Department of Examiners of Public Accounts Report On Alabama A&M

Report on the
Alabama A&M University

Normal, Alabama
October 1, 2008 through September 30, 2013
Filed: March 13, 2015
Department of
Examiners of Public Accounts
50 North Ripley Street, Room 3201
P.O. Box 302251
Montgomery, Alabama 36130-2251
Website: www.examiners.alabama.gov
Ronald L. Jones, Chief Examiner

15-216
State of Alabama
Department of

Ronald L. Jones
ChiefExaminer
P.O. Box 302251, Montgomery, AL 36130-2251

50 North Ripley Street, Room 3201
Montgomery, Alabama 36104-3833
Telephone (334) 242-9200
FAX (334) 242-1775
Honorable Ronald L. Jones

Chief Examiner of Public Accounts
Montgomery, Alabama 36130
Dear Sir:
Under the authority of the Code of Alabama 1975, Section 41-5-21, we submit this report on
the results of the examination of Alabama A&M University for the period October 1, 2008
through September 30, 2013.
Respectfully submitted,
Sworn to and subscribed before me this
the Q./o day of .,j-~ , 2012_.
Audxr.L
G~
Notary Public
Sworn to and subscribed before me this
the .(2JQ_ day ofSe~, 2015._.
~c~
Notary
rb
15-216
Publi~
Hal Bradsher
fPublic Ace
Table of Contents
Page
Summary
Contains items pertaining to state legal compliance, University operations

and other matters.
Comments
Contains information pertaining to the history of the University.

Schedule of State Compliance and Other Findings
Contains detailed information about findings pertaining to state legal

compliance and other findings.
Additional Information
Provides basic information related to the University.

Exhibit #1
Board Members and Officials a listing of the Board

members and University officials.
_________________________________________

Normal, Alabama
Department of

SUMMARY
Alabama A&M University (the University) is a state land-grant university, which provides
opportunities for Bachelor, Masters and Doctoral degrees in a number of different programs.
The University receives funding from state, local, private and federal sources in addition to
student tuition, fees and auxiliary activities. The University expends these resources for
education and general purposes, auxiliary activities, research, public service, student services,
institutional support, capital acquisitions and retirement of indebtedness.
The University is a part of the Alabama Cooperative Extension System, the outreach
organization for the land grant function of Alabama A&M University and Auburn University.
The Thomas Agricultural Research Station at Hazel Green is a part of the University and
provides outdoor laboratory space for agricultural research. Farm support buildings for plant,
soil and animal sciences research are also available for use by the research scientists and
students. The University is a participant in the states agricultural research program
administered by the Alabama Agricultural Experiment Station, headquartered at Auburn
University.
The State Black Archives, Research Center and Museum is located on the Universitys
campus. The Center serves the state by collecting and preserving source materials on the
contributions, achievements and general experiences of black Americans, providing
bibliographic information to state agencies, and encouraging the use of collected materials in
state educational services. Additional information on the history of the University is included
in the Comments section of this report.
The firm of Banks, Finley, White & Co., Certified Public Accountants conducted the financial
audit for the fiscal years ended September 30, 2009 through September 30, 2013.
This report presents the results of an examination of the University and a review of
compliance by the University with applicable laws and regulations of the State of Alabama in
accordance with the requirements of the Department of Examiners of Public Accounts under
the authority of the Code of Alabama 1975, Section 41-5-14.
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Findings are numbered and reported by the examination period in which the finding originally
occurred.
The following instances of noncompliance with state laws and regulations and other matters
were found during the examination as shown on the Schedule of State Compliance and Other
Findings and are summarized below.
CURRENT FINDINGS
2013-001 The University did not ensure that the Trust for Educational Excellence was
administered in accordance with the Courts instructions.
2013-002 Procedures did not ensure that entries to the payroll files were properly
reviewed resulting in overpayments to employees.
2013-003 Procedures did not ensure that support for incentive payments to the President
were properly reviewed prior to payment.
2013-004 A payment for reimbursement of moving expenses was not properly supported.
2013-005 Change Orders and record retention practices relating to the Wellness Center
construction project may not be in compliance with the Code of Alabama and applicable
regulations.
2013-006 The University may not have complied with the competitive bid law relating to
equipment purchased for the Wellness Center.
2013-007 The University may not have complied with the Code of Alabama by returning a
bid bond to a general contractor that submitted the lowest bid on the Thigpen Hall project
without proper documentation to support this action.
2013-008 The University may not have complied with the Code of Alabama by negotiating
a contract on the Thigpen Hall renovation project and by processing a Change Order to add
work not in the scope of the bid specifications.
2013-009 The University failed to properly safeguard assets by operating without fidelity
bond coverage for over two years.
2013-010 The University may not have complied with the Code of Alabama by not
remitting unclaimed property to the State Treasurer.
2013-011 The University may not have complied with appropriations acts by not sending
earmarked funds to Miles College as prescribed by the applicable appropriations acts.
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2013-012 An employee of the University may not have complied with the ethics law by
requisitioning purchases from a company with which she has ties.
2013-013 The University procedures did not ensure that travel payments to employees were
made in accordance with the Code of Alabama.
2013-014 The University did not consistently reimburse Board members for expenses in a
manner which complies with the Code of Alabama.
UNRESOLVED PRIOR FINDINGS
2008-002 We were unable to determine if the Universitys operating bank account and other
accounts were being reconciled to the general ledger.
2007-002 A complete physical inventory of capital assets has not been performed in
recent years.
2005-006 Documentation of revenue collected for athletic events was not retained and
amounts collected were not properly accounted for.
2005-005 Fixed asset subsidiary accounts did not support amounts presented in the
financial statements.
The following officials/employees were invited to an exit conference to discuss the
findings and recommendations appearing in this report: Dr. Andrew Hugine, Jr., President;
Dr. Kevin Rolle, Executive Vice-President/Chief Operating Officer; Mr. Clayton Gibson,
Vice-President for Business and Finance; and Mr. Norman E. Jones, Assistant Vice-President
for Finance and Comptroller. The following individuals attended the exit conference:
Dr. Andrew Hugine, Jr., President; Dr. Kevin Rolle, Executive Vice-President/Chief
Operating Officer; Mr. Clayton Gibson, Vice-President for Business and Finance;
Mr. Norman E. Jones, Assistant Vice President for Finance and Comptroller; and
Dr. Malinda Gilmore, ACE Fellow 2014-2015. Representing the Department of Examiners
of Public Accounts was Mr. Hal Bradsher, Assistant Director of Education Audits and
Ms. Lola Fuqua-Haney, Examiner.
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Department of

COMMENTS
The University was organized in 1875 as the result of a bill passed in the State Legislature in
1873 and through the continued efforts of its first Principal and President, William Hooper
Councill, an ex-slave. The school opened on May 1, 1875, as the Huntsville Normal School
with an appropriation of $1,000 per year. It had 61 students and two teachers.
Industrial education was introduced around 1878. It attracted wide attention and the school
was assisted financially by the Slater and Peabody Funds and by private contributors. The
work in industrial education was so successful that the State Legislature authorized the name
to be changed to the State Normal and Industrial School at Huntsville. The appropriation
was increased by the State to $4,000 per year.
In 1891, the school became the recipient of a part of the Federal Land-Grant Fund provided
by an act of Congress which was approved on August 30, 1890. The purpose of this fund was
to provide further training in agriculture and mechanical arts in the various states at the
college level.
The name of the school was changed again to The State Agricultural and Mechanical
College for Negroes, and a new location was provided at Normal, Alabama, where the
school would have ample room for the development of its trades and agricultural programs.
In 1919, the institution became a junior college, and its name was changed to The State
Agricultural and Mechanical Institute for Negroes.
In 1939, by authority of the State Board of Education, the Institute was permitted to offer
work on the senior college level. On January 14, 1948, the name was again changed to the
Alabama Agricultural and Mechanical College. On June 26, 1969, the Alabama State
Board of Education adopted a resolution changing the name of the institution to Alabama
Agricultural and Mechanical University.
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Schedule of State Compliance

and Other Findings

For the Years Ended September 30, 2013
Ref.
No.
2013-001
Finding/Noncompliance
Finding:
The Alabama A & M University Trust for Educational Excellence, ("Trust") was
established by the Federal court as a result of the Knight-Sims vs. the State of
Alabama Remedial Decree. The court mandated that the principal of any public
funds, gifts, grants, monies and property of every kind and character received by
the Trust shall be maintained in perpetuity as the corpus of said Trust with at least
25% of the annual income therefrom to be reinvested in the corpus of the Trust.
The 75% not required to be reinvested in the corpus could be used for specified
educational purposes at Alabama A&M University.
During our examination, we reviewed the audited financial statements of the
Trust. The audited financial statements for the fiscal year ended July 31, 2012
showed that none of the annual income totaling $1,377,644.00 was reinvested in
the corpus. The $1,377,644.00 in income and $2,673,737.00 of the balance from
the permanently restricted corpus of the trust was transferred to the University.
The financial statements for the fiscal year ended July 31, 2013 also indicated that
none of the annual income totaling $4,033,576.00 was reinvested in the corpus.
A member of the Board of Alabama A&M University raised concerns about this
practice. Documents furnished to us indicate that the firm who audited the Trust
issued a Statement to the President Pro-Tempore of the University Board of
Trustees indicating that it was their belief that the Court ordered stipulations no
longer applied. The University officials, the Executive Director of the Trust for
Educational Excellence, and other Board members also received a copy of this
Statement. Since 25% of the income was not reinvested in the corpus during
these two years and $2,673,737.00 was removed from the corpus, the University
may not have complied with the terms of the perpetual Trust.
The Trust is administered by the Alabama A & M Foundation (Foundation). The
Foundation By-Laws state that biannual meetings are to occur in June and
October of each year. A review of the minutes provided for the Foundation show
that only four meetings occurred during the five year period from October 1, 2008
through September 30, 2013. A quorum was present in only three of these
meetings.
Recommendation:
The University should develop controls to ensure that the Trust corpus is
maintained in perpetuity and income is reinvested in accordance with the
instructions of the Court.

Normal, Alabama

Ref.
No.
2013-002
2013-003
Finding:
Internal controls should ensure that supporting documentation for changes
to the electronic payroll file are properly reviewed prior to entering the
information into the payroll system. The examination included a review of
payroll payments to 30 employees. Based on our review it appeared that 6 of the
employees had received overpayments of various amounts totaling $4,558.76 in
the 2009-2010 and 2010-2011 fiscal years. The University initiated procedures to
obtain reimbursement for the overpayments due and obtained $277.55 from 2 of
the employees. It was determined that $3,401.87 of the total still due was owed
by persons no longer employed by the University.
Recommendation:
Procedures should be developed to ensure that changes to the payroll file are
properly reviewed and supported prior to being entered into the payroll system.
Finding:
The Presidents July 2009 employment contract provided for base compensation
of $230,000. Since the President was to maintain a residence off campus, the
contract provided a $3,000 per month housing allowance. The contract also
provided an $800 per month car allowance (increased to $1,000.00 in October
2013), allowed the use of Hillcrest, an on campus presidents residence, for and in
connection with the business of the University and the performance of his
functions as President and representative of the University, and other benefits.
The contract provided that the President shall have earned incentive pay in each
year in which certain benchmarks were reached, including the following.
1. 5% of his University salary in any year in which the first year student
enrollment increases by 15%.
2. 5% of his University salary in any year in which he raises individual and
corporate donations to the University in an amount in excess of
$3,500,000.
On October 9, 2012, the President submitted a letter to the President Pro Tempore
of the Board requesting incentive pay of 15% totaling $34,500 based on an
increase in enrollment from Fall 2009 to Fall 2010 as well as donations of
$4,058,000 in fiscal year 2009-2010 and $3,812,703 in fiscal year 2011-2012.
On October 15, 2012, the President Pro Tempore of the Board prepared a letter to
the Vice-President for Business and Finance authorizing the payment of the
incentive.

Normal, Alabama

Ref.
No.
Finding Continued:
Both letters were forwarded to all members of the Board of Trustees. On
November 30, 2012 the President sent a letter to the Vice-President for Business
and Finance requesting that the incentive be paid to the Alabama A&M
Foundation in two $17,250.00 installments in the 2012 and 2013 calendar years.
This letter also requested that the Foundation credit the funds to the account of
the President and his wife. The President was to instruct the Foundation on
how the funds should be distributed in separate correspondence. The University
disbursed $17,250 to the Alabama A&M Foundation in December 2012 and an
additional $17,250 in May 2013 to satisfy the incentive request. Of the donation
amounts claimed in these years $3,385,000 and $626,992 respectively were
from the company holding the food service contract at the University. These
amounts were given in consideration of the Universitys agreement to enter into a
contract extending through June 2020, and not donations. Since these amounts
are not considered to be donations, $23,000 (2/3 of the incentive) was not
actually earned. Based on a request from the President after this was brought
to his attention, the Foundation refunded the $23,000.00 to the University in
January 2015.
IRS guidelines state that wages subject to federal employment taxes generally
include all pay you give to an employee for services performed. It includes
salaries, vacation allowances, bonuses, commissions, and fringe benefits. A
review of the amounts reported on the Presidents W-2 for calendar year 2012 and
2013 indicated that the cash payments for the housing allowance, car allowance,
and incentive were not included in the gross income reported. The housing and
car allowances were included on 1099s provided during the examination. The
$34,500.00 incentive was not reported. The University may not have complied
with IRS guidelines by not including all payments made to the President pursuant
to his contract on his W-2.
Recommendation:
The University should develop procedures to ensure that all incentive payments
are properly supported. Procedures should also ensure that all payments to
employees are included on federal tax reports as required.

Normal, Alabama

Ref.
No.
2013-004
2013-005
Finding:
The contract for the employment of the Chief of Staff dated August 14, 2009
allowed for payment of reasonable moving expenses. A payment request was
submitted on October 9, 2009 to initiate the payment of $6,534.55 to this
employee based on an invoice from a moving company that showed a scheduled
move date of October 27, 2009 and a list of items moved. Information in the
footer of the invoice indicated it was produced in June 2010. Due to the
disparity in the dates additional procedures were taken to verify the validity of
this invoice. The phone number on the invoice was called and it was determined
that it was in error and was not the number of the moving company. Contact was
made with the company and a copy of the invoice was sent to the company for
verification purposes. According to the company representative the invoice was
not produced by the company and the Chief of Staff was not in their database.
Based on the above the Chief of Staff repaid the $6,534.55 to the University on
January 30, 2015.
Recommendation:
Reimbursement requests should be properly supported.
Finding:
The Code of Alabama 1975, Section 39-2-2, requires awarding authorities to
advertise for sealed bids before entering into any contract for a public works
project involving an amount in excess of fifty thousand dollars ($50,000). The
Code of Alabama 1975, Section 41-16-21, states that the educational and
eleemosynary institutions shall let by free and open competitive bidding on sealed
bids to the lowest responsible bidder all contracts of whatever nature for labor,
services or work or for the purchase or lease of materials, equipment, supplies, or
other personal property involving fifteen thousand dollars ($15,000) or more. The
Records Disposition Authority for Public Universities of Alabama requires
that capital improvements contract records be retained for six years after the
expiration of the applicable capital improvement contract. Public Works contracts
are sometimes adjusted during the course of construction due to unforeseen
circumstances not contemplated by the owner when bid specifications were
prepared. These adjustments are referred to as change orders.
The Attorney General, in Opinion 79-313, set out the types of change orders to be
allowed on public works projects as follows:
Minor changes for a total monetary value less than required for
competitive bidding;
Changes for matters relatively minor and incidental to the original
contract necessitated by unforeseeable circumstances arising during the
course of the work;

Normal, Alabama

Ref.
No.
Finding Continued:
Emergencies arising during the course of the work on the contract;
Changes for alternates provided for in the original bidding where there is
no difference in the price of the change order from the original best bid on
the alternate;
Changes of relatively minor items not contemplated when the plans and
specifications were prepared and the project was bid which are in the
public interest and which do not exceed 10% of the contract price.
The opinion also required that a signed statement from the architect be attached to
each change order containing the following:
A statement of what the change order covers and who instituted the change
order and why it is necessary or desired;
There must be a statement stating the reasons for using the change order
method rather than competitive bids;
There must be a statement that all prices have been reviewed and found
reasonable, fair and equitable and recommending approval of the same;
The local owner shall either endorse the architects statement and
recommendations or submit a separate statement covering the foregoing
items.
The Alabama Building Commission has developed forms to be used to process
project changes. These forms require the Owner and Architect to supply
information needed to fulfill the requirements of Attorney General Opinion 79-313
that lists the guidelines relating to Change Orders.
The Contract for the construction of the Wellness Center was entered into on
May 1, 2008 based on the lowest bid for $12,138,000. After the final Change
Order dated April 21, 2010, project changes had added $1,338,434.89 to and
deducted $101,940.70 from the cost of work on the contract. The following was
noted relating to change orders reviewed on this project.
Documentation available at the University relating to change orders did not
include the statements from the architect and owner required to be attached
to each change order as required by Attorney General Opinion 79-313.
The total changes exceeded the 10% mentioned in Attorney General
Opinion 79-313.

Normal, Alabama

Ref.
No.
Finding Continued:
As relates to Change Order #4, only the unsigned Change Order form was
available for review. No documentation was available to support the cost
added. The form provided indicated that this change order added
$63,893.75 to the contract when $110,314.24 was apparently added to the
contract by this Change Order based on the cumulative total carried
forward to Change Order #5. Failure to retain these construction contract
documents does not comply with the Records Disposition Authority for
Public Universities of Alabama.
Bid specification required contractors to include allowances in their bids.
In accordance with contract documents, allowances that are not used are
credited back to the owner. Change Order #1 dated November 8, 2008
included the addition of $465,323.00 for fireproofing work which was
partially funded with the $250,000.00 allowance for a net increase of
$215,323.00. This addition included $37,308 for overhead and profit of
the general contractor. Since an allowance for fireproofing was included in
the bid specifications, this work was contemplated when the bid
specifications were prepared and may not be an allowable change
according to Attorney General Opinion 79-313. Failure to subject this
work to competitive bids may not comply with the Code of Alabama 1975,
Section 39-2-2.
Change Order # 3 dated July 7, 2009 included an addition of $92,672.75
for physical education equipment. This addition included $12,087.75 for
overhead and profit of the general contractor. This equipment should have
been bid under the Code of Alabama 1975, Section 41-16-21 and not as
part of the public works contract in order to avoid the overhead and profit
paid to the general contractor.
Recommendation:
The University should develop controls to ensure compliance with the Records
Disposition Authority for Public Universities of Alabama, the Code of
Alabama 1975, Section 39-2-2 and Section 41-16-21; and Attorney General
Opinion 1979-313.

Normal, Alabama

Ref.
No.
2013-006
Finding:
The Code of Alabama 1975, Section 41-16-21, states that the educational and
eleemosynary institutions shall let by free and open competitive bidding on sealed
bids to the lowest responsible bidder all contracts of whatever nature for labor,
services or work or for the purchase or lease of materials, equipment, supplies, or
other personal property involving fifteen thousand dollars ($15,000) or more.
The Records Disposition Authority for Public Universities of Alabama
requires that capital improvements contract records be retained for six years after
the expiration of the applicable capital improvement contract.
Based on invoices from the architect and other documents relating to the
Wellness Center project it was determined the University had entered into an
agreement with the architect allowing the architect to hire a company to serve as a
Program Manager in accordance with a revised Furniture Fixtures and Equipment
(FF&E) completion package. Project budget information provided indicated that
this company was to receive $390,295.00. According to documentation reviewed
the University had provided $355,345.00 to the architect relating to the program
management service as of August 12, 2009. The University was asked to provide
a copy of the agreement with the architect relating to the program management
services. The agreement could not be located. During the 2009-2010 fiscal year
the University purchased $329,192.53 in fitness equipment for the facility. The
University was asked to provide bid documentation relating to this purchase.
According to the University this bid was handled by the Program Manager. The
bid tabulation and other documents relating to this purchase could not be located
so we were unable to determine if the University complied with the competitive
bid law in purchasing this equipment.
Recommendation:
The University should develop controls to ensure compliance with the
Records Disposition Authority for Public Universities of Alabama and the
Code of Alabama 1975, Section 41-16-21.

Normal, Alabama

Ref.
No.
2013-007
Finding:
The Code of Alabama 1975, Section 39-2-11 states that if the low bidder on a
Public Work contract discovers a mistake in his bid rendering a price
substantially out of proportion to that of other bidders, the low bidder may seek
withdrawal of its bid without forfeiture upon written notice to the awarding
authority within three working days after the opening of bids whether or not
award has been made. If the low bidder offers clear and convincing documentary
evidence as soon as possible, but no later than three working days after the
opening of bids, that it made such a mistake due to calculation or clerical error, an
inadvertent omission, or a typographical error, the awarding authority shall permit
withdrawal without forfeiture. The decision of the awarding authority shall be
made within 10 days after receipt of the low bidder's evidence or by the next
regular meeting of the awarding authority. In no event shall a mistake of law,
judgment, or opinion constitute a valid ground for the withdrawal of a bid without
forfeiture.
The University took bids for work to be done on Thigpen Hall. According to the
bid tabulation dated September 22, 2009, the lowest bid on the project was
$780,093.00 to a company that had posted the required $10,000.00 bid bond. The
low bidder withdrew his bid after the bid opening and retained his $10,000.00 bid
bond. The project was awarded to the next lowest bidder for $905,100.00. The
University did not obtain convincing documentary evidence that the low bidder
made a mistake due to calculation or clerical error, an inadvertent omission, or a
typographical error that caused his bid to be lower than the next lowest bidder.
Failure to obtain and retain this documentation may not comply with the Code of
Alabama 1975, Section 39-2-11.
Recommendation:
The University should develop controls to ensure compliance with the Code of
Alabama 1975, Section 39-2-11.

Normal, Alabama

Ref.
No.
2013-008
Finding:
The Code of Alabama 1975, Section 39-2-6 (b) states that if no bids or only one
bid is received at the time stated in the advertisement for bids, the awarding
authority may advertise for and seek other competitive bids, . . . the awarding
authority may negotiate for the work through the receipt of informal bids not
subject to the requirements of this section. Where only one responsible and
responsive bid has been received, any negotiation for the work shall be for a price
lower than that bid.
The University took bids for a project to perform domestic water pipe
replacement and HVAC renovation on Thigpen Hall. According to the bid
tabulation dated September 22, 2009, bids were received from eight general
contractors. The lowest bidder withdrew his bid and the next lowest bidder
submitted a $1,004,100.00 bid. The University negotiated with this bidder in
December 2009 and removed certain portions of the project to bring the cost
down to the renovation budget. The negotiations removed items of work valued
at $99,000.00 and the contract was entered into for $905,100.00. The $99,000.00
included the deletion of 18 HVAC fan coils for a reduction of $30,000.00. Since
there was more than one bidder, negotiation of the contract price may not be in
compliance with the Code of Alabama 1975, Section 39-2-6 (b).
On May 31, 2011, the University processed a Change Order that increased the
project by $282,392.15. The changes included:
The installation of flooring for $124,576.00.
The addition of 15 HVAC fan coils for $55,830.00.
Light fixtures and switches in the amount of $101,986.15.
Adding costs to a project that are for items not in the original scope and at prices
that appear to exceed the bid amount may not comply with guidance issued by the
Attorney General in Opinion 79-313, which sets out the types of change orders to
be allowed on public works projects.
Recommendation:
The University should develop controls to ensure compliance with the Code of
Alabama 1975, Section 39-2-6(b), and Attorney General Opinion 1979-313.

Normal, Alabama

Ref.
No.
2013-009
2013-010
Finding:
In order to safeguard University assets controls should ensure that adequate
fidelity bond coverage is maintained for all employees that handle cash or
approve the disbursement of funds. It was noted that the Universitys fidelity
bond coverage lapsed on May 10, 2012. The University did not have fidelity
bond coverage on its employees from May 10, 2012 to August 13, 2014.
Recommendation:
The University should develop procedures to ensure that fidelity bond coverage is
maintained to adequately safeguard University assets.
Finding:
Under the Uniform Disposition of Unclaimed Property Act of 2004 property is
presumed abandoned if it is unclaimed by the apparent owner within the time set
forth in the Code of Alabama 1975, Section 35-12-70 through 35-12-96. The
Code of Alabama 1975, Section 35-12-71(11)(a) defines property as including
but not limited to any of the following: money, a check, draft, deposit, interest, or
dividend. The University had old outstanding checks totaling $91,936.22, on the
Regions bank reconciliation. The check dates ranged from September 29, 2010
through June 27, 2013.
Recommendation:
The University should investigate old outstanding checks to determine their
proper disposition. Outstanding checks meeting the criteria of unclaimed
property should be remitted to the State Treasurer in accordance with state law.

Normal, Alabama

Ref.
No.
2013-011
Finding:
The Code of Alabama 1975, Section 41-4-93, states All unencumbered balances
of all appropriations shall revert to the State Treasury at the end of each fiscal
year and to the credit of the General Fund or special fund from which the
appropriation or appropriations were made. The University received
appropriations from the Education Trust Fund for the Miles College Consortium
for fiscal years 2008-2009 and 2009-2010 in the amount of $403,394.00 and
$362,332.00 respectively. The documentation provided as of the date of this
report indicates that approximately $8,067.88 of the 2008-2009 appropriation and
all of the 2009-2010 appropriation were not forwarded to Miles College as of the
end of the respective fiscal years. The funds for the 2009-2010 fiscal year were
re-appropriated for use in the 2010-2011 fiscal year. In February 2011, Miles
College submitted a request for the 2009-2010 appropriation in the amount of
$359,229.00, which is $3,103.00 less than the amount received by the University
for Miles College for the 2009-2010 fiscal year. The $359,229.00 amount on this
February 2011 request ties to the 2010-2011 appropriation for Miles which was
sent to Miles College in October 2011. Based on the documentation reviewed it
appears that the University should send the $8,067.88 and $362,332.00 relating to
the 2008-2009 and 2009-2010 respectively to Miles College in order to satisfy the
legislative intent.
Recommendation:
The College should develop procedures to ensure that appropriations are
expended in accordance with the applicable appropriations act.

Normal, Alabama

Ref.
No.
2013-012
Finding:
The Code of Alabama 1975, Section 36-25-5, states that no public employee shall
use or cause to be used his or her official position or office to obtain personal gain
for himself or herself, or family member of the public employee or family
member of the public official, or any business with which the person is associated
unless the use and gain are otherwise specifically authorized by law. The Code of
Alabama 1975, Section 41-16-82, requires the disclosure statement to be
completed and filed with all proposals, bids, contracts, or grant proposals to the
State of Alabama in excess of $5,000. Pursuant to the Code of Alabama 1975,
Section 41-16-84 (b), the State of Alabama shall not enter into any contract or
appropriate any public funds with any person who refuses to provide information
as required.
The University made 12 disbursements totaling $41,861.55 to the Alabama
Women in Agriculture, Inc. (AWIA) during the period under examination. An
employee of the University is the registered agent for this entity. Two of these
disbursements were reviewed during the examination. For one of these
disbursements, in the amount of $5,004.00, this employee issued the requisition
requesting the purchase order to this entity, and endorsed the check issued by the
University in payment for catering services received. This may not comply
with the Code of Alabama 1975, Section 36-25-5. Since no disclosure form
was obtained from the AWIA prior to issuing the $5,004.00 purchase order,
the University may not have complied with the Code of Alabama 1975,
Section 41-16-82.
Recommendation:
The University should develop controls to ensure compliance with the applicable
ethics laws and ensure that disclosure forms are obtained prior to entering into
purchase contracts in excess of $5,000.00.

Normal, Alabama

Ref.
No.
2013-013
Finding:
The Code of Alabama 1975, Section 36-7-20 states that the amount allowable to
a person traveling inside the State of Alabama in the service of the state or
any of its departments, institutions, boards, bureaus, commissions, councils,
committees, or other like agencies for expenses other than transportation may be
fixed by the Governor at not less than seventy-five dollars ($75) per day. The
current rate fixed by the governor is $75.00 per day. The Code of Alabama 1975,
Section 36-7-22 states that persons traveling on official business in privately
owned vehicles shall receive an amount equal to the mileage rate allowed by the
Internal Revenue Code for income tax deductions per mile in lieu of actual
expenses for transportation.
During the 2009-2010 fiscal year an employee of the University made a
two day in-state trip and was reimbursed $150.00 per diem plus $119.00
for a hotel room and $16.00 for valet parking. The payment of the
$135.00 for the hotel and valet parking caused the reimbursement to
exceed the amounts fixed by the governor. The $135.00 was not repaid by
the employee.
During the 2012-2013 fiscal year an employee of the University flew to
Seattle and claimed both taxi expenses and personal mileage in Seattle on
her travel claim. The personal mileage was not justified. Excess mileage
was also claimed for the commute to the local airport in Huntsville. Total
excess mileage claimed in the amount of $93.62 was repaid by the
employee prior to the completion of our examination.
Recommendation:
Controls should be developed to ensure that travel reimbursements are limited
to the amounts allowable in accordance with the Code of Alabama 1975,
Section 36-7-20 and Section 36-7-22.

Normal, Alabama

Ref.
No.
2013-014
Finding:
The Code of Alabama 1975, applicable to Alabama A&M University addresses
trustee expense reimbursement in two sections. Section 16-49-20 (a) (8) states
that no trustee shall receive any pay or emolument other than his or her actual
expenses incurred in the discharge of his or her duties. Section 16-49-28 states
that the certificate of the president of the board or, in his absence, of the president
Pro-Tempore, countersigned by the secretary, shall entitle the several trustees and
ex officio members to the payment of their actual expenses incurred in the
discharge of their duties as such trustees, in conformity with regulations
governing travel expenses of state officials. The Code of Alabama 1975,
Section 36-7-20 states that the amount allowable to a person traveling inside the
State of Alabama in the service of the state or any of its departments, institutions,
boards, bureaus, commissions, councils, committees, or other like agencies for
expenses other than transportation may be fixed by the Governor at not less than
seventy-five dollars ($75) per day. The current rate fixed by the governor is
$75.00 per day.
During the period covered by this examination it was determined that the amounts
paid to Trustees for in-state travel had not been consistent. At times the trustees
were reimbursed for actual expenses and at other times the reimbursements had
been reduced to $75.00 a day for travel in overnight status. In some instances it
was noted that Trustees were paid for only one day on overnight status for a trip
that actually consisted of two days on overnight status. Based on questions in the
examination the University sought an Attorney Generals opinion on this issue.
Based on Opinion #2015-018 dated December 15, 2014 to Dr. Andrew Hugine,
Jr., President of Alabama A&M University, the University may reimburse
members of its board of trustees for actual expenses incurred for travel outside the
State of Alabama. Alabama A&M University may also reimburse member s of
its board of trustees for actual expenses for travel within the State of Alabama if
the travel is for the purpose of attending or assisting in hosting a convention,
conference, seminar, or other meeting of a national organization of which the
state is a dues-paying member. Otherwise, reimbursement for in-state travel is
limited to the per diem amounts set forth in Section 36-7-20 of the Code of
Alabama.
Recommendation:
The University should develop procedures to ensure that Trustees are paid in
accordance with the applicable sections of the Code of Alabama as stated by the
Attorney General.

Normal, Alabama

Ref.
No.
2008-002
Finding:
The software system used by the University accounts for ledger transactions and
balances relating to each fiscal year separately. Proper procedures require the
ending balances for each fiscal year be rolled into the subsequent year as
beginning balances. Internal controls should ensure that all transactions are
posted to the general ledger and monthly reconcilements of the ledger balances to
the bank balances are done in a timely manner. The main operating funds are
accounted for in two ledger accounts that are reconciled to three bank accounts.
The reconcilement provided for the main operating funds for September 30, 2013
indicated that the ledger account balances reconciled to the bank balances.
A review of the support for the reconcilement for the main operating accounts
showed the following:
Ledger balances shown on the reconcilement and identified as balances in
the system for the fiscal years ending September 30, 2010, 2011, and 2012
totaled $2,461,723.59. These balances had not been rolled into the
transaction file for the 2013 fiscal year. This $2,461,723.59 as well as the
balances for two accounts as of September 30, 2013 totaling
($1,578,953.00) were shown on the reconcilement to arrive at the total
ledger balance of $882,770.59. The $2,461,723.59 did not match amounts
currently in the system for these prior fiscal years. According to the
University, adjustments to the ledger had been made after the
reconciliation was done. A revised reconciliation was not prepared after
these adjustments.
The amount on the reconcilement for the two accounts as of
September 30, 2013 totaling ($1,578,953.00) exceeded the ledger balance
by $13,850.92.
The reconcilement showed fiscal year 2012-2013 deposits to the bank that
had not been entered into the ledger totaling $2,182,846.92. All but
$364,742.05 of these deposits occurred prior to September 2013.
Based on our review we were unable to show that the September 30, 2013 bank
balances relating to the main operating fund reconciled to general ledger
balances. Reconcilements were requested relating to a bank account for the
Universities cafeteria plan and two accounts relating to student loan funds that
had a combined bank balance of $303,171.14 as of September 30, 2013. The
reconcilements for these accounts had not been prepared.
Monthly reconcilements were also requested for five bank accounts in June 2009,
six bank accounts in August 2010, six bank accounts in May 2011, and six bank
accounts in April 2012. The reconcilements for these accounts had not been
prepared.

Normal, Alabama

Ref.
No.
2007-002
2005-006
Recommendation:
The University should develop procedures to ensure all deposits are entered into
the general ledger in a timely manner and that bank balances are reconciled to
ledger balances on a monthly basis. Revised reconciliations should be prepared
using the last ledger balance for the fiscal year.
Finding:
University policy states that Inventory Control should conduct a campus-wide
inventory every two years. A complete physical inventory of capital assets has
not been performed in recent years. As a result, several errors were noted in the
testing of current year deletions and additions to capital assets. Out of a sample
of 124 items of equipment with a purchase price in excess of $5,000.00, 40 items
could not be located. According to the University 38 of these items had been
disposed of and should not have been on the inventory.
Recommendation:
The University should perform and document a campus-wide physical inventory
on a yearly basis.
Finding:
Athletic Revenue
Football Ticket Sales
The University uses commercial software to print tickets and account for sales of
football game tickets. On the day of a game a number of tickets are preprinted for
sale by various cashiers in locations where they do not have access to the
software or printers. The preprinted tickets that are not sold are later voided in
the system. Other cashiers operating out of the ticket office print tickets as they
are sold. The game held on October 13, 2012 was selected for testing.
It was determined that reports were not available from the software system
to support the ticket activity. According to the ticket manager, the system
reports would not print and receipt cashier totals were taken from the
computer screen display. Since there were no printouts available for the
cashiers, we were unable to properly support the funds each cashier was
accountable for.
The University could not locate the unsold tickets for this game for
counting as part of the examination.
Procedures were not in place to ensure that accountability was established and
maintained for all football tickets printed and that cash receipts were properly
accounted for.

Normal, Alabama

Ref.
No.
Parking Revenue
The University charges for parking at the football stadium. A change fund and
pre-numbered parking tickets are distributed to parking attendants prior to each
home game. The amount of the change fund advanced and the numbered tickets
issued to each attendant are listed on a separate Parking Cash Collection Form
signed by the parking attendant and person issuing the change funds and tickets.
The parking attendants return the change fund, cash receipts and unsold tickets to
the parking supervisor after each game. The cash receipts due from each
attendant is tabulated based on the Parking Cash Collection Forms and deposited.
The parking revenue for the game held on October 13, 2012 was selected for
testing. Parking tickets were sold by ten attendants at this game. The following
was noted in our review of the Parking Cash Collection Forms submitted and
other documentation.
The Sales Manager for the Athletics Department signed for the receipt of
$29,987.00 after the game.
Included in the amounts listed on the Parking Cash Collection Forms was
a total parking tickets sold of $26,750.00, an overage in collections of
$1,559.00, and a total of $28,309.00.
Errors were noted in the calculations on the forms. The recalculated
amounts reflected total parking tickets sold of $26,260.00, an overage in
collections of $2,049.00, and a total of $28,309.00.
A $28,314.50 deposit was made to the bank which was $5.50 more than
the $28,309.00 accountability listed on the eleven Parking Cash
Collection Forms and $1,672.50 less than the $29,987.00 signed for by the
Sales Manager for the Athletics Department.
The University was not able to locate the unsold parking tickets to verify
the total of the returned tickets listed on the Parking Cash Collection
Forms.
Based on this review it was determined that procedures were not in place to
ensure that accountability was established and maintained for parking ticket
receipts.
Recommendation:
Procedures need to be developed to ensure that accountability is established and
maintained for football ticket and parking revenues as well as unsold tickets.

Normal, Alabama

Ref.
No.
2005-005
Finding:
Internal controls should ensure that all ledger entries relating to capital assets tie
to supporting documentation and are reviewed by management. Reported
balances should be reconciled to the general ledger. Variances between
supporting documentation, ledger balances, and the amounts reported on the
financial statements for all years were noted during the examination. The
University was asked to determine the reason for the variances noted. A
comparison worksheet prepared by the University for all years under examination
based on the supporting documentation indicated that the general ledger balance
for all classifications of property was over stated by a cumulative amount of
approximately $9.6 million. The same comparison indicated that the reported
balances were overstated by approximately $15.4 million.
Recommendation:
Capital asset ledger control accounts should be maintained to support amounts
presented in the financial statements. Variances between the subsidiary and
control accounts should be reconciled.

Normal, Alabama
This Page Intentionally Blank
Additional Information

Normal, Alabama
Board Members and Officials

Board Members
Term Expires
Hon. Robert Bentley, Governor
Ex-Officio
From January 1, 2011
Hon. Bob Riley, Governor
Ex-Officio
Until December 31, 2010
Hon. Robert Avery
2010
Hon Tom Bell, Jr.
Resigned
February 2012
Hon. Lucien Blankenship
2012
Hon. Raymond Burse
Resigned
June 2011
Hon. Norman Hill
2014
Hon. John Hudson, III
2018
Hon. Odysseus Lanier
2014
Hon. Edward E. May
2009
Hon. W. C. McNeil
2009
Hon. Emma Jean Melton
2010
Hon. James Montgomery, Sr.
2018
Hon. Chasidy Privett
Resigned
September 2012
Hon. Leroy C. Richie
2009
Hon. Shefton Riggins
2010
Hon. Richard Reynolds
2014

Normal, Alabama
Exhibit #1
Board Members and Officials

Board Members
Term Expires
Hon. Chris Robinson
2013
Hon. M. Lynn Sherrod
2010
Hon. David J. Slyman, Jr.
2009
Hon. Andre Taylor
2016
Hon. Velma Tribue
2018
Hon. Jerome Williams
2016
Officials
Dr. Andrew Hugine, Jr.
President
Dr. Beverly Edmonds
Interim President
Until July 2009
Mr. Clayton Gibson
Vice-President for
Business and Finance
August 10, 2013

to Present
Mr. Ralph Johnson
Vice-President for
October 11, 2010

August 9, 2013
Mr. Dane Alexander
Vice-President for
July 1, 2010
October 10, 2010
Mr. Charlie Rucker
Vice-President for
Business Affairs
Mr. Norman Jones
Comptroller
December 2010 to Present
Mr. Patrick Farier
Comptroller
Until November 2010

Normal, Alabama
July 2009 to Present
Until June 30, 2010
Exhibit #1

Department of Examiners of Public Accounts Report On Alabama A&M

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Report on the

Alabama A&M University

Filed: March 13, 2015

Ronald L. Jones, Chief Examiner

Examiners of Public Accounts

P.O. Box 302251, Montgomery, AL 36130-2251

Honorable Ronald L. Jones

Contains items pertaining to state legal compliance, University operations

Contains information pertaining to the history of the University.

Contains detailed information about findings pertaining to state legal

Provides basic information related to the University.

Board Members and Officials a listing of the Board

Alabama A&M University

Examiners of Public Accounts

Examiners of Public Accounts

Schedule of State Compliance

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

Schedule of State Compliance and Other Findings

Alabama A&M University

This Page Intentionally Blank

Alabama A&M University

Board Members and Officials

Hon. Robert Bentley, Governor

From January 1, 2011

Hon. Bob Riley, Governor

Until December 31, 2010

Hon. Robert Avery

Hon Tom Bell, Jr.

Hon. Lucien Blankenship

Hon. Raymond Burse