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Internal Auditing

Case in Point:
Lessons for the pro-active manager

February 2013
Vol. 5 No. 02
Quotable...
''It's tough to make predictions, especially about the future.''

-- Yogi Berra

Last month we looked back at what we observed as the most common events/ issues noted in Case in Point during 2012. This month we look forward at which might be some areas to pay special attention to in the coming year. Obviously, we are speculating to a large degree but certainly part of proactive risk management involves anticipating what might be ahead that could cause difficulty or derail us from success.

Information Security & Technology

  • Security Related to Mobile Devices --While certainly not a new item per se, the growth of mobile device use from phones, tablets, and other similar items and what employees can do from these devices as far as accessing institutional systems will be an issue that should be considered. For example, the lines will likely continue to blur with respect to work done from a home mobile device verses an institutionally owned device. If personal devices are being used to access institutional data and records, then a whole new avenue for data loss and potential security breaches could be opened. ''Lose your smart phone, lose your data'' becomes an even greater possibility as the power of these mobile devices increase.

  • General Network Security -- Hacking has been around for years; however, security in the institutional environment as a whole has been lacking and difficult at least partially due to the nature of higher education as a whole which can be characterized by openness and sharing of information. It is likely that universities will face even more pressure from hackers and data thieves from around the world. It is possible to foresee that pressure for strengthening IT security could come in the form of legislation if high profile cases occur within higher education and gain major media attention.

Fraud & Ethics Related Events

  • Fiduciary Responsibility -- Pressure and competition for funding will likely increase the requirements of fiduciary responsibility within higher education. It is within the realm of possibility that this will lead to greater accountability at the manager level. By this we refer to the fact that managers and supervisors who fail to carry out their role as a fiduciary may face personal responsibility for inaction or negligence.

  • Use of Donated Funds -- We've noticed a few cases where institutions have faced lawsuits over how funds donated for a specific cause were later used. We believe it is likely that these type cases will continue. Ensuring controls are in place to ensure the appropriate use of donor funds is something all institutions should think about before legal issues arise.

Compliance and Legal Events

  • False Advertising or Promises -- One emerging issue that we've noticed in a couple of instances involves graduates claiming they were led to believe a degree from some institution guaranteed a job. While these cases have been relatively few from what we've observed, we should remember to use prudence in communicating with students and potential students to ensure promises are not made that the institution simply cannot guarantee. If there is success with some of these current legal actions it would certainly increase this risk higher for all institutions.

These are five items that we think could grow in importance in the coming year. We might be wrong, but in any case we will continue to monitor the events happening within higher education each month and attempt to communicate risk related items as best we can. We again invite you to review the most recent happenings and think about your sphere of influence and how you could proactively help manage risks at your institution.

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


Information Security & Technology Events

Feb 26, 2012: A former Penn admissions officer who had shared excerpts from applicants' essays on her personal Facebook page is no longer employed by the University. Near the end of 2012, Penn's Office of Admissions was made aware of a series of online posts written by Nadirah Farah Foley -- a 2011 Princeton University graduate who had been responsible for coordinating Penn admissions in Connecticut. (link)

Feb 19, 2013: EDUCAUSE discovered a security breach involving an EDUCAUSE server. Individuals with active EDUCAUSE website profiles and administrative and technical contacts for .edu domain accounts were notified via e-mail on Tuesday, February 19. (link)

Feb 19, 2013: The University of Oxford temporarily blocked Google Docs on Monday in an attempt to make its students and professors more aware of an increase in phishing scams that use the Web service. (link)

Feb 18, 2013: A student expelled from Central Lakes College's nursing program over his Facebook posts has sued the Minnesota institution, reports the Pioneer Press, a newspaper in St. Paul. The student, 37-year-old Craig Keefe, says officials at the two-year college never explained what they had found objectionable in his posts or how he had violated the college's policies. His lawyer called the episode ''a huge, glaring absence of due process and a violation of his free-speech rights.'' The lawyer, Jordan Kushner, also said he wondered how college officials had gotten access to his client's private Facebook account, a move he called a violation of the Fourth Amendment. (link)

Feb 11, 2013: In mid-March 2011, wet weather and finals week forced many Ohio University students indoors. Inside campus libraries and dormitory rooms, thousands of students connected to the Internet not only to study with online systems like Blackboard but also to watch movies and TV shows on Netflix. The second, more leisurely activity was soon eating up the network's bandwidth, and slowed Blackboard to a crawl as students prepared for final examinations. Network technicians twice decided to restrict Netflix traffic, but both attempts unexpectedly backfired, causing Internet outages across the campus. (link)

Feb 8, 2013: The University of Wisconsin System lost an additional $1.1 million due to glitches in its new payroll and benefits system, an accountant and top UW System financial official told the Board of Regents on Thursday.(link)

Feb 6, 2013: It's not every day that a woman from Nebraska pays for two students from Egypt to attend the University of Wisconsin-Green Bay. Staff became suspicious and investigated after one of the students came to the bursar's office to get a refund because his account was overpaid after the woman's credit card was used online in April to pay more than $3,300 on the students' accounts. Employees later determined the woman never gave anyone permission to use her credit card number. (link)

Feb 4, 2013: When Fatimah Wirth decided to teach a massive open online course about how to run a virtual classroom successfully, she did not expect it to turn into a case study for the opposite. But after a series of design flaws and technical glitches turned Ms. Wirth's MOOC, ''Fundamentals of Online Education: Planning and Application,'' into an Internet punch line, the instructional designer and her colleagues at the Georgia Institute of Technology decided on Saturday to suspend the course. (link)

Feb 4, 2013: Wall Street companies use high-speed trading software to generate billions of dollars in profits. Fans of performers devise their own programs to help their favorite stars win online popularity contests. So some Baruch College students tried using a similar method to gain an edge in signing up online for a new semester's classes. But instead of getting seats in the most popular courses, they got themselves in a bit of trouble. (link)

Feb 1, 2013: Course-management systems have become crucial to the everyday operations of colleges so gradually that many users may not think about it all that much. That is, until the lights go out. A number of institutions had a rude awakening this week, when Desire2Learn, which makes a course-management system used by many colleges, saw what one top official described as the biggest malfunction in the company's history. (link)


Fraud & Ethics Related Events

Feb 28, 2013: Bradley John Witham, former director of the information technology (IT) division of the San Mateo County Community College District, pleaded no contest to three counts of forgery and one count of embezzlement on Wednesday (Feb. 27). He also pleaded guilty to "taking, damaging or destroying" at least $65,000 worth of property during the commission of a felony. (link)

Feb 26, 2013: Former Medical College of Georgia (now Georgia Regents University) employee Christin Lynn Wright surrendered herself at the Tattnall County Jail. Wright, was an hourly employee of the Medical College of Georgia and contracted to work as an administrative assistant at the Georgia State Prison in Reidsville. Her mother, Debbie Lynn Wright, was a salaried employee of the Georgia Department of Corrections, working as a senior clerk at the Georgia State Prison in Reidsville. As senior clerk, Debbie Lynn Wright was also the designated timekeeper responsible for making manual entries into TimeWare for all hourly employees. Debbie Lynn Wright manually entered fraudulent data into TimeWare that resulted Christin Lynn Wright being paid for overtime hours that she did not work. (link)

Feb. 25, 2013: York University says it has discovered that a controversial former executive -- now facing criminal and civil fraud charges -- submitted a ''bogus degree'' when it hired him. Markicevic submitted a resume for a York management posting indicating he had earned a Masters of Business Administration degree from Auburn State University, but acknowledged in a pre-trial proceeding last fall that wasn't the case. In a transcript of those proceedings, Markicevic initially insisted he held the degree. But then York lawyers confronted him with their own correspondence from Auburn University in Alabama showing Markicevic never attended there or received a degree. Furthermore, the lawyers found there is no ''Auburn State University.'' (link)

Feb 21, 2013: The former chief financial officer for Southern Vermont College in Bennington, who resigned earlier this month amid allegations he embezzled at least $440,000, was found dead at his home Wednesday night, the Vermont State Police said Thursday. (link)

Feb 8, 2013: A Saluda woman has been charged with embezzling $270,000 from Montreat College, where she worked as a bookkeeper, according to police. A magistrate's order filed with Buncombe County District Court shows that Pace was "employed in bookkeeping for the college and wrote checks payable to her account at the time." (link)

Feb 8, 2013: A former Ashford University employee has been charged making unauthorized cash withdrawals and purchases totaling more than $10,000. Stacy Lynn Powers, 28, of Camanche was charged with first-degree theft, according to court records. She made her initial court appearance Friday in Clinton County District Court. (link)

Feb 7, 2013: A 31-page report released Thursday by a special panel of the UNC Board of Governors looking into the long-running academic fraud at UNC-Chapel Hill places the blame on a former department chairman and his longtime assistant, but also expresses dissatisfaction that scores of bogus classes were offered over a 14-year period with no one "effectively" coming forward to stop it. (link)

Feb 3, 2013: The University of Texas System will review policies regarding inappropriate relationships between employees and students at all 15 campuses in the system, officials said Sunday. The review, announced after a rare Sunday meeting of the system's Board of Regents, was prompted by the disclosure that an assistant football coach at the Austin campus was disciplined in 2009 for an inappropriate relationship with a female student. (link)

Feb 1, 2013: An Arizona college's search for a new chancellor has been postponed after it found TMCC President Maria Sheehan -- a top-two finalist for the job -- was the chief executive of a California community college district during a seven-year period of fraud there, according to Pima Community College's search advisory committee. (link)

Feb 1, 2013: In an apparent disclosure about the Harvard cheating scandal, a top university official said Friday that more than half of the Harvard students investigated by a college board have been ordered to withdraw from the school. (link)

Jan 31, 2013: A University of Central Arkansas employee was fired Monday after an investigation found he oversaw the financial aid of a friend, advised that friend on how to get a scholarship renewed and filed paperwork on a damaged car wheel that allowed the friend to get about $1,300. (link)


Compliance/Regulatory & Legal Events

Feb 28, 2013: Eleven students who will graduate in May 2013 from Concordia University Chicago's school counseling master's program filed a lawsuit against the university in Cook County Circuit Court on Wednesday for what they say is consumer fraud. (link)

Feb 28, 2013: A Johns Hopkins Hospital gynecologist accused of secretly videotaping patients wore a pen around his neck that may have been used to conceal a camera, according to the employee who reported the doctor. Class-action lawsuits have been filed against Hopkins. (link)

Feb 26, 2013: A transgender woman is suing California Baptist University in Riverside for allegedly expelling her because of her gender identity. Domaine Javier, 25, was expelled in August 2011 after she revealed in an episode of MTV's ''True Life'' that she is biologically male. (link)

Feb 22, 2013: A former Texas A&M University employee has been arrested by University Police in connection with the bomb threat at the Clayton Williams Jr. Alumni Center Friday morning. Michael Francis Thomas, 43, has been charged with making a terroristic threat, a third degree felony. He was taken into custody at a Bryan location and is currently being held in the Brazos County jail. (link)

Feb 21, 2013: The University of Iowa has halted for now its practice of sending to the Johnson County Sheriff's Department information about students who apply for gun permits, after questions about whether that process violates student privacy laws. (link)

Feb 19, 2013: Students at Louisiana State University's College of Art + Design will begin receiving credits to their accounts this month after an internal audit revealed more than $60,000 in course fees have been unlawfully collected since 2010. The audit was carried out after former faculty member Margaret "Margot" Herster blew the whistle on the unlawful fees. She is suing the university for wrongful termination and harassment. (link)

Feb 19, 2013: Embattled Northern Illinois University police Chief Donald Grady -- the man many hailed as a hero for his handling of a mass shooting on campus five years ago -- was fired Tuesday, the university confirmed. The dismissal comes more than three months after he was put on paid leave for his department's alleged misconduct in a high-profile rape case, and five months after he asked the FBI for help investigating university finances. (link)

Feb 18, 2013: The NCAA emerged Monday from a 27-day external review of its ongoing University of Miami investigation with president Mark Emmert calling the situation a "debacle," and with new leadership of its enforcement division. (link)

Feb 18, 2013: Brevard Community College announced on Friday that it would seek to fire a faculty member who it found to have inappropriately pressured students in classes last year to back the re-election of President Obama. (link)

Feb 15, 2013: Penn State University says it has now spent more than $27.6 million in costs related to the Jerry Sandusky child sex abuse scandal. The university has posted an update of the costs on its website. The spending covers legal fees and consulting bills through Nov. 30. It does not include Penn State's $60 million fine to the NCAA. (link)

Feb 14, 2013: A Northampton County judge on Thursday rejected the claims of a Lehigh University graduate suing over her C+ grade, a verdict that upheld the school's insistence that she earned the mark she got. After four days of testimony in a civil trial that captured worldwide attention, Judge Emil Giordano decided that the Bethlehem university neither breached a contract with nor sexually discriminated against Megan Thode, whose lawsuit had sought $1.3 million in damages. (link) (link)

Feb 12, 2013: Louisiana State University on Monday reached an out-of-court settlement with a scientist who asserted in a lawsuit that the institution had wrongfully ended his contract in retaliation for his criticisms of the U.S. Army Corps of Engineers, which oversaw the construction of levees that failed to protect New Orleans from flooding during Hurricane Katrina. The corps is a major source of the university's federal grants. (link)

Feb 12, 2013: Supporters say it would preserve the constitutional right of free association on college campuses. Critics say its purpose is more nefarious: to undermine a 2010 U.S. Supreme Court decision and permit otherwise improper discrimination by college clubs supported with public dollars. The pro-side won out Monday when the Virginia Senate voted 22-18 to approve legislation that would allow student groups to restrict membership to those committed to their missions. The Virigina measure, HB 1617, would also prohibit colleges and universities from discriminating against clubs that make club participation exclusive.(link)

Feb 12, 2013: Attorneys for the parents of two students who were killed in the 2007 Virginia Tech massacre asked Tuesday for a Supreme Court hearing on their request to put Tech's president on trial for negligence, while the state sought to reverse a jury's conclusion that the state was negligent for failing to alert students right away when the shootings began on the campus. (link)

Feb 7, 2013: Alabama A&M University and its research institute have severed all ties in what ultimately resulted as an academic divorce. That's the result of an out-of-court settlement finalized on Feb. 1 of a lawsuit the university filed in 2011 against the Alabama A&M Research Institute, ending the existence of a contracting arm of the school founded in 1999 to work with local industry and government agencies. (link)

Feb 1, 2013: A jury on Thursday awarded $849,000 to a former Wayne State University student who claimed her pregnancy caused discrimination during an internship and was a factor in her removal from the school's social work program. (link)


Campus Life & Safety Events

Feb 25, 2013: At least one student was sent to a hospital Tuesday afternoon following a leak of chemical gas into the air in a Villanova University science center. (link)

Feb 19, 2013: As Eastern Michigan University's Board of Regents met on the third floor of the Ypsilanti school's administration building Tuesday, 25 to 30 people --several Native Americans among them-- protested the school's recent usage of its former Huron mascot. A group protested EMU's recent use of the Huron logo on band uniforms Tuesday, Feb. 19. The school incorporated the Huron logo, which it abandoned in 1991 for the current Eagles mascot, in new band uniforms it debuted last fall. (link)

Feb 13, 2013: Turbo-charged parents still running their university-aged children's schedules, laundry and vacations could be doing more harm than good with a study on Wednesday showing these students were more likely to be depressed and dissatisfied with life. (link)

Feb 11, 2013: A tornado tore through Hattiesburg on Sunday as part of a wave of severe storms that downed trees, damaged buildings and injured more than a dozen people. The twister traveled down one of Hattiesburg's main streets and mangled homes, commercial buildings and structures on the campus of the University of Southern Mississippi. Emergency officials said at least 10 people were injured in surrounding Forrest County and three were hurt to the west in Marion County, but they weren't aware of any deaths. (link)

Feb 8, 2013: University of Colorado faculty members are circulating an online petition that asks CU President Bruce Benson to push for legislative changes to keep guns off the school's campuses. (link)

Feb 6, 2013: The Kappa Sigma fraternity's chapter at Duke University set off a flood of criticism last week for inviting students to a party titled ''Asia Prime,'' which featured conical hats, sumo loincloths, and an invitation written in a stereotypical accent. The fraternity changed the party's name to ''International Relations'' when a backlash erupted. But the event went on as planned, and students gathered on Wednesday in protest: (link)

Jan 31, 2013: The smell of antiseptic is in the air on college campuses across the state as school officials begin the spring semester by wiping down door handles, disinfecting light switches and sanitizing computer labs in an attempt to keep flu and other contagious germs from spreading. (link)


Other News & Events

Feb 22, 2013: For the second time in three months, faculty at Alabama A&M University expressed concerns over a lack of pay raises to university officials. (link)

Feb 20, 2013: Florida Atlantic University's announcement to change the name of its football stadium to that of a private prison corporation accused of human rights violation has surprised and outraged students as well as South Florida's pro-immigrant activists. (link)

Feb 20, 2013: A health-advocacy group was premature when it announced that Tulane University had stopped using pigs in a program to train doctors about emergency and trauma procedures. (link)

Feb 19, 2013: First-year students in a ''Frontiers of Science'' course at Columbia University were shocked and confused on Monday when their professor, Emlyn Hughes, began what was to be a lecture on quantum physics by stripping to his shorts and changing clothes in front of them. (link)

Feb 18, 2013: An Eastern Michigan University student organization, Students for an Ethical and Participatory Education, is urging the university to consider severing its contract with Adidas due to allegations of workers rights violations, the Eastern Echo reported. (link)

Feb 14, 2013: It's not uncommon for a university to suffer the indignity of an embarrassing typo. But for Missouri State University's bookstore, a recent bite from the typo bug might be more painful than most: After all, this is the same bookstore whose director resigned last summer after officials discovered $81,000 in cash in his desk drawer. A month before the director left, bookstore employees approved a logo design that would be used on free canvas book bags for students. But as the Springfield News-Leader reports, the bags ended up emblazoned with the misspelling ''univeristy'' (link)

Feb 13, 2013: The White House is releasing a website designed to help college-bound students have a better sense of how much their education will cost and how much they can expect to pay in studentĀ loans. (link)

Feb 12, 2013: More than 10,000 community college students in Alabama have lost or are within two semesters of losing Pell grant support due to new restrictions on the federal student-aid program, a study says. (link)

Feb 8, 2013: Stereotypical college students who live in dorms and go home for the occasional weekend no longer are the main driver of changes in higher education, one of the nation's top education experts told the University of Wisconsin System Board of Regents on Friday. (link)

Feb 6, 2013: Declining state appropriations, unstable endowment returns, a projected drop in the number of high-school graduates--there's no shortage of grim news for higher education of late. But a new analysis from the State University of New York at Albany's Nelson A. Rockefeller Institute of Government says institutions in the Northeast may be hit harder than the rest. (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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