The Virginia Auditor of Public Accounts last week produced its report on Norfolk State University’s controversial 2011 institutional audit, revealing the university’s struggle with understaffing in critical finance positions and improper systems of documenting financial records and policies.
The audit found no evidence of misappropriation or wrongdoing, and cited several improvements made since its last audit. But NSU also did not give corrective action on several previously discovered problems cited in earlier corrective reviews, and specifically pointed to poor reporting and management on the part of former president Tony Atwater in the university’s handling of financial issues. From the report:
“…management did not take appropriate action with respect to implementing corrective action on findings from previous audits, nor did they identify significant risks that arose as a result of staff turnover and the implementation of a new accounting system, which resulted in the need for members of the Board of Visitors to engage in the audit process on a day-to-day basis.
When the Board of Visitors must engage in functions typically performed by management, it is an indicator that the Board lacks confidence in the ability of University management to accomplish the objectives of the University. In order for the University to correct issues currently noted and prevent the future occurrence of these issues, University management must be proactive in communicating with the Board regarding potential problems and take a proactive approach to addressing deficiencies which may prevent the University from achieving its objectives.”
According to the report, Norfolk State’s division of finance and management is understaffed by about four accounting and reporting staff positions, and lacks defined rules for internal control processes. Additionally, the audit detailed antiquated systems in accounting, such as the usage of spreadsheets instead of accounting software, as threats to financial reporting integrity.
The report gave six mandates for correcting “material weaknesses” including:
- Address Inadequate Staffing and Organizational Structure
- Develop and Implement Policies and Procedures
- Improve Year-end Financial Reporting Process
- Properly Maintain Documentation for Audit
- Properly Perform Reconciliations of Bank Accounts and Accounting System; and,
- Correct Deficiencies in Fixed Asset Management Program