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Sept. 8, 2011
In an email to Northwest Missouri State University employees today, University President Dr. John Jasinski addressed questions about how the institution is responding to the recent findings and recommendations of State Auditor Thomas A. Schweich.
"Transparency is a priority at Northwest ...," Jasinski wrote in the email. "Please remember, Northwest requested this audit be conducted, and this was the first state audit performed in our institution's 107-year history. A tremendous amount of time and effort went into this audit, and these findings will help guide us toward improved functions throughout the University."
Auditors began their work at Northwest in January 2010 and were on-site through July 2010. Their findings were released Tuesday, Sept. 6.
In his email, Jasinski included Northwest's responses to each of the auditor's findings, which can also be found in the comprehensive audit report. The responses appear below.
1. Auxiliary Services Contracts
The Board of Regents agrees Northwest should be open and transparent in all purchasing transactions. The Board believes in competitive bids and proposals that will lower the cost of books, food and housing and thus save the students money and keep college affordable.
We are reviewing these auxiliary services contracts, and proposals for these services will be issued and contracts awarded as soon as possible but not later than the next 24 to 36 months in accordance with state law. Northwest also has agreed in the future to not accept loans and donations from vendors for leases, or lease extensions. Any future loans will be reviewed by legal counsel and approved by the Board of Regents.
Northwest agrees that contract oversight is important and is in the process of re-establishing and revising the criteria and review process. In addition, our finance office currently reviews vendor summary sales reports and plans to implement periodic verifications of these summary reports to the original sales documentation.
2. Former President's Employment Contract
The Board of Regents agrees the 2004 president's contract may have violated the spirit of the Missouri Constitution. The Board, in 2009, corrected many items and now requires documentation for actual expenses incurred as well as a more realistic market-based car expense allowance that is about half of what was allowed under the previous contract.
Under the state auditor's recommendations, all new and future Regents will receive a copy of this audit report. Northwest also encourages future Board of Regents to obtain a written legal opinion on future presidents' contracts and amendments. During its July 30, 2009, meeting the Regents directed me, as president, to develop a work plan for former President Hubbard for the remaining 11 months of his contract. With the Board, I developed a six- point work plan that held the former President Hubbard accountable and met the needs of the University.
The Board will continue to have its legal counsel advising it with regard to future employment contracts for me and future Northwest presidents. My current contract meets all of the requirements of Missouri law and addresses the issues identified by the auditor. Additionally, the Board will review the reasonableness of any allowances provided with each contract renewal cycle and generally on an annual basis.
3. Northwest Foundation
The sole purpose of the Northwest Foundation is to support Northwest's mission. Any University assets used by the Foundation's operations are, in turn, used to generate external funds for the operation of Northwest. Functions of University Advancement staff would be necessary whether there was a separate 501(c) (3) organization or not. All activities of the development and alumni staff benefit Northwest. The benefits far outweigh the use by the Foundation of University assets. Future operations of Northwest will benefit from planned gifts and from endowed gifts to the University that were solicited by development personnel. Investment in fundraising activities is a prudent investment and will be emphasized by the University, even in the absence of a separate foundation. The University's facilities have also benefitted from the Foundation incurring significant debt to finance the $4.4 million renovation to the football stadium and $7.675 million for other University buildings.
The University and the Foundation are working together to carefully monitor the mutual relationship. Additionally, the Northwest Foundation Board of Directors and the Board of Regents are working to adopt a formal memorandum of understanding that details the relationship between the University and the Foundation. We are working toward a goal of completing this within the next 90 days.
4. Contract Controls and Procedures
Stacy Carrick, vice president of finance, is evaluating procedures related to review and payment of contracted services to ensure payment in accordance with the terms of the contracts. An overview of the procedures will be communicated to the campus community within the next 12 months.
5. Room and Board Charges
Northwest uses a systematic process for setting room and board rates including an annual review of associated costs and comparative benchmarks to determine competitive rates. The University has formally documented the process and will ensure appropriate documentation is maintained and the process followed for subsequent reviews.
6. Program Operating Results and Related Subsidies
Northwest routinely evaluates the financial feasibility of each of its academic programs to ensure the education provided by that program is as cost effective as possible. The Horace Mann Laboratory School and the Early Childhood Education and Care Laboratory, for example, exists because of academic programs to which they are linked, and therefore those laboratories are considered in the overall cost benefit analysis that is consistently reviewed for each such program. The University does not break down a particular aspect of a program, such as a laboratory, to evaluate whether it is self-sustaining. Instead, Northwest reviews the program as a whole, taking into account, among other things, the tuition and fees generated by students who are enrolled in that program.
Northwest, established in 1905 as a Normal School, has a long tradition for preparing teachers, and these initiatives are consistent with that mission and inextricably linked to our academic programs. These laboratories do not exist primarily for the pre-K through grade 6 students. They are one aspect of the program for University students majoring in teacher education. Thus, we will continue to monitor operations on a regular basis.
7. Real Estate Acquisitions
Northwest appreciates the audit team's findings and understands the broad intent on this subject, but this applies to planning and future operations. Nonetheless, the development of a plan for underdeveloped property has already been placed within the University's strategic planning process. The University will put a process in place regarding obtaining appraisals prior to June 1, 2012.
8. University-Owned Airplane
The University will finalize the cost-benefit analysis for the airplane and make an appropriate decision on ownership within the next 24 months. I made the decision to ground the airplane in April 2010, and we continue to evaluate the efficient use of the airplane in comparison to alternative methods.
9. Cash Receipts
Northwest has changed its cash receipt process to include the following procedures: immediate recording and date-stamp for each receipt compared to daily batching of receipts, receipt numbers issued for all monies received, and zero balance checks returned daily upon receipt. With regard to cashing personal and payroll checks, the University has adequate controls in place to ensure deposits are balanced and reconciled for all transactions regardless of composition. All University departments that collect monies will also begin working together to enhance current processes. These practices will be implemented within the next 12 months. In addition, we will implement processes to document ticket stock, sales and monies collected and complete an inventory of the stock. In addition, Northwest will implement a process to document voided tickets and have two people present when destroying these tickets.
10. Capital Assets
We have begun the process of reviewing the capital asset records in an effort to align the database records with assets on hand, and we will continue this process until all assets are reviewed over the next three to four years. Northwest also will implement periodic physical inventories of its capital assets within the next four to five years and reconcile the inventory results to the detailed capital asset record. Furthermore, I, as University president, will recommend and the Board of Regents will adopt a policy regarding updating the disposal or relocation of assets and communicate that policy to campus departments within the next two to three years.
11. Computer Security
We appreciate the audit team's opinions, and Vice President of Information Systems Dr. Jon Rickman and his team will test and evaluate the procedures and facilities it has in place for disaster recovery of computer systems and data to determine what if any changes might need to be made. Dr. Rickman and his team also will implement a process to ensure supervisors review employee access to data systems. In addition, current safeguards, including triggered email notices related to Human Resources actions concerning employee status changes, will be continued.
Mark Hornickel, Communication Manager
firstname.lastname@example.org | 660.562.1704 | Fax: 660.562.1900
Northwest Missouri State University
215 Administration Building | 800 University Drive | Maryville, MO 64468