Summary of Report 03-028

March 2003

Report Number 03-028

Texas Southern University (University) has improved processes for producing accurate and consistent financial information. Part of our review focused on the University's Annual Financial Report (AFR) for fiscal year 2002. We found that the AFR is supported by information recorded in the University's financial system.

It appears the Legislature and other oversight bodies can rely on the AFR. Although our review of the AFR was more limited than a full financial audit, we did not find significant inaccuracies or significant inconsistencies.

In addition, we followed up on previously identified issues involving journal vouchers. The University's financial system continued to allow unbalanced vouchers in fiscal year 2002; however, management implemented compensating controls to identify and correct those vouchers. The system also allows for the deletion of journal vouchers without creating a record of the reasons the vouchers were deleted. Management has recently begun processes to identify and record journal voucher deletions.

Conversely, in the areas we audited, which represented 17 percent of total expenditures, the University is not consistently following procedures to ensure that funds are spent in accordance with state regulations and University policies. Our tests of fiscal year 2002 expenditures (excluding payroll) revealed payments that lacked support, payments that lacked the required approvals, and payments to employees for travel and other expenses without evidence that those expenses were related to University business. Although we found errors in 24 percent of the expenditure transactions tested, those errors did not result in a significant dollar impact to the University's AFR.

Our review of outcome measure results indicated that the University has improved its reporting of performance measures. We tested three measures and found that management accurately calculated and reported two of them. University management has also implemented initiatives to continue improving outcome results.

• Our review of the fiscal year 2002 Annual Financial Report found that it is supported by information reported in the University's financial system. We did not find significant inaccuracies or inconsistencies in the report.
  
  
• Our tests of approximately 17 percent of fiscal year 2002 expenditures indicated that the University is not consistently following procedures to ensure that funds are spent in accordance with state regulations and University policies. We found errors, primarily related to supporting documentation, in 24 percent of the expenditure transactions we tested.
  
  
• The University has improved its reporting of outcome performance measures. Two of the three measures we tested were accurately calculated and reported.

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