Report on the

Alabama A&M University

Normal, Alabama
October 1, 2013 through September 30, 2014

Filed: January 15, 2016

Department of
Examiners of Public Accounts
50 North Ripley Street, Room 3201
P.O. Box 302251
Montgomery, Alabama 36130-2251
Website: www.examiners.alabama.gov

Ronald L. Jones, Chief Examiner

16-105

State of Alabama
Department of

Examiners of Public Accounts

P.O. Box 302251, Montgomery, AL 36130-2251
50 North Ripley Street, Room 3201
Montgomery, Alabama 36104-3833
Telephone (334) 242-9200
FAX (334) 242-1775

Ronald L. Jones
Chief Examiner

Honorable Ronald L. Jones

ChiefExaminer ofPublic Accounts
Montgomery, Alabama 36130

Dear Sir:
Under the authority of the Code of Alabama 1975, Section 41-5-21, we submit this report
on the results of the examination of Alabama A&M University, Normal, Alabama, for
the period October 1, 2013 through September 30, 2014.

Sworn to and subscribed before me this

ilie

.J::_~n~20JQ_

4NOi&y

Public

Swor:?Jto and subscribed before me this

ilie

~o~~O~

<6

rb

16-105

Notary Public

Tiffany L. Mason
Examiner ofPublic Accounts

Table of Contents
Page
Summary

Contains items pertaining to state legal compliance, University operations,

and other matters.
Comments

Contains information pertaining to the history of the University.

Schedule of State Compliance and Other Findings

Contains detailed information about findings pertaining to state legal

Compliance and other findings.
Additional Information

Provides basic information related to the University.

Exhibit #1

Board Members and Officials a listing of the Board

Members and University officials.

_________________________________________

Alabama A&M University

Normal, Alabama

Department of

Examiners of Public Accounts

SUMMARY
Alabama A&M University
October 1, 2013 through September 30, 2014

Alabama A&M University (the University) is a state land-grant university, which provides
opportunities for Bachelor, Masters and Doctoral degrees in a number of different programs.
The University receives funding from state, local, private and federal sources in addition to
student tuition, fees and auxiliary activities. The University expends these resources for
education and general purposes, auxiliary activities, research, public service, student services,
institutional support, capital acquisitions and retirement of indebtedness.
The University is a part of the Alabama Cooperative Extension System, the outreach
organization for the land grant function of Alabama A&M University and Auburn University.
The Thomas Agricultural Research Station at Hazel Green is a part of the University and
provides outdoor laboratory space for agricultural research. Farm support buildings for plant,
soil and animal sciences research are also available for use by the research scientists and
students. The University is a participant in the states agricultural research program
administered by the Alabama Agricultural Experiment Station, headquartered at Auburn
University.
The State Black Archives, Research Center and Museum is located on the Universitys
campus. The Center serves the state by collecting and preserving source materials on the
contributions, achievements and general experiences of black Americans, providing
bibliographic information to state agencies, and encouraging the use of collected materials in
state educational services. Additional information on the history of the University is included
in the Comments section of this report.
The firm of Banks, Finley, White & Co., Certified Public Accountants conducted the financial
audit for the fiscal year ended September 30, 2014.
This report presents the results of an examination of the University and a review of
compliance by the University with applicable laws and regulations of the State of Alabama in
accordance with the requirements of the Department of Examiners of Public Accounts under
the authority of the Code of Alabama 1975, Section 41-5-14.

16-105

Findings are numbered and reported by the examination period in which the finding originally
occurred.
The following instances of noncompliance with state laws and regulations and other matters
were found during the examination as shown on the Schedule of State Compliance and Other
Findings and are summarized below.
CURRENT FINDINGS
2014-001 The University did not ensure that accountability was established and
maintained for public funds received through contracts.
2014-002 The University may not have administered the Alabama Endowment Trust Fund
for Eminent Scholars in compliance with Act Number 85-759, Acts of Alabama.
2014-003 The Universitys procedures did not ensure that travel payments to employees
and Board Members were made in accordance with the Code of Alabama.
2014-004 The University did not ensure that proper documentation was maintained and
policies were complied with relating to funds disbursed for travel advances.
2014-005 The University did not ensure that accountability was established and
maintained for all athletic tickets printed or sold.
2014-006 The University did not ensure that accountability was established and
maintained for the enrollment fee received from students.
2014-007 The University may not have complied with Attorney General Opinion 8900166 by providing faculty and staff meals and refreshments in relation to two Christmas
parties held on campus.
2014-008 The University may not have complied with Internal Revenue Service rules and
regulations by failing to report non-overnight per diem payments on employee W-2 forms.
2014-009 The University failed to properly safeguard equipment by failing to maintain
documentation for all vehicles that were taken to a salvage yard.
UNRESOLVED PRIOR FINDINGS
2013-001 The University may not have ensured that the Trust for Educational Excellence
was administered in accordance with the Courts instructions.
2013-003 The University may not have complied with Internal Revenue Service rules and
regulations by reporting the Presidents housing and car allowance on a Form 1099.

16-105

 2013-010 The University may not have complied with the Code of Alabama by not
remitting unclaimed property to the State Treasurer.
2013-011 The University may not have complied with the Code of Alabama by failing to
return appropriations that were not expensed or encumbered by the end of the fiscal year.
2008-002 The University failed to ensure bank reconciliations and reconciling
adjustments were performed in a timely manner.
2007-002 The University failed to properly safeguard equipment.
2005-005 Capital asset subsidiary accounts did not support amounts presented in the
financial statements.
The following officials/employees were invited to an exit conference to discuss the
findings and recommendations appearing in this report: Dr. Andrew Hugine, Jr., President;
Mr. Clayton Gibson, Vice-President for Business and Finance; and Mr. Norman E. Jones,
Assistant Vice-President for Finance and Comptroller. The following individuals attended
the exit conference: Dr. Andrew Hugine, Jr., President; Mr. Clayton Gibson, Vice-President
for Business and Finance; Mr. Norman E. Jones, Assistant Vice-President for Finance
and Comptroller; Angela Redmond Debro, General Counsel; and U. W. Clemon, Legal
Representative. Representing the Department of Examiners of Public Accounts was
Mr. Hal Bradsher, Assistant Director of Education Audits; Ms. Melissa Knepper, Audit
Manager; Ms. Lola Fuqua-Haney, Examiner; and Ms. Tiffany L. Mason, Examiner.

16-105

Department of

Examiners of Public Accounts

COMMENTS
Alabama A&M University
October 1, 2013 through September 30, 2014

The University was organized in 1875 as the result of a bill passed in the State Legislature in
1873 and through the continued efforts of its first Principal and President, William Hooper
Councill, an ex-slave. The school opened on May 1, 1875, as the Huntsville Normal School
with an appropriation of $1,000 per year. It had 61 students and two teachers.
Industrial education was introduced around 1878. It attracted wide attention and the school
was assisted financially by the Slater and Peabody Funds and by private contributors. The
work in industrial education was so successful that the State Legislature authorized the name
to be changed to the State Normal and Industrial School at Huntsville. The appropriation
was increased by the State to $4,000 per year.
In 1891, the school became the recipient of a part of the Federal Land-Grant Fund provided
by an act of Congress which was approved on August 30, 1890. The purpose of this fund was
to provide further training in agriculture and mechanical arts in the various states at the
college level.
The name of the school was changed again to The State Agricultural and Mechanical
College for Negroes, and a new location was provided at Normal, Alabama, where the
school would have ample room for the development of its trades and agricultural programs.
In 1919, the institution became a junior college, and its name was changed to The State
Agricultural and Mechanical Institute for Negroes.
In 1939, by authority of the State Board of Education, the Institute was permitted to offer
work on the senior college level. On January 14, 1948, the name was again changed to the
Alabama Agricultural and Mechanical College. On June 26, 1969, the Alabama State
Board of Education adopted a resolution changing the name of the institution to Alabama
Agricultural and Mechanical University.

16-105

Schedule of State Compliance

and Other Findings

Schedule of State Compliance and Other Findings

For the Year Ended September 30, 2014
Ref.
No.
Finding/Noncompliance
2014-001 Finding:
Internal Controls should ensure that accountability is established and maintained
for all public funds received by the University.
The University entered into a Food Services Management contract in the
2009-2010 fiscal year. In consideration for the University entering into the
contract, the Food Services company agreed to provide certain payments to the
University during each fiscal year. The contract was amended in August 2013,
and the amounts due to the University each fiscal year in accordance with the
amended contract totaled $400,000 as follows:
An unrestricted grant to the University in the amount of $175,000 for
furthering the Universitys general educational mission.
An unrestricted grant to the University in the amount of $200,000 for
furthering the Universitys general educational mission through the
provision of scholarship funding.
An annual contribution of $25,000 to the Universitys First Lady
Scholarship Program.
Documentation obtained during the examination indicated that $400,000
received in August 2013 applicable to the 2012-2013 fiscal year and $400,000
received in July 2014 applicable to the 2013-2014 fiscal year were deposited
directly into the accounts of the Alabama A&M University Foundation and
not the accounts of University.
The University entered into a contract to set terms between specified parties
for the Magic City Classic Game. The contract commenced with the 2009
football season and ended with the 2013 football season.
In consideration for the University entering into the contract, the City of
Birmingham agreed to provide financial support to the Magic City Classic
during each fiscal budget year in specific amounts. The amount for the 2013
year totaled $275,000 with half going to Alabama A&M University and half
going to Alabama State University. The City of Birmingham sent a check to
the University in the amount of $137,500 for the Universitys half of the
support on November 13, 2013.
Documentation obtained during the examination indicated that $137,500 was
deposited directly into the accounts of the Alabama A&M University
Foundation and not the accounts of University.
We were not provided with any documentation to show that the Board approved
the deposit of these contractual revenues totaling $937,500 into the account of the
private foundation.
Alabama A&M University
Normal, Alabama

Schedule of State Compliance and Other Findings

For the Year Ended September 30, 2014
Ref.
No.

Finding/Noncompliance

Recommendation:
The University should develop controls to ensure that accountability is established
and maintained for all public funds received.
2014-002 Finding:
Act Number 85-759, Acts of Alabama, established the Alabama Endowment Trust
Fund for Eminent Scholars. The Act provided $400,000 of state funding for each
$600,000 raised by the respective universitys foundation, by contributions and
accrued interest thereon, from sources other than the state appropriations, student
fees, federal funds, research grants, and interest earned thereon. The Act stated
that the foundation serving a university shall have the responsibility for the
maintenance and investment of its fund and for the administration of the program
at the University. The Act further required that the University enter into a written
agreement with its Foundation to provide from the earnings from its Eminent
Scholars Trust Fund an amount not to exceed said earnings which the University
could use as specified in the Act. The endowment income can be used as salaries
or a supplement of salaries for the holder of an endowed chair and for those
individuals directly associated with the holder of the chairs scholarly work and
for expenses directly related to the chairs scholarly work.
In a previous year the required $600,000 was raised and the State provided
$400,000 to establish a $1,000,000 Endowment Trust Fund for Eminent Scholars
(Endowment). The Alabama A&M Foundation (Foundation) is a discretely
presented component unit of the University in the Universitys financial
statements. The Foundations financial statements for the fiscal year ended
July 31, 2013 disclosed a $1,000,000 permanently restricted balance related to
Endowment. The Foundations financial statements for the fiscal year ended
July 31, 2014 did not include any permanently restricted amounts. A copy
of the agreement between the University and the Foundation as required by Act
Number 85-759 was requested, but was not provided as of the date of this report.
The University was also asked to provide documentation of any money requested
from the Endowment for use during the 2013-2014 fiscal year, and to provide the
balance of the accumulated Endowment interest available to be expended by the
University as of September 30, 2014. The Universitys Vice-President for
Business and Finance who is also the Treasurer for the Foundations Board stated
that no funds were requested from the accumulated earnings during the 2013-2014
fiscal year. He also submitted an excerpt from the Foundation financial statements
indicating that the accumulated Endowment interest available to be expended by
the University remained unchanged at $43,174 as of July 31, 2013 and 2014.

Alabama A&M University

Normal, Alabama

Schedule of State Compliance and Other Findings

For the Year Ended September 30, 2014
Ref.
No.

Finding/Noncompliance
Finding Continued:
It appears that none of the investment income that was earned during
the 2013-2014 fiscal year by the $1,000,000 endowment was allocated to the
accumulated Endowment interest available. Due to these matters it appears
that administration of the Endowment may not be in compliance with Act
Number 85-759.

Recommendation:
The University should develop procedures to ensure that the Endowment
Trust Fund for Eminent Scholars is administered in accordance with Act
Number 85-759, Acts of Alabama.
2014-003 Finding:
The Code of Alabama 1975, Section 36-7-20(a) states, the amount allowable
to a person traveling inside the State of Alabama in the service of the state or any
of its departments, institutions, boards, bureaus, commissions, councils,
committees, or other like agencies for expenses other than transportation may be
fixed by the Governor at not less than seventy-five dollars ($75) per day, and this
amount shall be uniform in operation as to all persons traveling within the state on
official business. The current allowable rate is $75.00 per day.
The University paid $13,309.29 for hotel accommodations and $1,270.35 for food
for twenty-three individuals, including seven Trustees, twelve University
employees, three students, and one unidentified individual to attend and represent
the University at the Magic City Classic in Birmingham. Based on documentation
provided, it was determined that the University payment for room charges
exceeded the allowable per-diem for the thirteen employees by $4,470.21. The
payment on behalf of the Trustees exceeded the allowable per-diem amount rate
by $1,834.36. The $1,270.35 paid to the Hotel for food appeared to increase the
amounts paid in excess of the allowable per-diem. A $397.16 charge on the hotel
invoice for a person that the University did not identify as an employee, trustee or
student would also appear to be unallowable. The total amount of $7,972.08 was
repaid with funds provided by the Alabama A&M Foundation before the
conclusion of the examination.
Recommendation:
The University should comply with the Code of Alabama 1975,
Section 36-7-20(a) and pay in-state travel in accordance with the allowable
per-diem rate.

Alabama A&M University

Normal, Alabama

Schedule of State Compliance and Other Findings

For the Year Ended September 30, 2014
Ref.
No.
Finding/Noncompliance
2014-004 Finding:
Proper supporting documentation should be obtained relating to all funds
disbursed. University policy allows for the issuance of travel advances to
employees for student group or team travel, individual student travel, athletic
recruiting and admissions recruiting. The policy requires that travel advances be
cleared within five days after the end date of travel, unused funds must be remitted
to the cashier, unused funds may not be retained for future travel, and travel
advances not cleared within 5 days will be payroll deducted.
Four travel advances were randomly selected during the test of expenditures. One
travel advance was not cleared within five days and was eventually used for future
travel. One travel advance was not cleared by submission of supporting
documentation until five months after the advance was issued. Supporting
documentation including a reconciliation of expenses and receipts was not
available for one of the advances. Seven additional travel advances relating to two
employees were selected for review. Complete supporting documentation was not
available for six of the additional advances selected. The seven cash advances that
were missing information were made from October through November of 2013
and totaled $3,876. Although the University indicated that the employee receiving
these advances expended $2,492.52 for team travel, paid receipts for the amount
expended could not be located. The University documented that the employee
returned $1,034.81 in March and April 2014. A total of $348.67 appears to be due
relating to these advances. There were no payroll deductions relating to the
improperly documented advances.
Recommendation:
The University should ensure that proper documentation is obtained relating to all
funds disbursed and require compliance with policies regarding travel advances.

Alabama A&M University

Normal, Alabama

Schedule of State Compliance and Other Findings

For the Year Ended September 30, 2014
Ref.
No.
Finding/Noncompliance
2014-005 Finding:
Proper controls should ensure that accountability is established and maintained for
all athletic tickets printed and sold or provided to individuals as complementary
tickets. The football game held on October 5, 2013, was selected for testing. The
following issues were noted:
According to documents reviewed, 2,711 tickets were provided to students
at no cost. The University was asked to provide a listing of the students
that received the tickets. The University did not retain a listing of the
students that received the tickets.
The University provided 1,716 complimentary tickets to various additional
individuals/organizations at no cost. The Universitys complimentary
ticket policy allows certain faculty/staff/executives to receive a prescribed
number of complimentary tickets at no cost. Based on the documents
reviewed it appears that certain employees received complimentary tickets
in excess of the amount prescribed by policy. The University was asked
for documentation that would authorize the provision of the additional
tickets and deviation from policy. We were not provided with any
documents authorizing the deviation from this policy. Based on the fact
that detailed records were not available and lack of adherence to prescribed
controls we were unable to verify that accountability was being maintained
for all complimentary tickets printed and issued to students and others.
Recommendation:
The University should develop controls to ensure that accountability is established
and maintained for all athletic tickets printed and sold or provided to individuals
as complementary tickets.

Alabama A&M University

Normal, Alabama

Schedule of State Compliance and Other Findings

For the Year Ended September 30, 2014
Ref.
No.
Finding/Noncompliance
2014-006 Finding:
Proper internal controls should ensure that accountability is established and
maintained for all funds received. The University charges all first year students an
$85 enrollment fee. This fee is not posted to the accounts of the individual
student, as are other charges, in order to establish accountability for funds to be
received. In addition, the University does not issue pre-numbered receipts to the
students when payment is received. The funds received are posted to a
miscellaneous revenue account in the general ledger. Since funds due are not set
up as a receivable and pre-numbered receipts are not issued to the students when
paid, we were unable to determine if accountability had been established for all
enrollment fees due from or paid by the students.
Recommendation:
The University should develop controls to ensure that accountability is established
and maintained for enrollment fees.
2014-007 Finding:
Attorney General Opinion 89-00166 states that the University may properly use
state funds to pay for meals and non-alcoholic refreshments during business
meetings related to University purposes when those meals and refreshments are
incidental to such meetings.
It appears that the University provided funds totaling $10,131.48 for two faculty
and staff Christmas parties during the examination period. These Christmas
parties may not be allowable since the parties do not appear they were incidental
to a University business meeting.
Recommendation:
The University should develop controls to comply with existing Attorney General
Opinions relating to meals.

Alabama A&M University

Normal, Alabama

Schedule of State Compliance and Other Findings

For the Year Ended September 30, 2014
Ref.
No.
Finding/Noncompliance
2014-008 Finding:
The University travel policy states, In-State travel is reimbursed on a per-diem
basis as established by state law. The rates are set according to the length of time
traveled and whether or not overnight stay is involved. Same day travel trips that
do not encompass overnight stay are eligible for the following meal
reimbursement: Less than six hours-$0.00, six to twelve hours-$11.25, and over
twelve hours-$30.00.
The Internal Revenue Service considers subsistence (meals and incidental
expenses) for trips less than 24 hours without overnight lodging as taxable travel
reimbursements. The reimbursement amounts are to be reported on a Form W-2.
It appears that the University failed to report non-overnight per diem amounts on
employees Form W-2 for 2014.
Recommendation:
The University should develop procedures to ensure that all payments to
employees are correctly included on federal tax reports as required.
2014-009 Finding:
In order to ensure that equipment items are properly safeguarded internal control
policies and procedures should ensure that accountability is maintained for all
capital assets. The University took 50 assets, including 45 vehicles, with a
historical value totaling $422,489 to a salvage yard during the 2011-2012 fiscal
year. The University did not remove the items from the general ledger until the
2013-2014 fiscal year. The University was asked to provide receipts from the
salvage yard for the vehicles delivered. The University did not locate receipts that
specifically identified all of the vehicles delivered. We were unable to determine
if accountability had been maintained for these vehicles.
Recommendation:
The University should develop controls to ensure that accountability is maintained
for all equipment items.

Alabama A&M University

Normal, Alabama

Schedule of State Compliance and Other Findings

For the Year Ended September 30, 2014
Ref.
No.
Finding/Noncompliance
2013-001 Finding:
The Alabama A&M University Trust for Educational Excellence, (Trust) was
established by the Federal Court as a result of the Knight-Sims vs. the State of
Alabama Remedial Decree. The Court mandated that the principal of any public
funds, gifts, grants, monies and property of every kind and character received by
the Trust shall be maintained in perpetuity as the corpus of said Trust with at least
25% of the annual income therefrom to be reinvested in the corpus of the Trust.
The 75% not required to be reinvested in the corpus could be used for specified
educational purposes at the Alabama A&M University.
During our examination, we reviewed the audited financial statements of the
Trust. The audit of the Trust for the fiscal year ended July 31, 2013 reflected
$2,757,044 in the Temporarily Restricted balance available to be expended for
specified educational purposes at the Alabama A&M University. The audit
of the Trust for the fiscal year ended July 31, 2014 showed a beginning
Temporarily Restricted balance available of $5,166,658.
It appears that
$2,409,614 of the July 31, 2013 permanently restricted corpus was reclassified as
funds available for expenditure by the University. Documentation for the
reclassification was requested and the University provided a worksheet compiled
to summarize Trust activity from its inception in 1998 to 2014. It was determined,
that amounts on the worksheet used to calculate the reclassification did not agree
with amounts reported on previously issued Trust audit reports.
In addition, a transfer in the amount of $1,240,638 was listed as an expense on the
Trust financial statements for the year ended July 31, 2014. The Universitys
September 30, 2014 financial statement identified this as a transfer to the
University. When documentation was requested, the Universitys Vice-President
for Business and Finance who is also the Alabama A&M Foundation Board
Treasurer stated that this amount was not a transfer to the University and should
not have been listed on the financial statements as such.
Since the $2,409,614 reclassification was not properly supported the University
may not have complied with the terms of the perpetual Trust.
Recommendation:
The University should develop controls to ensure that the Trust corpus is
maintained in perpetuity and administered in accordance with the instructions of
the Court.

Alabama A&M University

Normal, Alabama

Schedule of State Compliance and Other Findings

For the Year Ended September 30, 2014
Ref.
No.
Finding/Noncompliance
2013-003 Finding:
The Presidents August 2012 employment contract provided for base
compensation of $230,000 (increased to $236,400 in October 1, 2013). Since the
President was to maintain a residence off campus, the contract provided a $3,000
per month housing allowance. The contract provided an $800 per month car
allowance (increased to $1,000 in October 2013). The contract also allowed use
of Hillcrest, an on campus presidents residence, for and in connection with the
business of the University and the performance of his functions as President and
representative of the University, and other benefits.
IRS guidelines state that wages subject to federal employment taxes generally
include all pay you give an employee for services performed. It includes salaries,
vacation allowances, bonuses, commissions, and fringe benefits. A review of the
amounts reported on the Presidents W-2 for calendar year 2014 indicated that the
payments for the housing allowance and car allowance were not included in the
gross income reported. The housing allowance and car allowance were included
on a 1099. The University may not have complied with IRS guidelines by not
including all payments made to the President pursuant to his contract on his W-2.
Recommendation:
The University should develop procedures to ensure that all payments to
employees are correctly included on federal tax reports as required.
2013-010 Finding:
The Code of Alabama 1975, Section 35-12-71(11a) defined property as: money, a
check, draft, deposit, interest, or dividend. Section 35-12-76 requires the filing of
an annual report and remitting of the assets to the Unclaimed Property Program of
the Alabama Treasurer's Office. This report must be filed on or before November
1st of each year and should cover the 12 months preceding July 1st of that year. A
review of the outstanding check listing as of September 30, 2014 indicated that the
list included checks totaling $27,416.73 dated prior to July 1, 2011, which meet
the criteria for unclaimed property. The University was asked to provide any
documentation relating to remittances made or annual reports submitted relating to
the period under examination. Based on these inquiries it appears that the
University did not remit any funds to the Unclaimed Property Division during the
period from October 1, 2013 to September 30, 2014. Annual reports due
November 2013 and 2014 were not provided.
Recommendation:
The University should investigate old outstanding checks to determine their proper
disposition in a timely manner. Outstanding checks meeting the criteria of
unclaimed property should be remitted to the State Treasurer in accordance with
state law.
Alabama A&M University
Normal, Alabama

Schedule of State Compliance and Other Findings

For the Year Ended September 30, 2014
Ref.
No.
Finding/Noncompliance
2013-011 Finding:
The Code of Alabama 1975, Section 41-4-93 states, All unencumbered balances
of all appropriations shall revert to the State Treasury at the end of each fiscal year
and to the credit of the General Fund or special fund from which the appropriation
or appropriations were made. In order to determine if funds should be reverted,
the entity should monitor amounts received and expended. Act Number 2013-264,
appropriated $2,584,080 for Teacher In-Service Centers. Included in this amount
was $256,858 that was to be distributed to the University. Expenses in the amount
of $219,491.19 were recorded to the general ledger. The University determined
that $37,366.81 had not been expended or encumbered prior to the end of the
fiscal year. The $37,366.81 was reverted on October 6, 2015.
Recommendation:
The University should develop controls to monitor revenues and expenses
associated with appropriations to ensure compliance with the Code of Alabama
1975, Section 41-4-93. Amounts not expended or encumbered for their intended
purpose should be reverted as required, in a timely manner.
2008-002 Finding:
The software system used by the University accounts for ledger transactions and
balances relating to each fiscal year separately. Proper procedures require the
ending balances for each fiscal year be rolled into the subsequent year as
beginning balances. Internal controls should ensure all transactions are posted to
the general ledger and monthly reconcilements of the ledger balances to the
bank balances are done in a timely manner. All reconciliations for the months of
May 2014 and September 2014 were selected for testing.
Although
reconcilements had been prepared for all of these accounts, the following was
noted:
Ledger balances shown on the reconcilement and identified as balances in the
system for the fiscal years ending September 30, 2010, 2011, 2012, and 2013
totaled $6,923,618.78. These balances had not been rolled into the transaction
file for the 2014 fiscal year.
Reconciling items at September 30, 2014 totaling a net amount of
$2,455,153.07 were not recorded in the ledger. $2,726,197.93 of this amount
is made up of deposits to the bank that had not been entered into the ledger.
All of these deposits occurred prior to September 2013. This amount also
includes all 2013-2014 fiscal year transactions for one bank account totaling
$47,651.82 that were not recorded to the ledger.
Bank reconciliations were not prepared or approved in a timely manner with
some reconciliations taking 8 months to be prepared and reviewed.

Alabama A&M University

Normal, Alabama

Schedule of State Compliance and Other Findings

For the Year Ended September 30, 2014
Ref.
No.

Finding/Noncompliance

Recommendation:
The University should develop procedures to ensure bank reconciliations are
performed timely and all deposits and other reconciling items are entered into the
general ledger in a timely manner.
2007-002 Finding:
In order to ensure that equipment items are properly safeguarded internal
control policies and procedures should ensure that accountability is maintained for
all capital assets. The Universitys capitalization threshold for equipment is
$5,000. Asset numbers are assigned to each item purchased and a bar code
label is attached to the items. Policy states Inventory Control shall conduct a
campus-wide inventory survey on each room on campus that contains equipment
once a year. However, the accountability for equipment lies with the Budget Unit
Head, who is responsible for all property assigned to his or her area. Transfer
forms are required when equipment is moved from one department or unit to
another. If capital equipment is not located during the campus-wide survey, the
item is considered to be misplaced or lost. The Universitys policy is to earmark
the property as missing.
Inquiries and documents reviewed during the examination indicated that an
inventory of all equipment had not been completed.
A random sample of 50 items of equipment was selected from the University
equipment listing. University personnel were asked to locate the items for
physical observation. As of the end of fieldwork 5 (10%) of the 50 items
sampled had not been located.
The University deleted 159 capital equipment items totaling $1,424,569 during
the period from October 1, 2013 to September 30, 2014. Of this total, the
records provided indicated 66 items, totaling $512,058, were deleted due to
being categorized as lost. The documentation for 26 of the deletions was
selected for review in the examination. Of the 26 items selected, eight were
deleted because the documentation indicated they were lost.
Recommendation:
In order to ensure that accountability is maintained for capital equipment, the
University should develop and require adherence to control procedures that
adequately safeguard capital equipment.

Alabama A&M University

Normal, Alabama

Schedule of State Compliance and Other Findings

For the Year Ended September 30, 2014
Ref.
No.
Finding/Noncompliance
2005-005 Finding:
Internal controls should ensure that reported balances are reconciled to supporting
documentation and that accountability is established and maintained for capital
equipment items. The University financial statements showed equipment
deletions of $2,295,036 for the fiscal year ended September 30, 2014. The
University provided detailed listings to support the amounts shown as additions
and deletions to equipment for the fiscal year ended September 30, 2014. A
review of the deletions listing indicated that duplications may have occurred
overstating the detailed listing and the related $2,295,036 reported as deletions.
The University reviewed the supporting documentation provided and revised the
detailed reports for additions and deletions. The revision decreased both additions
and deletions by approximately $870,468. Based on the above it appears,
although the end balance was correct, the amounts reported on the University
financial statement for deletions to equipment were overstated by $870,468.
Recommendation:
Controls should be established to ensure that subsidiary ledgers are properly
maintained to support amounts reported in the financial statements.

Alabama A&M University

Normal, Alabama

This Page Intentionally Blank

Additional Information

Alabama A&M University

Normal, Alabama

Board Members and Officials

October 1, 2013 through September 30, 2014

Board Members
Hon. Robert Bentley, Governor

Term Expires
Ex-Officio

Hon. Kevin Ball,

(Beginning March 4, 2014)

2018

Hon. Ginger Harper,

(Beginning March 19, 2014)

2020

Hon. Norman Hill,

(Until January 31, 2014)

2014

Hon. John Hudson, III

2018

Hon. Perry D. Jones,

(Beginning March 4, 2014)

2020

Hon. Odysseus Lanier,

(Until January 31, 2014)

2014

Hon. James Montgomery, Sr.

2018

Hon. Neal G. Morrison,

(Beginning March 4, 2014)

2015

Hon. Hattie Myles,

(Beginning March 19, 2014)

2020

Hon. Richard Reynolds,

(Until January 31, 2014)

2014

Hon. Chris Robinson

2016

Hon. Andre Taylor

2016

Alabama A&M University

Normal, Alabama

Exhibit #1

Board Members and Officials

October 1, 2013 through September 30, 2014

Board Members

Term Expires

Hon. Velma Tribue

2018

Hon. Jerome Williams

2016

Officials
Dr. Andrew Hugine, Jr.

President

Mr. Clayton Gibson

Vice-President for
Business and Finance

Mr. Norman Jones

Comptroller

Alabama A&M University

Normal, Alabama

Exhibit #1