Objective

To determine the extent of implementation of the four recommendations included in our initial audit report Oversight of Campus Foundations (Report 2016-S-93).

About the Program

The State University of New York’s (SUNY) State-operated campuses are authorized to contract with foundations, which are private, not-for-profit corporations, to support fundraising efforts, real property management, or other activities and functions that are not specifically vested with the campus. Generally, foundations receive and manage donations and make these resources available to the campus to support approved programs and activities. In 2017, SUNY’s 31 campus-related foundations had net assets totaling $2.3 billion. Two foundations, Stony Brook Foundation, Inc. (SBF) and University at Buffalo Foundation, Inc. (UBF), controlled $1.2 billion, more than half of the total foundation assets.

SUNY’s Board of Trustees grants oversight responsibility of the campus foundations to the University Controller’s Office (UCO) and the Office of the University Auditor (OUA). Both UCO and OUA are part of SUNY’s System Administration (SSA). OUA is responsible for conducting periodic audits of the foundations, while UCO is responsible for ensuring the foundations have the required contracts with the campuses and for reviewing the foundations’ annual audited financial statements, management letters, and corresponding corrective action plans.

We issued our initial audit report on February 26, 2018. The audit objective was to determine if SSA provided sufficient oversight of campus foundations to make certain the campus foundations conducted their activities in accordance with applicable laws, rules, and regulations. The audit found SSA should improve its oversight of campus foundations. For example, UCO did not ensure each campus had an executed contract with its foundations, yet the foundations continued to oversee and manage donations and resources on behalf of the campuses. OUA also did not obtain and review available information that the foundations were required to have, such as the IRS Form 990 and the foundations’ policies and procedures for key business functions, to assess risk in the foundations’ operations. We determined certain foundations did not have all the required policies and procedures, or their policies were inadequate or contained questionable provisions. Our audit also identified certain questionable foundation expenses from UBF and SBF that were either not in compliance with the foundations’ policies and procedures or were not consistent with the foundations’ mission to support campus programs and activities.

Key Finding

We found the SSA has made significant progress in addressing the problems we identified in the initial audit report. Of the four prior audit recommendations, three were implemented and one was partially implemented.

Key Recommendation

Officials are given 30 days after the issuance of the follow-up report to provide information on any actions that are planned to address the unresolved issues discussed in this report.