FISCAL ACCOUNTABILITY PROCESS (OSU)

Background Summary

In response to concerns expressed by members of the Board's Budget and Finance Committee (Committee) over the fiscal condition of Oregon State University (OSU), the Chancellor's Office has developed a plan to help ensure adequate fiscal accountability at OSU through the end of the biennium, and into the future. The plan will involve establishing reporting requirements for OSU and will include a review process carried out by the Finance and Administration division of the Chancellor's Office, as well as an audit performed by the Internal Audit Division. The plan will establish clear fiscal targets and definitive reporting requirements, while maintaining OSU's management autonomy. The goal of this process is to ensure that the Board and the Chancellor can more effectively assess the performance of OSU's financial management into the future.

This report and process are limited to the Education and General fund at OSU. Other Funds will be included in the quarterly reporting process being developed as a part of the Accountability Framework Project. It is anticipated that the reporting process envisioned herein will be combined with, and become a part of, the reporting process coming out of the Accountability Framework Project.

OSU Reporting Requirements

OSU will prepare a balance sheet and a report of actual revenues and expenditures compared to targeted revenues and expenditures (fund 001000) at December 31, 2001, March 31, 2002, and June 30, 2002. These reports will be submitted to the Vice Chancellor for Finance and Administration for Chancellor's Office review and presented to the Committee in February, May, and August for FY 2001-02. These reports will include the following:

Until the more comprehensive process resulting from the Accountability Framework project is implemented, this reporting process will continue into the second year of the biennium and reports will be presented to the Committee in November, February, May, and August for FY 2002-2003.

Chancellor's Office Review

The Chancellor's Office of Finance and Administration (Controller's, Budget and Management, Institutional Research, and Human Resources) will review the reports prepared by OSU to test the reasonableness of the amounts reported, the projections, and management's assumptions. This review will include the following:

It is important to note that the amounts reported are the responsibility of OSU management and that the review procedures performed are not designed to detect intentional misstatements. Any material unresolved discrepancies resulting from the above review processes will be reported to the Committee.

Chancellor's Office Internal Audit

The OUS Internal Audit Division (IAD) will perform an internal audit of the fiscal management process within the OSU Office of Budgets and Institutional Research. Once the OSU audit is completed, similar reviews will be conducted as a cycle audit across other OUS campuses and the Chancellor's Office. The objective of the review will be to determine if the internal control structure is adequate over the following areas of budget processing:

The control procedures for review include, but are not limited to:

IAD will perform this engagement in accordance with the Institute of Internal Auditing Standards for the Professional Practice of Internal Auditing. The National Association of College and University Business Officers' higher education standards and practices are used as a reference in developing a detailed audit program.

OSU Budget Engagement Time Line

Audit Stage Timing
Planning December
Fieldwork January/February
Summary-Issues and Recommendations March
(No Board action required)

PART II: CAPITAL RENEWAL/DEFERRED MAINTENANCE FUNDING STRATEGIES TO REDUCE THE BACKLOG

Executive Summary

In the October meeting of the Board of Higher Education, OUS Finance & Administration provided Board members background information on the amount and severity of OUS capital renewal/deferred maintenance. This report was designed to serve as the backdrop to a discussion in the December Board meeting of alternative funding solutions to reduce the backlog of deferred maintenance (now estimated at $488 million for Education & General facilities system wide, and $555 million for all facilities, including E&G).

The Board will be apprized of actions taken to date to position the campuses for a major new strategic initiative to renew the extant capital asset base, in keeping with the Board's stewardship role. Following a review of alternative funding solutions, the Board will be asked to consider a Legislative Concept for a General Obligation (GO) bond measure which would be submitted by the legislature to the voters as a ballot measure in the November 2003 General Election.

(No Board action required)

(For a hard copy of the slide report, Part II, Capital Renewal/Deferred Maintenance Funding Strategies to Reduce the Backlog, contact the Board's office.)