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UMBC Audit Update: Legislative Findings and Case Studies

Stay informed about the recent USM Legislative Audit findings and UMBC case studies. Read updates on compliance recommendations and external audits. Learn valuable lessons from real-life case studies on fraud prevention and internal controls.

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UMBC Audit Update: Legislative Findings and Case Studies

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

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

  3. USM Legislative Audit Follow-Up

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

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

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

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

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

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

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

  11. USM Office of Internal Audit

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

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

  14. External Audits Update

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

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

  17. Case Studiesand Lessons Learned

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

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

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

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

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

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

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

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

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

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

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

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

  30. P-Card News and Reminders

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

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

  33. Any Questions/Comments?

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

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

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