COLLEGE OF SOUTHERN NEVADA AUTOMOTIVE DEPARTMENT Internal Audit Report July 1, 2009 through June 30, 2010

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1 COLLEGE OF SOUTHERN NEVADA AUTOMOTIVE DEPARTMENT Internal Audit Report July 1, 2009 through June 30, 2010 GENERAL OVERVIEW The Associate of Applied Science degree program in Automotive Technology at College of Southern Nevada (CSN) is one of the largest of its kind in the western United States. It prepares students for careers as automotive technicians, as well as related automotive occupations. Instruction is provided on state-of-the-art equipment in both classrooms and labs and the program has many partnerships with major automobile, tool and equipment manufacturers. The Automotive Department employs three professional staff, four classified staff, as well as 12 instructors. SCOPE OF AUDIT The Internal Audit Department has completed a review of the Automotive Department at CSN for the period of July 1, 2009 through June 30, The scope of our review included tests of departmental records and other auditing procedures as considered necessary. The tests included but were not restricted to the following. 1. Reviewing purchasing transactions to determine compliance with established Board of Regents and institutional policies, procedures and controls. 2. Reviewing expenditures for propriety, supporting documentation, and proper approval. 3. Examining equipment inventory, leave records and telephone charges. (AUDIT COMMITTEE 12/02/10) Ref. A-17, Page 1 of 12

2 4. Reviewing automotive work order files for proper documentation and accountability. In our opinion, we can be reasonably assured that the Automotive Department is operating in a satisfactory manner. However, implementation of the following recommendations would further improve operations. CASH CONTROLS The Internal Audit Department reviewed controls over cash and other receipts. While the department does not physically handle cash, it does accept debit and credit cards for payment of fees. We reviewed 74 credit card transactions totaling $5,505 during the audit and noted the following. 1. Thirty-four transactions included the merchant copy of the credit card receipt in the work order files. 2. Fifteen transactions included the customer copy of the credit card receipt in the work order files. 3. Twenty-five transactions did not include a copy of the credit card receipt in the work order files. Due to inconsistencies in the documentation maintained for credit card transactions, we recommend written policies and procedures be revised to ensure consistent filing of pertinent information. If procedures for credit card transactions and maintaining of documentation are already established, we recommend employees be reminded of those procedures. (AUDIT COMMITTEE 12/02/10) Ref. A-17, Page 2 of 12

3 The College concurs with these recommendations. The Automotive Program will accept two proofs of payment: 1) the credit card receipt issued to the customer by the Automotive staff (in the case where the customer wishes to retrieve their vehicle and provides payment after the regular Bursar s Office business hours. Note: Cash and checks are not accepted in the department); or 2) the validated yellow receipt copy of the CSN Office of the Bursar Official Receipt which shows that the customer has made payment at the Bursar s Office. The department has refined and finalized the credit card processing procedures to be consistent with CSN Cash and Payment Handling Operations Policies and Procedures to ensure that reconciliation occurs the appropriate credit card settlement documentation is maintained in the Bursar s Office; and the Automotive Program will retain and safeguard in the department files, the Work Order and the credit card copy and/or the yellow copy of the Bursar s Official Receipt document. The College s Cash and Payment Handling Operations Policies and Procedures have been provided to NSHE Internal Audit and can be reviewed upon request. Faculty and staff have been provided with a copy of the procedures and this information has been reinforced by the program director at a staff meeting. In addition, we reviewed the corresponding cashier s office receipts to ensure the amount charged to a customer matched the amount on invoice. In two instances, the amount charged to the customer did not correspond with the amount on the invoice. We recommend a review of (AUDIT COMMITTEE 12/02/10) Ref. A-17, Page 3 of 12

4 transactions be performed to determine whether the proper amount was charged to the customer and deposited with the cashier. The College concurs with this recommendation. The department reviewed the transactions and determined that the two customers were charged and paid to the Bursar the appropriate amounts. Upon further review it was determined that inconsistencies occur when parts, which may be included in the Work Order estimate of services, are determined not to be needed as the service is completed. The Mitchell System invoicing software that the Automotive Program utilizes (which is the standard system used in the auto industry) does not allow for a credit to be applied to the initial Work Order invoice when unneeded parts are returned to the vendor. To remedy this problem, the Automotive staff will issue a credit invoice in the amount of the cost of the returned part(s) to reflect the reduction to the original Work Order. We also recommend consideration be given to implementing a periodic reconciliation process to ensure transaction amounts are consistent from the work order and invoice to credit card and batch receipts. The College concurs with this recommendation. The Department implemented a reconciliation procedure that is completed weekly while school is in session. If a repair should completed during a period other than the regularly scheduled semester* the reconciliation will occur at the time that the repair is executed. *Due to availability of parts or extensive repairs beyond what was expected, an occasional vehicle repair may extend past the end of the semester. In such a case, the (AUDIT COMMITTEE 12/02/10) Ref. A-17, Page 4 of 12

5 instructor would work independently with the student to complete the project. This may cause the payment for the work to be delayed until after the end of the semester. This is a rare occurrence. CONTRACTS We reviewed contracts to ensure the department complied with NSHE policies. The Automotive department uses work orders as a means to provide services to vehicles. The work order is used to obtain owner and vehicle information and serves as an agreement between CSN Automotive Department and the client. During our review, we noted that the agreement did not include language approved by the NSHE Procedures and Guidelines Manual. We recommend greater care be taken to ensure that agreements are between the proper parties. We also recommend the work order wording be reviewed by Legal Counsel to ensure it meets the Board of Regents contract guidelines. The College concurs with these recommendations. CSN General Counsel reviewed the Work Order document and revised the text of that agreement to be consistent with the NSHE Procedures and Guidelines Manual language. The new text is in place on the Work Order document currently in use. This document has been provided to NSHE Audit staff and is available for review upon request. These recommendations have been completed. EQUIPMENT INVENTORY (AUDIT COMMITTEE 12/02/10) Ref. A-17, Page 5 of 12

6 We performed a review of controls over equipment inventory in accordance with the NSHE Procedures and guidelines manual. We examined 72 items and noted the following. 1. Sixteen items were missing an asset control number or the control number was difficult to read. 2. The room location for six items was incorrectly reported in Financial Data warehouse (FDW). 3. The vehicle identification numbers for one vehicle was incorrectly entered into the inventory system. For items one through three, we recommend the department request that Inventory Control department make the appropriate changes to the records. The College concurs with these recommendations. The following steps were undertaken to address the deficiencies. 1. Asset Inventory staff were contacted and have completed retagging those items that had asset control tags that had become illegible over time. In addition, those items that were missing tags have been tagged and it has been verified that the appropriate information has been entered into the inventory control system. This recommendation has been completed. 2. Automotive staff utilizes Property Movement forms to identify the correct location for equipment. However, in this academic program, some equipment is in limited supply and must be moved between rooms (but within the same building) continuously as mandated by the curricular demands. For these devices, the use of Property Movement forms is inappropriate due to the frequent changes between rooms. To address the (AUDIT COMMITTEE 12/02/10) Ref. A-17, Page 6 of 12

7 recommendation, the faculty/staff will use the standard Property Movement form when equipment is involved in building-to-building transfer as this is a less frequent occurrence and would likely be either a permanent relocation for the equipment, or at the least, location reassignment for a longer duration. 3. Research determined that the Vehicle Identification Number (VIN) was transposed when entered into the Asset Inventory System. The number has been corrected, and this recommendation has been completed. STUDENT WORKERS We performed a review of six student employees. We noted in eight instances the student timesheets conflicted with the academic schedule. We recommend that greater care to be taken to ensure that student employees do not work during times they are scheduled to be in class, and in the event they are at work during class hours, the reason is properly documented on the timesheet. The College concurs with this recommendation. The Automotive Program staff will review student workers class schedules and students will be scheduled for work only during times that they are not enrolled in a class. However, if a student reports to work during a period for which a class is regularly scheduled and the class has been cancelled or the class schedule has been modified, the student will be allowed to work only after such a change is confirmed by the program faculty. Faculty will notate the verified change on the student s timesheet as documentation of the schedule revision. This recommendation has been implemented. (AUDIT COMMITTEE 12/02/10) Ref. A-17, Page 7 of 12

8 TELEPHONE CALLS We performed a review of controls over telephone charges. We were advised that the telephone charges were being reviewed and filed by the Department Chair, however, no indication of supervisory initials and dates attesting such review was included. NSHE Procedures and Guidelines manual states, Sound internal control procedures require that each department be responsible for reviewing its telephone charges on a monthly basis. We recommend for a supervisor s signature to be present for attestation of review of telephone charges in accordance with NSHE Procedures and Guidelines manual. The College concurs with this recommendation. As part of the departmental procedure for monthly telephone charge review, the department chair will consistently initial or sign off on the long distance telephone record before it is filed, and will continue to maintain the logs in his/her office for audit staff review. This recommendation has been implemented. STATEMENT OF REVENUES AND EXPENDITURES The statement of revenues and expenditures provided below is based on the activity within the department s accounts during the audit period. The revenue and expenditure information was obtained from the financial accounting system. The statement is provided for informational purposes only. State Funds Auxiliary Funds Gift Funds Total Balance July 1, 2009 $ - $ 37,498 $ 12,291 $ 49,789 (AUDIT COMMITTEE 12/02/10) Ref. A-17, Page 8 of 12

9 Revenues State Appropriations 1,444, ,444,412 Tuition & Fees - 79,572-79,572 Gifts - - 1,500 1,500 Other Total Funds Available 1,444,412 79,572 1,500 1,525,484 Transfers-Out - - 1,750 1,750 Expenditures Salaries 1,386, ,386,247 Operating 58,058 71, ,179 Travel Total Expenditures 1,444,412 71,121-1,515,533 Balance June 30, 2010 $ - $ 45,949 $ 12,041 $ 57,990 (AUDIT COMMITTEE 12/02/10) Ref. A-17, Page 9 of 12

10 The Internal Audit Department would like to thank the personnel of the Automotive Technology department for their cooperation and assistance during this review. Las Vegas, Nevada September 1, 2010 Ibeth Bojorquez Internal Auditor Joseph R. Sunbury Internal Audit Manager SIGNATURE ON FILE Grant Dintiman IT Auditor Sandra K. Cardinal Assistant Vice Chancellor for Internal Audit and Risk Management (AUDIT COMMITTEE 12/02/10) Ref. A-17, Page 10 of 12

11 (AUDIT COMMITTEE 12/02/10) Ref. A-17, Page 11 of 12

12 (AUDIT COMMITTEE 12/02/10) Ref. A-17, Page 12 of 12