Internal Auditing

Case in Point:
Lessons for the pro-active manager

July 2009
Vol. 1 No. 7
Quotable...

"It's very important for universities to be high places of integrity. That's about all we have to go on."

-- Morton Weir
former university chancellor and current university board member at Knox College

We are pleased to present our monthly update on current events across higher education with respect to risk, compliance, and control problems. Our goal in this communication is to help make you aware of current issues so you can pro-actively manage any similar concerns here at Auburn University. Our biggest challenge each month is narrowing the list of events to a manageable level. There is certainly no shortage of risks facing higher education and the list seems to grow daily.

I call your attention specifically to the item dated July 13, 2009, in the "Misappropriation, Fraud, and Ethics" section dealing with the University of Illinois. This article discusses "clout admissions" where lesser qualified students connected to board members and politicians were granted admission to the university after pressure from their connections. This story has drawn national media attention and has certainly affected the institution's reputation. The Chicago Tribune first broke the story over these questionable admissions and since then state officials and others have conducted investigations and hearings to determine if laws were broken. This story appears to be a classic case of failure in the institution's "tone at the top" from both the board and executive levels. It's also a good reminder that our actions set the tone for our area of responsibility and that others are frequently affected by our actions and decisions.

University of Illinois Chancellor Richard Herman said in testimony before a state commission that the institution had a "weakened capacity to withstand those pressures and safeguard the integrity of the University" with respect to these special admissions. Herman also admitted, "I should have stood in the door. ... This was a bad moment for me personally." While it's easy to read the Illinois story and critically evaluate the actions and failures, the important point for us is: When faced with similar choices how will you respond in your role here at Auburn University? Are you taking actions to put your faculty or staff in tenuous positions asking themselves if they should go along with your directives or are you creating a culture where you and your unit can withstand the pressures and safeguard integrity? Everyone is affected by their organizations board and executives, but within our industry the tone is also being set at the local level by deans, directors, and department heads. Maintaining a strong tone at the top can keep an institution out of the news in many cases.

Sincerely,
M. Kevin Robinson, CIA, CFE, CCEP
Executive Director, Internal Auditing


Information Security Related Events

June 25, 2009: An Elmont resident and former admissions director of Touro College's Manhattan School of Career and Applied Sciences was convicted June 9, for creating and falsifying student transcripts in exchange for money. (link)

June 23, 2009: A computer with thousands of people's personal information has been stolen from Cornell University. School officials say current and former faculty, staff and students could be at risk of identity theft. (link)

June 23, 2009: Cory M. Papp was seen looking at child porn on computers in the Valley Library at Oregon State University between July 31 and Aug. 1, 2007. Police charged him after searching the hard drives of two computers he had used and obtaining several CDs with a search warrant, the statement said. (link)

June 17, 2009: A computer that was swiped from a car in Charleston last year contained personal financial information on 84,000 University of North Dakota donors, it was disclosed this week. The missing laptop belonged to Daniel Island-based software giant Blackbaud Inc., which stressed Tuesday that all of the information was password-protected and encrypted. It also said it was not aware of any data breaches. (link)

June 17, 2009: The Web site for the Johns Hopkins University's Applied Physics Laboratory, which works closely with the military and NASA on research projects, was hit with a cyber attack that officials discovered Sunday and which led them to take down the site until they analyze their computer systems, a spokesman confirmed Tuesday. (link)


Misapproriation/Fraud/Ethics Events

July 14, 2009: The former chancellor of City College of San Francisco and two associate vice chancellors pleaded not guilty Tuesday in San Francisco Superior Court to charges of misusing public funds and making illegal campaign contributions. Prosecutors say Day diverted money toward political campaigns for local and state education bond measures to benefit community colleges in 2001, 2005 and 2006, and used $45,000 for a secret fund that paid for expenses such as parking tickets, alcohol at functions, and a membership at an exclusive business club in San Francisco. (link)

July 13, 2009: Former presidents and chancellors of the University of Illinois are laying much of the blame for the current admissions scandal at the feet of trustees, calling for sweeping changes on the board and the way it is appointed. An ongoing Chicago Tribune investigation has found that trustees meddled in the applications process nearly 100 times in the last three years alone. Some applicants, including trustees' relatives, were admitted over the objections of admissions staff. (link)

July 9, 2009: A University of Georgia employee, working as a computer specialist with access to student Social Security numbers, continued to work in the Registrar's Office for almost a year despite facing a felony theft by deception charge that in April resulted in a guilty plea yielding a 10-year prison term. (link)

June 29, 2009: A former employee of the University of Maryland University College improperly used a corporate credit card to purchase $8,800 in electronic equipment and had it shipped to her home, according to a state legislative audit released last week. The audit says that in August and September 2005, the employee used the card to buy laptops, music players, cameras and other items. Upon discovering those transactions, auditors found four other purchases worth $2,800 that could not be accounted for on campus. (link)

June 24, 2009: An Arizona woman recruited as many as 136 people to pose as college students and defraud the government out of nearly $540,000 in student aid money, federal prosecutors said on Wednesday. Halton is accused of creating fake documents and helping people enroll in online classes at Rio Salado Community College in Tempe over a 15 month period beginning in July 2006. (link)

June 23, 2009: Two former Tufts University employees pleaded guilty last week to stealing nearly $1 million from the University in two separate schemes, according to Middlesex District Attorney Gerry Leone. Josephine Nealley, director of the University's Office of Student Activities between 1996 and 2007, and Raymond Rodriguez, the budget and fiscal coordinator for the Office of Student Activities between 2001 and 2007, both pleaded guilty to multiple counts of larceny in Woburn Superior Court. Nealley stole $372,576 and was indicted by a Middlesex Grand Jury on July 1 on three counts of larceny over $250. Rodriguez stole $604,873 and was also indicted on July 1 on two counts of larceny over $250. (link)


Compliance/Regulatory Failure Events

Junly 11, 2009: University of Northern Colorado president Kay Norton pledged a thorough investigation into allegations of sexual misconduct by theater professor Vance Fulkerson, saying the truth will probably be "complicated and painful." In the days since Fulkerson's arrest, a number of former students and colleagues have come forward saying they made complaints to university officials going back nearly two decades about Fulkerson's behavior, only to see little apparent action on those complaints. (link)

July 9, 2009: A fundraiser at Binghamton University has sued two senior athletic department officials, accusing them of using her as a "plaything" and trying to make her ply big donors with her sexuality. (link)

June 29, 2009: Universities that deny requests for records about athletes may be interpreting too broadly a federal education law that protects the privacy of students’ academic records, a federal education official said Monday. (link)

June 20, 2009: The Califonia State University system has agreed to pay $50,000 to a veteran San Francisco State instructor who was passed over for a tenure-track job at age 61 in favor of a 36-year-old candidate without a doctorate. (link)

June 20, 2009: The University of Iowa will pay more than $65,000 in legal fees to settle a lawsuit filed against it as part of the search to find a new president for the school in 2007. Harold Hammond, a retired UI oral pathology professor, filed suit against the university's presidential search committee for violating Iowa's open meetings law by not revealing the location of semifinal candidate interviews for the post. (link)

June 20, 2009: A scathing audit of Kansas State University reveals a pattern of undisclosed payments, conflicts of interest, poor accounting and possible tax problems for the school, several of its former employees and its athletic department. (link)

June 16, 2009: Members of a national watchdog group for academic freedom voted to censure Stillman College for firing a former professor, saying the school violated historically accepted rules of academic freedom and due process. The college claimed Ekow Hayford violated a prohibition outlined in the faculty handbook against malicious gossip. According to the handbook, malicious gossip is defined as "rumor or innuendo based on incomplete facts or downright fiction intended to cause harm or discredit individuals or the institution." (link)


Other Events

July 13, 2009: The golden age for philanthropy—and the United States—may be over.That was the sobering message delivered late last week at the annual conference for the Council for Advancement and Support of Education. Speakers at the fund-raising conference, including Robert B. Reich, a former U.S. secretary of labor, predicted that the economic recovery, when it happens, is likely to be weak, and that the number of megagifts to higher education will probably fall and the pace of such giving slow.(link)

July 5, 2009: The state's public colleges lost more than 200 professors overnight in the retirement incentive program last week, which could translate into slightly larger classes, more courses taught by free-lance or retired professors and a possible cap on enrollment this fall. From the University of Connecticut to the community colleges, public schools are scrambling to assess the damage and fill holes left by the mass retirements without the benefit of knowing what the state budget will be. (link)

June 24, 2009: Less than 10 hours after police promised to step up patrols in a crime-riddled area near Georgia Tech, armed robbers held up another student. Eric Mills said he was walking on Hunnicutt Street about 1 a.m. Wednesday, heading toward his apartment in the Centennial Place complex. "I'm on the phone, talking, all of a sudden I felt a presence behind me," Mills told Channel 2 Action News reporter Ryan Young. "As I turned around I see two guys dressed in black." (link)

June 23, 2009: It seems that City College of San Francisco Chancellor Don Griffin never told the Board of Trustees about his idea to offer naming rights to anyone who ponies up $6,000 to save a canceled college class, a story that went national after it appeared in Monday's Chronicle. Irritated, the trustees are squelching the plan until they can discuss it at their Thursday night board meeting. Even then, the idea is no sure thing, said Milton Marks, president of the seven-member elected board. (link)

June 23, 2009: The "affirmative-action bake sale," at which the Bucknell University Conservatives Club charged different prices depending on a customer's race, was shut down by the administration in April. But it didn't end there. (link)


 

If you have any suggestions, questions or feedback, please e-mail me at robinmk@auburn.edu. We hope you find this information useful and would appreciate hearing your thoughts. Feel free to foward this email to your direct reports, collegues, employees or others who might find it of value. Back issues of this newsletter are available on our web site at http://www.auburn.edu/audit

If you have any suggestions for items to include in future newsletters, please e-mail Robert Gottesman gotterw@auburn.edu.

Department of Internal Auditing
Auburn University
304 Samford Hall
M. Kevin Robinson, Exec. Director
robinmk@auburn.edu
334.844.4389
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