Summary

The audit of the financial statements of Florida Agricultural and Mechanical University for the fiscal year ended June 30, 2006, was conducted pursuant to Section 11.45, Florida Statutes, and applicable standards contained in Government Auditing Standards issued by the Comptroller General of the United States.

The scope of this audit included an examination of the financial statements of the University, a component unit of the State of Florida, and a determination as to whether management has complied with applicable laws, administrative rules, regulations, contracts, and grant agreements and other matters that are material to the financial statements.  An examination of Federal awards administered by the University is included in our Statewide audit of Federal awards administered by the State of Florida.

The following provides a summary of the findings of our audit of the financial statements of the University:

• We found that, except for the effects of such adjustments, if any, as might have been determined to be necessary had we been able to satisfy ourselves as to the amounts reported for certain accounts as discussed in the FINDINGS AND RECOMMENDATIONS section of this report, the University’s financial statements presented fairly, in all material respects, the financial position of the University and its aggregate discretely presented component units as of June 30, 2006; the revenues, expenses, and changes in net assets; and the cash flows for the fiscal year then ended.

• We noted certain matters involving the University's internal control over financial reporting and its operation that we considered to be material weaknesses, as follows:

• Numerous journal entries were not adequately supported or no support was available to demonstrate how the journal entry transaction amounts were determined and the purpose of the entries.

• The University prepared a bank account reconciliation for the operating account for each month; however, documentation supporting reconciling items on the reconciliations was not adequate to demonstrate that complete and proper reconciliations had been accomplished.

• Records were not maintained to adequately support amounts reported as accounts receivable and deferred revenue related to contracts and grants.

• Subsidiary records did not agree with amounts reported as student fee accounts receivable and the related allowance for doubtful accounts, and subsidiary records had not been reconciled to the general ledger.

• Subsidiary records did not agree with amounts reported as loans and notes receivable, and interest and dividends receivable, and subsidiary records had not been reconciled to the general ledger.

• Amounts reported for capital assets and related depreciation were misstated as a result of several recording errors; tangible personal property capital outlay expenses were not reconciled to additions to the subsidiary property records; and records maintained to support reported capital asset activity contained several errors, resulting in misstatements of amounts reported for construction in progress, buildings, and infrastructure and other improvements.  In addition, depreciation expense and accumulated depreciation were misstated, in part, due to problems in recording capital asset data in the PeopleSoft Financials System asset management module from the predecessor accounting system.

• Records were not adequately maintained to support amounts reported as accounts payable and deposits payable, and amounts reported as accounts payable, construction contracts payable, and salaries and wages payable were misstated.

• The University had not provided for an adequate separation of duties, or established adequate compensating controls, in certain areas of its operations.

• Certain information technology (IT) controls related to the support of the University’s PeopleSoft Financials System could not be evaluated because of a lack of sufficient records and documentation, or needed improvement.

• Deficiencies existed in various IT controls over the University's PeopleSoft Financials System, jeopardizing the integrity of application programs and data.

• Deficiencies existed in certain security controls protecting the PeopleSoft Financials System.

• The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards, other than the University’s compliance with certain debt administration requirements related to bonded indebtedness.

The University’s response is included as Appendix A of this report.