In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor (OSA) has conducted a performance audit of certain activities of Massachusetts College of Liberal Arts (MCLA) for the period July 1, 2018 through December 31, 2019.
We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
Below is a list of our audit objectives, indicating each question we intended our audit to answer; the conclusion we reached regarding each objective; and, if applicable, where each objective is discussed in the audit findings.
To achieve our audit objectives, we gained an understanding of MCLA’s internal control environment related to the objectives by reviewing MCLA policies and procedures, as well as conducting inquiries with MCLA’s staff and management. We also reviewed, and tested the operating effectiveness of, internal controls related to procurement card transactions.
To obtain sufficient, appropriate audit evidence to address our audit objectives, we conducted further audit testing as follows.
To determine whether MCLA ensured that furniture and equipment were added to the inventory list and that assets were identified annually during the physical inventory, we obtained a list of furniture and equipment purchases made during the audit period from MCLA’s Great Plains1 accounting system. In addition, we obtained a list of furniture and equipment as of December 31, 2019 from the Great Plains fixed asset management module and the college’s physical inventory documentation sheet.2 We selected a nonstatistical, judgmental sample of 20 furniture and equipment purchases from a population of 76 purchases during the audit period. We analyzed the invoice for each item in our sample to determine whether the purchased item was valued above $1,000 and qualified to be tagged with an asset identification number (ID) according to MCLA policies and procedures. If the item required an asset ID, we traced it to the furniture and equipment list to determine whether it was tagged and added to the list. Additionally, if the item was tagged, we traced it to the physical inventory documentation sheet to determine whether it was included in the annual physical inventory.
To determine whether MCLA complied with Chapter 647 of the Acts of 1989 in reporting stolen and/or missing property, we obtained police logs and incident reports for the audit period and identified 43 incident reports we believed could lead to Chapter 647 report filings. We examined all 43 incident reports to determine whether the incidents required Chapter 647 reports to be generated and filed with OSA. We then compared the incident reports with Chapter 647 reports filed by the college during the audit period.
To determine whether MCLA ensured that procurement card expenditures were reconciled, supported, and approved in accordance with its policies and procedures, we obtained a list of all procurement card expenditures made during the audit period from Great Plains. We selected a nonstatistical, judgmental sample of 50 procurement card logs from a population of 611 logs that were required based on card activity during the audit period. We requested the procurement card logs and all supporting documentation, such as activity statements, invoices, receipts, and purchase orders. We determined whether each procurement card log was prepared, whether each transaction activity was reconciled, whether there was sufficient documentation to support each purchase, and whether a supervisor approved the monthly activity.
Because we used nonstatistical sampling methods for our audit objectives, we could not project the results to the population.
We reviewed general information system controls over Great Plains, including security training and personnel screening. In addition, we obtained the police logs for each day of our audit period from the college’s Incident Management System software, a list of furniture and equipment purchases from Great Plains, an inventory list from the Great Plains fixed asset management module, and a list of procurement card transactions from Great Plains.
To determine the completeness and accuracy of the police logs, we traced a sample of five incidents in the police logs to incident reports and traced a sample of five incident reports to the police logs. To confirm the completeness and accuracy of the furniture and equipment purchases, we traced a sample of 20 purchases to the original vendor invoices and traced a sample of 20 vendor invoices to the list of furniture and equipment purchases. To confirm the completeness and accuracy of the inventory list, we traced a sample of 20 assets from the list and confirmed their existence on the MCLA campus; then we identified 20 assets on the campus and verified their existence on the inventory list. To confirm the completeness and accuracy of procurement card transactions, we traced a sample of 20 transactions to original hardcopy documents and traced a sample of five months of procurement card transactions to the list of procurement card transactions from Great Plains.
During our testing, we encountered many issues with the inventory list, including the following:
- In tracing items from the physical asset list, we found that 10 of 20 items did not agree. Specifically, 3 items were not tagged, 3 were in different locations from those listed, 2 had been recycled, 1 had been donated, and 1 had been disposed of.
- In tracing physical assets from their locations to the inventory list, we found that 5 items were not on the list and 1 item was in a different location.
- We encountered an issue when tracing expenditures to vendor invoices to test procurement card data. MCLA could not locate 2 of the 20 vendor invoices in our sample.
Although we identified these issues with the inventory list and procurement card list, they were the only lists we had to conduct our testing and conclude on our objective. We have determined that the information MCLA provided to us was sufficiently reliable for our audit purposes.
|Date published:||August 11, 2021|