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Northern Arizona University Internal Audit Department

April, 2008

NAU-Yuma Branch Campus Distribution: Audit Committee, Arizona Board of Regents David Bousquet, Vice President for Enrollment Management & Student Affairs Dr. Liz Grobsmith, Provost Dr. John D. Haeger, President Dr. Patricia Haeuser, Vice President for Planning, Budget & Institutional Effectiveness Dr. Laura F. Huenneke, Vice President for Research Frederick Hurst, Vice President for Distance Learning Dr. M. J. McMahon, Executive Vice President & Senior Associate to the President Mark Neumayr, General Counsel Dr. Kathe M. Shinham, Vice President for Administration & Finance NAU-Yuma: Dr. Krista K. Rodin, Associate Vice President & Campus Executive Officer; Roberta A. Kelly, Associate Director & Director of Operations; Diann B. Whittier, Administrative Associate Distance Learning: Candy Bacon, Associate Vice President; Dena K. Servis, Fiscal Operations Manager Comptroller’s Office: Robert G. Norton, Associate Vice President for Financial Affairs/Comptroller; Wendy A. Swartz, Assistant Comptroller; Jeane M. Olson, Bursar; Kevin P. Johnson, Director, Sponsored Projects Services; Becky E. McGaugh, Director of Purchasing Enrollment Services: Susan J. McKinnon, Assistant Vice President & Executive Director; Paul Orscheln, Director of Undergraduate Admissions; Pamela L. Anastassiou, University Registrar; Janet Heinrichs, Associate Registrar Human Resources: Diane Verkest, Director of Human Resources Planning, Budget & Institutional Effectiveness: Michelle DeAngeles, Budget Director Provost’s Office: Dr. H. Ronald Pitt, Associate Provost for Academic Administration; Karen Appleby, Special Assistant to the Provost and President Vice President for Research: Wilma Ennenga, Director, Office of Grant and Contract Services

NAU-Yuma Branch Campus April, 2008

Report Number 2007/08-06

March 21, 2008

(last day of fieldwork)

BACKGROUND This routine audit of NAU-Yuma was on our FY 2008 audit plan. Inclusion of NAU-Yuma on our audit plan was based on our risk analysis. NAU-Yuma has not undergone an internal audit since its inception in 1988. Associate Vice President Krista Rodin has been NAU-Yuma’s Executive Officer since January 2007. Dr. Rodin reports to President Haeger with a functional reporting line to the Vice President for Distance Learning, Fred Hurst.

Mission

According to NAU-Yuma’s web site, http://www.yuma.nau.edu/NAU_in_Yuma_Mission.htm its mission is: “To extend the reach of Northern Arizona University by providing educational programs, conducting applied research, developing student services, and fostering intellectual, cultural, and scholarly activity in a collaborative manner that meets the unique needs of the diverse and growing communities of the lower Colorado River region. The branch campus works in partnership with local community colleges, especially Arizona Western College, to be a local hub for furthering the educational goals of the citizens of Yuma and La Paz counties. As the Hispanic Serving branch campus, NAU-Yuma provides NAU faculty in Flagstaff and across the state with applied research opportunities in areas that facilitate trans-border studies, economic development, public safety and health, multicultural education, and environmental sustainability.”

History, Direction & Significant Milestones

(From a 2/20/08 article in Inside NAU about NAU-Yuma’s 20th anniversary celebration)

• NAU-Yuma has been serving the southwestern Arizona and southeastern California communities since 1988. NAU-Yuma's partnerships with Arizona Western College and Imperial Valley College provide students a direct path to complete four-year professional degree programs.

• NAU-Yuma offers undergraduate and graduate courses in a growing number of fields, including biology, business, criminal justice, education, environmental science, nursing, psychology, sociology, social work and Spanish.

• “Our partnership with Arizona Western College is very important,” (President) Haeger said. “It makes a great deal of sense that the community college and the university cooperate to provide a full range of programs, from a four-year baccalaureate degree to master's and doctoral degrees in the Yuma community.”

• The Arizona Board of Regents (in September 2006) officially has designated NAU-Yuma as a branch campus of the Flagstaff-based institution. The designation means that the university intends to increase its investments there, Haeger explained.

• “For example, we're going to be breaking ground this spring on a new facility - a research building - on our NAU-Yuma/AWC campus,” he (Haeger) said. “For

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Yuma it simply means more programs, more students, more work force preparation.”

• The campus has been designated (in March 2007) a Hispanic Serving Institution by the U.S. Department of Education, which will allow NAU-Yuma to apply for federal funding and offer more programs designed for the population of the Yuma area.

• “We're talking to the Yuma Proving Ground in terms of an engineering program in cooperation also with Arizona Western College,” Haeger said. “We also have a new nursing program in conjunction with the Yuma Regional Medical Center, and we're looking at additional programs we would be able to offer in Yuma, so we can better serve that population.”

See Attachment I, NAU-Yuma Timeline for further information.

Other Information

Costs for Shared Campus With Arizona Western College (AWC) – NAU-Yuma’s Partnership Agreement with AWC provides for a shared campus, with AWC being the partner with the majority of students and an existing facility. In 1995 NAU-Yuma financed and constructed a 52,000 square foot building on the AWC’s campus designated the “Academic Complex”. NAU-Yuma leases the building’s land from AWC. All buildings on campus (except for the residence halls, which house AWC students only) are shared by both NAU-Yuma and AWC.

The arrangement between NAU-Yuma and AWC related to cost sharing is spelled out in general terms in a 1996 agreement. AWC’s employees are responsible for utilities, refuse removal, security, building and grounds maintenance, including custodial, plumbing, HVAC, electric, painting, carpentry, locks, grounds and welding. NAU-Yuma agreed with AWC that NAU-Yuma would utilize AWC’s utilities and facilities/grounds maintenance as a cost-efficient source of services, and to avoid duplication. NAU-Yuma agreed to contribute toward the campus-wide costs based on a cost model of 2.5 FTE positions for custodial/maintenance and a 13%-of-total-square-footage proportion of utilities and security costs. The initial FY 1997 annual payment by NAU-Yuma to AWC for shared costs was $264,000. The FY 2007 billing was $255,000.

AWC also invoices NAU for certain reimbursables, such as copies and pro-rata share of joint student field trips.

Curricular Autonomy – Since becoming designated as a Branch Campus by the Arizona Board of Regents, NAU-Yuma has the ability to propose and develop its own curriculum separate from that offered in Flagstaff. This change allows NAU-Yuma to meet local curricular needs. The two programs that are currently uniquely offered through NAU-Yuma are the Bachelor of Business Administration and the teacher education programs. The W.A.Franke College of Business Bachelor of Science in Business Administration degree has been discontinued at NAU-Yuma and has been replaced by NAU-Yuma’s Bachelor of Business Administration (BBA). NAU-Yuma is now responsible for the BBA state-wide. NAU-Yuma has also completed the first two steps in obtaining programmatic approval from the Arizona Department of Education for its teacher education programs.

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The final step, an Arizona Department of Education field visit, is scheduled in April 2008. Curriculum oversight for other professionally accredited programs that are offered in Flagstaff, e.g., Social Work, are still handled from the main campus.

This curricular autonomy for the NAU-Yuma branch campus is in contrast to Distance Learning class offerings where the curriculum and instructor/vita are submitted to the applicable academic unit in Flagstaff for the Flagstaff College Dean’s approval.

Student Recruiting Assistance to NAU-Yuma – In March 2008, Vice President David Bousquet’s Enrollment Management unit took responsibility for undergraduate enrollment at NAU-Yuma “… to ensure that the necessary infrastructure and expertise required to consistently meet or exceed established enrollment goals for new and continuing undergraduate students on the Yuma campus is in place. The goal is to significantly increase undergraduate enrollment and to establish the policies, procedures, and practices necessary to continue to increase enrollment in keeping with stated university and ABOR expectations.” (from March 14, 2008 correspondence articulating the assignment).

FINANCIAL HIGHLIGHTS

Budget Expended BalanceNAY 1212 NAU-Yuma Administration 445,215$ 453,852$ (8,637)$ NAY 1223 NAU-Yuma Student Services 276,808 280,781 (3,973) NAY 1276 NAU-Yuma Instruction 1,775,393 1,830,146 (54,753)

TOTAL 2,497,416$ 2,564,779$ (67,363)$ (Note 1)

Beg. Bal. Revenue Expended End Bal.NAY 2501 NAU-Yuma Local (Note 2) 1,018,552$ 264,332$ 177,175$ 1,105,709$ NAY 2502 Special Class Fees 26,173 20,623 13,742 33,054 NAY 2556 Activity Programs 94,515 19,900 3,733 110,682

TOTAL 1,139,240$ 304,855$ 194,650$ 1,249,445$

Note 1 : The $67,363 (2.7%) state budget over-expenditure in FY 2007 was a result of over-spending employee-related expenditures (ERE), which were underbudgeted at 30% of salaries and wages. Effective for FY 2008, NAU-Yuma's ERE is centrally budgeted, as it is for all otherNAU units, so the problem should not recur.Note 2: $700,000 of this balance was set aside in FY 2008 for the new research building.

FY 2007

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ENROLLMENT HISTORY

SCH = Student Credit Hours FTE = Full-time Equivalent FTSE = AWC FTE

Total Total Undergrad Grad AWC FTSESpring Fall SCH FTE FTE FTE Main Campus

2003 5,445 476 338 138 2,402 2004 5,512 485 326 159

2004 6,559 573 406 167 2,525 2005 6,267 552 364 188

2005 6,060 529 376 153 2,507 2006 5,930 519 364 155

2006 5,975 518 372 146 2,483 2007 5,804 508 342 166

2007 5,508 481 331 150 2,601 2008 5,181 449 301 148

NAU-Yuma FTE

0

100

200

300

400

500

600

700

F-2003

S-2004

F-2004

S-2005

F-2005

S-2006

F-2006

S-2007

F-2007

S-2008

Years

FTE

Total FTEUndergrad FTEGrad FTE

NAU-Yuma receives credit for the SCH/FTE generated by all IITV and web classes taken by NAU-Yuma students. The percentage of SCH taken via IITV/web by NAU-Yuma students has grown from 20% in Fall semester 2003 to 30% in Spring semester 2008. NAU-Yuma received credit in Spring 2008 for about 1,200 SCH from IITV/web classes taught by other NAU locations (at no cost to NAU-Yuma for faculty salaries). Conversely, NAU-Yuma pays faculty to teach IITV/web classes for which students at other NAU locations are registered and those other NAU locations (e.g. Distance Learning’s Paradise Valley site) receive credit for the SCH - about 300 SCH in Spring semester 2008. As of January 2008, NAU-Yuma is responsible for the State-wide Bachelor of Business Administration program; only SCH earned in Yuma will be credited to NAU-Yuma.

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AUDIT OBJECTIVES To determine whether:

• there is effective control over NAU-Yuma’s revenues and expenditures, and • NAU-Yuma is in compliance with NAU and ABOR policies and procedures.

DESCRIPTION OF AUDIT WORK PERFORMED The period covered by this audit is July 1, 2006 through December 31, 2007. Revenue – We reviewed class fee revenue, deposits to accounts, summer session revenue and the cashiering operation. Expense – We reviewed payroll expenses including bi-weekly timesheets, student payroll, payroll deductions, and faculty workload. We reviewed expenses processed through Accounts Payable, Purchasing Card and travel claims. We tested the reasonableness of the annual cost-sharing assessment to NAU-Yuma by AWC. Other –

• Enrollment data – since NAU-Yuma’s enrollment has been declining the past few semesters, we obtained detail of the 21-day student credit hours (SCH) and Full-time Equivalent Enrollment (FTE). We verified the calculation of Spring 2008 and Fall 2007 FTE.

• We reviewed NAU-Yuma’s NAU Foundation activity in its discretionary (non-restricted donations) account. There is a $6,500 discretionary account balance, and $450 of expense activity in FY ‘07. The endowment account balance at the end of FY 2007 was $415,000 and $11,500 in scholarships were awarded in FY 2007.

• We tested that employees in safety/security sensitive positions received background/fingerprint checks.

The university’s administration is responsible for establishing and maintaining the internal control structure. Because of inherent limitations in any internal control structure, errors or irregularities may occur and not be detected by our audit tests. CONCLUSION

• NAU-Yuma’s control over revenue and expenditures requires improvement, as detailed in the recommendations starting on page 7 (#’s 1 – 7, & 9 - 11).

• NAU-Yuma’s compliance with NAU and ABOR policies and procedures requires improvement as detailed in the recommendations starting on page 7 (#’s 2, 3-5, 8 & 10).

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EXECUTIVE SUMMARY OF RECOMMENDATIONS We have categorized the recommendations into: RECOMMENDATIONS FOR THE ATTENTION OF SENIOR ADMINISTRATION (pages 7 - 13)

• Joint NAU-Yuma/AWC Grant • Class Fees • Travel Processing • Purchasing Card Processing

OTHER RECOMMENDATIONS (pages 14 - 19)

• 75-Mile/Good Neighbor Residency Policy • Arizona State Retirement System Contributions • Contract with Yuma Elementary School District • Background/Fingerprint Checks for “Safety, Security-Sensitive” Hires • Cashiering Separation of Duties • NAU Food Policy • Overpayment to Vendor

______________/s/_______________________ Christina Brown, Senior Internal Auditor _____________/s/________________________ Craig L. Hutton, University Auditor

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RECOMMENDATIONS FOR THE ATTENTION OF SENIOR ADMINISTRATION

Observation

Recommendation

Response

1) Joint NAU-Yuma/AWC Grant A) Without the knowledge of NAU’s Office of Grant & Contract Services (OGCS), NAU-Yuma and AWC applied for, and were jointly awarded, a $3.1 million Title V (“Developing Hispanic Serving Institutions Program”) cooperative grant to improve the delivery of distance education programs. The grant was for the five year period from October 1, 2003 through September 30, 2008. The proposal divided the award as follows: AWC $1.9 million and NAU-Yuma $1.2 million. After the award, AWC and NAU-Yuma requested and received approval from the US Department of Education for AWC to directly administer grant funds on behalf of NAU-Yuma. B) According to information supplied by AWC, as of February 2008:

• NAU-Yuma has under-expended its share of the grant by $308,000, and

• AWC over-expended a corresponding amount.

Throughout the duration of the grant, NAU-Yuma did not adequately monitor the financial transactions or the accomplishment of objectives of the grant. Because NAU-Yuma did not have input to how the grant funds were expended, NAU-Yuma may have missed opportunities to fully utilize this grant.

A) That NAU-Yuma submit all agreements and proposals through the Office of Grant & Contract Services. B) That all future cooperative grant agreements with other institutions be accounted for in NAU’s accounting system as a sub-contract.

A & B) This will be implemented effective immediately. (Roberta Kelly & Krista Rodin)

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Observation

Recommendation

Response

1) Joint NAU-Yuma/AWC Grant (continued) C) AWC awarded a $48,000 subcontract to NAU-Yuma, to be paid incrementally over 5 years. Through February 2008, $26,546 in wages/ERE has been charged to this account and NAU-Yuma has not been reimbursed by AWC. AWC tells us that the wages charged to this account are not covered by the grant, and therefore are not reimbursable. D) The $26,546 charged to the subcontract was for the wages and ERE of a Technical Support Specialist staff person (#2195004) for duties he performed at the La Paz Learning Center. #2195004 has been employed for 3 years: 19 hours with NAU-Yuma and 19 hours with AWC, performing the same job duties for each institution. This employee does not receive benefits at either AWC or NAU-Yuma.

C i) That the subcontract account be closed and that the disposition of the accumulated NAU-Yuma expenditures of $26,546 be determined. ii) That, in the future, agreements between AWC and NAU-Yuma have clear scopes-of-work and detailed budgets identifying all costs. D) That NAU-Yuma evaluate all split staff appointments with AWC to ensure that there are no other similar situations of employees jointly employed who should be, but are not receiving benefits.

i) Concur. The subcontract will be terminated for mutual convenience in accordance with the terms of the agreement. NAU-Yuma will have to determine a source of funds to transfer the accumulated $26,546 of expenses. (Winnie Ennenga, Director of Office of Grant & Contract Services) We will determine a source of funds and transfer the $26,546 by fiscal year end. (Roberta Kelly) ii) Concur. (Roberta Kelly) D) Will do. NAU-Yuma and AWC will resolve the benefits issues for the employee by May 31, 2008 and review all joint appointments by fiscal year-end to ensure that benefits are administered correctly. (Roberta Kelly & Krista Rodin)

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Observation

Recommendation

Response

2) Class Fees A) NAU-Yuma is receiving class fees that were established and approved for classes that are held on the Flagstaff campus. This is happening because the same class, e.g. ECI 490, is being taught at both the Yuma and Flagstaff campuses. The Associate Provost for Academic Administration tells us that NAU-Yuma must separately justify and assess their own class fees, because the two campuses would not necessarily have the same class fee requirements for the same class. The justification form has had a separate NAU-Yuma checkbox since 2004. B) All NAU-Yuma class fees revenue and expenses are posted to one account (NAY 2502). NAU-Yuma does not separately track the revenue received and expense paid out for individual classes.

Expenses were charged to the class fees accounts that were not approved via the justification form. We noted the following in our review of class fees account expenditures:

o $2,465 in class fees were received for travel & supplies for NAU teachers supervising classes, but $13,860 was spent on paying the cooperating teachers.

o $389 of travel expenses for a BIO 527 class trip were charged to the class fees account. BIO 527 does not charge class fees.

o $157 for software for a structural geology course was charged to the class fee account, but class fees were not received for any geology classes.

o $23 of travel expenses for GLG 301 was charged to the class fees account. GLG 301 does not charge class fees.

A) That NAU-Yuma re-justify all class fees. Bi) That the FY 2007 and FY 2008 expenditures in NAY 2502 be reviewed and that any expenditures that cannot be attributed to a particular class (that has an approved class fee), or that are not in accordance with the definitions in ABOR Policy 4-105 be transferred out of the class fees account and paid using other university funds. ii) That class fees revenue and expenses be tracked separately in the future for individual classes.

A) Concur. We are reviewing the need for individual class fees and with the assistance of Dr. Ron Pitt will prepare/submit justification forms for approval by May 31, 2008. (Krista Rodin & Roberta Kelly) Bi) Concur. We will perform the recommended review and move any expenses out of the class fees account as recommended by June 30, 2008. (Diann Whittier & Roberta Kelly) ii) Concur. Effective Fall 2008, each class will be treated as a separate accounting unit. (Diann Whittier & Roberta Kelly)

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Observation

Recommendation

Response

2) Class Fees (continued) C) NAU-Yuma’s Vocational Counseling and Career Development class (EPS 620) requires that students purchase specialized education testing programs. NAU-Yuma collects a $30 fee directly from students to fund this expense and deposits these fees into the class fee account. This fee is not an approved class fee.

ABOR Policy 4-105 requires that class fees be approved in writing by the University’s Vice President for Academic Affairs/Provost and that special class fees shall be billed and collected in the same fashion as other tuition and fees.

C) That NAU-Yuma not collect class fees directly from students and that a Justification Form for Instruction Fees be submitted for EPS 620.

C) Concur. Effective immediately, we will discontinue collecting class fees directly from students and will submit a Justification Form for Instruction Fees for this class. We will refund students for unapproved class fees that were collected in Fall 2007 and Spring 2008. This will be done by April 30, 2008. (Diann Whittier & Roberta Kelly)

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Observation

Recommendation

Response

3) Travel Processing We reviewed a total of 27 trips: 21 during FY ’07 and 6 during the first half of FY ’08. A) Travel claims processed by a former employee prior to 7/07 are inadequate and barely auditable. Adequate supporting documentation was not being required for travel claims. We noted the following:

• Not all travel claims prepared before 7/07 were

documented on a required travel claim (Exhibit J) form. A travel claim is required to document all travel expenses in an organized, understandable manner.

• Records for 8 travel claims were completely missing.

• Travel authorization (TA) documents were not prepared for any trips as required for both out-of-state travel and in-state travel over $300.

• Justification was not documented when the lowest priced airfare was not chosen or when airfare change fees were charged.

• An employee was over reimbursed $274 for airfare. (TP07070200037)

• Airfares are booked close to the date of the trip, incurring higher fares than are available when trips are booked in advance (example Phoenix to Atlanta $820 roundtrip).

• Airfare comparisons were not done. • “Record of Absence” forms were not always signed

off by the supervisor or were missing. • Absences of lodging bills were not always

explained. • The “Exception to Policy” section of the travel

claim was not always signed off on by the authorized individual when the traveler used a personal vehicle to travel out-of-state.

A i) That, for each of the 8 missing travel claim documents, NAU-Yuma create the Exhibit J travel claim after-the-fact, using employee reimbursements, employee records of trips taken, and PCard expenditures related to the trips.

Auditors’ Note: We are proceeding on the assumption that the 8 missing travel claim documents can be re-created, and will follow up that they are re-created. Unsupported expenditures would normally result in a qualified audit conclusion, but we are optimistic that the employee reimbursements, employee records of trips taken, and PCard expenditures will allow re-creation of the trips and supporting documentation.

ii) That the over reimbursement of $274 be collected from the employee. iii) That airfares be booked in advance to take advantage of lower advance purchase fares.

Ai) Concur. We will recreate these missing travel claims by 6/30/08. (Roberta Kelly & Diann Whittier) ii) We will collect the $274 from this employee by 6/30/08. (Diann Whittier) iii) Concur. We will notify all NAU-Yuma employees that all airfare must be reserved a minimum of 30 days in advance and documented with comparisons. Any exceptions will have to be approved by Dr. Rodin and will be approved only for good cause. (Roberta Kelly & Diann Whittier)

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Observation

Recommendation

Response

3) Travel Processing (continued) B) Travel processing has improved since a new Administrative Associate was hired in September 2007. However the following deficiencies still exist:

i) Travel authorization (TA) documents were not prepared for any trips as required for both out-of-state travel and in-state travel over $300. ii) “Record of Absence” forms are not always signed off by the supervisor or were missing. iii) Mileage reimbursed was recorded in wrong accounting code. iv) Airfare receipt does not agree with travel claim document. (TP NAY 071201003781)

B) That: i) Travel Authorizations be prepared for all trips as required.

ii) Record of Absence forms be completed and signed for all trips (Workman’s Compensation issue).

iii) The correct object code (7610-10) be used. iv) The airfare difference be investigated and explained.

B i – iii) We agree and will implement immediately. We have invited NAU’s travel specialist to come to NAU-Yuma to provide us with additional training. This training will be scheduled prior to the end of the fiscal year. (Roberta Kelly & Diann Whittier) iv) This has been done. When the travel claim was entered into Advantage both the mileage and airfare were combined into one object code, making it appear that all the expense in this object code was for airfare. (Diann Whittier)

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Observation

Recommendation

Response

4) Purchasing Card (PCard) Processing PCard processing requires improvement as follows: A) Missing PCard Logs – PCard expenditures of a former employee totaling $15,333 were inadequately documented. The former employee had PCard privileges from March through July 2007. PCard logs were not prepared to document/justify the expenditures. Receipts for the expenditures could not be found. $12,400 of the expenditures were travel related - airfare, hotels, rental cars. B) Use Tax - NAU-Yuma was not aware of the Use Tax reporting requirement for out-of-state non-taxed PCard purchases and has not reported any Use Tax liability to the Comptroller’s Office. C) Fiscal Liaison Review/Approval of Purchases - Departmental staff PCard transaction logs are not being signed by the Fiscal Liaison. There was no second-person review/approval of these PCard purchases. D) Cross-Reference to Travel Claims Travel items charged on PCards were not cross-referenced with travel claims by noting the travel claim reference number on the PCard log.

A) That PCard logs be created for these expenditures after-the-fact and be approved by the Operations Director and the Associate Vice President.

This will entail locating receipts or supporting documentation for each of the unsupported expenditures, cross-referencing the related travel claims (see similar recommendation in #3 Travel Processing), and identifying the NAU purpose for non-travel expenditures.

B) That NAU-Yuma fiscal staff gain an understanding of the Use Tax reporting requirement and that they work with the Comptroller’s Office to correct any prior PCard transactions subject to use tax. C) That the department Fiscal Liaison review, approve and sign all PCard logs. D) That the Fiscal Liaison cross-reference all past travel items purchased on PCards to assure that the travel expenditures were bona fide NAU business purpose travel.

A) Concur. We will complete this by 6/30/08. In the future, PCard logs will be placed in a secure location. (Roberta Kelly)

B) We will identify past outstanding use tax liability and make appropriate payment by 9/2008. Use tax will be identified and reported on a monthly basis in the future. (Roberta Kelly) C) Implemented. The Operations Manager has retroactively reviewed, approved, and signed PCard logs for the last year and the Fiscal Liaison will henceforth do so as per University policy. (Roberta Kelly)

D) This has been completed. All travel items purchased on PCards will be cross-referenced to the travel claim in the future. (Roberta Kelly) A-D) We will require all PCard holders at NAU-Yuma to retake the on-line PCard training to ensure that they fully understand the related policies and procedures. (Roberta Kelly)

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OTHER RECOMMENDATIONS

Observation

Recommendation

Response

5) 75-Mile/Good Neighbor Residency Policy ABOR Policy 4-203 allows persons domiciled within 75 miles of the Arizona border in certain Utah/ California/Nevada/New Mexico counties to pay resident tuition for classes (up to six credit hours) taken in certain Arizona counties. The Board approved an expansion to the “up to six credit hours” stipulation of ABOR Policy 4-203. This expansion allows California residents, who began a program during a three-year period beginning Fall 2004 through Spring 2007, and who live within 75 miles of the Arizona/California border, to take a full academic load of classes at resident tuition rates during any semester beginning with the Fall 2004 term and continuing until the student has completed his/her program.

So, to qualify for the “NAU-Yuma” expansion, the student had to begin a program no later than Spring 2007.

In Spring 2008, there were 10 non-resident students taking advantage of this expansion. Two of the students began their program after Spring 2007 (and thus don’t appear to qualify for the expansion):

• #2383316 is taking 12 credit hours for the Spring

2008 semester and was charged the Arizona in-state tuition rate. He first enrolled at NAU in the Fall 2007 semester.

• # 2515664 is taking 9 credits hours for the Spring 2008 semester and was charged the Arizona in-state tuition rate. She first enrolled at NAU in Spring 2008.

a) That the reason(s) for these two students paying resident tuition be researched and corrective action be taken.

b) That a query be run each semester to report on non-resident students receiving resident tuition under ABOR Policy 4-203, and that each student’s eligibility be verified.

a) Undergraduate Admissions and the Registrar’s Office will confirm these two students’ circumstances and correct tuition coding as needed. We will also request the query described in b) each semester and verify eligibility for anyone receiving resident tuition under the 75-Mile/Good Neighbor policy. (Paul Orscheln, Director of Undergraduate Admissions & Janet Heinrichs, Associate Registrar)

b) Agreed. We will run the query described in the recommendation upon request by Undergraduate Admissions or Graduate Admissions or the Registrar’s Office. (Laura Jones, Associate Director, Planning & Institutional Research)ill run this query upon request

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Observation

Recommendation

Response

6) Arizona State Retirement System Contributions NAU-Yuma hires Arizona Western College faculty as part-time temporary employees to teach NAU-Yuma classes. NAU new hires are required to complete an Arizona State Retirement System (ASRS) disclosure form disclosing whether or not they are in the ASRS system with another employer. If the employee answers affirmatively, then NAU, as an ASRS employer, must withhold ASRS contributions from the part-time employee’s compensation. Nine NAU-Yuma employees had ASRS Disclosure Forms on file stating that, at the time of hire, they were contributing to ASRS with another institution. However, ASRS contributions were not currently being withheld from their NAU salary.

(ID’s of nine employees affected: 1772697, 2438313, 2194840, 1012842, 1381519, 2056261, 1061942, 1381081, 1092322)

a) That NAU withhold (and match) ASRS deductions for these 9 employees who disclosed that they were in the ASRS system with another ASRS employer. b) That NAU determine if retroactive correction of employees’ ASRS contributions is required, and if so, how far back contributions must be corrected.

a) This issue was researched, determining that the set up of deductions was missed during the conversion to PeopleSoft. We set up contributions for these employees to begin with this current payroll (pay period end date of March 23, 2008). (Marilyn Seumptewa, Manager, Human Resources) b) Agreed. We are auditing each employee's records to determine the contributions that should have been taken in the last three years. We will remit the back contributions once we have determined how much they are. We will also check whether the years without ASRS contributions affected any employee’s retirement situation or amount and if so we will go back more than 3 years for such employee(s) if any. (Marilyn Seumptewa)

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Observation

Recommendation

Response

7) Contract with Yuma Elementary School District A) Without the knowledge of NAU OGCS, NAU-Yuma entered into a contract with Yuma Elementary School District #1 (YESD) to teach, develop curriculum, and evaluate the Science – Equipping Teachers, Inspiring Students (SETIS) grant that YESD received from the State of Arizona. Roberta Kelly signed the YESD contract on behalf of the University, but is not an authorized sponsored projects signer. NAU-Yuma was authorized to spend $10,530 for Year 1 and $22,512 for Year 2. B) The contract budget approved by NAU-Yuma did not take into account the ERE that would have to be paid for NAU employees, creating a situation where grant tasks cost more than was reimbursed by YESD: Empl. id# Amt. Paid YESD Reimbursed. Deficit 1150962 $6,018 $5,850 $ 168 1150962 7,377 6,256 1,121 1754629 7,371 6,256 1,115 1381519 5,424 5,000 424 C) Because the contract was not funneled through OGCS, a restricted account was not set up. Contract financial activity was processed through the state and local accounts. The FY ‘07 revenue was deposited into a state account and the expenses were charged to a local account. D) $4,680 was reimbursed by YESD for a task completed by #1150962, but #1150962 never received any compensation for this task.

A) That NAU-Yuma personnel not sign contracts on behalf the University. Agreements should be channeled to the appropriate authorized signer for sponsored projects.

B) That all grants and contracts be processed through OGCS. C) That a restricted account be set up for this contract and that all YESD contract financial activity be processed through this account.

D) That this apparent discrepancy be investigated and corrected if necessary. If the resolution is that #1150962 is paid for this task, the ($168 + $1,121) = $1,289 overpayment in (B) above should be deducted.

A) Concur. We will communicate this to all NAU-Yuma employees and will comply effective immediately. (Roberta Kelly & Krista Rodin)

B) Implemented effective immediately. For all future contracts we will do this. (Roberta Kelly & Krista Rodin) C) Concur. We will set up a new account and transfer the funds deposited to the state and local accounts and transfer the associated expense by fiscal year end. (Kevin Johnson, Director, Sponsored Projects Services) D) This will be done by 6/30/08. (Roberta Kelly)

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8) Background/Fingerprint Checks for “Safety, Security-Sensitive” Hires NAU Personnel Policy 1.085 requires a criminal background investigation on the final candidate for all “regular full-time and part-time positions” as well as requiring an academic credentials check for faculty and administrator positions. Certain final candidates, including those for “safety, security-sensitive positions” as defined, also require a fingerprint check. The policy definition of a safety, security-sensitive position includes positions with control over fiscal assets as a job responsibility. In the last 6 months, NAU-Yuma has hired 3 permanent employees who, we believe, should have been classified as “safety, security-sensitive” positions but were not: • #1959463 was hired on 1/16/08 as an

Administrative Assistant with cashiering duties. • #2593474 was hired on 1/14/08 as an Area

Coordinator who supervises the Administrative Assistant with cashiering duties.

• #2441339 was hired on 9/17/07 as an Administrative Associate and has authority to approve purchasing documents (PDs).

That NAU-Yuma comply with NAU Personnel Policy 1.085. There is a Safety, Security-Sensitive Position Identification Tool form located on Human Resources’ web site to help determine whether fingerprint checks are needed when hiring new employees.

We agree and will do so effective immediately on all future hires. (Roberta Kelly & Gina Vance)

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9) Cashiering Separation of Duties The Bursar’s Office considers NAU-Yuma’s cashiering function to be a satellite unit under the umbrella of the Bursar’s Office. Currently, NAU-Yuma does not have a separation of duties in the cashiering function and does not require a second signature on the bank deposit or cashiering reports.

That NAU-Yuma work with the Program Coordinator in the Bursar’s Office to review current cashiering procedures and align them with the standards in place to achieve separation of duties.

We plan to have a team from the Flagstaff Bursar’s Office do a site visit to NAU-Yuma by fiscal year-end and perform a review of their cashiering function. Since NAU-Yuma Cashiering is a small operation, we may have to establish compensating controls to achieve separation of duties. (Jeane Olson, Bursar and Wendy Swartz, Assistant Comptroller for Financial Controls)

10) NAU Food Policy A) NAU-Yuma reimbursed employees for meals where only NAU employees (both NAU-Yuma & NAU-Flagstaff) are in attendance. Except for workshop/training sessions, this is not permitted under Comptroller’s Office Policy CMP 420-02 Food and Refreshments. B) $1,419 was paid from NAU-Yuma’s state account for a holiday reception. Both NAU employees and Yuma community members were present at the event. NAU Policy does not allow food charges to be paid from the state account except for food items for “Classroom demonstration, laboratory instruction and research, and for research animals”. http://www4.nau.edu/comptr/policies_procedures/com420-02.html

A) That NAU-Yuma follow food policy CMP 420-02. B) That NAU-Yuma transfer the holiday reception expense to a local account.

A&B) Effective immediately we will comply with food policy CMP 420-02. (Roberta Kelly & Krista Rodin) B) Concur. This will be done by 6/30/08. (Roberta Kelly & Diann Whittier)

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11) Overpayment to Vendor NAU-Yuma paid Freedom Newspapers from a statement, rather than from an invoice. The statement contained a balance forward charge of $2,013, which had previously been paid. Thus, Freedom Newspapers was overpaid $2,013. Payments to vendors should always be paid from invoices, not from statements.

a) That NAU-Yuma work with NAU Accounts Payable to request reimbursement of the overpayment from Freedom Newspapers. b) That NAU-Yuma only pay from invoices, not from statements.

a). The reimbursement request will be completed by May 15, 2008. b) The new procedure was implemented effective immediately. (Diann Whittier & Roberta Kelly)

1988

Partnership agreement signed by NAU and

AWC; Augustus Cotera hired as Exec Director NAU-Yuma

1993

Nick Lund hired as Exec Director NAU-Yuma

1995

Construction of Academic Complex Building- funded by state appropriations and constructed on

AWC land

1997

Remodeling Student Services Building-

NAU contributed $1M toward construction

costs under President Lovett

AZ State Legislature enacts legislation under HB2207 to the AZ Board of

Regents- $6M from state general fund in FY 01-02 “for a joint venture among the U of A, AZ Western

College, and NAU to build a higher education and science complex in the

Yuma area to aid all three higher education programs”

Jan 2001

2005-6

Anna-Marie Aldaz serves as Interim Exec Director for NAU-Yuma for

FY 06

2006

Roberta Kelly serves as Interim Exec Director for NAU-Yuma for 6

mo. 7/1-12/31/06

9/28/06

NAU-Yuma designated as a

Branch Campus by

ABOR

Dual Admissions Agreement signed by Presidents of NAU and AWC

11/2/06

1/1/07

Krista Rodin hired to serve as Associate Vice Pres/ Campus

Exec Officer

Designated as Hispanic Serving

Institution

Attachment I - NAU-Yuma Timeline

February 2008

3/7/07

Groundbreaking/ began

construction on science research

building on NAU-

Yuma/AWC shared campus

nau-yuma branch campus - arizona board of regents documents/nau...nau-yuma branch campus...

Documents