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Audit committee flags material weakness; board approves stricter P‑card controls
Summary
The CSCU audit committee reported a material weakness tied to limited technical accounting expertise and system migration issues; the board approved a tighter P‑card policy and directed continued oversight.
The audit committee reported to the Board of Regents that three audits by the auditors of public accounts identified issues prompting management and governance attention, and the committee described one material weakness in internal controls.
Audit Committee Chair Elise Wright said auditors raised concerns tied to a lack of technical accounting expertise during the FY24 financial close and the timing of key staff departures, which contributed to errors in fringe benefit accounting and delayed audits. Committee materials reported that the consolidation of 12 community colleges into one organization required system changes—customized reports used in prior processes were lost in a Banner migration—forcing staff to rely on manual workarounds. Grant Thornton issued clean (unmodified) audit opinions for the principal financial statements, but audit work identified control shortcomings and adjustments, including a footnote capitalization of interest and immaterial fringe accrual errors that were not corrected.
In response, the audit committee described steps to strengthen controls, including reducing the number of P‑card users, multi‑tiered review of P‑card transactions, transitioning to a new vendor, eliminating unilateral exceptions, mandatory training for P‑card users, and creating a policy committee to provide oversight. The committee said the effective date for policy changes was set for April 1, 2025, to allow institution-level policy drafting and training.
Regents discussed the P‑card matter at length. Several members advocated for a “massive reduction” in the number of cards, with one regent saying his personal target would be roughly 100 cards systemwide, though staff said immediate reduction to that level would be impractical. The board voted to adopt the new P‑card policy; proponents described it as stricter than current state policy.
The audit committee also recommended standing up an accounting governance function and increasing technical accounting capacity. Regents asked management to present a plan for accounting governance and technical staffing; staff said they would return with proposals in due course.
