresenting such fees to the Board for:approval.The CoUege Board adopted Board Rule 6Hx7-4. 19, F ee ! a nd C ha rg es , establishing policies to be used for assessing userfees. The College also established procedures related to special fees that require the preparation of a Special FeeRequest Form (Form) to document the background, rationale, cost basis, and annual fiscal impact of the new orrevised fee. The Board Rule also requires that costs supporting such fees be reviewed at least every three years.Laboratory and other user fee collections totaled approximately $5.3 million for the 2010-11 fiscal ycar. Our reviewof ten laboratory and other user fees assessed disclosed the following: Although requested, supporting documentation for three laboratory fees, ranging from $12 to $7 0 per course,

was not available. In .response to our inquiry , College personnel indicated that two of these fees had beenassessed since 1999, when the College transitioned from its previous accounting system, and supportingdocumentation was not maintained. According to College personnel, supporting documentation for theother laboraeory fee could not be located. Absent supporting documentation, College records did notdemonstrate that the laboratory fees assessed were properly calculated and did not exceed the cost of servicesprovided.

.l > The three laboratory fees noted above and two other laboratory fees, totaling $254 and $781 per course, hadnot been reviewed within the previous three years, conttary to Board Rule 6&7-4.19. In response to ourinquiry , College personnel indicated that the College had not reviewed the two fees assessed since 1999, asdiscussed above, and the other three fees were last reviewed in 2000, 2002; and 2006, respectively. Absentt imely periodic reviews of user fees, there is an increased risk that fees will not be adjusted to reflect changesin costs since the fees were in i t ia l ly determined or previously reviewed.

Recommendation: The College should ensure that a documented evaluation of each laboratory andother user fee is periodically performed to ensure compliance with Section 1009.23(12), florida Statutes, andapplicable SBE and Board rules.

Administrative Management

Finding No, 4: Conflict of InterestSection 112313, Florida Statutes, establishes standards of conduct for public officers and employees.Section 112.313(7)(a), Florida Statutes, provides that no employee should have a contractual relationship with anybusiness entity that is subject to the regulation of, or is doing business with, an agency of which he or she is an officeror employee, except under specific circumstances listed in Section 112.313(12), Florida Statutes. The statute alsoprohibits an employee of an agency from having or bolding a n y employment or contractual relationship that willcreate a continuing or frequently recurring conflict between his or her private interests an d the performance of h is orher public duties or that would impede the full and faithful discharge of his or her public duties. EffectiveMay 31, 2011, the Board approved an administrative procedure relating to standards of conduct for employees thataddresses such matters as conflicts of interest, unauthorized compensation, and misus ing public position.

5


16/36

JANUARY 2012 REpORT No. 2012-073The College has developed a business enterprise, referred ro as Sirius Academics, to provide fat the development anddistribution of low-cost instructional materials. Sirius Academics course materials are developed and owned by theCollege, and are soLd and distributed through a contracted bookstore that receives a commission on each sale.Students enrolled in Sirius Academics courses are required to purchase the materials from the contracted bookstore.The College also markets the materials to other educational institutions, primarily through a Federally-fundedconsortium comprised of 24 colleges and universities referred to as Project DELTA (Disseminating EffectiveLearning Through Automation). The College administers the Federal grant funding the Project DELTA consortium,and the College provides Sirius Academics course materials to the contracted bookstore for consortium members topurchase.During the 2010-11 fiscal year, we were made aware that a College employee directly involved with the SiriusAcademics project and the development and marketing of these course materials had an employment relationshipwith an out-of-State college that was also a Project DELTA consortium member, and purchased the College's SiriusAcademics course materials. Such an arrangement may represent a conflict of interest as defined bySection 112.313(7)(a), Florida Statutes.Recommendation: The College should ensure that conflicting employment or contractual relationships,as specified in Section 112.313, Florida Statutes, are prohibited.

Personnel and PaytonFinding N.o. 5: Severance PayChapter 2011-143, Laws of Florida, was signed into law on June 17, 2011, and amends Sec;tion215.425, FloridaStatutes. This law provides that, on or after July 1, 2011, a unit of government that enters into a contract oremployment agreement, or renewal or renegotiation of an existing contract or employment agreement, that contains a

tprovision for severance pay with an officer, agent, employee, or conrractor must include provisions consistent withthe following:

;> A requirement that severance pa y provided may not exceed an amount greater than 20 weeks ofcompensation- A prohibition of a provision for severance paywhen the officer, agent, employee, or contractor has been firedfor misconduct, as defined in Section 443,036(29), Florida Statute, by the unit of govemment

On July 12, 2011, the Board approved the 2011-12 f iscal year employment agreement with the College President.Paragraph 5.a.(3) of the employment agreement provides, upon termination without cause, for the payment of anamount equal to the lesser of one year's annual salary or the annual salary for the remaining term of the agreementending June 30, 2015, and foe certain insurance coverage under the College's medical and dental plans, at thePresident's election, for the same remaining term. This provision is contrary to Section 215.425(4)(a), FloridaStatutes, in that it allows for the possibility of the President receiving severance payments that exceed 20 weeks ofsa l a ry ,

Recommendation: The College should ensure that employment agreements, including the President'scontract. contain provisions foe severance pay that are in accordance with Section 215.425 (4)(a). FlocidaStatutes.

6


17/36

JANUARY2012 REpORT No. 2012-073Finding No.6: Transfer of President's Accrued Sick LeaveSection 1012.865(2)(e)2., Florida Statutes, provides that sick leave terminal pay for employees other than instructionalstaff or educational support employees (considered senior management class employees at the College) may notexceed an amount equal to one-fourth of the employee's unused sick leave, or 60 days of the employee's pay,whichever amount is less, for unused sick leave accumulated on or after Ju ly 1,2001.The President's employment contracts for the 2009-10 and 2010-11 fiscal years provided, in part , that sick leavebenefits in excess of 29 6 hours accrued as of December 31,2009, be transferred to accrued vacation leave. Accordingto College records, n6 sick leave hours were transferred from the President's sick leave account to his vacation leaveaccount on J a nu a ry 22, 2010, thereby reducing his sick leave balance to 296 hours.Because the sick leave transferred to annual leave 'Wasearned by the President after July 1, 2001, payment for anyunused balance remaining when the President separates from the College would be subject to a one-fourth limitationor 60 days of pay, 'Whichever is less; however, there are no such limitations on the payment of vacation leave.Consequently, these provisions may result in circumventing the limitation for payment for accrued leave upontermination of employment, as provided in Section 1012865(2)(e)2., Florida Statutes. Based on the President's sa laryrate as of October 31, 2011, the transfer of accrued sick leave to accrued annual leave would amount to an additional$95,518 in compensation,Upon i nqu i ry , College personnel advised us that the:Board's statutory authority and responsibility over the President'sannual evaluation and the terms and conditions of employment pursuant to Sections 1001,64(19) and (47). FloridaStatutes, provided the authority for theBoard to permit the transfer of accrued sick leave balances to accrued annualleave balances; however, we are unaware of .anyauthority that would allow the Board to transfer sick.leave to annualleave or to provide employment contract proVlSlons that are contrary to specific provisions ofSection l012.865(2){e)2., Florida Statutes.Recommendation: The College should restore the 776 hours to the President's accrued sick leaveaccount to ensure any future leave payments are in compliance with Section l012.865(Z)(e)2., FloridaStatutes. The College should also consult with its legal counsel to take appropriate actions to revise thePresident's employment contract. to ensure the provisions are consistent with applicable statutes.

Finding No.7: Terminal Pay fOJ; Accumulated Unused Sick LeaveIn audit report No. 2010-168, we noted the College overpaid 23 former administrative and professional employees atotal of $87,098 for accumulated unused sick leave because the College calculated the payments based on 100 percentof the employee'S unused sick leave earned after July 1, 2001, rather than using one-fourth of the: unused leave asrequired by Section 1012.865(2){e), Florida Statutes. College personnel advised us that when Board Rule 6Hx7-3.38,Sick Leave, was modified on December 3, 2002, the College inadvertently omitted the wording limiting terminalpayments to Due-fourth of the employee'S unused sick leave. In response to report No. 2010-168, the CollegePresident indicated that the College would not attempt to collect overpayments from the 23 former employees thatseparated from the College. On November 3, 2009, the Board approved revising the Rule to include the one-fourthlimitation; however, as of October 31,2011, the College had not attempted to recover any ovetpayments, nor had theCollege documented, of record, the public purpose served by not attempting to recover the overpayments.

L R e l4 1 1 ' y v . ?7

. . . ~


18/36

JANUARY 2012 REpORT No. 2012-073Recommendation: The College should attempt to recover the overpayments from former employees, cothe extent allowed under Section 95.11, Florida Statutes, D C document, of record, the public purpose servedby not attempting to recover the overpayments.

Construction Administration

Finding No.8: Construction Management ServicesPursuant to Section 1013.45(1), Florida Statutes, the CoUege may contract for the construction or renovation offacilities using various delivery methods, including selection of a construction manager (eM) pursuant toSection 287.055, Florida Statutes, which .requires that the College publicly announce, in a uniform and consistentmanner, each occasion when professional services must be purchased for a project in which the basic constructioncosts are estimated to exceed a specified amount ($325,000 foe the 2010-11 fiscal year) . The public notice mustinclude a general description of the project and must indicate how interested consultants may apply for consideration.Under the CM process, contractor profit and overhead are contractually agreed up.on,. and the contracted finn isresponsible for al l scheduling and coordination in both design and construction phases and isgenerally responsible forthe successful, t imely, and economical completion of theconstruction project. CM firms may also be required tooffer a guaranteed maximum price (GMP). The GMP provision allows for the difference between the actu.al cost ofthe project and the GMP amount, or the net cost savings, to be returned to the College. As such, a GMP contractrequires close monitoring by College personnel to ensure that the cost of construction is adequately documented.Our review of the College'S controls over construction administration disclosed the following:South Campus We1come Center ProjectOur review disclosed that the College utilized a local diso::ict school board's continuing contract to procureconstruction management services for its $850,000 South Campus Welcome Center project rather than utilizing thepublic announcement and competitive selection and negotiation process required. by Section 287.055, Florida Statutes.Upon inquiry, College personnel advised us they utilized the district school board's continuing contract forconstruction management services pursuant to SWe Board of Education Rule 6A-14.0734, Florida AdministrativeCode; however, this rule pertains to the general purchase of services or commodities not specifically addressed in thestatutes and we know of no legal basis for an administrative rule to supersede the requirements of Sections 1013.45and 287.055, Florida Statutes.The Legislature has recognized in Section 287.001, Florida Statutes, that fair and open competition is a basic tenet ofpublic procurement and that such competition reduces the appearance a n d . opportunity for favoritism and inspirespublic confidence that contracts are awarded equitably and economically. Absent utilization of the requiredcompetitive selection process, the College's assurances related to the fair, equitable, and economical procurement ofprofessional services are limited.SoutA Campus Fire Training Bum Ship ProjectThe College entered into a GMl' contract with a CM for construction of a Fire Trairllitg Bum Ship project with a totalproject cost of approximately $3.2 million. This project was completed during the 201(}.11 fiscal year. Our reviewdisclosed that the College could improve its controls over construction administration, as discussed below: The College did not require the eM to incJude supporting documentation for the itemized amounts it billed

to the College. The College'S contract with the CM required that invoices be submitted in detail sufficient fora proper pre-audit and post-audit thereof. Absent supporting documentation for the itemized amounts billed,

8


19/36

J ANUARY 2 01 2 REpORT No.2012-073College records do not evidence that the amounts requested by the eM were adequately verified prior topayment.

College personnel did not attend the bid openings for the first phase of the project with construction costs ofapproxir:rul.tely $1.7 million. Absent the College's presence a n d documented mon i t o r i ng of the subcontractorselection process, the College has limited assurance that the CM complied with the terms of the contract inthe handling and awarding of subcontractor bids. For example, we noted several inconsistencies betweensubcontractor bids and bid tabulations, and between the apparent low bidders and the subcontractors actuallyselected. Subsequent to out inqu iry , College personnel contacted the CM finn and obtained reasonableexplanations for the inconsistencies noted b y our review.

Although required by the College's contract with the CM, copies of the project manual and a n y updates werenot provided to the College. The project manual describes the services set forth in the contract and providesa plan for the control, direction, coordination, and evaluation of work performed throughout the project,induding identification of key personnel; responsibilities of the eM, College,and architect; work flowdiagrams; and strategy for b idd ing the work. Subsequent to OUI inquiries, the College requested and obtaineda copy of the project manual.

> The College's contract with the CM required that copies of subcontracts be provided to the College as part ofthe project manual and, as noted above, the project manual was not obtained until subsequent to ourinquiries. Our review disclosed that several subconttact:swere not included in the project manua l , and that anumber of the subcontracts were executed in amounts that did not agree with b id amounts or b id tabulationswithout College personnel obtaining explanations for these differences. For example, the subcontract forconcrete was $8,286 more than the subcontractor's bid amount and the subcontract for site-work wa s$29,431 less than the amount awarded per the bid tabulation, Copies of subcontracts should be maintainedfor verifying contractor b i l l ings , monitoring project contingency funds, and ensuring that cost savings aremaximized under the GMP. Additionally, subcontract amounts should agree with bid amounts or reasonableexplanations for an y differences should be obtained.

In response to our inquiry, we were advised by College personnel that the standard procedure for future projects willbe to require that a College employee attend b id openings and that bid tabulations, projects manuals, and detailedpayment requests, with supporting invoices, be timdy provided and utilized in monitoring project progress andbi l l ings.Recommendation: The College should enhance its procedures to ensure a formal competitive selectionand negotiation process is held for selecting professional services when the basic construction cost or the feefor professional services is estimated to exceed the thresholds specified in Section 287.055, Florida Statutes.Additionally, the College should continue its efforts to improve eM contract monitoring procedures byensuring that a College employee attends subcontractor bid openings, obtaining project manuals andsubcontracts, and requiring that CM payment requests contain adequate supporting documentation to allowverification of the accuracy of amounts billed.

Finding No.9; Insurance CoverageThe College'S requests for qualifications (RFQ) for both architectural and constructions managers (CM) andsubsequent contracts contain certa in requirements related to insurance coverage for architects and CMs selected toperform construction services. Ow: review of insurance certificates for the South Campus Fire Training Burn Shipproject disclosed that the College needed to enhance its procedures for monitoring evidence of insurance coverage, asfollows:

> Although required in the RFQ for CM services, the College was not listed as an . additional insured on thecertificates of insurance. The certificates of insurance listed m e College as the certificate holder; however, tohave an interest in the pol icy, the College must be listed. as an additional insured.

9


20/36

JANUARY 2012 REpORT No. 2012-073} > The College's RFQs for both the architectural and CM services required that the certificates of insurance

provide at least 30 days advance nonce of cancelation or non-renewal. The certificates reviewed addressedthe cancelation provision; however, the certificates did not address notifying the College in the event ofnon-renewal.

}> The contract for eM services required the certificate of insurance to specifically identify the job name and jobnumber. The College initially accepted a certificate of insurance applicable to another project and d id notrequire the eM to provide a project specific certificate of insurance until November 17, 2009, or 225 daysafter the contract was signed. The RFQ for architectural services requited that new certificates of insurance be provided to the College atleast 15 days prior to renewal. College records indicated that evidence of renewal was not obtained untilNovember 24,2010, or 149 days after the renewal date.

Failure to ensure that architects and eMs are maintaining adequate insurance could increase the College'S risk of lossin the event of an occurrence causing injury to persons Or damage to property.Recommendation: The College should enhance its monitodng procedures to ensure that contractorsand architects timely provide proper certificates of insurance as required by contracts and RFQs.

Confi~ential InformationFinding No. 10: Collection of Social Security NumbersThe Legislature 'has acknowledged in Section 119.071(5)(a), Florida Statutes, the necessity of collecting social securitynumbers (SSNs) for certain purposes because of their acceptance over time as a unique numeric identifier for identityverification and other legitimate purposes. The Legislature has also recognized. that SSNs can be Used to acquiresensitive personal information, the release of which could result in fraud against individuals or cause other f inancia l orpersonal harm, Therefore, public entities ate required to provide extra care in maintaining such information to ensureits confidential status.Section 119.071(5)(11.),Florida Statutes, provides that the College may not collect an individual's SSN unless theCollege has stated inwriting the purpose for: it s collection and unless it is specifically authorized by law to do so, or isimperative for the performance of the College's duties and responsibilities as prescribed by law. Additionally, thisSection requires that if the College collects an individual's SSN, it must provide that individual with a writtenstatement indicating whether the collection of the SSN is authorized or mandatory under Federal or State l aw, andiden.tifYingthe specific Federal or State law governing the collection, use, or release of SSNs for each purpose forwhich the SSN is collected. 'This Section also provides that SSNscollected by the College ma y not be used for anyputpose other than the putpose provided in the written statement. This Section further requires that the Collegereview whether its collection of SSNs is in compliance with the above requirements and immediately discontinue thecollection ofSSNs for pru:poses that are not in compliance.Although the College has assigned unique student and employee identification numbers to replace SSNs for recordkeep.i.cg purposes, it continued to collect SSNs from students, employees. and employee applicants. As similarlynoted in our repott No. 2010-168, College procedures over the collection and use of SSNs needed improvement; asfollows:

We noted six standard forms available on the College's Web site that requested SSNs but did not contain orreference to the required written statement regarding the collection and use of SSNs. Four other formsprovided genetal statements regarding the collection and use of SSNs and referenced to a statement in theCol lege 'S online. catalog. However, the statement in the College's online catalog did not identify the specific

10


21/36

JANUARY 2012 REpORT N o. 2012-073Federal and State laws governing the collection, use, or release of SSNs and whether the collection wasauthorized or mandatory under Federal or State l aw .

~ The Human Resources Department established a written statement addressing the collection and use ofSSNsthat was to be signed by new employees upon employment; however, a similar statement was nor provided toemployee applicants who applied online.

In the above circumstances, College records did not evidence that individuals were provided the required writtennotification when their SSNs were collected. Effective controls to properly monitor the need for and use of S SN sand ensure compliance with statutory requirements reduce the risk that SSNs may be used for unauthorized purposes.Recommendation: The College should continue its .efforts to ensure compliance withSection 119.071(S)(a), Florida Statutes.

Information Technology IFinding No. 11: Access PrivilegesAccess controls a re intended to protect da ta a n d information technology (I1) resources from unauthorized disclosure,modification, or destruction. Effective access controls provide employees access to IT resources based on ademonstrated need to view, change, or delete data and restrict employees from performing incompatible functions orfunctions outside of their areas of responsibility. Periodically reviewing IT access privileges assigned to employeespromotes good. internal control and is necessary to ensure that employees cannot access computer resourcesinconsistent with their assigned jobresponsibilities.Our tests of selected access privileges to the finance application disclosed that some employees had access privilegesthat either permitted the employee to perform incompatible duties or were not necessary for their job responsibilities.Specifically: Two database administrators had security administrator privileges for the finance application. Since the

College's practice was to distribute security administration responsibilities to various departments, this accesswas unnecessary-and contrary to an appropriate separation of duties. In addition, an employee with budgeta nd fi na nc ia l planning responsibilities had security administrator privileges that were no l o n g e r necessary forthe employee's job responsibilities.

_ > Four current finance employees had update capability in the .f~nance application, including vendor andelectronic funds transfers, which WlIS unnecessary for their assigned jo b r es po n s ib i li ti es . Additionally, oneformer employee who had not b een e mpl oye d by the College since 2001 continued to have update capabi l i tyin the f i n a nce application as of June 29 , 2011.

~ Two programmers had update ca.pability in the finance application. Based on their application programmingresponsibilities in support of the business application s ys te m, th is access was unnecessary and contrary to anappropriate separation of duties.

As also noted in our report No. 2010-168, the College did not have written procedures to provide for acomprehensive review of employees' access privileges. Without a comprehensive review, inappropria te accessprivileges may not be t ime ly detected and addressed b y the College, increasing the riskof unauthorized disclosure,modification, or destruction of College data and IT resources.

11


22/36

J AN U ARY 2 01 2 REpORT No. 201UJ73

Recommendation: The College should establish written procedures for reviewing the appropriateness ofIT access privileges, including those employees who have been granted security administrator authority,and timely remove or adjust any inappropriate or unnecessary access detected to ensure that accessprivileges are compatible with employee job duties.

Finding No. 12: rusk AssessmeneManagement of IT-related risks is a key part of enterprise IT governance. Incorporating an enterprise perspectiveinto day-to-day governance actions helps an entity understand it s greatest security risk exposures and determinewhether planned controls are appropriate and adequate to secure IT resources from unauthorized disclosure,modification, or destruction. IT risk assessment, including the identification of risks and the evaluation of thelikelihood of threats and the severity of threat impact, helps support management's decisions in establishingcost-effective measures to mitigate risk and, where appropriate, focmallyaccept residual risk.The College had not developed a written, comprehensive IT risk assessment. The absence of a written,comprehensive IT risk assessment may l imi t the College's assurance that all l ikely threats and vulnerabilities have beenidentified, the most significant risks have been addressed, and appropriate decisions have been made regarding whichrisks to accept and which risks to mitigate through security controls. "", .Recommendaticn; The College should develop a written, comprehensive IT risk assessment to providea documented basis for managing IT -related risks.

Finding No. 13~ Access Control RecordsThe Stale ojF /Q ri da , G e ne ra l & C O T P s Schdttle G S1SL , jor State a nd local G ovem mm t Agem:ieI (General Records Schedule),revised b y the Department of State effective August 2010, provides that access control records must be retained forone anniversary year after superseded or after the employee separates from employtnent Contrary to the GeneralRe cordr Schedul e requirements, the College's practice was to delete an employee's application account from the systemand disable the employee's network account upon termination of employment and automatically delete the networkaccount 60 days thereafter. Without adequate retention of access control records, the risk is increased that the Collegemay not have sufficient documentation to assist in future investigations of security incidents, should they occur.Addi t i ona l ly , the College is not in compliance with the State's record retention requirements.Recommendation: The College should ensure that access control records are retained as required by theGeo.t:.m1 Records Schedule.

Finding No. 14: Policies and ProceduresEach IT function needs complete, well-documented policies and procedures to describe the scope of the function a n dits activities. Sound policies and procedures provide benchmarks ag a i n s t which compliance can be measured andcontribute to an effective control environment.Although informal. procedures were followed, the College lacked written policies and procedures for the following ITfunctions:

> Removing confidential Collcge information from consultant or vendor equipment upon completion ofcontractual services.

12


23/36

JANUARY 2012 REpORT No. 2012-073); > Granting and management of administrative rights by end-users.); > Sanitizing computet hard drives prior to disposal of the equipment.

A similar finding was noted in our report No. 2010-168. Without written policies and procedures, there is anincreased risk that IT controls may not be followed consistently and in accordance with management's expectations.Recommendation: The College should establish written policies and procedures to documentmanagement's expectations for theperfoanance of the above-listed IT functions.

FindJngNo.15: Access to Telecommunications EquipmentPhysical access controls include restricting physical access to IT resources to minimize the risk of intentional orunintentional loss or impairment Access to telecommunications equipment located in storage closets, throughout thevarious College campuses, was not restricted or centrally managed through the IT Department. Consequently, the ITDepartment was not always notified of individuals who were granted access to the telecommunications equipmenr,Although our audit did not disclose any unauthorized use of telecommunications equipment, the inability todetermine who may have accessed telecommunications equipment may l imit the College's ability to appropriatelyrespond to and take action against an individual attempting unauthorized actions or causing damage to connections orequipment.Recommendation: The' College should establish procedures for limiting access to telecommunicationsequipment, including notification to the IT Department of all individuals granted such access.

Finding No. 16: Security Controls - User AuthenticationSecurity controls are intended to protect the confidentiality, integrity, and availability of data and IT resources. Ouraudit disclosed certain College security controls related to user authentication that needed improvement. We are notdisclosing specific details of the issues in this report to avoid the possibility of compromising College data and ITresources. However, we have notified appropriate College management of the specific issues. W1thout adequatesecurity controls related to user authentication, the confidentiality, integrity. and availability of data and IT resourcesmay be compromised, increasing the risk that College dam and IT resources may be subject to improper disclosure,modification, or destruction. A s imi la r finding was noted in our report No. 2010-168.Recommendation: The College should improve security controls related to user authentication to ensurethe continued confidentiality. integrity, and availability of College data and IT resources.

Except as discussed in the preceding paragraphs, the College had taken corrective actions for f indings included in ourreport No. 2010-168.

13


24/36

J AN U ARY 2 01 2 REpORT No, 2012-073

The Auditor General conducts operational audits of governmental entities to provide the Legislature, Florida'scitizens, public entity management,' and other stakeholders unbiased, timely, and relevant information for use inpromoting government accountability and stewardship and improvinggovemrnent operations.We conducted this operational audit from February 2011 to October 2011 in accordance with generally acceptedgovernment auditing standards. Those standards require that we plan and perform the audit to obtain sufficient,appropriate evidence to provide a reasonable basis for OUI findings a n d conclusions based on our audit objectives.We believe that the evidence obtained provides a reasonable basis for our f indings and conclusions based on our auditobjectives.The objectives of this operational audit were to; (1 ) obtain an understanding and make overall judgments as towhether College internal controls promoted and encouraged compliance w i t h applicable laws, rules, regulations,contracts, and grant agreements; the economic and efficient operation of the College; the reliability of records andreports; and the safeFdin~ of assets; (2) evaluate man~ent's performance in these areas; and (3) determinewhether the College had taken corrective actions for f i nd ings included in our report No. 2010-168. Also, pursuant toSection 1l.45(7)(h), Florida Statutes, our audit may identify statutory and fiscal changes to be recommended to 'theLegislature.The scope of this operational audit is described in Exhibit A . Our audit included examinations of various records andtransactions (as well as events and conditions) occurring during the 2010-11 fisca l ye ar and selected transactionsthro~h October 31, 201l.Our audit methodology included obtaining an understanding of the internal controls by interviewing Collegepersonnel and, as appropriate, performing a walk-through of relevant internal controls through observation andexamination of SUPP?rtlns. documentation and records, Additional audit procedures applied, to determine tha tinternal controls were working as designed, and to determine the College'S compliance with the above-noted auditobjectives, are described in Exhibit A. Specific information describing the work conducted to address the audit.objectives is also included in the individual f i nd ings .

Pursuant to the provisions of Section 11.45, FloridaStatutes, I have directed that this report be prepared topresent the results of our operational audit.

Management's response is included as Exhibit B.

David W. Martin, CPAAuditor General


25/36

JANUARY 201.2 REpORT No. 2012-073EXHIBI'T A

AUDrT SCOPE AND METHODOLOGYScope (!'opic) Methodology

Information Technology ([1) policies and procedures. Reviewed the College's written IT policies and procedures todetermine whether they addressed certain important [Tcontrol functions.

IT access privileges and separation of duties. Tested select application access privileges to determinewhether access privileges granted to sensitive finance andhuman resources applications were appropriately granted andauthorized.

Procedures to timely prohibit fanner employees' access to Tested access privileges to data files for employees whoelectronic data files. terminared employment during the audit period and verified

that the College terminated access privileges.Board meetings. Reviewed Board minutes to determine whether Board

approval was obtained for policies and procedures placed ineffect during the audit pe rio d a nd for evidence of compliancewith Sunshine law requirements (i.e.,proper notice ofmeetings, ready access to public, mainta in minutes).

Sensitive and confidential information, Examined written policies, procedures. and Board of TrusteesRules governing the proper st0nJge, handling; transmission,use, and format of sensitive and confidential information,

Fraud pol icy and related procedures. Examined written policies, procedures, and supportingdocumentation related to the College's fraud policy andrelated procedures.

Social security number requirements of Section 119.071 (S)(a), E~ supporting documentation to determine whetherFlorida Statutes. the College had provided individuals with a written statement

of the purpose of collecting their social security numbers.Identity theft prevention program (Red flags Rule). Reviewed the College'S pol icies and procedures related to its

identity theft prevention program for compliance with theFederal Trade Commission's Red Flags Rule.

Fund equiry controls. Determined whether the unencumbered balance in theunrestr icted current fund of the Board of Trustees approvedoperating hudgetwas below five percent at june 30, 2011, andif so, whether the College notified the Florida Department ofEducation, as required by Section 1011.84(3)(e), FloridaStatutes.

Florida residency determination and tuition, Tested student registrations todetermine whether the Collegedocumented Florida residency and correctly assessed tuitionin compliance with Section 1009.21, Florida Statutes, andState Board of Education Rule 6A-l0.044, FloridaAdministtaci.ve Code .

Technology, laboratory, and other user fees. Reviewed the College's procedures and determined whetherthey were approved by the Board of Trustees. Testedtechnology, laboratory, and user fees and examinedsupporting documentation to determine whether the Collegeproperly calculated these fees.

Student enrollment reporting. Determined whether the College properly reported .FfEstudenr enrollment for its continuing workforce educationprograms.

15


26/36

JANUARY 2012 REpORT No.2012-013EXHIBIT A (CONTfNUED)

AUDIT SCOPE AND METHODOLOGYScope (Topic) Methodology

Adult general education program enrollment reporting. EXamined supporting documentarian on a test basis todetermine whether the ColJege reported instructional andcontact hours in accordance with Florida Department ofEducation requirements.

Sir ius Academics project Reviewed the business plan, contracts, and financial activityrelated to the College'S Sirius Academics project to determinewhether College personnel properly administered andaccounted for project revenues and expenses and monitoredcompliance with contract terms.

Personnel and payroll. Tested payroll transactions to determine the accuracy of therate of pay, accuracy of the retirement contribution, validity ofemployment contracts, adequacy of qualifications, completionof performance evaluations, accuracy of leave records, andcertifications by supervisory personnel of employee timereports. Also, tested new hires to determine whetherpersonnel records evidenced that employees had thenecessary qualifications, degrees. experience, necessarybackground checks. etc,

Overtime payments. Performed analytical procedures of overtime payments todetermine reasonableness.

Terminal pay. Reviewed the College's rules and procedures foe terminal pa yto ensure consistency with Florida l aw. Tested formeremployees to determine appropriateness of terminal pay.

Leave policies. Reviewed policies and procedures to determine whether theCollege had a Board-approved leave policy pursua,nt toSection l001.64(18}. Florida Statutes.

Purchasing card transactions. Tested transactions to determine whether purchasing cardswert: administered in accordance with College policies andprocedures. Also, tested former employees to determinewhether purchasing cards were timely cancelled UpOIltermination of employment,

Contractual agreements. Reviewed contractual agreements to determine compliancewith applicable J aws , rules, and contractual requirements.

Wtrcless communication devices. Reviewed policies and procedures to determine whether theCollege l imited the use of. a nd documented the level ofservice for. wireless communication devices. Also,determined whether the College paid Federal, Stare, or localtaxes or fees for which it was exempt.

Construction administration. For selected major construction projects, rested payments andsupporting documentation to determine compliance withCollege policies and procedures and provisions of Ja w andrules. Also, for construction management contracts,determined whether the CoHege monitored the selectionprocess of subcontractors by the construction manager: and,for delivery order contracts, determined whether the Collegeimplemented procedures to ensure that construction costestimates were independently evaluated for validity andreasonableness.

1 6


27/36

J AN U AR Y 2 012 REpORT No. 2012-073EXHIBIT A (CONTINUED)

AUDrT SCOPE AND METHODOLOGYScope (Topic) Methodology

Earmarked capita! project resources. Determined, on a test basis, whether Public Education CapiolOutlay expenditures were in compliance with the restrictionsimposed au m e use of these resources.

Insuring architects and engineers. Determined whether the Board had adopted a policyestablishing minimum insurance coverage requirements fordesign professionals, such as architects and engineers.Examined recent construction projects to determine whetherarchitects and engineers provided evidence of the requiredinsurancc,

State sales tax exemption for direct purchase of construction Tested significant construction projects to determine whethermaterials. the College made use of ir s sales tax exemption to make direct

purchases of materials, or documented its justification for notdoing so.

Capital outlay purchases. Tested purchases to determine that the asset was properlycapitalized or expensed, and was an allowable use of restrictedcapital oucla.y resources.

State-funded capital outlay program reporting. Determined whether amounts reported to the FloridaDepartment of Education for State-funded capital outlayprograms were supported by the College's accountingrecords.

17


28/36

J AN U AR Y 2 012 REpORT No. 2012-073EXHIBITB

MANAGEMENT'S RESPONSE

FLORIDAA5TATE ~ 2 ; , ~ ! : 9 , ;ExHmltB

MANAGEMENT'S REsI'ONSI1:

Dr. Steven R, WallaceCo l le g e P r e ,i r ie n t

January 3,2012

David W.MartinAuditor GenecalState of FloridaIII WestMadison StreetTallahassee, FL 32399-1450Reference: Preliminary and Tentative Findings Operational AuditFlorida State College at JacksonvilleFor the Fiscal year Ended June 30, 20 [ (

18

.Dear Mr.Martin:The following is a summary of the State of Florida Auditor General f ind ings and recommendations and. College responses to the Operational Audit for the fiscal year ended June 30, 201l;

1. Finding - The College bad not provided data for its Continuing Workforce Education (eWE)courses requested by the Florida Department of Education (FDOE) fo determine adjustmentsnecessary to the College's full-time equivalent (FTE) CWE enrollment for the 200607 through2009-1 a fiscal years. As a result, the College may receive State funding that it is not entitled toreceive. Recommendation - Since State funding provided to the College is based partially on thePTE reported to FDOE, the College should consult with. FDOE on the reporting of1'T~ for theseprograms and determine the corrective action necessary to . 1 < - fH reported for programs for the2006-01 through 2009-10 fiscal yeats.College Response -The finding recommended the College cnnsnlt with the Department ofEdlu:atiOD., and the College cnnsulted with the former Chancellor;, Divfsion of FloridaColleges. in !\{arch 2011 on this issue, and no data requests we~ required or any furtheraction. The C()Uege believed this finding Wll.! moot as a result ofthe law change. The Collegewas surprised at the revfval of this finding in tbis audit, hut win consult with the currentChancelIo r, Division of Florida Colleges to $(lJicIt a def"mitive written resolutloo of thisissue.

2. Finding - The College needed to strengthen its controls to ensure the accurate reporting ofinstructional contact hours for adult general education classes to the Florida Department ofEducation. Recommendation - The College should enhance its controls to ensure the accuratereporting of instructional contact hours for adult general ~ucafion classes L o FooR In addition,the College should contact FDOE to determine what corrective actions are necessary- regardingunsupported, OYC{" and under reported hours,

AdministrativeOffices I SOl West State Street j Jacksonville, fL 32202 IP: (904) 632-3222 WlWI.fu:j.edu


29/36

JANUARY 2012 REpORT No. 2012-073EXHIBIT B (CONTINUED)MANAGEMENT'S RESPONSE

College Response - The College will enhance its procedures and controls to strengthen tbeaccuracy of reporting instructional con tad hours for adult general education classes, TheCollege wlll consult wnh FDOE regllrding: corrective action, Ifany, is required forineorrectly reported hours.

19

3. Finding - The College needed to strengthen its procedures for assessing user fees.Recommendation - The College should ensure that a documented evaluation of each laboratoryand other user fee is periodically performed [0ensure compliance with Section 1009.23(12).Florida Statures, andapplicable State Board of Education (SSE) and rules.College Res)J9nse - The Cotlege will strengthen its processes to ensure that Iaborarory andother user fees are reviewed in aceo ..dance with all applicable statutes and SBE rules. TheCollege will ensure that snch reviews ar.e documented,

4. Findiog - A College employee's employment with another organization doing business with theCollege may have resulted in a conflict ofintcrcst inviolation of Section 112.313(7}(a), FloridaStatutes, Rerommendation - The College should ensure that conflicting employment orcontractual reiaticnships, as specified in Section 112.313, Florida Statutes, are prohibited. In thefuture, fue College should consider referring the possible conflict of interests to the Commissionon Ethics for a determinaricn of whether a situation represents a violation of Section112.3B(1Xa), Florida Statutes.College Response - The College has enhanced its procedures and employee lntiniag in thearea of professional coud uct, etbics and conflicts of interest to ensure that con flicfingemployment or contractual relationships are prohibited.

5. ~ - The President's employment agreement included a severance pay provision that iscontrary to Section 215.425(4)(a), Florida Statutes. Recommendation -Thc College shouldensure that employment agreements, Including the President's contract, contain provisions forseverance pay that are in accordance with Section 2 t5.425( 4}(a), florida Statutes.College Response - The College wil l consult with its legal counsel to mke appropriateactions to revise the President's employment eontract to eascre the provisions are eousisrent!"ith applicable statutes, including Section 21S.425(4}(a), Florida Statutes.

6. Finding - Pursuant to the College President's employmen t contract, accrued sick leave wastransferred to accrued vacation leave, effectively circumventing the limitation for payment ofunused sick leave upon feImination provided in Section 1012.865(2Xe)2., Florida Statutes.Recommendation-The Collegc shculd restore !tie 776 hours to the President's a


30/36

JANUARY 2012 REpORT No. 2012-073EXHIBIT B (CONTINUED)Mru"lAGEtvtENT'S RESPONSE

1 '. ~.g e 1 3 .

College Response - The College wiU consult with its legal counsel to take appropriateactions to revise the Presldear'aemplcymeut contract to ensure the provisions are consistentwith applicable statutes, including Section I012.865(2)(e)(2)., Florida Statutes.

7. Finding - The College had not taken action to recover sick leave overpayments totaling $87,098noted in our prior report. Recommendation - The College should attempt to recover theoverpayment from former employees to the extent allowed under Section 95.11, Florida Statutes,or document of record the public purpose served by not collecting the overpayments.College Respo Dse - The C o ll eg e w il l I "" C vi ewt he regal merits o f proceeding in II coi lectionaction against former employees under the provisions of Section 95.11, Florida Statutes, andwil l take apprnprfate action consistent with public purpose.

8. Finding - The College's procedures for the administration of construction management projectsneeded improvement. Recommendation - The College should enhance it s procedures to ensure aformal competitive selection and nego t i a t i on process is held for selecting professional services'when the basic construction cost orthe fee for professional services is estimated to exceed thethresholds specified in Section 287.055, Florida Statutes. AdditionaUy, the College shou ldcontinue its efforts to improve eMcontract monitoring procedures by ensuring that a Collegeemployee attends subcontractorbid openings, obtaining project manuals and subcontracts, andrequiring that eM payment requests contain adequate supporting documentation to 1I11owverification of'the accuracy of amounts billed.

20

College Respolue- The College will enhance its procurement business practices for futurepurchases ofCM services and issue its own Request for Qualificatwlhq as opposed topiggybacking off other public entity eM contracts.The CoUege win eebance its b-aining efforts of staff relative to improving eM contractmonitoring procedures by ensllr ing that a College employee from both the Purchasing andFacilities Offices win attend a n eM subcoctractor- bid openings to witness bid openhigs andto verifY project award to the lowest responsive subcontractor, In addmon, they wil l obtaincomplete project manuals aad copies of subcontracts and verify, in advance of approval,that CM payment requests contain adequate supporting documentation to aUowverification ufthe accuracy of amounts billed.

9. Finding - The College needed to enhance itsmonitoring procedures for ensuring thal designprofessionals and construction managers obtain required i n su r ance coverage. Recommendation -The College should enhance it s monitoring procedures to ensure tllllt contractors and architectsthne!y provide proper certificates of insurance 1 1 . < ; required by contracts and RFQ's.College Response - The College wil l enhance procedures to ensure that all requiredpaperwork is secured (rom vendors related to insurance coverage and that the certificatescontain all required language,


31/36

JANUARY 2012 REpORT No. 2012-073EXHrBIT B (CON"rINUED)MANAGEMENT'S RESPONSE

10. Fieding - The College did not always provide the required written notification to individualswhen their social security numbers were collected, contrary to Section 119.07J(5Xa), FloridaStatutes. Recommendation - The College shou ld continue its efforts [0 ensure compliance withSection I 19.07 I (5Xa), Florida Statutes.College Response - The College will continue its efforts to ensure fuI! compliance withSectian 119J}71(5)(a), Florida Statutes.

11. Finding- Some inappropriate and unnecessary information technology (I'I') access privilegesexisted. Recommendation - The College should establish written procedures for reviewing theappropriateness of IT access privileges, including those employees who have been grantedsecu ri(y adm inist rator authority. and t imely remove or adjust any inappropriate or unnecessaryaccess detected to ensure that access privileges arc compatible with employee job duties.

21

College ResOOllse - The College bas established written procedures consistent with tblsrecommendation.

12. f.iru!ing - The College had (lot developed a written, comprehensive IT risk assessment,Recommendation - The College should develop a written, comprehensive IT risk assessment toprovide a documented basis for managing IT-related risks.COUege Response- The CoRege wil l develop IIwritten, comprehensive IT risk assessmentfor managing IT-rehlted risks.

13. Finding - The College did not retain some access control records, contrary to the requirements ofthe Slate of Florida, General Records Schedule. R\


32/36

JANUARY 2012 REpORT No. 2012-073EXHIBIT B (CONTINUED)MANAGEMENT'S RESPONSE

l' 0 $ < IS

16. finding - The College' s IT security controls related to user authentication needed improvement,R eco mm en da tio n - The College should improve security controls related (0 user aurhentication toensure the cont inued confidentiality, integrity, and availability of College data. a nd it resources.College Response - The Col l ege has implemented appropriate controls in this area and hasdetermined that current practices meet the College's risk acceptability levels.

F lo rida S ta te C ol leg e a t Jacksonville va lu es the reco mm en da tio ns fro m the A udito r G en era l 's Office an dwH I impl eme n t several en ha ncem en ts to pro ced ures a s d escrib ed above.Sincerely,

~ Steven R . W al la ce P h.D .C o l le g e P re si d en tFlorida Stare College at Jacksonville

42

clb.Cc: Peggy B oo rd, V ice P resid en t F in an cia l S ervices

S teven B ow ers , V ice President Admi n is tr ati ve S e rv ic esJeanne Miller, General Coun se lTr ac y P i er ce , V i ce President of Student DevelopmentRobert Rennie, Vice President of Technology


33/36

Wednesday, February 1,201211:40:33 AM ET

Subject; FW: Audit Issue with SenateDate: Friday, January 20, 2012 10:58:37 AM ETFrom: P ierce, Tracy A .To : M cA rthu r, Celine J ., Corby, MichaelCeline, Michael,Rightnow the statement below is draft. Please do not distribute this at this time.Currently please collect inquiries from the media. I am working with Dr. Wallace to determine who should reply. Ifyou have inquiries, please media capture contact information and forward contact information to me. I will ensurethat thevrecelve response in a timelvfashlon, Thanks. -TracyFro m: C EO D a te : F ri , 20 Jan 2012 10:05:16 -0500To: "Pierce, Tracy A." , "C ab ra l-M alv Margarita A." , "Corby, Michael" Cc:"Miller, Jeanne M." , "Lehr, Susan M." , SteveBowers , 'J im McCo ll um '


34/36

Re: COLLEGE AUDITS OUTRAGE SENATE PANELM iller, J ea n ne M .Sen t :F r iday , J anua r y 201 2012 9:29 A MTo: WALLACE, S TEVEN RC c: L eh ~ S u sa n M .; P ie rce , T ra cy A .; C or by , M ic ha el; M cA rth ur , C elin e J.

A s w e have previo us ly d iscu ssed , the D BOT wil l revise D r. W a lla ce's em plo ym en t co ntra ct in lu ne(du rin g the P res iden t's reg ula r a n nu a l eva lu a tio n perio d) an d w e w il l w ork w ith the b oa rd to en su rethat th e c o n tr ac t is in fun compl i ance with F lo rid a la w .

S e n t f r om my i PhoneOn Jan 20, 2012, a t 8:40 AM, "W A LLA CE, S TEV EN R " < S teven .W aila ce@ fscj.edu> w ro te:

Once again, Chancellor, I am very sorry that my contract issue became a problem. We don't think itshouldhave ever been an audit item, While we think we can defend the contract provision we opted not to f ightthe issue and agreed in our response to change it to satisfy the auditors. That should have been the en d ofi t - but it is clearly not.It would be very helpful for me to see exacttywhat the Senators were reacting to before I call you today todiscuss this further.

We will be working on our media response now (thought we have no inquires - yet) and will coordinatethat with you.

From: Lehr, S usa n M .Sent: Thursday, January 19, 20129:55 PM'to: CEOCc: M iller , Jea nn e M .; B owers, S tev en P .S ub ject: Fwd : CO LLEG E AU DIT S. OU TR AG E S EN AT E PA NEL

No t g oo d. S ee wha t thra sher ha d to say a b o u t yo ur a uditS e n t from my iPadBeg in f o rwa rded message :

From: t1McCoiskey, Eri n S f ! Date: Janua ry 19,20128:43:12 PM ESTT o: S u sa n L ehr Subject: Fwd: COLLEGE AUDITS OUTRAGE SENATE PANEL.


35/36

N ot su re if u have this service.Sen t f rommyiPhoneB eg in fo rw arded m essa ge:From: The News Serv ice of Flor ida


36/36

201200492

~. RULES OF THE BOARD OF TRUSTEES~UMBRR I TITLE PAGEFLORIDAsr"n CO lLEGE 6Hx:7-3_5 t Reti rement 3 - 65,.. ._,"-.I' ~"( '",g n"\l;:f1

Date post:	05-Apr-2018
Category:	Documents
Upload:	the-florida-times-union
View:	217 times
Download:	0 times

Celine McArthur documents regarding audits of FSCJ

Documents