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Auditor Logo Tom Schweich

Report No. 2011-47
August 2011

Complete Report
Findings in the audit of Northwest Missouri State University (NWMSU)


Auxiliary Services Contracts
NWMSU has not solicited competitive bids or proposals for auxiliary services for years, which is required by state law. Instead, NWMSU extended and amended its food services, facilities management, vending and bookstore contracts in exchange for approximately $1.5 million in donations or other payments to fund a stadium renovation. These amendments effectively guaranteed the continued renewal of the contracts, because NWMSU would otherwise be required to repay prorated portions of the payments. NWMSU also is not properly monitoring its food services and facilities management contracts. It does not check the accuracy of weekly sales reports or the calculation of commissions remitted, the facilities management joint review committee has not met since July 2008, and the facilities management services contractor has not submitted an annual report since fiscal year 2006.

Former President's Employment Contract
The former President's employment contract included payments which may have been in violation of the Missouri Constitution. Former President Dr. Hubbard was paid $224,762 for the year after he stepped down as President, he and his spouse received health and accident insurance for 2 years after his resignation as President, and NWMSU paid $8,930 to move his personal property and furnishings to his new residence in Kansas City. Dr. Hubbard also received $30,000 from the Northwest Foundation in March 2009 in recognition of his 25 years of service to NWMSU and to compensate him because he had not been provided a vehicle for 6 years, even though he had received $1,800 a month for a vehicle allowance. Dr. Hubbard's 2004 employment agreement also entitled him to an annual miscellaneous personal expense allowance of $12,500, and yet, in a 2 year period, Dr. Hubbard used his purchasing card to charge nearly $3,000 for meal expenses instead of paying for them from this personal expense allowance.

It appears Dr. Hubbard performed some services for NWMSU during the year after he resigned as President. It is not clear whether such services justified the salary and benefits provided. Moreover, the Missouri Constitution forbids payments to public officials in recognition of past services.

Northwest Foundation
In a 3 year period, NWMSU subsidized over $3.3 million of the operating costs of the Northwest Foundation, a not-for-profit corporation, in apparent violation of the Missouri Constitution. Moreover, NWMSU and the Northwest Foundation have not entered into a written agreement defining the objectives of any collaboration and the parties' respective obligations.

Contract Controls and Procedures
NWMSU needs to improve its controls and procedures for managing contracted services to avoid overpaying for services and to ensure services provided are in accordance with contract terms.

Room and Board Charges
NWMSU raised room and board rates in each of the last 4 years but does not maintain documentation of the annual reviews to show how rates are determined.

Program Operating Results and Related Subsidies
NWMSU incurs significant operating losses operating 3 programs for preschool to high school children. The NWMSU accounting system is not capable of separately reporting operating results for various programs and operating segments.

Real Estate Acquisitions
At the request of NWMSU officials, the Northwest Foundation purchased a parcel of property in 2004 for $475,000 and one in 2007 for $501,060, but there are no specific plans for their use, and no appraisals were conducted before the purchases to determine the fair market value of the parcels.

University-Owned Airplane
NWMSU should perform a cost-benefit analysis to determine whether the continued ownership of its airplane is justified, and NWMSU policy should require that the cost of alternative travel methods be considered prior to authorization of a flight on the university-owned airplane.

Cash Receipts
Internal controls over cash receipts need improvement. The Bursar's office does not record and restrictively endorse checks immediately upon receipt, receipts slips are not always given, and monies collected are not always deposited intact. Monies collected for football camps and student meal cards are not reconciled to amounts remitted to the Bursar's office, and tickets for performing arts and athletic events are not accounted for properly.

Capital Assets
Capital asset records are not accurate and contain assets that are likely no longer owned by NWMSU. A complete physical inventory of capital assets has not been conducted for at least 15 years, and no formal policy exists requiring notification when capital assets are disposed of or relocated.

Computer Security
NWMSU lacks an adequate disaster recovery plan, and supervisors do not periodically review user accounts to prevent unauthorized computer access.

In the areas audited, the overall performance of this entity was Fair.*

American Recovery and Reinvestment Act 2009 (Federal Stimulus)
NWMSU was awarded $4,049,576 from Federal Budget Stabilization - Education Funds, which it received and spent in the year ended June 30, 2010, to retain 76 current employees and create 8 new positions. NWMSU also received a $55,979 Recovery Act: Federal Work-Study Grant, which it received and spent in the year ended June 30, 2010, to create 6 new work-study positions.

*The rating(s) cover only audited areas and do not reflect an opinion on the overall operation of the entity. Within that context, the rating scale indicates the following:

Excellent:
The audit results indicate this entity is very well managed. The report contains no findings. In addition, if applicable, prior recommendations have been implemented.

Good:
The audit results indicate this entity is well managed. The report contains few findings, and the entity has indicated most or all recommendations have already been, or will be, implemented. In addition, if applicable, many of the prior recommendations have been implemented.

Fair:
The audit results indicate this entity needs to improve operations in several areas. The report contains several findings, or one or more findings that require management's immediate attention, and/or the entity has indicated several recommendations will not be implemented. In addition, if applicable, several prior recommendations have not been implemented.

Poor:
The audit results indicate this entity needs to significantly improve operations. The report contains numerous findings that require management's immediate attention, and/or the entity has indicated most recommendations will not be implemented. In addition, if applicable, most prior recommendations have not been implemented.

Complete Audit Report
Missouri State Auditor's Office
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