Purpose

To determine whether the City University of New York’s (CUNY) Central Office (Central) officials adequately ensured that all Borough of Manhattan Community College (BMCC) bank accounts were authorized and used only for appropriate purposes and transactions. The audit covers BMCC bank accounts for the period 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. BMCC, located in lower Manhattan, is one of CUNY’s seven community colleges and has more than 26,000 students.

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 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 a list of 23 bank accounts that they were aware of at BMCC. Seven of BMCC’s accounts were opened after CUNY’s bank authorization policy was established in 2008. However, CUNY Central did not have the required notification forms for one of these accounts (the BMCC Administrative Income Account, opened in May 2014). Additionally, we identified two accounts, for the BMCC Foundation, that were not on CUNY Central’s list. These findings point to weaknesses in the monitoring of bank accounts, which increase the risk that BMCC personnel could conduct transactions using unauthorized accounts.
• A review of the source of funds in BMCC’s accounts found $120,116 that BMCC officials should have transferred to the City of New York (City).
• Of 78 payments (totaling $3,136,579) paid from six judgmentally selected bank accounts, 45 payments totaling $563,605 were either improper (did not comply with CUNY, State, and/or City policies and procedures) and/or were unsupported.

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 ensure 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

City University of New York: SPS - Controls Over Bank Accounts (2014-S-78)
City University of New York: Lehman College - Controls Over Bank Accounts (2014-S-69)
City University of New York: Medgar Evers College - Controls Over Bank accounts (2015-S-92)