Purpose

To determine if the Board of Directors of the Fuller Road Management Corporation (FRMC) promoted internal controls that helped to ensure an ethical business climate and compliance with applicable laws, rules and regulations.

Background

FRMC is a private, not-for-profit real estate holding corporation. Its mission is to plan, design, develop, construct, own, operate and lease facilities that support the technical programs, strategic partnerships and business consortia of the College of Nanoscale Science and Engineering (CNSE). The Research Foundation of the State University of New York (Research Foundation) and the UAlbany Foundation are equal founding members in the mission of FRMC.

FRMC has an unpaid Board of Directors chaired by the CNSE Senior Vice President and Chief Executive Officer. The FRMC Board also includes four directors appointed by the UAlbany Foundation, four directors appointed by the Research Foundation and two independent directors elected by unanimous vote of the other Board members.

For the fiscal year ended June 30, 2011, the FRMC reported about $350 million of assets. FRMC has reported that, since its creation in 1993, about $14 billion of public and private investment has been made in facilities and programs of the CNSE. According to FRMC, this investment has resulted in the creation of about 3,100 jobs at the CNSE complex.

Key Findings

• The FRMC Board of Directors has promoted internal controls that help to ensure that the FRMC continues to support CNSE and continues to foster an ethical business climate and compliance with applicable laws, rules and regulations.
• The FRMC Internal Revenue Service (IRS) Form 990 for 2010 omitted the required disclosure of business relationships and related financial transactions for two Board Directors. FRMC amended Form 990 to correct this lack of disclosure when we pointed out the deficiency. Further, FRMC management retained a new independent auditor to help ensure that future regulatory reporting requirements would be in full compliance.
• While the FRMC had established effective procedures and controls over financial transactions, at a time of our audit fieldwork, these were not formalized into a written Accounting Procedures Manual that serves to memorialize requirements. Subsequent to the completion of our audit, FRMC management provided us with a copy of a finalized Accounting Procedures Manual that incorporated necessary procedures and controls over financial transactions.

Key Recommendations

• Ensure that IRS Form 990 is consistently prepared to disclose Board of Director business relationships and related financial transactions that are pertinent to the FRMC.
• Continue to maintain the Accounting Procedures Manual.

Other Related Audit/Report of Interest

Fuller Road Management Corporation & The Research Foundation of the State University of New York: Use of State Funding for Research in Emerging Technologies at the State University of New York at Albany - Nanotechnology (2010-S-4)