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Internal Auditing

Case in Point:
Lessons for the pro-active manager

August 2012
Vol. 4 No. 8
Quotable...
''Some choices we live not only once but a thousand times over, remembering them for the rest of our lives. ''

-- Richard Bach

I have frequently made the point that higher education faces more unique and diverse risks than any other industry. This uniqueness is well demonstrated in one article listed from August 22nd where a ''lab tech was discovered in a campus locker room engaging in unusual behavior.'' According to the story, the lab tech was ''intoxicated with his pants down in a locker room ... while two lab monkeys were found roaming free, outside their cages.''

Most industries don't have to factor into their assessment of risk the possibility of their employees drinking unclothed with monkeys. Fortunately, for most of you reading this you do not have that risk either. However, other risks are very real and can hit more close to home if we are not pro-actively seeking to manage them.

Nearly every month there are numerous stories dealing with an institution accidentally disclosing confidential data. These accidental disclosures can become very costly for both the institution and in the worst cases for the individuals impacted. In almost every case, the disclosure could have been prevented if proper security and controls were in place and followed.

We also continue to see basic occupational fraud committed at institutions every month. In most of these cases, a contributing factor is an employee who has too much control over financial processes. As I have noted before, if one person has total control of a process, then you have no control. Once again basic internal controls can vastly reduce the risk that occupational fraud will occur.

You will also note this month that the Penn State scandal continues to receive major publicity. Of the stories linked here this month, five continue to deal with this scandal and its impact on this institution. Our most important lesson from this scandal in my view is the need to create a campus culture where communication is open and issues are reported timely to those with oversight and responsibility. If you have any issues of concern or something just doesn't seem ''right'' we would suggest you discuss this with your supervisor or someone who can take action to address or evaluate the concern. The risks of staying quiet are high. If you feel you have nowhere to go with your concern, you can always talk with our office or use our anonymous reporting system.

As we do each month, we suggest you scan the stories from across higher education and think about the unique high-risk items that you may be responsible for managing or overseeing. Evaluate whether you might need additional controls or procedures to reduce these risks to a more appropriate level. If you would like our advice or assistance, certainly let us know.

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


Information Security & Technology Events

Aug. 30, 2012: A lapse in student record-keeping on the University of North Carolina at Chapel Hill's computer system led to the online release of a former football star's grades, Chancellor Holden Thorp said Thursday, in explaining a disclosure that's prompted new questions about special treatment for athletes at the elite public college. The computer breach happened because a university employee copied Peppers' academic record in 2001, when he was a student. A second employee moved the file to an unsecured location during a technology migration in 2007, Thorp said. The first staff member has been disciplined and the second no longer works at the university, Thorp said. (link)

Aug. 29, 2012: A former Albany State University student has pleaded guilty to four counts of computer trespass following an investigation in to grade-changing. (link)

Aug. 28, 2012: Del Mar College's East Campus reported Tuesday that paper documents containing personal information, including Social Security numbers, were discovered in a recycling bin. (link)

Aug. 27, 2012: The University of Rhode Island is notifying about 1,000 current and former faculty members that certain personal information that appeared on a publicly shared College of Business Administration computer server was accessed and able to be viewed by unauthorized individuals. The University took immediate corrective action to shut down the server. (link)

Aug. 22, 2012: The University of South Carolina has started notifying 34,000 people with ties to its College of Education that their personal information might have been accessed in a computer intrusion discovered nearly three months ago. (link)

Aug. 21, 2012: Over 19,000 students and applicants at CSU-Pueblo receive a letter about a possible breach of information. (link)

Aug. 8, 2012: Thousands who received payments from the University of Arizona last school year are at risk of identity theft after their personal data was mistakenly put online for more than a month during an upgrade of UA's financial systems. About 7,700 vendors, consultants, guest speakers and UA students had their names and Social Security numbers compromised in the incident that occurred in February and early March, a school official said. (link)

Aug. 3, 2012: A student at the University of Central Florida has been placed on academic probation for creating a Web site that tells students when a seat becomes available in a given class. (link)

Aug. 1, 2012: Hundreds of Tarleton State University documents containing students' personal information were scattered across the intersection of Washington and Lillian streets Tuesday afternoon breaching a federal law that is supposed to protect student records. (link)

July 31, 2012: Oregon Health & Science University Hospital officials are sending letters to the families of 702 pediatric patients after a USB drive containing some of their patient information was stolen. In total, data for more than 14,000 patients was stored on the drive, along with information for about 200 OHSU employees. (link)


Fraud & Ethics Related Events

Aug. 31, 2012: Harvard University said it is investigating dozens of undergraduate students over allegations of cheating on a take-home final exam in the last semester. (link)

Aug. 28, 2012: Tammy Hamlet, Florida A&M University’s director of university events, has been charged with eight misdemeanor counts of fraudulently claiming per diem and travel expenses. (link)

Aug. 23, 2012: A former City Colleges of Chicago professor falsified a doctoral degree to pocket hundreds of thousands of dollars in fraudulent pay, Cook County prosecutors said Wednesday. (link)

Aug. 20, 2012: Missouri State University fired the director of the University Bookstore after an internal audit couldn't account for $400,000 in receipts over the past three years.  Mark Brixey worked for the university for 21 years and has been the bookstore director for about a dozen years. Top university officials say auditors discovered $81,000 cash in his desk in his bookstore office while he was on vacation last week. (link)

Aug. 20, 2012: For more than a decade, Emory University has intentionally misreported the SAT and ACT scores of its enrolled students, the university acknowledged in a statement on Friday after a three-month investigation. (link)

Aug. 16, 2012: A former Oklahoma City Community College bursar accused of a scheme to embezzle nearly $400,000 from the school has pleaded guilty to wire fraud. (link)

Aug. 14, 2012: The author of a medical journal article published in 2006 raised the red flag that led to allegations of plagiarism against two University of Missouri School of Medicine researchers, according to the company that published the original piece. (link)

Aug. 6, 2012: Olga Hutnik, a pharmacy buyer at the University of Miami, noticed something odd in May 2011 when she looked at the results of a new program to track drugs in the UM medical system: Hundreds of syringes of an expensive cancer drug were apparently missing. (link)

Aug. 3, 2012: A former University of Virginia law student pleaded guilty Friday in Charlottesville Circuit Court to breaking into the school’s registrar office in December to intercept a request for his transcript. (link)

Aug. 2, 2012: Southern New Hampshire University is conducting an internal investigation into alleged financial mismanagement at the school. Gregg Mazzola, vice president of marketing, says the investigation is focused on a budget manager. He did not name the manager but said that person has been placed on leave, pending an investigation by the attorney general's office and a full report from an independent auditor. (link)


Compliance/Regulatory & Legal Events

Aug. 30, 2012: After a lengthy investigation, a former University of Central Arkansas president was charged Wednesday with a misdemeanor for tampering with a public record, Prosecuting Attorney Cody Hiland said. (link)

Aug. 29, 2012: A fraternity at Miami University in southern Ohio has sued the school for $10 million, arguing that university officials acted with "malice, hatred and ill will" by suspending the organization for having a fireworks battle with another fraternity house, which led police to find marijuana. (link)

Aug. 27, 2012: California legislators last week sent a bill to the governor’s desk that would prohibit colleges from requiring students to hand over access to their social media accounts, raising the re-emerging question of how much control athletes -- who are very much public faces of many universities -- should have over personal accounts that nonetheless are visible in the public domain. (link)

Aug. 24, 2012: The US Department of Agriculture has cited Harvard University for the death of 41 mice in a research laboratory earlier this year. Eleven adult and 30 young rodents became dehydrated in April after a connection in a system that supplies drinking water became loose. (link)

Aug. 23, 2012: The University of Iowa took the rare step Thursday of firing a tenured professor who has been barred from campus since January 2011, saying he subjected a wide range of colleagues to repeated personal attacks, harassment and threats that disrupted the workplace. (link)

Aug. 22, 2012: A Georgia Health Sciences University lab tech was recently discovered in a campus locker room engaging in unusual behavior. (link)

Aug. 22, 2012: California State University campuses would be required to designate liaisons between student protesters and campus law enforcement under a bill approved by the Assembly. (link)

Aug. 21, 2012: Student-athletes at the University of Kentucky and most at the University of Louisville surrender their online privacy to their coaches under a social media monitoring system used by both schools and others across the country. (link)

Aug. 20, 2012: The chair of the Tennessee State University Faculty Senate was arrested by campus police Monday for disorderly conduct during a meeting of senators and university administration. The Faculty Senate then voted to remove the chair, Jane Davis, from her leadership position, although she claims the vote was illegitimate. (link)

Aug. 16, 2012: Penn State's ousted university president is quietly awaiting a decision on whether he will face criminal prosecution in the Jerry Sandusky scandal while two former subordinates fight charges they tried to cover up the former defensive coordinator's sexual molestation of boys. (link)

Aug. 16, 2012: Radiology technician David Kwiatkowski was a few weeks into a temporary job at the University of Pittsburgh Medical Center-Presbyterian in 2008 when a co-worker accused him of lifting a syringe containing an addictive painkiller from an operating room and sticking it down his pants. (link)

Aug. 15, 2012: Eighteen people have been convicted in the Alabama two-year college corruption scandal. The latest, Jimmie Clements of Opelika, a former lobbyist who worked out a plea deal Tuesday. (link)

Aug. 15, 2012: An independent panel of scientists and veterinarians enlisted by Harvard Medical School to review its troubled primate research facility in Southborough is recommending that new leadership positions be created and that a committee be formed to ensure animal safety and foster closer ties with the main medical school. (link)

Aug. 14, 2012: An accreditation warning issued to Penn State is serious and necessary given the issues raised by a recent child sex-abuse scandal, but the school is unlikely to lose the all-important designation, experts said Tuesday. They also expect the university to comply quickly with demands to show that its governance, finances and integrity meet standards set by its accreditation agency, the Middle States Commission on Higher Education. (link)

Aug. 9, 2012: If you hope to land a job at Penn State, you will have to undergo a background check.That is the bottom line of a new policy that’s among the changes the university has been rolling out in the wake of the Jerry Sandusky scandal. (link)

Aug. 9, 2012: A New York man has pleaded guilty to harassment for sending threatening e-mails to University of Pittsburgh professors at the height of a series of bomb scares at the university earlier this year. (link)

Aug. 9, 2012: The wrongful death case against the state and Virginia Tech for the handling of the April 16, 2007, campus shootings may go back to court. Both the plaintiffs and the defense in the case have filed formal notices of appeal to the Virginia Supreme Court, which may or may not take it up. (link)

Aug. 8, 2012: The University of Central Arkansas recently finished an administrative investigation into allegations of sexual harassment of interns at The Oxford American offices on campus, according to records released by the university under the Freedom of Information Act. Between July 19 and Aug. 1, UCA officials interviewed interns, staff and former staff and found: ''There were many examples of inappropriate sexual conversation and language, obscene gestures were witnessed and potential sexual harassment situations were documented.'' (link)

Aug. 8, 2012: Former University of Maryland student Alexander Song was found guilty Tuesday on charges of making online threats of a campus rampage. (link)

Aug. 8, 2012: Four men accused of the theft of more than $5 million from New York’s Columbia University were convicted of all counts against them after a jury trial, Manhattan District Attorney’s Cyrus Vance Jr.’s office said.(link)

Aug. 7, 2012: Two University of Colorado wide receivers have been suspended for the team's first two games of the season for their involvement in an incident with a Airsoft gun early Saturday, Coach Jon Embree said Tuesday. (link)

Aug. 6, 2012: Questioning Penn State President Rodney Erickson’s authority to accept the sanctions the NCAA brought down on the university in July, several trustees are appealing penalties they say are ''excessive and unreasonable.'' (link)

Aug. 2, 2012: Yale University officials say 49 complaints of sexual harassment and other misconduct were brought to their attention in the first six months of this year and nearly a fourth of the cases involved allegations against faculty. (link)

Aug. 2, 2012: Nebraska Auditor Mike Foley has found six-figure University of Nebraska-Lincoln contracts that were not competitively bid and a $470,600 contract that wasn’t reported to elected university leaders as he thinks it should have been. The audit report looked at UNL’s process for paying for services and equipment, examining 49 out of 3,203 total vendors paid $298 million in 2011. The report found five instances in which contracts were signed by UNL staff who weren’t authorized to do so, and seven contracts that should have been reported to the University of Nebraska Board of Regents but weren’t. (link)

Aug. 2, 2012: A 3.2 grade point average is not what it used to be.That's what a Baylor University law school applicant, Michael Kamps, is arguing in a lawsuit against the university, which alleges that by neglecting to account for grade inflation when evaluating applicants’ undergraduate G.P.A.s, the admissions committee did not give Kamps the same chance at admission as it did younger applicants. (link)

Aug. 1, 2012: The University of Virginia is being sued by the family of a literary journal managing editor who committed suicide in 2010. (link)

Aug. 1, 2012: Should Penn State be found in violation of the provisions of the Cleary Act, it could face fines of up to $27,500 per incident as well as a possible loss of federal aid including grants, loans, and work-study payments. (link)

Aug. 1, 2012: A new agreement with federal investigators will force Xavier University to comply with Title IX anti-discrimination laws. Xavier must start multiple training and reporting programs to protect victims of sexual assault and harassment, and also will be forced to pay for counseling for one current student and ensure her safety on campus, part of a wide-ranging agreement with the Education Department’s Office of Civil Rights. (link)

July 31, 2012: Former Catawba College soccer coach Ralph Wager has been indicted in connection with allegations he sexually abused a young boy more than two decades ago. (link)

July 31, 2012: The University of Cincinnati has agreed to pay a couple $600,000 to settle a claim involving a chemistry experiment that seriously burned their 7-year-old daughter during an experiement conducted at her school. (link)


Campus Life & Safety Events

Aug. 31, 2012: Increased evening patrols are planned at Washington University after a female student was forced into her car and robbed. (link)

Aug. 24, 2012: Calling it a critical component of creating a violence-free campus, the University of Montana this week unveiled a first-of-its-kind tutorial aimed at addressing sexual violence and personal behavior. All students attending the university will be required to watch the tutorial and pass a quiz with a score of 100 percent before registering for second semester classes. (link)

Aug. 23, 2012: A University of South Carolina freshman has been arrested and accused of having five handguns in his dorm room. (link)

Aug. 22, 2012: Arkansas Tech University tossed a small fraternity from campus Wednesday following a student's arrest on a battery charge for alleged hazing that left a student hospitalized for weeks. (link)

Aug. 22, 2012: Dubuque police say a Waterloo man has been arrested in a methamphetamine lab explosion at Loras College in Dubuque earlier this year. (link)

Aug. 22, 2012: A man was arrested for crashing his car into a University of California at Berkeley residence hall this morning and causing a gas leak that forced the evacuation of roughly 230 students. (link)

Aug. 21, 2012: The president of Humboldt State University on Tuesday suspended the school's men's soccer team for the coming academic year as a result of a new recruit hazing ritual involving most of the team's players. (link)

Aug. 20, 2012: UNCG about two weeks ago canceled the registrations of about 1,300 students because they had yet to pay their tuition bills — the highest number of cancellations since fall 2009, university officials said. Administrators are concerned about the large number of students who are having trouble paying this year. (link)

Aug. 14, 2012: A shooting that left three dead in College Station on Monday did not occur on the campus of Texas A&M University or involve members of the A&M community. Yet in headlines around the country, it is being referred to as the "Texas A&M shooting." With new students scheduled to move into A&M's residence halls on Sunday, this has left the university with a bit of a public relations problem that officials are scrambling to rectify. (link)

Aug. 10, 2012: About 15 people gathered on the edge of Virginia Tech's controversial Stadium Woods to commemorate the cutting of one of the forest fragment's several dozen large oaks, some of which are estimated to be more than 300 years old. (link)

July 30, 2012: Contractors and university staff are working to repair 61 chimneys and 105 flues at the University of Virginia, and install a modern fire-suppression system in time to allow students to use their rooms' fireplaces later this fall and winter. (link)


Other News & Events

Aug. 27, 2012: Low morale. Troubled funding. Persistent uncertainty. Lack of stability. Concerns about political meddling. Those are among the assessments that higher education consultants catalogued as they interviewed dozens of university leaders, faculty, staff and students across the LSU System. (link)

Aug. 22, 2012: A businessman hires a Lehigh University professor to do software work for him, but is unhappy with the job the professor does, so he pickets outside his office and repeatedly calls and emails Lehigh University officials about him, calling him a con man and a crook and comparing the coverup of his supposed scandalous behavior to Jerry Sandusky and Penn State. (link)

Aug. 22, 2012: A top administrator at the University of Colorado says if a professor doesn't like his students legally bringing guns to class, he'll have to holster his emotions. Jerry Peterson, a professor and chair of the CU-Boulder Faculty Assembly, told colleagues he'd cancel his class if a student brought a gun there. (link)

Aug. 15, 2012: The student editorial staff of The Red & Black, a newspaper long run by students at the University of Georgia, walked out on Wednesday to protest the appointment of a nonstudent as editorial director. (link)

Aug. 14, 2012: A senior member of the University of Virginia's board offered a public confession Tuesday for his role in the forced departure and subsequent rehiring of the school's president, which he said "brought embarrassment" to the university. (link)

Aug. 8, 2012: Alabama’s four-year institutions perform poorly in credentials produced per 100 full-time equivalent undergraduates, contributing to the state’s below average performance. Both the state’s four- and two- year institutions are below the national medians for completion and retention rates. (link)

Aug. 7, 2012: The fallout from the leadership crisis at the University of Virginia continued on Tuesday with the resignation of Michael Strine, Virginia's executive vice president and chief operating officer. (link)

Aug. 2, 2012: The most unfortunate typos are those that are preserved for posterity, like misspelled names on birth certificates or extra N’s on gravestones. This week, spring graduates of Idaho State University were dismayed to find themselves in an uncomfortable position, as their brand-new diplomas, which had just arrived in the mail, seemed to have one glaring problem: a ''b'' where the ''v'' in ''University'' should be. (link)

Aug. 1, 2012: News media sometimes run stories about students who graduated with six-figure student load debt. These stories have shock value and sensationalize the student debt problem, but the borrowers depicted in these stories are not representative of typical college graduates. (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 forward this email to your direct reports, colleagues, 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 at gotterw@auburn.edu.

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

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