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Georgia colleges face audits

Monday, June 25, 2012 9:11 AM
Last updated 10:02 PM
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ATLANTA — As the state’s fiscal year comes to a close June 30, another round of audits will begin for the 35 public colleges and universities, and administrators are hoping they’ll get no surprises, as they did in the last one.

Audits from the previous year delivered to the Board of Regents showed the schools in the University System of Georgia with 35 deficiencies, including six problems that accountants classified as “material weaknesses” and nine as “significant deficiencies.” The heightened categories warned that the books might not have shown the whole problem.

Indeed, at Georgia Perimeter College, the inquiry revealed a $16 million deficit. In response, the regents replaced the president and the senior financial staff in May. The new team immediately imposed drastic expense cuts and announced the layoffs of 282 employees last week.

“We are putting a financial staff in place to fix what’s wrong and do things right in the future,” Interim President Rob Watts told faculty and staff when he took over. He added that he didn’t know what went wrong at the two-year college, which has the state’s third-highest enrollment on its six Atlanta-area campuses.

University System spokesman John Millsaps said an investigation is ongoing.

One of the material deficiencies auditors reported was Georgia Perimeter’s inadequate accounting procedures, issuing its caution in the unemotional wording of accountants.

“Through our examination, it was determined that the college failed to properly monitor budgetary financial activity during the year,” they wrote, adding that several funds were in a deficit.

If Perimeter College triggered the most dire warning, Fort Valley State University drew the most serious comments of any institution audited. The south Georgia school has had years of deficits, at one point peaking at $5 million. In March, when the regents got the report on the audits, Fort Valley instituted three days of unpaid vacation for faculty and staff to whittle down what was a $900,000 shortfall.

Claire Arnold, director of the education division of the Georgia Department of Audits & Accounts, reminded the regents in March that auditors usually find more problems at entities that haven’t been under their microscope in some time.

On the other hand, one of the items noted in a review at Savannah State University was as small as $4,670. While that didn’t reach the level of “significant,” it did add to the school’s list.

Also cited at Savannah State were uncommon entries posted to the wrong category, including one-time federal stimulus funds and some gifts to the school.

The most serious errors involved the way the school accounted for federal grants. Arnold said that no fraud was involved and that a plan was in place to prevent repeats.

“We resolved them,” said Edward Jolley, the school’s vice president for business and financial affairs.

That doesn’t mean everything is being done exactly as the auditors prescribed, he added. Other compensating controls may be used to accomplish the same thing.

Across town at Armstrong Atlantic State University, auditors turned up a pair of finance officials with two passwords each to the accounting software, missing documentation for accounts receivable of $34,500 and the failure to send a report needed by the federal government.

“That matter was addressed and resolved before the audit was issued to the Board of Regents in December 2011,” said David Carson, Armstrong’s vice president for business and finance.

Also in Savannah is the Skidaway Institute of Oceanography, which had two “significant deficiencies” and one “material weakness.” The main issue, according to Arnold, is that Skidaway is unique in the state as a research lab that gets most of its money from federal grants. So it simply doesn’t do its accounting the way state procedures require.

Skidaway is one of the smallest entities in the university system.

All of the issues cited by auditors in the latest batch of examinations were at small schools. They cited nothing significant at the largest schools, including the University of Georgia, Georgia Health Sciences University and Georgia State University.

It takes a big problem to raise a red flag at the largest schools. For instance, as huge as the University of Georgia is, only errors of $33 million or more would count as “material” to the overall health of the budget.

Still, issues arise, such as complications at Augusta State University when it switched payroll software. That became a case study last year at the annual conference the University System conducts for accounting staff from all the schools.

The next conference is in a month. The lessons of Perimeter College aren’t on the agenda, although they’re certain to be discussed informally.

Regents officials hope the lessons will stick, especially in the recent atmosphere triggered by the weak economy.

“In the last five or so years, we’ve all been responding to significant growth in our student body while state resources have been restricted,” said Savannah State’s Jolley. “We’ve all tried to keep things in balance.”

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Craig Spinks
Craig Spinks 06/25/12 - 08:29 am
No Half-measures: Fresh Eyes.

Bring in competent, disinterested, out-of-state entities to conduct these audits. Then release their unredacted reports to the print and electronic media simultaneously with their delivery to the USG.

Sweet son
Sweet son 06/25/12 - 01:20 pm
33 Million Doesn't Matter

"Plus, it takes a bigger problem to raise a red flag at the largest schools. For instance, as huge as the University of Georgia is, only errors of $33 million or more would count as “material” to the overall health of the budget." What an assinine statement. Hell just keep badgering the small institutions over 10's of thousands of dollar and let the big ones have millions unaccounted for. Simply incredible!! The Feds are no better at keeping up with money but the USG needs dual audits. One from the State and one from the Feds!!

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