CACC “endures” another “negative audit”Published 8:02pm Wednesday, March 19, 2014
A year to the day Susan Burrow was named acting president of Central Alabama Community College, the State Examiners of Public Accounts released its audit of accounts for fiscal year 2012.
It showed there is still some work to be done.
The state auditors found multiple problems with internal financial controls and compliance with state and federal rules in the audit, which covered the school’s finances from Oct. 1, 2011 to Sept. 30, 2012. The audit reflected a continuation of the insufficient accounting practices and compliance issues that led to the change of leadership at the Alexander City-based two-year institution in February 2013.
In a statement on the audit, Burrow noted the records examined predate her tenure and that of Postsecondary Education Mark Heinrich, who named her CACC’s acting president.
“We have worked diligently to understand the prior accounting system failures and lack of audit controls,” Burrow wrote. “Dr. Heinrich encouraged and directed me to move forward with a commitment to address any and all technical, operational or human resource issues required to take the corrective action needed and necessary to address the Examiners’ concerns.”
Burrow wrote in the statement that she and her staff at CACC “have worked diligently … to ensure compliance and correction of all identified issues.”
Those efforts include changes in CACC’s accounting department, consulting with outside accounting experts to help revise the school’s process and train the its staff and adjusting the internal control procedures in the school’s accounting system, she wrote.
The audit listed instances of noncompliance with state laws and regulations and other matters that were found during the audit, including:
ν the failure to perform an annual physical inventory of property,
ν the failure to revert to the state’s Education Trust Fund more than $74,253 in unspent state appropriations,
ν the failure to get approval from the chancellor for the lease of property for use in the school’s Truck Driver Training Program,
ν the school allowing students who still owed money to continue registering for classes in violation of state board of education policy,
ν maintaining negative balances in agency funds that effectively extended the credit of the state of Alabama to outside entities and
ν the overpayment of a former employee by more than $1,343 without an effort to collect the overpayment until 21 months later.
Auditors also listed numerous problems with the college’s internal control over financial reporting. In 2011, auditors reported the college did not perform bank reconciliations accurately or in a timely manner, did not reconcile its accounts receivable ledgers with the general ledger, did not maintain proper physical controls over its computer system, didn’t segregate duties between accounting personnel and did not identify all accounts payable at year-end.
Findings for the 2012 fiscal year included the failure to properly calculate employee payroll, failure to implement proper controls over credit card purchases, failure to record long-term debt payments to the general ledger and failure to maintain adequate supporting documentation for the calculation of scholarship allowance.
“Various adjusting entries had to be made to correct the college’s financial statements,” the auditors wrote in its summary of findings.
There were also problems with the school’s compliance with federal financial assistance programs. The school did not perform a monthly reconciliation of federal student aid or maintain adequate documentation for federal student aid draw-downs, auditors found.
Burrow said in her statement that CACC leaders “expect and anticipate one more year of exceptional findings (for the 2013 fiscal year)” as efforts to remedy the accounting problems will not be evident until the FY 2014 audit.
“Our corrective action plans are well under way and compliance standards are being achieved in the current budget cycle,” Burrow wrote.
The audit also listed basic financial information about the school, which maintains campuses in Talladega and Gadsden as well as its home campus in Alexander City. The school’s total net assets were just under $25.3 million in 2012, down slightly from $25.59 million in 2011.
Operating revenues were down in 2012, at 6.7 million, compared to $7.2 million in 2011. The school’s most significant source of operating revenue, the auditors reported, was student tuition and fees totaling $3.9 million.
“The college’s overall financial position is strong,” auditors wrote in their economic outlook, noting enrollment growth is expected to be “as good or better” than in previous years.
Burrow said it is “regrettable” the school has had to “endure the distraction of this negative audit process,” but changes in supervision and leadership have “paved the way” for the school’s finances to be better managed in a manner compliant with accounting rules.
“It is our mission to make sure that these type issues do not reoccur,” Burrow wrote.