Purpose

To determine whether the City University of New York’s (CUNY) Central Office (Central) officials adequately assured that all Medgar Evers College (MEC) bank accounts were authorized and used only for appropriate purposes and transactions. The audit covers MEC bank accounts for the period of January 1, 2013 through March 4, 2015.

Background

CUNY is the largest urban university in the United States, consisting of 24 institutions. CUNY provides education for more than 269,000 degree-credit students and 247,000 adult, continuing, and professional education students. MEC has approximately 6,700 students and is located in Brooklyn, New York. CUNY reported 567 bank accounts, including 24 at MEC that were active or closed during the period January 1, 2013 through March 4, 2015. As of July 31, 2015, MEC had 17 active accounts with a total balance of $1.02 million.

CUNY’s Cash Management and Banking Policy (Policy), effective July 1, 2008, requires the University Controller (UC) and the Vice President of Finance and Administration at each college to ensure that each bank account complies with University policies and procedures. Prior to establishing any new bank account, the Policy requires colleges to notify the UC by completing a “Bank Account Notification Form.” The Office of the UC notifies the college within five business days of the receipt of the form as to whether there are any concerns with establishing the new account. If not contacted within this time frame, the college can proceed with the account.

Key Findings

• CUNY Central officials provided us with a list of 24 bank accounts that they were aware of at MEC. Fourteen accounts were opened after CUNY’s bank authorization policy was established in 2008. However, CUNY Central did not have any of the required notification forms for these accounts. Additionally, our inquiry to banks located in the proximity of the college found an additional two accounts (“Medgar Evers College” and “Student Gov’t Assoc. Medgar Evers College”) that were not on the list. These findings point to weaknesses in the monitoring of bank accounts, which increase the risk that MEC personnel could conduct transactions using unauthorized accounts.
• Of 54 payments (totaling $810,608) paid from six judgmentally selected bank accounts, 26 payments totaling $118,782 were either improper (did not comply with CUNY and/or State and City policies and procedures) and/or were unsupported. For example, two payments (in August and September 2013) totaling $32,421 were used to furnish the President’s residence, which is owned by CUNY. To pay for these purchases, tax levy funds were transferred into the account used to pay for them, including $50,000 from CUNY Central intended for the Child Care Center and $40,000 from CUNY auxiliary and student fees. These funds were not used for their intended purposes.

Key Recommendations

• Fully comply with prescribed procedures for opening new bank accounts and the monitoring of existing accounts. Develop and implement additional policies and procedures to administer bank accounts, as warranted.
• Strengthen the control environment to assure that funds are appropriately disbursed from bank accounts by:
  • Reinforcing with staff the importance of adhering to New York State, City, and CUNY
    requirements; and
  • Training Finance and Administration employees on the appropriate policies and procedures
    related to bank accounts and banking operations.

Other Related Audits/Reports of Interest

CUNY: SPS - Controls Over Bank Accounts (2014-S-78)
CUNY: Lehman College - Controls Over Bank Accounts (2014-S-69)