3.10.4 Control of Finances

The institution exercises appropriate control over all its financial resources.

Judgment of Compliance

PVAMU SACS Accreditation - Judgement Compliance

Narrative of Compliance

Prairie View A&M University exercises appropriate control over its financial resources. The institution adheres to Texas A&M University System Policy 21.01: Financial Policies, Systems and Procedures that requires financial policies and procedures be uniform throughout the system and in conformance with the directives of the Board of Regents, state and federal laws, and any appropriations bills [1] as well as all sub-policies under 21.01 related to accounting, reporting, deposit, and disbursement of funds. The Chief Financial Officer for Prairie View A&M University is the Vice President for Business Affairs (VPBA) [2]. To maintain control over the vast resources of the University, in 2007 the Office of Business Affairs was reorganized into a more efficient infrastructure of offices reporting to the VPBA, including the following areas related to finances: budgets and reconciliation [3]; compliance [4]; financial accounting, reporting, and procurement [5]; financial services [6]; HUB procurement [7]; human resources [8]; institutional research [9]; and information technology services [10], as well as the Information Security Officer.

All individuals working under Business Affairs have education, experience, and training appropriate to their positions. For example, the Vice President for Business Affairs, a CPA who holds an M.S. in Taxation, has been in the position since December 2004, after eight years in administration at another state university [11]. The Assistant Vice President for Financial Accounting, Reporting, and Procurement has been at Prairie View A&M for 16 years and was previously employed as a state auditor working with universities [12]. Both the Assistant Vice President for Financial Services [13] and the Director of Budgets and Reconciliation [14] have at least 20 years of experience with the finances of Texas colleges and universities. Additionally, each Business Affairs employee is provided an annual professional development budget for conferences, seminars, and other activities, and an office library with close to 70 books and CDs is available for staff use [15].

Control of Financial Resources
Each August, expenditure guidelines are distributed campus wide via e-mail and the Business Affairs Policy Library. Account budget authorities receive the VPBA Annual Operational Guidance for Budget Memorandum [16] [17] which offers guidance for budget, salary and wages for the new fiscal year and gives a brief definition of the account structure. Annual budget packets with personnel, approved accounts, and fixed costs also are distributed to each account manager. Any budget changes are submitted from each Director, Dean and Vice President to the Vice President for Business Affairs for final approval in accordance with PVAMU Administrative Procedure 20.01 [18]. Starting in spring 2008, paper forms were replaced with an electronic Departmental Budget Request (DBR) application integrated with existing financial programs such as Canopy and FAMIS [19]. Unit budgets are folded into the total University operating budgets. Budgets for FY2005 through 2009 are freely accessible online [20], and copies are available in the John B. Coleman Library, located on the main campus. Since the System budget for FY2009 is over 2,800 pages long, just the first four pages of Prairie View A&M University's board-approved operating budget are included here [21].

To ensure that budgeted financial resources are managed appropriately, the PVAMU Administrative Procedures Manual (APM) [22] provides departments with guidance on policies for key administrative processes, including institutional spending.  Expenditure guidelines are located in the following sections of the APM: (10) Procurement, (20) Budget and Payroll, (30) Cash Management, (40) Accounting and Safeguarding of Assets, and (50) Travel. Requests for purchasing, travel, internal services (IDO), scholarships, and payroll expenditures are initiated by the requesting department by submission of an electronic document in the secure Financial Accounting Management Information System (FAMIS) or a paper requisition sent to the appropriate office for entry into FAMIS. PVAMU Administrative Procedure 40.10 governs FAMIS access and security; the appropriate supervisor, the Manager of Financial Accounting, and the University Controller must approve any employees needing access before they can proceed to a training session. Upon completion of training, employees must sign a security statement [23].

Through a series of approvals in FAMIS, funds are encumbered and reserved for payment.  Expenditures over $2,000 must go through a bid process (three written bids), while those over $10,000 require sealed, written bids to ensure optimal use of University funds and equitable treatment of vendors [24]. In keeping with state goals and Texas A&M System Policy 25.06: Participation by Historically Underutilized Business [25], whenever possible, HUB vendors are used. The HUB webpage lists bid opportunities and awarded projects, as well as lists of approved vendors and their contact information [26]. Annual memoranda remind units of the HUB program and their goals for the coming fiscal year [27]. The bid process and HUB goals apply to traditional purchase orders as well as to any purchases made through Prairie View's procurement card program, which provides an efficient, cost-effective way to work with vendors on non-restricted goods; logs and reconciled expense reports for ProCard purchases are required by the 12th day of each month to the Office of Financial Services and its two dedicated ProCard specialists. Funds are deducted from a linked FAMIS account [28].

It is the responsibility of each account manager to administer and reconcile budgetary account, including monthly FAMIS financial statements [29], on a regular basis. As Prairie View A&M University is governed by the financial policies of the Texas A&M University System Board of Regents, the TAMUS Internal Audit Department functions as the institution's internal auditor [30], but the University has added its own Compliance Office to add oversight and minimize risk. Starting in September 2007, the Compliance Office instituted and trained personnel to do a monthly review of statements for errors and needed corrections [31] [32] and also has conducted trainings for internal controls [33]. Accounts also are audited randomly by the Compliance Office to check that departmental account reviews are being performed. Additionally, when the Texas Comptroller's office audited Prairie View in the third quarter of FY2005 for payroll, purchase, travel, grant, and library book transactions, it found "minimal payment and documentation errors," projected at less than 0.01% [34].

Cash management procedures are covered in section 30 of the PVAMU Administrative Procedures and based on Texas A&M System Policy 21.01.02:  Receipt, Custody, and Deposit of Revenues [35]. Guidelines for receipts, collection, returned checks, working funds, petty cash funds, gift processing, and matching gifts are covered, and Treasury Services has offered training presentations to faculty and staff [36].

Prairie View A&M's endowment funds are handled and invested by the Texas A&M University System under Policies 21.05, 21.05.01 and 22.02 [37] [38] [39]. At the end of the third quarter of FY2009, the System managed 194 different funds for Prairie View; an example of a market summary report for the general University endowment is included here [40]. As of May 31, 2009, the total System Endowment Fund (SEF) was invested as follows: 46.5% in domestic and international equities, 17.2% in hedge funds, 18.6% in fixed income, 8.2% in inflation hedging investments, and 9.5% in private equity [41]. Disbursement rates are calculated annually, based on the average quarterly market value for the previous 5 years [42].

Another financial resource managed on behalf of the University is the non-profit Prairie View A&M Foundation, started in April 2009. The Foundation grew out of the successful $32 million Capital Campaign concluded in December 2008; Campaign Cabinet members now supervise the Foundation and raise funds for endowed scholarships, fellowships, and professorships, among other student and faculty development efforts, and is undertaking its first capital project, building a new athletic complex [43]. The Foundation Board is responsible for administration and disbursement of the funds [44].

For risk management, the University follows Texas A&M System Policy 24.01: Risk Management [45]. The TAMUS Information Security Awareness, Assessment, and Compliance (ISAAC) System allows Prairie View to develop policies for business continuity and disaster recovery and risk assessment, especially for servers and electronic data [46]. Recent updates to the university's administrative procedures for information resources also clarify policies with e-mail usage, privacy, security awareness, and management of computer security incidents [47].

Internal System Audit
In FY2006, the Texas A&M System performed an audit of Financial Management Services and found that of nine areas of concern noted earlier, four sets of recommendations were fully implemented and five were considered partially implemented [48]. Based on the audit findings, the Office of Business Affairs hired additional personnel for reconciliations, contracted with external collections agencies for outstanding payments, required additional training for employees in the Travel Office, and implemented stronger procedures related to the cashier working fund. TAMUS was satisfied with the University's response to all items, and no follow-up audits have been required.

Supporting Documentation and Links

Comprehensive Standards 3.10.4
© 2009 Prairie View A&M University