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Internal Auditing

Case in Point:
Lessons for the pro-active manager

April 2013
Vol. 5 No. 4
Quotable...
''No snowflake in an avalanche ever feels responsible.''

-- Stanislaw Jerzy Lec

I recently heard a speaker from an organization that is routinely listed as one of the country's best places to work talk about their company's culture and history. During her speech, the speaker (a vice president in the company) mentioned that the founder of the company frequently told employees, ''This organization will be a little better place to work, or not quite as good, because of you.'' This statement was very simple yet in many ways quite profound. This message of personal responsibility for the success of the organization has been built into their culture and has made a significant impact on their success and reputation of strong customer service.

As I thought about the statement I realized it is also true for us in the educational environment. I believe it is particularly true in how our institution manages the numerous risks we face. Ultimately, our university will be a little better at managing risks, or not quite as good, because of you.

Developing a proactive culture where, when someone sees a problem they either raise the issue to those who can influence needed action or take action themselves to reduce risks or solve the problem, is more important than ever due to highly publicized events within our industry where actions were not taken and crisis ensued. Ultimately, whether we are considering compliance issues, data protection, safety of students, or any other risk we face, it comes down to each employee taking responsibility and acting proactively for the institution to succeed.

As you review the events across higher education this month, we encourage you to think about the risks you face and where you might need to take proactive action. Ultimately, developing a proactive culture is probably more important than any program we could develop for managing risk.

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


Information Security & Technology Events

Apr. 29, 2013: Upstate University Hospital, affiliated with the State University of New York (SUNY) system, told 283 patients recently of a late March data breach involving the theft of a portable electronic device. (link)

Apr. 26, 2013: A portable electronic device containing personal medical information has been stolen from Upstate University Hospital. The hospital notified 283 patients that their information may be compromised. (link)

Apr. 11, 2013: An administrative error caused the personal information of some students to be exposed online. The issue was discovered on February 27. Authenticated users of Chapman's on-campus network could have viewed names, Social Security numbers, student identification numbers, and dates of birth. (link)

Apr. 8, 2013: Hackers gained access to an online database containing personal information of 125,000 people who applied to take credit classes at an Iowa community college during the last eight years, the school said Monday. (link)


Fraud & Ethics Related Events

Apr. 30, 2013: Dominican University of California announced last week that it had for many years misreported admissions data to the Education Department as well as to U.S. News & World Report and other groups that rank colleges. (link)

Apr. 27, 2013: An independent investigation into the actions of Louisiana College President Joe Aguillard found he ''engaged in falsehoods and misrepresented material information to the Board of Trustees on countless occasions.'' A special committee of the LC board, however, found Aguillard ''has not acted improperly.''(link)

Apr. 26, 2013: A West Texas university has fired its chief financial officer amid accusations he used the school's money to pay off debts he and his wife incurred. (link)

Apr. 24, 2013: A former University of California business dean is suing the school system, alleging that a prior chancellor mismanaged fees paid by MBA students and improperly diverted financial aid from the MBA program. (link)

Apr. 24, 2013: A former San Francisco State University official has been charged with 128 felonies for allegedly taking bribes for a waste-disposal contract that ultimately cost the university millions of additional dollars, prosecutors said Wednesday. (link)

Apr. 23, 2013: Northern Kentucky University says it has discovered that its former athletics director, fired for ethical misconduct last month, also diverted as much as $150,000 in university funds for his personal use. (link)

Apr. 23, 2013: In an unprecedented case, an internationally renowned computer engineer, who recently left the UC Irvine faculty, has been criminally charged for conflicts of interest involving secret payments from a major Japanese telecommunications firm funding his academic research. (link)

Apr. 22, 2013: Two University of Connecticut employees at the West Hartford campus were arrested for using university funds for personal reasons and for conspiring to authorize over $5,000 through the university in funds used for home improvements. (link)

Apr. 16, 2013: When Bucknell University in January admitted that it had been reporting false SAT averages to U.S. News & World Report (and others), it followed a flurry of similar confessions over the previous 12 months. Since then, several months have since passed. Until Monday, no other colleges had come forward to admit that they too had been submitting false numbers. But York College of Pennsylvania did so on Monday. (link)

Apr. 15, 2013: A prominent Emory University professor and Orthodox rabbi is facing tough scrutiny after a Jewish-oriented television channel reported that he created a fake identity to join a rabbinic group. Rabbi Michael Broyde allegedly joined the International Rabbinic Fellowship under the false name of Rabbi Hershel Goldwasser, who claimed to live in Israel. By joining the organization, Broyde could access its listserv and he also promoted his own work, according to a report by Steven I. Weiss on The Jewish Channel. (link)

Apr. 5, 2013: A former Ashford University employee has admitted to stealing more than $10,000 from the organization. Stacy Powers' voice broke Thursday as she pleaded guilty to first-degree theft. (link)

Apr. 2, 2013: A researcher at the Medical College of Wisconsin is charged with espionage after prosecutors say he stole details of a cancer-fighting compound that he wanted to share with China. (link)


Compliance/Regulatory & Legal Events

Apr. 30, 2013: The Internal Revenue Service (IRS) has released its final report summarizing the audit results from its United States colleges and universities compliance study, which began in 2008 and describes the agency's multi-year project on that major segment of tax-exempt organizations. "The audits identified some significant compliance issues at the colleges and universities examined," said Lois Lerner, Director, Exempt Organizations division. "Because these issues may well be present elsewhere across the tax-exempt sector, all exempt organizations need to be aware of the importance of accurately reporting unrelated business income and providing appropriate executive compensation." (link)

Apr. 29, 2013: Colleges should not retaliate against students who raise a civil rights complaint -- either with an individual institution or with the federal government -- The U.S. Education Department's Office for Civil Rights said in a ''Dear Colleague'' letter sent out last week. (link)

Apr. 29, 2013: The former director of tech support services for the San Mateo County Community College District was sentenced Friday to three years in state prison for stealing more than $150,000 worth of computer equipment, according to the San Mateo County District Attorney's Office. (link)

Apr. 29, 2013: The part-time instructors' union at Kalamazoo Valley Community College has filed an unfair labor charge against the institution with the Michigan Employment Relations Commission, the KVCC Federation of Teachers announced Monday. Beginning in the fall, part-time faculty would be limited to nine contact hours a semester, according to an email sent out to KVCC department chairs April 16. Previously, the maximum amount allowed per semester had been 11 credit hours, as stated in the part-time faculty handbook. (link)

Apr. 26, 2013: UCLA chemistry professor Patrick Harran has been ordered Friday to stand trial on felony charges stemming from a laboratory fire that killed staff research assistant Sheharbano ''Sheri'' Sangji more than four years ago. (link)

Apr. 25, 2013: A 19-year-old East Haven woman has pleaded guilty to federal charges that she threatened to bomb and shoot up Gateway Community College. (link)

Apr. 24, 2013: All undergraduate and graduate classes in the arts and sciences at Dartmouth College were canceled for the day after a student demonstration sparked a backlash that included violent online threats against the protesters. (link)

Apr. 23, 2013: The Harvard primate research center where four monkeys died because of animal care problems will be largely shut down by 2015, Harvard Medical School announced Tuesday afternoon. The university cited a tough economic climate for biomedical research funding and shifting long-term strategic plans. (link)

Apr. 23, 2013: Eastern Connecticut baseball coach Bill Holowaty's 45-year career has come to a halt -- at least for now -- after a university investigation substantiated four of five charges of misconduct against him. With those four charges having been "substantiated and affirmed through eyewitnesses and supporting documentation," Holowaty was suspended with pay Monday for a period of three weeks. According to the suspension letter to Holowaty from labor relations officer Joseph R. Tolisano, obtained Tuesday by The Courant, Holowaty is eligible to return to his job May 13. (link)

Apr. 23, 2013: On May 7, 2013, employers must begin using a new version of Form I-9 published by the U.S. Citizenship and Immigration Services (USCIS) to verify the identity and authorization of their employees to work in the United States. Employers have been allowed to use the new form since its publication in March, but, beginning May 7, failure to use it may result in penalties. (link)

Apr. 22, 2013: Stark State, in North Canton, Ohio, is among a growing number of colleges that have limited the number of weekly hours part-time employees can work to keep them below the level at which employers are required to provide health insurance. Under the new law, which takes effect in January 2014, employees of large companies who work 30 hours or more a week must receive health benefits from their employers. Employers who violate the rule could be fined. (link)

Apr. 19, 2013: A federal judge in Nebraska ruled Friday that university-owned housing is subject to the Fair Housing Act in the case of a University of Nebraska at Kearney student whose therapy dog wasn't allowed to live with her. (link)

Apr. 17, 2013: An algebra instructor at Brevard Community College has been fired after an investigation by college officials found that she urged -- and forced in some cases -- students to sign pledge cards promising to vote for President Barack Obama in November. (link)

Apr. 12, 2013: Nearly two dozen people face charges related to a widespread financial aid scam in which they received money to attend Contra Costa College but never went to class, a prosecutor said Thursday. (link)

Apr. 12, 2013: A computer science professor at the University of Houston Clear Lake who allegedly threatened another faculty member over getting tenure has been charged with making a terroristic threat. Lei Wu, 40, was arrested April 10 and was released the same day after posting $500 bond. (link)

Apr. 11, 2013: The Department of Justice on Tuesday charged the former student health insurer for Virginia Tech with defrauding the university and its students of $9 million, a move that underscores new risks insurers could face as the government increases its scrutiny of the industry under the Affordable Care Act, experts said. (link)

Apr. 8, 2013: Rutgers University will hire an independent investigator to review the handling of abuse allegations against Mike Rice Jr., the former head men's basketball coach who was fired last week after video surfaced of him shoving players and yelling gay slurs at them. (link)

Apr. 5, 2013: The president of Northern Kentucky University has released additional information about the school's former athletic director. Scott Eaton was fired last month due to alleged violations of the university's code of conduct and ethical principles. President Geoffrey Mearns sent a letter Friday to Terry Mann, the chairman of the university's board of regents, saying that Eaton had admitted to "inappropriate, intimate relationships with four University employees, including two women whom he supervised." (link)

Apr. 1, 2013: Former UCLA standout Ed O'Bannon is watching the NCAA men's basketball tournament with mixed emotions. There's the love for the game and the tournament itself -- he led his UCLA Bruins to the 1995 championship with 30 points and 17 rebounds and earned the most outstanding player award. But then there's the commercial side of things."Everybody's getting paid except for the players," O'Bannon said in a phone interview from Las Vegas recently. "It's not fair, and it needs to change." (link)

Mar. 31, 2013: A judge ruled Friday that UNC-Chapel Hill did not violate the state whistleblower act but did fail to protect a housekeeper from sexual harassment and retaliation. Administrative Judge Melissa Lassiter also said UNC-CH should amend and simplify its reporting procedures to comply with state and federal requirements. (link)


Campus Life & Safety Events

Apr. 26, 2013: The president of the Meramec campus of the St. Louis Community College resigned Monday, effective immediately. His resignation followed turmoil and sharp criticism of the college's handling of an attack on a female student in a restroom on campus and the subsequent handling of the suspect. (link)

Apr. 25, 2013: A UC Irvine fraternity is trying to distance itself from a member-produced video featuring a man in blackface. But UCI's Black Student Union says it's an example of racial insensitivity that is common on campus. (link)

Apr. 25, 2013: The sorority gal who sent a scathing, profanity-laced email to her sisters has quit her Greek organization. Delta Gamma said on its website that it has accepted the resignation of the University of Maryland college junior, whose passionate email calling out her ''AWKWARD'' and ''BORING'' sisters for their lackluster social interactions with Sigma Nu Fraternity has been widely circulated and parodied. (link)

Apr. 25, 2013: Four men, including two Virginia State University students, have been charged with hazing in connection with an initiation ritual over the weekend that led to the apparent drowning deaths of two VSU freshmen in the Appomattox River. (link)

Apr. 23, 2013: Dartmouth College is canceling classes for a day after students who staged a recent protest decrying homophobia, sexual assault and racism on campus were targeted by online threats. Hundreds of high school seniors deciding whether to attend the Ivy League college in Hanover were watching a student performance Friday night when about 15 students burst in chanting ‘‘Dartmouth has a problem!'' That led to online threats being made against the protesters and their perceived supporters. (link)

Apr. 19, 2013: A bunch of classy sorority girls from Indiana University's Kappa Delta chapter carefully smudged dirt on their faces and fake-begged for food, money and prayers during a homeless-themed party this week. (link)

Apr. 18, 2013: Occidental College has hired two former sex crimes prosecutors to complete an extensive review of the university's handling of sex abuse cases amid allegations that officials don't take such cases seriously. (link)

Apr. 17, 2013: "You don't want to make your campus paranoid, but people need to be aware of their surroundings and report unusual activity to the police," University of Nebraska Chief of Police Owen Yardley said. "Security isn't something that happens a week or two in advance of an event; it's got to happen year-round." (link)

Apr. 12, 2013: To what extent can coaches use negative tactics to motivate athletes? And what impact does that approach have on coaches' credibility? According to new research: Verbally aggressive language doesn't work, even in an environment where athletes have been conditioned to expect it, the researchers found. (link)

Apr. 10, 2013: Anti-abortion activists at the Johns Hopkins University who had fought to form an official club have been fully recognized, clearing the way for them to use the institution's logo and raise cash on campus. The university announced Wednesday that an earlier decision by the Student Government Association to block the group, Voice for Life, was reversed by a panel of student judges. (link)

Apr. 9, 2013: At least 14 people were wounded in an apparent mass stabbing at Lone Star College's CyFair campus in Cypress, Texas. (link)

Apr. 4, 2013: Today's college students are more stressed out and career-minded than ever, and anxiety has become the leading mental health issue among them. On the campus of Wake Forest University, Provost Rogan Kersh could see why, at least in part: students never take time to relax. They run from class to meeting to practice, describing everything they have to do as ''work'' or ''an obligation.'' Even penciling in time to hang out with roommates has become the norm. (link)

Apr. 3, 2013: On Monday, April 1, anonymous black-and-white fliers were found pinned to billboards at Riverside City College saying the student body president is a registered sex offender. Students at first thought it was a cruel prank, but once it was confirmed, the revelation left them asking whether RCC administrators, who acknowledge they knew about it before the election, should have disclosed the information to the campus community. (link)


Other News & Events

Apr. 22, 2013: As Boston's universities shuttered their campuses and canceled activities during Friday's lockdown, prospective students who had come from around the country for open house visits suddenly found themselves stranded and without answers to the many questions that would influence their college decision. (link)

Apr. 15, 2013: A growing number of Fortune 500 companies, like Walmart, have grown tired of waiting for colleges and universities to produce the skilled workers they need and have started offering their own classes instead. And as an added bonus for employees: Many of these courses -- from Starbucks' Barista Basics to Jiffy Lube's finance fundamentals -- are eligible for college credit. (link)

Apr. 12, 2013: Kean University has spent much of the past year dogged by controversy. Yet its veteran president, Dawood Farahi, has not only weathered the storms, but gotten the strong backing of his board of trustees. (link)

Apr. 5, 2013: Last month Steven Landsburg, an economist at the University of Rochester, published a post on his personal blog laying out a series of hypothetical public-policy "dilemmas." Anticipating the usual abstract debates with his community of regular readers, he set forth three rhetorical queries. Question 3, after a few days, went viral. Should rape be illegal if the victim is unconscious, the professor wrote, and if no physical harm results? (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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