Auditors Question more than $620M in FAMU journal transfers/entries

FAMU unresponsive to auditors
In a letter dated May 11, 2006, addressed to FAMU Interim President Castell Bryant, state auditors asked the University to turn over “documentation/information” for nine items necessary to complete the University’s 2005 Financial Audit. Auditors pointed out that they’d originally requested these documents during a working conference with FAMU on April 26, 2006.






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Among the nine (9) items questioned are the following:

• For 40 journal entries totaling $85,206,212, documentation evidencing how the journal entry amounts were determined and the purpose of the entries is needed.


• For 29 journal entries totaling $56,450,202, documentation evidencing that the entries had been reviewed and approved by appropriate University employees prior to being posted to the accounting system is needed.

• For a journal entry that increased cash, and decreased contracts and grants receivable, by a cumulative amount of $2,452,033, the following information/documentation for certain components of the entry is needed:

a. Amounts collected per the Student Financial System (SFS) module, amounts collected as posted to the general ledger, and variances between SFS and general ledger for 722 deposit identification numbers shown on a schedule supporting a $1,866,855 cash increase.

b. An explanation for an $855,573 cash increase, and documentation evidencing that University personnel investigated and resolved this difference prior to posting this entry on the general ledger.

c. For a $8,296,507 cash decrease that was reportedly based on deposits recorded in the Contracts and Grants module that could not be matched with a deposit posted to the bank statement, documentation evidencing that the University investigated the entries to determine that such entries were made in error.

• The University used a calculated amount of $36,849,466 or cash collections in determining the contracts and grants receivable balance at fiscal year end, reportedly based on a comparison of amounts recorded in the general ledger with a list of deposits per bank statements maintained by the Assistant Director of Contracts and Grants. However, the amount of deposits per the Assistant Director’s list totaled $41,630,600, a difference of $4,781,134. An explanation of the difference is needed, as well as documentation supporting the methodology used in calculating the cash collections so that we can trace reported collections to deposits posted to bank statements and to the general ledger.

The auditors emphatically stated that the requested “documentation/information is required for us (auditors) to render an opinion on whether the University’s financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles.” They continued, “…unless such documentation supports amounts reported on the University’s financial statements or recorded in the University’s accounting records, and is presented in a manner that allows audit staff to readily determine the validity of the documentation/information, we may be unable to render an opinion on the University’s financial statements for fiscal year ended June 30, 2005.”

The letter from state auditors was copied to: Challis Lowe, Board Chair; Pam Duncan, Chair, BOT Audit Committee; Gerald Dunn, CFO, VP Administration and Fiscal Affairs; and Rufus Little, III, VP for Audit and Compliance.

In all, state auditors were question $620,909,120 worth of journal entries and transfers by FAMU. To date, FAMU still has not provided state auditors with the information that they requested. Auditors are proceeding to write their report without FAMU’s input.