Audit of the University of Massachusetts Building Authority Objectives, Scope, and Methodology

An overview of the purpose and process of auditing the University of Massachusetts Building Authority.

Overview

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of the University of Massachusetts Building Authority (UMBA) for the period July 1, 2016 through June 30, 2018.

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.

Objective	Conclusion
1.       Did UMBA follow the capital project review and approval process for the design and construction contracts required by the “Capital Planning, Land and Facilities Use Policy”?	Yes
2.       Did UMBA ensure adequate reporting and documentation for the administration of contracts during the audit period? Specifically,
a.     Did UMBA monitor the payments of invoices as required by the “Agreement for Professional Services between Owner and Owner's Project Manager”?	Yes
b.     Did UMBA monitor the processing of change orders for projects as required by the “Agreement for Professional Services between Owner and Owner's Project Manager”?	Yes
c.     Did UMBA’s owner’s project managers (OPMs) monitor compliance with the Prevailing Wage Law?	No; see Finding 1
3.       Did UMBA ensure that the OPMs complied with the “Completion and Closeout” section of the “Agreement for Professional Services between Owner and Owner's Project Manager” for all projects closed during the audit period?	Yes

 

To achieve our audit objectives, we gained an understanding of the internal controls we deemed significant to our audit objectives by interviewing UMBA management and evaluating the controls’ effectiveness specifically for project approvals and payment of invoices.

We performed the following procedures to obtain sufficient, appropriate audit evidence to address our audit objectives.

• We selected a nonstatistical judgmental sample of 5 projects from a population of 10 projects that were determined to be in the early stage phase and had received approval from the board of trustees to determine whether there was sufficient documentation, such as the board of trustees’ meeting minutes, quarterly capital project reports, project justifications, project schedules, financial planning reports, and estimated project cost reports, to allow the university’s board of trustees to approve the projects.
• We selected a nonstatistical judgmental sample of 60 out of a population of 1,288 invoices paid during our audit period and verified that there was sufficient supporting documentation, such as invoice cover letters, capital project invoice review signoff sheets, invoices, and evidence of payment, to authorize the payments.
• We selected a nonstatistical judgmental sample of 5 of the 14 projects with the highest total project costs, selecting at least 1 each from the Amherst, Dartmouth, Lowell, and Boston campuses. There were no projects with expenditures at the Worcester Medical School. We also selected 3 projects that had exceeded their budgets by at least 10% and required approval from UMBA’s board of directors. These 8 projects had a total of 172 change orders; we tested all 172. We verified that there was sufficient supporting documentation to authorize the change orders, such as change order logs, original contracts, and the change orders themselves.
• We selected a nonstatistical judgmental sample of 5 out of 21 construction-phase projects with expenditures. The 21 projects consisted of 6 projects on the Amherst campus, 8 on the Boston campus, 3 on the Dartmouth campus, and 4 on the Lowell campus. There were no projects with expenditures at the Worcester Medical School. We selected our sample of 5 projects by choosing the project with the highest expenditure amount for each campus, ensuring that each project selected had a different OPM. On two campuses, the projects with the highest expenditure amounts were managed by the same OPM; for one of those two campuses, we selected the project with the second-highest expenditure amount. For each project, we selected a nonstatistical judgmental sample of 10 weeks of certified payrolls from the audit period. The 10 weeks of payroll tested for the 5 projects contained a total population of 3,344 contract employees. We traced the job classification and pay rate for each employee from the certified payrolls to the Department of Labor Standards’ prevailing wage rate sheets to determine whether the pay rates based on the payroll classifications matched the amounts on the sheets.
• We selected all 16 projects that the auditee had classified in its database under the “Completed” and “Closeout” project phases. We did this to ensure that the OPMs had complied with the “Completion and Closeout” section of the “Agreement for Professional Services between Owner and Owner's Project Manager” for all projects closed during the audit period. We reviewed the closeout checklist, occupancy permit, and certificate of completion for each project.

Whenever sampling was used, we applied a nonstatistical sampling approach, and as a result, we could not project our results to the entire population.

Data Reliability

We requested general ledger fixed assets and accounts payable reports generated from Sage Intacct (UMBA’s accounting / project management system package) and reconciled them to the audited financial statements for fiscal years 2017 and 2018 to determine their completeness and accuracy. We compared UMBA’s accounts payable data from Sage Intacct to its construction requisition database to trace and confirm active projects with expenditures during our audit period.

We determined that the data were sufficiently reliable for the purpose of our audit objectives.

Date published:	May 21, 2020