Audit shows Alabama A&M overpaid employee $7,200 following form error

NORMAL, Ala. (WHNT) — A state audit of Alabama A&M from 2019-2022 showed the university had several areas of non-compliance.

In the most recent audit of Alabama A&M University, filed in 2023, it says there were roughly seven areas of non-compliance, one of which resulted in the University violating state property laws.

Below is the full list of non-compliance areas, per the Alabama Department of Examiners of Public Accounts.

• 2022-001: The Athletic Department did not ensure accountability was established and maintained for all athletic tickets printed or sold.
• 2022-002: The University did not reconcile bank accounts in a timely manner or obtain proper approval of the reconciliations performed.
• 2022-003: The University failed to reconcile student accounts receivable and accounts payable subsidiary ledgers to the general ledger during the examination period.
• 2022-004: The University failed to ensure journal entries were properly documented, reviewed, and approved.
• 2022-005: The Winfred Thomas Agricultural Research Station circumvented the University’s purchasing process.
• 2022-006: The University failed to enter an employee’s salary correctly in the administrative system, resulting in an overpayment to the employee.
• 2022-007: The University did not comply with the Code of Alabama 1975, Section 35-12-76, in regard to remitting unclaimed property to the State of Alabama Treasurer’s Office.

2022-001

Based on the procedures performed and the documentation provided, the state audit determined that accountability for tickets printed and sold was not being maintained by the Athletic Department.

“Reconciliations provided were only for game day sales and were not
reconciled to the general ledger.

Discounts were provided to alumni, faculty and staff, and for tailgate packages
without documentation or a standard list of the types of discounts offered.

Neither a listing of complimentary tickets nor evidence of supervisory review
of the complimentary tickets issued could be provided.”

State Audit

Because of this, the recommendation was that the Athletic Department should develop policies and procedures that establish control to make sure accountability is maintained for all athletic tickets printed and sold or provided to individuals as complimentary tickets.

Following the audit, the University made some ticketing changes. “All ticketing is cashless,” the 2024 AAMU Homecoming Activities page says.

2002-002

All bank reconciliations for two months were selected for review during this audit period. During the review, the audit found that the University does not have policies requiring bank reconciliations nor procedures on how the reconciliations are to be performed. As a result, it could not be determined when the bank reconciliations were performed because there were no dates shown on the reconciliation. “However, general ledger printouts supporting the amounts on the bank reconciliations were dated between four and eleven months after the reconciliation month rather than in the month immediately following. In addition, none of the reconciliations had signatures noting there was a review or approval was performed, or a date it was conducted,” the audit said.

Per the state audit’s recommendation, it said the University should develop and implement procedures and policies to reconcile all bank accounts in a timely manner, as well as ensure all reconciliations are reviewed and approved.

2022-003

“The University has not established policies and procedures requiring subsidiary ledgers for student receivables and accounts payable to be reconciled to the general ledger. Consequently, the University did not prepare reconciliations of subsidiary ledgers to the general ledger for student receivables or accounts payable during the examination period. A review of the subsidiary ledgers indicated that the subsidiary ledgers did not agree with the amounts on the
financial statements or the general ledger. The aging report for accounts payable contained amounts owed that spanned multiple years, going back as far as 2010. The student receivable subsidiary listing indicated that the University was annually adding back and then removing balances that had previously been deemed uncollectible, and permission had been received from the Attorney General, in 2016, to write the balances off. A selection of other write-offs and
manual adjustments was selected for review. However, adequate documentation and approval for these adjustments could not be provided,” the audit said.

Based on these findings, the audit recommended that the University develop policies and procedures to reconcile subsidiary listings of accounts receivable and payable to the general ledger. In addition to this, adjustments are recommended to accounts that should have adequate supporting documentation and be approved.

2022-004

25 journal entries were tested for proper approval and documentation. Out of those 25, a total of seven times the journal entries were not properly approved and adequate supporting documentation could not be provided for six of the journal entries.

The recommendation from the audit is that the University implement procedures to ensure internal controls are in place that require journal entries to be properly documented and approved.

2022-005

Per University policy, a Purchase Order is a “formal document that authorizes the acquisition of goods or services. No individual has the authority to enter into purchase contracts or in any way financially obligate the University except the Director of Purchasing or Buyers. Purchases made that obligate the University without a Purchase Order are unauthorized.”

After review, the state audit found that the Winfred Thomas Agricultural Research Station allowed a company to haul grain to be sold without a contract. The company would obtain payment from the buyer of the grain in the form of a check. The company would then write a check to the Research Station for the amount of the payment less the cost of hauling the grain to the buyer. As a result of this, the audit said the Research Station did not obtain a purchase order as required by the Purchase Orders Policy and violated the University and Foundation Accounts Policies for Banking by making expenditures from receipts.

It also says the University may have also not complied with the Code of Alabama 1975, Section 41-16-20(a), which says the following:

“With the exception of contracts for public works whose competitive bidding requirements are governed exclusively by Title 39, all contracts of whatever nature for labor, services, work, or for the purchase or lease of materials, equipment, supplies, other personal property or other nonprofessional services, involving fifteen thousand dollars ($15,000) or more, made by or on behalf of any state department, board, bureau, commission, committee, institution, corporation, authority, or office shall, except as otherwise provided in this article, be let by free and open competitive bidding, on sealed bids, to the lowest responsible bidder.”

The state audit’s recommendation is that the Research Station ensure purchase orders are obtained for purchases and that purchases are not made with receipts.

2022-006

An employee who started with the University in March 2022 was given an incorrect hire form, the audit says. It says the supervisor prepared the form, but that the annual salary had an end date of September 30, 2022. However, the employment of said employee was not meant to end at that date, meaning the end date part of the form should have been left blank. Because of this, this employee was overpaid.

“The form was approved on eight different occasions by seven different approvers. Based on the hire form, the employee’s annual salary was entered into the accounting system to be paid over 7 months instead of 12 months, resulting in a payroll overpayment totaling $7,228.26,” the state audit said.

The state gave the University a recommendation of ensuring pay rates are entered into the system correctly and making sure employees are paid accurately.

2022-007

Per state law, the State Treasurer shall serve as the custodian of property or funds deemed abandoned under its provisions.

“Wages or other compensation for personal services, one year after the compensation becomes payable…” Code of Alabama 1975, Section 35-12-72(a)(14) says.

“All other property, three years after the owner’s right to demand the property or after the obligation to pay or distribute the property arises, whichever first occurs,” Code of Alabama 1975, Section 35-12-72(a)(18) says.

The audit says the University does not have a policy in place to review outstanding checks each
year to determine reportable unclaimed property. As a result, the University did not submit an unclaimed property report for fiscal year 2022.

Audit testing found 12 payroll checks totaling $7,125.38 were over one year old as of June 30, 2022, and 267 checks totaling $103,410.48 were over three years old as of June 30, 2022. Since the University did not review the outstanding checks, the audit said it could not be determined whether all or some of the checks should have been remitted as unclaimed property.

You can view the full audit by ADEPA below.