Among the many findings from the recently released forensic audit, by an outside firm, on FAMU Athletics’ periodic use of auxiliary funds to stay afloat. The auditors specially focused on a two-year period (2017/18 and 2018/19) and found disturbing errors in the general ledger.
Among them were that in 2017/18 expenses were $50,000 greater than the approved amount and that an additional $100,000 in concessions revenue was recorded general ledger which was not contained in the final board-approved budget.
To their credit University auditors had previously reported “a significant deficiency regarding supporting documentation and not reconciling” issues in the athletic budget.
Auditors dug deeper to try to gain an understanding on how the budget was created.
Budget numbers seemingly pulled out of the air
Interviews of “key personnel” by the outside auditor revealed that University management, and the Board, relied on specific budget-to-actual and projections.
Auditors found “several instances” where the projections calculated, in the projections tab, were based solely on management judgement. What they could not determine is what the (projection) numbers represented or their source. Said another way, without supporting documentation, auditors were of the opinion that management were just pulling numbers out of the air.
Additionally, auditors “identified instances where fields in the actual and/or projection columns were blank where a balance would have been expected.” Further, they noted that there was “a strong potential for over estimation of revenue as the persons responsible for developing the budget may be subject to bias created by their desire for the athletic programing to succeed, inflating their perception of the revenue that could be potentially generated.”
In essence, there was no evidence that the budget was based on accurate historical information or informed needs-based assessments of expected operations. Stated another way, FAMU’s athletic budgets were based on risky assumptions, that more often than not proved false. And, with an anemic development arm it forced financial officials to borrow unauthorized auxiliary funds to close the books at year-end.