the university texas system · 2016-01-27 · the university of texas system fourteen institutions....

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THE UNIVERSITY of TEXAS SYSTEM

FOURTEEN INSTITUTIONS. UNLIMITED POSSIBILITIES.

Audit Office 210 West 6th Street, Suite B14.o.E

Austin, Texas 78701

512-499-4390 I Fax: 512-499-4426

WWW. UTSYSTEM.EDU

January 1 5, 201 6

Dr.W. David Watts, Ph.D., President The University of Texas of the Permian Basin 4901 East University Boulevard Odessa, Texas 79762

Dear Dr. Watts:

We have completed our Independent Auditor 's Report on the Application of the Agreed-Upon Procedures for the Department of Intercollegiate Athletics at The University of Texas of the Permian Basin (UTPB) for the Fiscal Year Ended August 3 1 , 201 5 . Please see the attached report.

We appreciate the assistance provided by the UTPB Department of Intercollegiate Athletics staff.

. Sincerely,

�.U�) J. Michael Peppers, CPA, CIA, QIAL, CRMA Chief Audit Executive

cc: Steven Leslie, Ph.D., Executive Vice Chancellor for Academic Affairs, UT System Mr. Mark McGurk, Vice President for Business Affairs, UTPB Steve Aicinena, Ph.D., Athletics Director, UTPB Felicia Nzere, Director of Accounting, UTPB Mr. Glenn Spencer, Institutional Chief Audit Executive, System Audit Office - UTPB

The University of Texas at Arlington • The University of Texas at Austin· The University of Texas at Dallas· The University of Texas at El Paso

The University of Texas of the Permian Basin · The University of Texas Rio Grande Vall ey· The University of Texas at San Antonio

The University of Texas at Tyl er· The University of Texas Southwestern Medical Center· The University of Texas Medical Branch at Galveston

The University of Texas Health Sci ence Center at Houston· The University of Texas Health Science Center at San Antonio

The University of Texas MD Anderson Cancer Center· The University of Texas Health Sci ence Center al Tyl er

The University of Texas of the Permian Basin

Department of Intercollegiate Athletics

Independent Auditor's Report on the

Application of Agreed-Upon Procedures

For the Fiscal Year Ended August 31, 2015

January 2016

THE UNIVERSITY OF TEXAS SYSTEM AUDIT OFFICE

210 WEST SIXTH STREET, SUITE B.140E

AUSTIN, TX 78701

(512) 499-4390

The University of Texas of the Permian Basin Independent Auditor's Report on the Application of Agreed-Upon Procedures For the Fiscal Year Ended August 31, 2015

INDEPENDENT1 AUDITOR'S REPORT ON THE APPLICATION OF AGREED-UPON PROCEDURES

We have performed the procedures enumerated below, which were agreed to by the President of The University of Texas of the Permian Basin (UTPB), solely to assist UTPB management in evaluating whether the accompanying Statement of Revenues and Expenses (SRE) ofUTPB's Department of Intercollegiate Athletics (Athletics) is in compliance with the National Collegiate Athletic Association (NCAA) Constitution 6.2.3. 1 for the fiscal year (FY) ended August 3 1 , 201 5. UTPB's management is responsible for the SRE and compliance with NCAA requirements.

This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the specified users of the report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose.

Our procedures and findings are explained in the following pages. Reportable findings are defined as errors or misclassifications equal to or greater than one percent of total revenues or total expenses. Also attached to this report are the following appendices:

• Appendix A, UTPB Athletics SRE for the Fiscal Year Ended August 3 1 , 201 5; • Appendix B, Findings and Recommendations; • Appendix C, Follow::Up on Open Recommendations; • Appendix D, Notes to the Statement ofRevemies and Expenses; and • Appendix E, FY 201 5 Budget to Actual Variance Analysis of Major Revenue and Expense

Accounts • Appendix F, FY 201 4 to FY 201 5 Variance Analysis of Major Revenue and Expense Accounts

Agreed-Upon Procedures Related to the Statement of Revenues and Expenses

Agreed-Upon Procedures Related to all Revenues and Expenses 1 . Agree the amounts reported on the SRE to UTPB 's general ledger.

In most instances, revenues mid expenses reported on the SRE materially agreed to the amounts reported in UTPB 's general ledger. There are certain items recorded on the SRE that are not required to be recorded in athletic accounts, including out-of-state tuition waivers, indirect facilities and administrative support, and gifts-in-ldnd. The NCAA requires that these items be reported on the SRE to fully reflect the operations of Athletics. As a result of this procedure, we identified six material adjustments. The specific adjustments identified and recorded in the SRE are described for the affected SRE line item in the results below. Management agreed and recorded these adjustments in the SRE located in Appendix A. We provided management one

1 The NCAA requires this agreed-upon procedures engagement to be conducted by an independent accountant. For purposes of this engagement, the NCAA considers the UT System Audit Office to be independent.

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The University of Texas of the Permian Basin Independent Auditor's Report on the Application of Agreed-Upon Procedures For the Fiscal Year Ended August 3 1 , 2015

recommendation to improve processes for preparation of the SRE to provide consistent, accurate, and complete reporting of athletic revenues and expenses. See recommendation 1 in Appendix B.

2. Perform the following procedures for all revenue and expense categories applicable to the SRE: a. Compare and agree each operating revenue and expense category reported in the SRE

during the rep01iing period to supporting schedules provided by the institution. If a specific rep01iing category is less than 0.5% of the total revenues or total expenses, no procedures are required for that specific category.

b. Compare and agree a sample of operating revenue receipts and operating expenses obtained from the above suppmiing schedules to adequate supporting documentation.

c. Compare each major revenue and expense account over 10% of the total revenues or total expenses to prior period amounts and budget estimates. Obtain and document an understanding of any variations over the lesser of $1 million or 1 0%.

d. Recalculate totals.

As part of the procedure described in item a above, we identified material adjustments that management agreed to record in the SRE. These are the same adjustments described in procedure #1. The specific adjustments are described for the affected SRE line items in the results below.

3. Identify and document aspects ofUTPB's internal control structure that are unique to Athletics. Test specific elements of the control environment and accounting systems that (1) are unique to Athletics and (2) have not been addressed in connection with the audit of the institution's financial statements.

No material exceptions were noted as a result of these procedures.

4. Identify all intercollegiate athletics related affiliated and outside organizations and obtain those organizations' financial statements for the reporting period.

Athletics does not have any cifjiliated organizations whose financial activity is included in its SRE.

Agreed-Upon Procedures Related to Revenues

Ticket Sales 1. Compare tickets sold during the repo1iing period, complimentary tickets provided during the

reporting period and unsold tickets to the related revenue reported by UTPB in the SRE and the related attendance figures and recalculate totals.

According to guidelines in the NCAA 's 2015 Agreed-Upon Procedures, "if a specific reporting catego1Jl is less than 0. 5% of the total revenues, no procedures are required for that specific category. " Because the total categ01Jl amount was less than 0. 5% of total revenues, no testing procedures were pe1formed.

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The University of Texas of the Permian Basin Independent Auditor's Report on the Application of Agreed-Upon Procedures For the Fiscal Year Ended August 3 1, 2015

Student Fees 2. Compare and agree student fees reported by UTPB in the SRE for the reporting period to student

enrollments dming the same reporting period and recalculate totals. 3. Obtain and document an understanding of the institution's methodology for allocating student fees

to intercollegiate athletics programs. 4. If the athletics department is rep01iing that an allocation of student fees should be countable as

generated revenue, recalculate the totals of their methodology for supporting that they are able to count each sport. Tie the calculation to supporting documents such as seat manifests, ticket sales reports and student fee totals.

UTP B has two restricted athletic fees. The first is a $12 per semester credit hour ($12/SCH) fee. The. second is a repwposed athletic fee.

From our work we determined that student fees reported in the SRE agreed to amounts recorded in PeopleSoft without exception. As part of work, we also developed an independent expectation of amounts for both the $12/SCHfee and the $35 per student repurposed fee. Our independent estimate for the $12/SCHfee was an estimated 35% higher than the amount recorded in People.Soft. Our estimate included semester credit hours for the fall, spring and summer semesters and excluded semester credit hours for the following types of students: online students and dual credit students. See finding and recommendation 2 in Appendix B.

In addition, we identified ,$2 7, 63 6. 7 4 of the re.purposed fee that was recorded in a .non-athletic cost centers. We were informed that these fimds were not made available to the Athletic Department in FY 2015. As such, this amount is not included in the SRE. UTPB 's FY 2015 budget estimate for the repwposed fee was $278, 880. The budgeted amount for the repurposed fee was also less than our independent estimate. Our estimate included students for the fall, spring and summer semesters and excluding the following: online students and dual credit students. As of the report issuance, the total amount actually collected and the purpose, for which it may have been spent, if spent at all, was not definitively !mown. See finding and recommendation 2 in Appendix B.

As indicated above, UTP B allows certain students to be exempted from paying the restricted athletic fees. In addition, there are certain fixed tuition amounts that were approved by the Board of Regents that exclude athletic and other types of fees. However, UTP B has not published in its institutional catalog a description of the criteria for any authorized exemptions and waivers as required by the Regents ' Rules. See finding and recommendation 2 in Appendix B.

Direct State or Other Governmental Support 5 . Compare direct state or other governmental support recorded by UTPB during the reporting period

with state appropriations, institutional authorizations and other coffoborative supporting documentation and recalculate totals.

We determined that five graduate students who provided part-time operational support to Athletics were compensated from state fimds. According to Article III of the Texas General Appropriations Act, Section 9 Intercollegiate Athletics, "no educational and general fimds appropriated may be used for the operation of intercollegiate athletics. " Combined, the graduate

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students were compensated $38,324.44 from statefimds. This amount was initially omitted from the SRE but is included in the final SRE that appears in Appendix A. See recommendation 3 in Appendix B.

Direct Institutional Support 6. Compare the direct institutional support recorded by UTPB during the reporting period with the

institutional supporting budget transfers documentation and other corroborative supporting documentation and recalculate totals.

We determined that Direct Institutional Support was initially overstated on the SRE by $246, 356. 02. The original amount of $1,229,197. 37 reported on the SRE included intra-fimd transfers in that should not have been reported. Instead, $983, 115. 85 consisting primarily of amount fi'om designated tuition and a transfer fi'om other institutional sources should have been reported as Direct Institutional Support. The corrected amount of Direct Institutional Support is included in the final SRE that appears in Appendix A. See finding and recommendation 1 in Appendix B.

Additionally, $646, 000 of intuitional support for Athletic Student Aid that is included in Direct Institutional Support could not be agreed to information recorded in PeopleSoft. The amount recorded is an estimate and based on amounts that UTPB reported to the NCAA as Athletic Aid exclusive of an estimated $49, 000 in gifts and endowments that appear elsewhere in the SRE See finding and 1:ecommendation 4 in Appendix B.

Transfers Back to Institution 7 . Compare the transfers back to institution with permanent transfers back to institution from the

athletics department and recalculate totals.

There was $936,293.95 reported as transfers back to the institutions on the initial SRE. From procedures we pe1formed, we determined that there were no transfers back to the institution. The corrected amount for this categ01y is included in the final SRE that appears in Appendix A. See recommendation 1 in Appendix B.

Indirect Institutional Support 8. Compare the indirect institutional support recorded by UTPB during the reporting period with

expense payments, cost allocation detail and other corroborative supporting documentation and recalculate totals.

No material exceptions were noted as a result of t,hese procedures.

Guarantees 9. Select a sample of settlement reports for away games during the reporting period and agree each

selection to UTPB's general ledger and/or the SRE and recalculate totals. 10. Select a sample of contractual agreements pertaining to revenues derived from guaranteed contests

during the reporting period and compare and agree each selection to UTPB 's general ledger and/or the SRE and recalculate totals.

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According to guidelines in the NCAA 's 2015 Agreed-Upon Procedures, "if a specific reporting categ01y is less than 0. 5% of the total revenues, no procedures are required for that specific category. " Because the total category amount was less than 0. 5% of total revenues, no testing procedures were pe1formed.

Contributions 1 1 . Obtain and review supporting documentation for any contributions of moneys, goods or services

received directly by the intercollegiate athletics program from any affiliated or outside organization that constitutes 10 percent or more in aggregate for the reporting year of all contributions received for intercollegiate athletics during the reporting period and recalculate totals.

UTPB received $3,836, 615. 73 in contributions for Athletics during FY 2015; however, the amount reported as revenue from contributions in the SRE excludes the portion of these contributions to be used in fitture reporting years. The majority of these contributions were for the pwpose of supporting UTPB 's football program which is scheduled to begin play in FY 2017. As a result, revenue fi'om contributions reported in the SRE excludes contributions made for the football program in excess of FY 2015 football program expenses. No material exceptions were noted as a result of these procedures.

In-Kind 12 . . Compare the in-kind recorded by UTPB during the reporting period with a schedule <;>f in-kind .

donations and recalculate totals.

According to guidelines in the NCAA 's 2015 Agreed-Upon Procedures, "if a specific reporting categ01y is less than 0. 5% of the total revenues, no procedures are required for that specific categ01y. " Because the total category amount was less than 0. 5% of total revenues, no testing procedures were performed.

Compensation and Benefits Provided by a Third-Party 13. Obtain the summary of revenues from affiliated and outside organizations (Summary) as of the

end of the reporting period from UTPB and select a sample of funds from the Summary and compare and agree each selection to supporting documentation, UTPB's general ledger and/or the Summary and recalculate totals.

14. If the third party was audited by independent auditors, obtain the related independent auditors' report.

Athletics did not receive compensation and.benefits provided by a third-party during the reporting period.

Media Rights 15. Obtain and inspect agreements to understand UTPB's total media (broadcast, television, radio)

rights received by UTPB or through their conference offices as reported in the SRE. 16. Compare and agree the media right revenues to a summary statement of all media rights identified,

if applicable, and UTPB 's general ledger and recalculate totals.

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. The University of Texas of the Permian Basin Independent Auditor's Report on the Application of Agreed-Upon Procedures For the Fiscal Year Ended August 3 1, 2015

Athletics did not receive revenues or enter into agreements for media rights during the reporting period.

NCAA Distributions 17. Compare the amounts recorded in the revenue and expense rep01ting to UTPB's general ledger

detail for NCAA distributions and other corroborative supporting documents and recalculate totals.


Conference Distributions 18. Obtain and inspect agreements related to UTPB 's conference distributions and participation in

revenues from tournaments during the reporting period to gain an understanding of the relevant terms and conditions.

19. Compare and agree the related revenues to UTPB's general ledger and/or the SRE and recalculate totals.

Athletics did not receive revenues from conference distributions during the reporting period.

Program Sales, Concessions, Novelty Sales and Parking 20. Compare the amount recorded in the revenue reporting category to UTPB 's general ledger detail

of program sales, concessions, novelty sales.and parking as well as any other conoborative supporting documents and recalculate totals.

According to guidelines in the NCAA 's 2015 Agreed-Upon Procedures, "if a specific reporting categ01y is less than 0. 5% of the total revenues, no procedures are required for that specific categ01y. " Because the total catego1y amount was less than 0. 5% of total revenues, no testing procedures were pe1formed.

Royalties, Licensing, Advertisements and Sponsorships 2 1. Obtain and inspect agreements related to UTPB 's participation in revenues from royalties,

licensing, advertisements and sponsorships during the reporting period to gain an understanding of the relevant terms and conditions.

22. Compare and agree the related revenues to UTPB's general ledger, and/or the SRE and recalculate totals.

Athletics did not receive revenues or enter into agreements for royalties, licensing, advertisements or sponsorships during the reporting period.

Sports C amp Revenues 23. Inspect sports camp contracts between UTPB and persons conducting institutional sports-camps or

clinics during the reporting period to obtain an understanding of the UTPB 's methodology for recording revenues from sports-camps.

24. Obtain schedules of camp participants and select a sample of individual camp participant cash receipts from the schedule of sports-camp participants and agree each selection to UTPB 's general ledger, and/or the SRE and recalculate totals.

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Athletics Restricted Endowment and Investment Income. 25. Obtain and inspect endowment agreements to gain an understanding of the relevant terms and

conditions. 26. Compare and agree the classification and use of endowment and investment income reported in

the SRE during the reporting period to the uses of income deferred within the related endowment agreement and recalculate totals.


Other Operating Revenue 27. Perform minimum agreed-upon procedures referenced for all revenue categories and recalculate

totals.

According to guidelines in the NCAA 's 2015 Agreed-Upon Procedures, "if a specific reporting categ01y is less than 0. 5% of the total revenues, no procedures are required for that specific categ01y. " Because the total category amount was less than 0. 5% of total revenues, no testing procedures were pe1formed.

Agreed Upon Procedures Related to Expenses

Athletic Student Aid 28. Select a sample of students from the listing of institutional student aid recipients during the

reporting period. 29. Obtain individual student account detail for each selection and compare the total aid allocated

from the related aid award letter to the student's account. 30. Perform a check of each student selected to ensure their information was reported accurately in the

NCAA Membership Financial Reporting System. 3 1. Recalculate totals for each sport and overall.

The amount of Athletic Student Aid reported on the SRE could not be tied to information recorded in PeopleSoft. Of the $722, 328.47 reported, $695, 000. 00 could not be agreed to amounts recorded in PeopleSoft. See finding and recommendation 4 in Appendix B.

For a sample of individual student athletes, we determined that student aid information in Poise, UTPB 's financial aid system, did not always agree to information in Compliance Assist. We also found that equivalencies reported to the NCAA were generally understated, but not amount significant enough to cause UTPB to exceed the maximum athletic awards allowed per sport by the NCAA. Additionally, we were unable to validate the fitll grant in aid amount reported in Compliance Assist which is used as the denominator for calculating equivalencies. In addition, the student aid information reported to the NCAA through Compliance Assistant did not always agree to amounts recorded in Poise. See finding and recommendation 5 in Appendix B.

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Guarantees 32. Obtain and inspect visiting institution's away-game settlement repo1is received by UTPB during

the reporting period and agree related expenses to UTPB's general ledger and/or the SRE and recalculate totals.

33. Obtain and inspect contractual agreements pe1iaining to expenses recorded by UTPB from guaranteed contests during the reporting period. Compare and agree related amounts expensed by the institution to UTPB's general ledger and/or the SRE and recalculate totals.

According to guidelines in the NCAA 's 2015 Agreed-Upon Procedures, "if a specific reporting catego1J1 is less than 0. 5% of the total expenses, no procedures are required for that specific categ01J1. " Because the total catego1J1 amount was less than 0. 5% of total expenses, no testing procedures were pe1formed.

Coaching Salaries, Benefits, and Bonuses Paid by the University and Related Entities 34. Obtain and inspect a listing of coaches employed by UTPB and related entities dming the

repmiing period. Select a sample of coaches' contracts that include football, and men's and women's basketball from the listing.

35. Compare and agree the financial terms and conditions of each selection to the related coaching salaries, benefits, and bonuses recorded by UTPB and related entities in the SRE during the reporting period.

36. Obtain and inspect payroll summary registers for the reporting year for each selection. Compare and agree payroll summary registers from the repo1iing period to the related.coaching salaries, benefits and bonuses paid by UTPB and related entities expense recorded by UTPB in the SRE during the reporting period.

37. Compare and agree the totals recorded to any employment contracts executed for the sample selected and recalculate totals.


Coaching Other Compensation and Benefits Paid by a Third-Party 38. Obtain and inspect a listing of coaches paid by third parties during the reporting period. Select a

sample of coaches' contracts that include football, and men's and women's basketball from the listing.

39. Compare and agree the financial terms and conditions of each selection to the related coaching other compensation and benefits paid by a third party and recorded by UTPB in the SRE during the reporting period.

40. Obtain and inspect repo1iing period payroll summary registers for each selection. Compare and agree related payroll summary register to the coaching other compensation and benefits paid by a third party expenses recorded by UTPB in the SRE during the reporting period and recalculate totals.

Athletics did not receive compensation and benefits provided by a third-party during the reporting period.

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Support Staff/Administrative Salaries, Benefits and Bonuses Paid By the University and Related Entities

41. Select a sample of suppori staff/administrative personnel employed by UTPB and related entities during the reporting period.

42. Obtain and inspect reporiing period summary payroll register for each selection. Compare and agree related payroll summary registers to the related support staff administrative salaries, benefits and bonuses paid by UTPB and related entities expense recorded by UTPB in the SRE during the reporting period and recalculate totals.


Support Staff/Administrative Other Compensation and Benefits Paid by a Third-Party 43. Select a sample of support staff/administrative personnel employed by third parties during the

reporting period. 44. Obtain and inspect reporting period payroll summary registers for each selection. Compare and

agree related payroll summary registers to the related support staff administrative other compensation and benefits expense recorded by UTPB in the SRE during the reporiing period and recalculate totals.

Athletics did not receive compensation and benefits provided by a third-party during the reporting period.

Severance P ayments 45. Select a sample of employees receiving severance payments by UTPB during the reporting period

and agree each severance payment to the related termination letter or employment contract and recalculate totals.

Athletics did not make severance payments during the reporting period.

Recruiting 46. Obtain and document an understanding ofUTPB's recruiting expense policies. 47. Compare and agree to existing institutional- and NCAA-related policies. 48. Obtain general ledger detail and compare to the total expenses reported and recalculate totals.


Team Travel 49. Obtain and document an understanding of UTPB 's team travel policies. 50. Compare and agree to existing institutional- and NCAA-related policies. 5 1. Obtain general ledger detail and compare to the total expenses reported and recalculate totals.


Sports Equipment, Uniforms and Supplies 52. Obtain general ledger detail and compare to the total expenses reported. Select a sample of

transactions to validate existence of transaction and accuracy of recording and recalculate totals.

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We determined that Equipment, Uniforms, and Supplies expenses were initially overstated on the SRE by $154, 649. 61. This amount includes $147, 725.61 of expenses that should have been reported as Direct Overhead and Administrative Expenses and $6, 9 24. 00 of capital purchases that should not have been included in the SRE. The corrected amount of Equipment, Uniforms, and Supplies expenses is included in the final SRE that appears in Appendix A. See recommendation 1 in Appendix B.

Game Expenses 53. Obtain general ledger detail and compare to the total expenses reported. Select a sample of

transactions to validate existence of transaction and accuracy ofrecording and recalculate totals.

No material exceptions ·were noted as a result of these procedures.

Fund Raising, Marketing and Promotion 54. Obtain general ledger detail and compare to the total expenses reported. Select a sample of


According to guidelines in the NCAA 's 2015 Agreed-Upon Procedures, "if a specific reporting category is less than 0. 5% of the total expenses, no procedures are required for that specific category. " Because the total category amount was less than 0. 5% of total expenses, no testing procedures were pe1formed.

Sports Camp Expenses 55 . Obtain general ledger detail and compare to the total expenses reported. Select a sample of


According to guidelines in the NCAA 's 2015 Agreed-Upon Procedures, "if a specific reporting categ01y is less than 0. 5% of the total expenses, no procedures are required for that specific categ01y. " Because the total categ01y amount was less than 0. 5% of total expenses, no testing procedures were pe1formed.

Spirit Groups 56. Obtain general ledger detail and compare to the total expenses reported. Select a sample of


We determined that Spirit Group expenses were initially understated on the SRE by $33,997.46. This amount represents cheer and dance team expenses that were paJd with non-athletic fimds. The corrected amount of Spirit Group expenses is included in the final SRE that appears in Appendix A. See the recommendation 1 in Appendix B.

Athletic Facility Debt Service, Leases and Rental Fees 57. Obtain a listing of debt service schedules, lease payments and rental fees for athletics facilities for

the reporting year. Compare a sample of facility payments including the top two highest facility payments to additional supporting documentation (e.g. debt financing agreements, leases, rental agreements).

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58. Compare amounts recorded to amounts listed in the general ledger detail and recalculate totals. No material exceptions were noted as a result of these procedures.

Direct Overhead and Administrative Expenses 59. Obtain general ledger detail and compare to the total expenses reported. Select a sample of


Direct Overhead and Administrative Expenses was understated on the initial SRE by $148,545. 34. Most of the difference was due to expenses that should have been reported in this category that were initially recorded in Sports Equipment, Uniforms, and Supplies. Other SRE categories were also affected by the misclassification of expenses,· however, those amounts were immaterial. In addition the misclassifications had no impact on the bottom line of the SRE. The corrected amount of Direct Overhead and Administrative Expenses is included in the final SRE that appears in Appendix A. See reconunendation 1 in Appendix B.

Indirect Institutional Support 60. Tested with revenue section - Indirect Institutional Support (see procedure #8).


Medical Expenses and Medical Insurance 6 1. Obtain general ledger detail and compare to the total expenses reported. Select a sample of ·


No material exceptions vvere noted as a result of these procedures.

Memberships and Dues 62. Obtain general ledger detail and compare to the total expenses reported. Select a sample of


According to guidelines in the NCAA 's 2015 Agreed-Upon Procedures, "if a specific reporting categ01y is less than 0. 5% of the total expenses, no procedures are required for that specific categ01y. " Because the total category amount was less than 0. 5% of total expenses, no testing procedures were pe1formed.

Other Operating Expenses and Transfers to Institution 63. Obtain general ledger detail and compared to the total expenses reported. Select a sample of


According to guidelines in the NCAA 's 2015 Agreed-Upon Procedures, "if a specific reporting category is less than 0.5% of the total expenses, no procedures are required for that specific categ01y. " Because the total categ01y amount was less than 0. 5% of total expenses, no testing procedures were pe1formed. Additionally, Athletics did not make any transfers to institution during the reporting period.

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Additional Minimum Agreed-Upon Procedures • Compare and agree the sports sponsored reported in the NCAA Membership Financial Reporting

System to the squad lists of the institution.


We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on the compliance of the accompanying SRE of Athletics. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report relates only to the procedures specified above and does not extend to UTPB's financial statements.

This report is intended solely for the information and use ofUTPB management and is not intended to be and should not be used by anyone other than those specified parties. However, this report is a matter of public record and its distribution is not limited.

J. Michael Peppers, CPA, CIA, QIAL, CRMA Chief Audit Executive January 15, 201 6

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nski, , CPA Assistant Director of Audits January 15, 2016


APPENDIX A THE UNIVERSITY OF TEXAS PERMIAN BASIN DEPARTMENT OF INTERCOLLEGIATE ATHLETICS

STATEMENT OF REVENUES AND EXPENSES FOR THE FISCAL YEAR ENDED AUGUST 31, 2015

Men's Women's Men's Men's Men's Men's \Vomen's Women's Women's Women's Football Basketball Basketball Baseball Cross Countrv Soccer s,";mming Tennis Cross Country Soccer Softball S"imming Tennis

Operating Revenues: Ticket Sales $ $ 566.50 $ 400.50 $ 4,202.00 $ $ 942.75 $ $ $ $ 1,353.50 $ 1,166.00 $ $ s Direct State or Other Governmental Support 3,534.80 3,574.97 4,027.83 3,876.95 4,027.82 3,876.95 Student Fees Direct Institutional Support 89.500.00 98.500.00 80,000.00 25.000.00 54,500.00 28.000.00 15,000.00 21,000.00 48,000.00 36,500.00 37.000.00 35,000.00 Indirect Institutional Support

Guarantees 9,500.00 1,500.00 500.00 Contnbutions 307,523.99 1,300.00 33,335.75 3,000.00 1.017.00 9,163.00 10,000.00 5,660.95 In-Kind 3,775.00 700.00 NCAA Distnbutions Program Sales, Concessions, Novelty Sales and Parking 514.00 597.50 514.00 597.50 674.99 Sports Ca"l' Revenues 6,480.01

Athletics Restricted Endowment and Investment Income I2,040.60 Other Total Operating Re><nue $ 314.004.00 $ 115.382.10 s 105.935.30 $ 1 I7.537.75 s 28,514.00 $ 60.632.22 s 41.190.83 $ 28.876.95 $ 21.514.00 $ 49.951.00 $ 44.501.94 $ 41.027.82 $ 38,876.95 $

Operating Expenses: Athletic Student Aid $ 136,688.33 s 101,000.00 $ 80,000.00 s 25,000.00 $ 54,500.00 s 32,000.00 s 15,000.00 s 2I,000.00 $ 48.000.00 s 38.500.00 s 38,000.00 $ 35,000.00 s Guarantees 2,500.00 Coaching Salaries, Benefits, and Bonuses Paid by the University and Related Entities 178,511.66 77,992.93 80,765.73 78,265.55 32,961.59 67,136.28 22,636.20 22,134.68 14.589.92 53,303.41 58.086.58 22,636.20 21,339.31 Support Staff/Administrative Salaries, Benefits and Bonuses Paid by the University and Related Entities Recruiting 34,233.20 5,190.68 9,551.11 1,201.57 603.27 1.687.46

' 922.59 1,053.99 370.23 5.356.23 3,232.97 277.25 2,242.42

Team Travel 65,215.26 48,949.09 44,826.23 I 1,355.85 24,478.78 36,942.99 13,934.6I 6,542.6I 17,357.89 42,817.99 21,171.80 25,200.34 Equipment, Uniforms and Supplies 46,501.99 9,679.20 11,541.30 14.883.00 8,841.93 15,708.75 6,222.95 1.824.78 6,494.87 5,998.00 I2,389.66 3,983.18 2,679.52 Cl!me Bqienses 7,264.50 7.276.00 8,810.00 71.18 6.800.00 : 1.377.47 71.17 6.340.00 6,762.19 1.382.43 Fund Raising, Marketing and Promotion 175.00 105.00 Sports C.111'!' Bqienses 913.03 Spirit Groups Athletic Facility Debt Service, Leases and Rental Fees 4,000.00 4,000.00 Direct Overhead and Administrative Bqienses 53,669.12 5,302.55 5,126.49 19,760.26 604.08 358.50 3,084.79 4,015.95 37.39 1.480.50 6,84286 1,574.50 3.480.28 Indirect Institutional Support Medical Bqienses and Medical Insurance Merrberships and Dues 550.00 217.50 130.00 550.00 217.50 Other Operating Bqienses I35.00 7.100.00

Women's Non-Program Volleyball Specific Total

1,634.00 $ 1,052.00 $ 11,317.25 15,405.12 38,324.44

735,827.12 735,827.12 78,000.00 337,115.85 983.115.85

115,238.69 115.238.69

11,500.00 4,205.00 6,659.03 381,864.72 4,925.57 9,400.57

82,324.06 82,324.06 45.00 2,942.99

7,195.00 13,675.01 4,541.43 10,012.46 26,594.49

2.094.79 2,094.79 115.951.12 $ 1.290.324.00 $ 2.414.219.98

97.640.I4 s 722,328.47 2.500.00

109,224.98 839,585.02

285,099.88 285,099.88 1,639.05 2,492.64 70,054.66

43,140.48 3I,893.75 433,827.67 5,493.27 152,242.40

7.279.49 568.00 54,002.43 140.00 1,153.00 1,573.00

2,746.34 3.659.37 33,997.46 33,997.46

8,000.00 3,945.49 86,977.03 196,259.79

115,238.69 1 I5,238.69 121,796.00 121,796.00

10,900.00 12.565.00 143.00 3.363.38 10,741.38

Total Operating Expenses $ 314.004.00 $ 309.833.45 s 264.344.72 $ 254.846.61 s 79.437.90 s 170.669.77 s 106.359.52 s 59.558.98 s 49.106.19 s 137.966.03 s 168.737.25 s 92.192.93 $ 91.541.80 $ 265.898.97 s 698.973.10 $ 3.063.471.22

facess (Deficiency) of Re1cnues 01er (Under) Expenses s $ (194.451.35) s (158.409.42) $ (137.308.86) s (50.923.90) s (110.037.55) s (65.168.69) s (30.682.03) s (27.592.19) s (88.015.03) $ (124.235.31) s (51.165.11) $ (52.664.85) $ (149.947.85) s 591.350.90 $ (649.251.24)

- 1 3-'


APPENDIX B FINDINGS AND RECOMMENDATIONS

The following are our engagement findings, related recommendations, and management's responses.

No. Findin2 Recommendation & Mana2ement's Response 1 Procedures for Prel!aration of the SRE Recommendation:

We identified three revenue categories and UTPB should develop procedures for three expense categories with material errors preparation of the SRE designed to provide that were reported in the SRE initially consistent, accurate, and complete reporting of prepared by UTPB. Due to changes in athletic revenues and expenses to both the employees responsible for preparing the SRE NCAA and the UTPB president. In addition, and recent implementation of PeopleSoft as management should consider cross training the university's primary accounting system, employees so that more than one individual is UTPB staff experienced challenges in knowledgeable in preparation of the SRE. collecting complete data for preparation of the report. Additionally, the NCAA made Management Response:

significant changes to the reporting We concur. The difficulties encountered during requirements for FY 2015 which fmiher the preparation of the S¥ this year will be increased the likelihood that certain line items documented to ensure that adequate procedures might be materially misstated for all member are identified to address the recommendation. institutions. The categories affected are listed

.. �below: Anti cipated Implementati on Date:

• Direct State or Other Government Support August 31, 2016 was understated by $38,324.44.

• Direct Institutional Support was overstated by $246,356.02.

• Transfers to Institution were overstated by $936,293.95 - there were no such transfers.

• Sp01is Equipment, Uniforms and Supplies expenses were overstated by $154,649.61.

• Spirit Group expenses were understated by $33,997.46.

• Direct Overhead and Administrative Expenses were understated by $148,545.34.

2 Athletic Fees Recorded Significantly Less Recommendations: than Estimate • Ensure that total amounts amount collected Considering exempt online and dual credit for athletic fees are complete and accurate. students, we calculated an independent • Ensure any repurposed athletic fees collected estimate of the $ 1 2/SCH athletic fee of from students are made available to Athletics $990,900. The FY 2015 Budget for this fee in accordance with its intended purpose. was $800,000 and �he total amounts recorded • Research the student financial aid system and in PeopleSoft and the UTPB AFR for athletic

- 14-

No.


Findin2 Recommendation & Mana2ement's Resoonse fees was significantly lower at $735,837 . 1 2 . determine whether the repurposed fee was As ofreport issuance, a definitive reason for collected. If not, determine the reason why the difference between the estimate and actual the fees were not collected and take corrective amounts was not known. action to ensure that all fees are assessed and

collected. Re�uri�osed Athletic Fee • If fees were collected, determine the amount In the spring of 2014, UTPB students voted to of fees collected, the cost center in which they re-purpose a student union fee ($35 per were recorded, and how the money was spent. student) to support the UTPB intercollegiate • Consider creating a cost center specifically athletics program. That the repurposed fee for repurposed athletic fees. was intended to be made available to the • Reallocate any previously collected intercollegiate athletics program is reflected in repurposed fee to Athletics. This should not the university's FY 201 5 budget that was be netted against any amounts spent from the approved by the Board of Regents and in the collected fees if not spent for athletic 201 5 - 201 7 undergraduate course catalogues. purposes.

• In accordance with RR 40401 , UTPB should We identified a material discrepancy between ensure that it includes a description of the UTPB budgeted revenues from repurposed criteria for any authorized exemptions and student fees designated for Athletics and waivers. actual known amounts collected and recorded in PeopleSoft from the fee. As of report · · Management Response: ·

issuance, the only definitively known amount Exceptions to the fees for general students will be . collected and recorded in PeopleSoft is in a published in the next Undergraduate and non-athletic cost center for $27,636.74, and, Graduate Catalogs. The publication date for the according to the VPBA, this amount was not next Undergraduate Catalog is fall of 201 7, and made available to Athletics in FY 201 5 . the next Graduate Catalog will be published fall Lastly, our independent estimate of the 2016. repurposed fee that could have been collected is substantially higher than the $278,880.00 Accounting will review collection and allocation budgeted by UTPB for FY 201 5 . of the Athletic Fee. If fees were incorrectly

transferred to cost centers outside of athletics, Athletic Student Fee Exem�tions and they will be returned to the Athletic Fee Waivers account. According to Section 1 , Published Fees, of Regents' Rule 40401 , Assessment, Collection, Anti cipated Implementati on Date: Delegation, and Waiver of Tuition and Fees, March 1, 2016 (with the exception of updating "tuition, fees, and other charges will be fixed the Undergraduate and Graduate Catalogs, as prescribed or authorized by statute . . . and which will be completed August 31, 2016) will be published in the institutional catalog with a description of the criteria for any '

authorized exemptions and waivers." UTPB has not published in its institutional catalog a description of the criteria for any authorized exemptions and waiver.

- 1 5-

No. 3

4


Fin din� Recommendation & Mana�ement's Response Use of State Funds Recommendation : We determined that five graduate students UTPB should consult the UT System Office of who provided part-time operational support to General Counsel and seek a written opinion to Athletics were compensated from state funds. dete1mine whether graduate assistants that According to Article III of the Texas General provide part-time operational support to Athletics Appropriations Act, Section 9 Intercollegiate may be legally compensated from state funds. Athletics, "no educational and general funds appropriated may be used for the operation of Management Response: intercollegiate athletics." Combined, the We will share the observations made by Audit graduate students were compensated with Office of General Counsel concerning $38,324.44 from state funds. Athletics Graduate Assistants. As athletes sign

up for intercollegiate athletics courses and as the graduate assistants assist in instructional activities as a part of their duties, we feel that our practices are appropriate. Further, the graduate assistants are fit!! time students, worldng toward their degrees as are all of the graduate assistants employed by the university. Should the Office of General Counsel disagree with our view, the fimding and/or awarding

. .. process will be changed as of fall 2016. We will - follow any guidance supplied by the Office of

General Counsel concerning our Graduate Assistant fimding.

Anticipated Implementation Date: August 31, 2016

Athletic Student Aid and Direct Recommendations : Institutional Support • Consistent with our recommendation from the Of the $983,115.85 reported as Direct FY 201 2 Report on the Application of Institutional Support, $646,000.00, which was Agreed-Upon Procedures, UTPB should provided to support Athletic scholarships, reconcile financial aid amounts recorded in could not be agreed to amounts recorded in Poise to amounts recorded in PeopleSoft to PeopleSoft. The amount recorded is an ensure that amounts reported in the SRE for estimate and based on amounts that UTPB Athletic Student Aid and Direct Institutional reported to the NCAA as Athletic Aid Support are adequately supported. exclusive of an estimated $49,000 in gifts and • It would also be helpful for Athletics if the endowments that appear elsewhere in the SRE University could transfer lump sum amounts

of athletic awards from the designated Of the $722,328.47 reported as Athletic Aid account to applicable athletics scholarship expense, $695,000 of this amount could not be accounts. This could facilitate the agreed to amounts recorded in PeopleSoft. reconciliation process and help ensure that This latter amount represents Athletic Aid Athletics correctly records scholarship reported by UTPB to the NCAA through the amounts and waivers correctly within the

-16-

No.

5


Fin dine Recommendation & Management's Response NCAA's Compliance Assistant software. SRE.

The cause is related to how financial Manage111ent Response: information migrates from Poise, the financial We concur. As part of the implementation of aid system, to PeopleSoft. UTPB initially PeopleSoft Student, we created specific item records financial aid transactions in Poise. types for each sport. The use of these item types The Poise transactions are then batched and to award athletic scholarships will enable the recorded in PeopleSoft. As a result, amounts University to identify which sport the award is attributable to individual student athletes for and facilitate the reconciliation process. cannot be easily identified from information Adrian Wallace awards will still be a manual recorded PeopleSoft. process.

This observation is a repeat finding from Anti cipated I111plementati on Date:

UTPB Athletics Report on the Application of August 31, 2016 Agreed-Upon Procedures for FY 2012. (See Appendix C.)

Financial Aid Reconciliation to Comuliance Recommendations: Assist and Calculation of Eguivalencies • Retain supp01ting documentation for UTPB 's For a sample of individual student athletes, we full grant-in-aid amount that is reported to the determined that student aid information in NCAA. Maintain this documentation in Poise, UTPB's financial aid system, did not accordance with institutional document always agree to information in Compliance retention requirements. Assist. Our recalculations of equivalencies • Reconcile information reported to the NCAA for these students did not agree to those found through Compliance Assist to actual financial in Compliance Assist for 1 1 of 13 student aid awarded as reflected in UTPB's financial athletes in our sample. The differences were aid system to ensure equivalencies are caused by two primary factors. First, the calculated accurately and that total aid amount of out-of-state waivers reflected in reported to the NCAA is accurate and Compliance Assist was less than actual out-of- complete. state waivers recorded in Poise. Second, book scholarships recorded in Poise were not Management Response: always reflected in Compliance Assistant. In the past, audits did not require presentation of The net result is that equivalencies were a document demonstrating how the fitll grant in generally understated. aid amounts were generated. One was supplied

for the current year. In the fitture, the University Additionally, we were unable to validate the will maintain copies of the worksheet for full grant-in-aid amount reported in presentation to audit. Compliance Assist which is used as the denominator for calculating equivalencies. Financial aid is reconciled between the UTPB did not retain support for this amount financial aid office and Computer Assistant and the employee responsible for the annually. In spite of this activity, differences calculation has since left UTPB. were still noted by auditors when using POISE

during our audit. PeopleSoft reports will be We determined that student aid information used in the fitture to reconcile data in Computer

-17-

No.


Fin dine Recommendation & Manaeement's Response reported to the NCAA through Compliance Assistant, ensuring that the Equivalencies Assistant is not adequately reconciled to reported in CA are consistent with those in Poise. This increases the risk that Athletic PeopleSoft. Student Aid could be awarded in excess of limits established by the NCAA. To address Anti ci12.ated Im12.lementati o11 Date: this risk, we compared total equivalencies for August 31, 2016 all sports to established limits and determined that UTPB awarded Athletic Student Aid well below these limits. As a result, the understated equivalencies referenced above may not have caused UTPB to exceed established limits. However, as UTPB establishes its football program the risk of exceeding those limits will increase.

- 1 8-

. The University of Texas of the Permian Basin Independent Auditor's Report on the Application of Agreed-Upon Procedures For the Fiscal Year Ended August 31, 2015

APPENDIX C FOLLOW-UP ON OPEN RECOMMENDATIONS

The following are the open engagement findings from FY 201 2 and related follow-up.

No. Finding Recommendation & Management's Response 1 Direct Institutional Su1mort Recommendation :

F. We also found that the scholarship amounts Athletics should reconcile its financial aid and related out-of-state waiver amounts amounts to amounts recorded in DEFINE (for recorded in DEFINE did not agree to amounts both scholarships and related out-of-state recorded in the SRE. Consequently, waivers). It would also be helpful for Athletics scholarship amounts and related waiver if the University could transfer lump sum amount related to Direct Institutional Support amounts of athletic awards from the designated were overstated by $85,78 1 . We also noted account to applicable Athletics scholarship that Athletics does not reconcile amounts accounts. This would facilitate the recorded by financial aid, to amounts recorded reconciliation process and help ensure that in DEFINE, to determine amounts that Athletics conectly records scholarship amounts ultimately should be recorded in DEFINE. To and waivers correctly within the Statement of fmiher complicate matters, the majority, in Revenues and Expenses (SRE). dollars, of Athletic scholarships are funded

· from a designated scholarship account (19- Management Response: . . . 1 800- 1 270). Non-athletic awards are also Athletic scholarships fimded through designated

provided to both UTPB students and UTPB tuition will be transferred into an athletic-student-athletes. Consequently, athletic and specific account to enable easier tracldng of non-athletic awards cannot be readily athletic scholarships from that source during distinguished from the detail of the designated the reconciliation process. Out-of-state tuition account activity. waiver amounts shall be obtained from the

office of financial services for completion of fitture SREs. In order to best match athletic scholarship awards with annual academic year expenditures, Athletics will utilize DEFINE data to reconcile scholarship awards made betvveen August 1 and July 31 of each year.

Revised Plan of Acti on: I have spoken with the Budget Manager, Assistant Director of Accounting and drafted a plan to create a new cost center in PeopleSoft Financials (FMS). With the new cost center, the Budget Manager will reduce the budget in the designated tuition scholarship account by the budget amount of athletic scholarships, transfer his amount to the cost center. The Assistant Director of Accounting will identifa athletic scholarships extended from the designated tuition account and move the expenses to the

- 1 9-

No.

2


Finding

Follow-Up Status: Closed

. .

Recommendation & Management's Response new cost center for Athletic Scholarships. This will encompass the entire FYI 5 fiscal year.

With the creation of the new cost center, the amount budgeted for Athletic Scholarships will automatically roll into the new fiscal year. The Budget Manager and Assistant Director of Accounting will work with Financial Aid to set up new award codes for Athletic Scholarships. When these codes are utilized, PeopleSoft Campus Solutions will automatically post expenses to the new cost center.

Orig_inal Im11..leme11tati o11 Date: A. through F. - October 2013 to coincide with preparation and completion of the FY 2013 SRE.

Revised Im11..leme11tati on Date: August 31, 2015

. . .

Since issuance of the FY 20 1 2 report, UTPB management made two requests for extension of the due date for implementation of the recommendation. The latest request for extension was made on March 12, 20 1 5 , for which the revised plan of action and revised implementation date are included above. We consider this finding to be closed due to its similarity to the current audit finding regarding Athletic Student Aid and Direct Institutional Support. See recommendation #4 in Appendix A. However, we will continue to track and follow-up on the status of management 's plan of action until the recommendation has been fully implemented.

Athletic Student Aid Recommendations: A. Amounts on the SRE did not agree to A. Athletics should reconcile its financial aid amounts provided by Financial Aid. Amounts amounts to amounts recorded in DEFINE (for provided by Financial Aid materially agreed both scholarships and related out-of-state to amounts recorded in DEFINE when waivers). It would also be helpful for Athletics exclusions were made for non-athletic award if the University could transfer lump sum from the designated account ( 1 9-1 800- 1 270). amounts of athletic awards from the designated Waivers provided by Athletics and recorded account to applicable Athletics scholarship on the SRE exceeded amounts recorded in accounts. This would facilitate the DEFINE. In addition, amounts recorded on reconciliation process and help ensure that the SRE for Wallace scholarships was $5,500 Athletics correctly records scholarship amounts less than amounts recorded in DEFINE. and waivers correctly within the SRE. Overall, it appears that scholarships and waivers recorded on the SRE were $7,4 1 2 less B. Athletics should reconcile student aid award than applicable amounts recorded in DEFINE. letters to DEFINE to ensure that student-athletes

-20-


No. Finding Athletics made the correction to the final SRE in Appendix A.

B. It appears that one student athlete received $1,000 less in financial aid than was agreed to with the university.

-2 1 -

Recommendation & Management's Response are awarded the correct amount of agreed upon financial aid.

Management Response: A. Funds from Designated tuition used for athletic scholarships will be transferred into an athletic-specific account to enable easier tracldng of athletic scholarships from that source during the reconciliation process. Out of state tuition waiver amounts shall be obtained from the office of financial services for completion of fitture SREs.

B. In order to best match athletic scholarship awards with annual academic year expenditures, athletics will reconcile scholarship awards made between August 1 and July 31 of each year for creation of the SRE. Reconciliation of individual scholarship contracts with DEFINE payments shall be done early each spring semester after awards have been applied to studentaccoun�s.

Revised Pl<tn of Acti on:

I have spoken with the Budget Manager, Assistant Director of Accounting and drafted a plan to create a new cost center in PeopleSoft Financials (FMS). With the new cost center, the Budget Manager will reduce the budget in the designated tuition scholarship account by the budget amount of athletic scholarships, transfer his amount to the cost center. The Assistant Director of Accounting will identifY athletic scholarships extended from the designated tuition account and move the expenses to the new cost center for Athletic Scholarships. This will encompass the entire FYI 5 fiscal year.

With the creation of the new cost center, the amount budgeted for Athletic Scholarships will automatically roll into the new fiscal year. The Budget Manager and Assistant Director of Accounting will work with Financial Aid to set up new award codes for Athletic Scholarships. When these codes are utilized, PeopleSoft

No.


Finding

Follow-Up Status: Closed

Recommendation & Management's Response Campus Solutions will automatically post expenses to the new cost center.

Orig_i 11al Ime.leme11tatio11 Date: A. and B. - October 2013 to coincide with preparation and completion of the FY 2013 SRE.

Revi sed Ime.lementati o11 Date: August 31, 2015

Since issuance of the FY 201 2 report, UTPB management made two requests for extension of the due date for implementation of the recommendation. The latest request for extension was made on March 1 2, 201 5, for which the revised plan of action and revised implementation date are included above. We consider this finding to be closed due to its similarity to the ctment audit finding regarding Athletic Student Aid and Direct Institutional Support. See recommendation #4 in Appendix A. However, we will continue to track and follow-up on the status of management's plan of action until the recommendation has been fully implemented.

-22-

. The University of Texas of the Permian Basin Independent Auditor's Report on the Application of Agreed-Upon Procedures For the Fiscal Year Ended August 31, 2015

APPENDIX D NOTES TO THE STATEMENT OF REVENUES AND EXPENSES

NOTE 1 - Summary of Significant Accounting Policies Fiscal Year - UTPB's fiscal year is the period beginning each September 1st and ending each August 31st of the subsequent calendar year.

Principles of Preparation - The SRE is prepared in accordance with the NCAA financial audit guidelines. Information used in the SRE's preparation is obtained primarily from subsidiary ledger information recorded in UTPB 's financial accounting system. Other information, such as amounts estimated for noncash trade-out agreements and gifts-in-kind, is obtained from records maintained by Athletics.

Student Fees - The current athletic fee is $12.00 per semester credit hour and a repurposed fee of $35.00 per student. Certain students, including those students emailed only in onlihe or dual credit courses pay a fixed charge amount of $150.00 per class and are therefore exempt from the Athletic fee.

Direct Institutional Support - Direct Institutional Suppo1i is comprised primarily of designated tuition and other institutional funds.

NOTE 2 - Contributions Constituting More than Ten Percent of All Contributions UTPB received $3,836,615.73 in contributions for Athletics during FY 2015. Three contributions were more than ten percent of all contributions received for Athletics during FY 2015, as follows:

• Grow Odessa made a $1,000,000 contribution. • Two anonymous donors made contributions of $ 1 ,000,000 and $500,000.

NOTE 3 - Capital Assets Athletics acquires, depreciates, and disposes assets in accordance with UTPB institutional policy as follows:

• Acquisition - Athletics acquires capital assets through the normal process at the institution. All purchases are centralized and are to be made using the method that provides the best value to UTPB. Competitive bidding is required for all assets above $5,000, which is the capitalization threshold.

• Depreciation - Depreciation is allocated to Athletics based on the assets, or portions of real-assets, under the control of Athletics. Depreciation is calculated on a straight-line basis.

• Disposal - Disposal of capital assets must be done in accordance with State of Texas law and institutional policy.

-23-


Note 4 - Other Required Disclosures:

Description Amounts Excess Transfers to Institution $0.00 Conference Realignment Expenses Not Applicable Total Athletics Related Debt $0.00 Total Institutional Debt $123,220,000.00 Value of Athletics Dedicated Endowments $576,092.59 Value of Institutional Endowment $41,283,380.65

-24-

The University of Texas of the Permian B asin Independent Auditor' s Report on the Application of Agreed-Upon Procedures_,.. For the Fiscal Year Ended August 3 1 , 2015

APPENDIX E FY 2015 BUDGET TO ACTUAL VARIANCE ANALYSIS OF MAJOR REVENUE AND EXPENSE ACCOUNTS

UTPB budgets its activity on a cost center basis. For this analysis, major cost centers were limited to those, that when summed together, comprised of 80% (or more) of the sum total of revenue and expenses for all Athletic cost centers. For variations over the lesser of $1 million or 10 %, an understanding was obtained as noted in the tables below.

559000 1 4 I ATHLETICS - FOOTBALL SUPPORT

41 270000 !ATHLETICS FEE

4 1 270001 IGAME GUARANTEES/CONCmCKETS

55900003 !ATHLETIC DEPT GOLF TOURN

4 1 270005 I Athletic Department Admin

1559000 1 4 ATHLETICS - FOOTBALL SUPPORT

41 270070 MEN'S BASKETBALL

41 270090 MEN'S BASEBALL

41 270030 !WOMEN'S BASKETBALL

4 1 2700 1 0 WOMEN'S VOLLEYBALL

4 1 270050 WOMEN'S SOFTBALL

4 1 270060 MEN'S SOCCER

14 1 270020 WOMEN'S SOCCER

4 1 270000 ATHLETICS FEE

witr,•··a:� $ (3.762.215.oo)I $ I $ (3.762.275.oo)

(745.875.44) 1 ( 1 .69 1 . 1 5 7 .68) 1 (1.777.875.44)

(92.240. 1 9) 29.3 9 1 .84 (1 07.240. 1 9)

(25.600.50) (25.600.50)

$ 444. 1 3 0. 1 2 $ 358.999.00 $ 85. 1 3 1 . 1 2

306.964.76 - 306.964.76

1 7 1 .775.03 1 32.832.00 38.943.03

1 60 . 1 25.27 1 30.72 1 .00 29.404.27

1 53 .937.42 1 38.928.00 I 5.009.42

1 5 1 .232.04 1 35.086.00 1 6. 1 46.04

1 1 8.729.02 1 1 8.466.00 263.02

1 1 1 .669.55 1 03.852.00 7.8 1 7.55

89.773. 1 5 89.246.00 527. 1 5

82.93 1 .25 ( 1 .69 1 . 1 57.68) 1 . 774.088.93

· Athletics did not develop an estimated budget for football gifts because at the time UTPB did not have pennission to begin the football program The UTPB President chose not to include football activity in the budget as a result.

_ 1 72.3%I The ree amoun_ts recorded in PeopleSofi may not accurately reflect actual rees collected for Athletics. See

Recommendanon 2 m Appendix B. _ 7 j 4_9%

1Athletics received more NCAA distnbutions in FY 201 5 as compared to prior years. In addition. other non-ticket , sale and game guarantee amounts can be recorded m this cost center

Athletics does not budget for events that may not take place every year.

23 70, 1rnsurance Costs were $54.000 rrore than anticipated and replacement desktop computers were purchased in FY

·'0

2 0 1 5 .

This i s a new cost center created in F Y 2015 fo r the new football program whose first season wi] begin in FY 2017.

29.3% 1Costs for travel. unifonns. and coaches compensation were more than anticipated.

22.5%1Costs for field maintenance and unifonns were more than anticipated.

I0.8%1Costs for travel. unifonns. and coaches compensation were more than anticipated.

l 2.0% 1Atl1letics hired a new coach in March 20 1 6 after tl1e Atl1letic Director stopped coaching the team

0.2% 1Variance between the FY 2015 budget and actual was not greater than 1 0% or $ 1 .000.000.

7.5%1Variance between the FY 2015 budget and actual was not greater than 1 0% or $ 1 .000.000.

0.6% 1Variance between the FY 201 5 budget and actual was not greater than 10% or $1 .000.000.

This is the cost center from which administrative and all sports activity are funded from Consequently. the credit amount for the budget of this cost center represents estimated amounts available for an atllletic cost centers from

- 1 04.9%lwhich expenses are to be made. This cost center itself did not have an estimated budgeted expense for FY 20 1 4 or FY 2015. In FY 2014. no e>q>enses were made from this cost center. However. in FY 20 1 5 . a small number of expenses were made. Over 90% of these expenses were for medical insurance.

-24-


APPENDIX F FY 2014 TO FY 2015 VARIANCE ANALYSIS OF MAJOR REVENUE AND EXPENSE ACCOUNTS

For this analysis, major cost centers were limited to those, that when summed together, comprised of 80% (or more) of the sum total of revenues and expenses for all Athletic cost centers. For variations over the lesser of $1 million or 10 %, an understanding was obtained as noted in the tables below.

559000 1 4 !ATHLETICS - FOOTBALL SUPPORT

41 270000 !ATHLETICS FEE

4 1 270001 IGAME GUARANTEES/CONCffi CKETS

55900003 !ATHLETIC DEPT GOLF TOURN

4 1 270005 I Athletic Department Admin

559000 1 4 !ATHLETICS - FOOTBALL SUPPORT

4 1 270070 IMEN'S BASKEIBALL I

4 1 270090 IMEN'S BASEBALL I 4 1 270030 !WOMEN'S BASKETBALL I 4 1 2700 1 0 !WOMEN'S VOLLEYBALL

4 1 270050 !WOMEN'S SOFTBALL I 4 1 270060 IMEN'S SOCCER I 4 1 270020 !WOMEN'S SOCCER I

4 1 270000 IATHLETICS FEE I

$ (3,762,215.oo) I $ 4 1 2, 1 00.00 I $ (4, 1 74,375.00)

(745,875.44) 1 (847,32 1 .5 1 )

(92,240. 1 9)1 (21 ,567.44)

(25,600.50) 1 ( 1 1 ,425.00)

$ 444, 1 30. 1 2 I $ 374,968.73 I $

306,964.76

1 7 1 ,775.03 1 30,239.03

1 60, 1 25.27 1 42,948.28

1 53,937.42 1 3 5,565 . 1 7

1 5 1 ,232.04 78,709.36

1 1 8,729.02 1 08,084.80

1 1 1 ,669.55 93,756.85

89,773 . 1 5 8 1 ,496.61

82,93 1 .25 -

1 0 1 ,446.07

(70,672.75)

( 1 4, 1 75.50)

69, 1 6 1 .39

306,964.76

4 1 ,536.00

1 7,1 76.99

1 8,372.25

72,522.68

1 0,644.22

1 7,91 2.70

8,276.54

82,93 1 .25 1 -25-

Athletics received a large number o f gifts in F Y 20 1 5 t o support the new football program, whose first season will begin in FY 2 0 1 7 .

_ 1 2_0% I The fee amounts recorded in PeopleSoft may not acctrrately reflect actual fees collected for Athletics. See

Recommendation 2 m AppendIX B.

327.7%1Athletics received more NCAA distributions in FY 20 1 5 as compared to FY 2014.

1 24. 1 % 1The golftotrrnament was less successful in FY 20 1 5 as compared to FY 2 0 1 4.

l 8.4% 1Athletics hired a marketing director and development assistant to its staff in FY 20 1 5 .

This is a new cost center created in F Y 20 1 5 fo r the new football program, whose first season will begin in FY

2 0 1 7 .

3 1 9'Y< I Athletics inctrrred expenses for exempt totrrnaments and ptrrchased new uniforms in FY 20 1 5. Additionally, all

• 0 coaches received a raise in pay and benefits of3% on average.

1 2_0% IAthletics ptrrchased new uniforms in FY 20 1 5 . Additionally, all coaches received a raise in pay and benefits of3%

on average.

1 3 _6%1Athletics ptrrchased new uniforms in FY 20 1 5. Additionally, all coaches received a raise in pay and benefits of3%

on average.

92 .o/c

I Athletics hired a full time coach and assistant coach in FY 2 0 1 5 . Additionally, all coaches received a raise in pay . l 0

and benefits of3% on average.

9.8% 1Variance between FY 2 0 1 4 and FY 20 1 5 was not greater than 1 0% or $ 1 ,000,000.

·1 9_ 1 % !Travel expenses increased in FY 20 1 5 . Additionally, all coaches received a raise in pay and benefits of3% on

average.

l 0.2% ITravel expenses increased in FY 20 1 5. Additionally, all coaches received a raise in pay and benefits of3% on

average.

This cost center itself did not have an estimated budgeted expense total for FY 2 0 1 4 or FY 20 1 5. In FY 20 1 4, no

expenses were made from this cost center. However, in FY 2 0 1 5 , a small number of expenses were made. Over

90% of these expenses were for medical instrrance.

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