32307-3100 PRESIDENT

En <lI,'lln' IIlIh C(/I'J/1.~


(850) _W9-3225 rxx: (850) 561-2152 TOD: (850) 56J -2784


February 14,2012

Mr. David W. Martin, CPA
Auditor General III West Madison Street Tallahassee, Florida 32399-1450 Dear Mr. Martin: Enclosed are the responses to the preliminary and tentative findings on the audit of the Federal awards administered by Florida A&M University for the fiscal year ended June 30,2011. The responses reflect the actual and proposed corrective actions as well as the estimated completion dates. We appreciate the work of your staff assigned to the audits of our campus. If there are any questions, please contact me at 850-599-3225. Sincerely,

James H. Ammons President Enclosure c: Dr. William Hudson, Jr., Vice President, Student Affairs Ms. Teresa Hardee, Vice President, Administrative and Financial Services Dr. Knife Redda, Interim Vive President Sponsored Programs Mr. Richard Givens, Interim Vice President, Audit and Compliance Ms. Michelle Williams, Interim Director, Office of Financial Aid



Finding Number CFDANumber Program Title Compliance Requirement State Educational Entity Administering State Agency Federal Grant/Contract Number and Grant Year Finding Type Finding


FA 11· 84.397 (American Recovery and Reinvestment Act Funds) State Fiscal Stabilization Fund (SFSF) Cluster Government Services, Recovery Act Activities Allowed or Unallowed and Allowable Costs/Cost Principles Florida A&M University (FAMU) Florida Department of Education (FDOE) CFDA No. 84.397 376-5921S-1CZ06, July 1, 2010 - June 30, 2011 Noncompliance and Significant Deficiency Questioned Costs - $867,203 The institution provided $180,000 of funds to a not-for-profit organization for purposes that do not appear to be allowable grant charges. Also, institution records did not evidence that $20,000 of funds provided to the same not-for-profit organization, and $667,203 provided to another not-for-profit organization, were used for allowable grant purposes. Additionally, required reports submitted by one of the not-for-profit organizations were not sufficiently detailed as to the use of the funds. United States Department of Education's publication Guidance on the State Fiscal Stabilization Fund Program April 2009), Section III-E-3, provides that funds may be used for student financial aid, such as IHE-sponsored grants and scholarships and student services that promote a student's emotional and physical well-being outside the context of the formal instructional program. During the 2010-11 fiscal year, the institution paid a total of $867,203 of grant funds to two not-for-profit organizations to provide scholarships and other mentoring and recruiting services for middle and high school students. We noted the following instances of unallowable or inadequately documented charges: ~ $200,000 was used for students attending a minority golf association program, of which $180,000 was used to repair a city golf course. Funds were paid directly to the organization with the intent of aSSisting in the institution's recruitment program. The organization awarded scholarships at its discretion without any review or input from institution personnel and institution records did not evidence review by institution personnel to determine that funds spent were used for allowable grant purposes. Further, the $180,000 of golf course repairs does not appear to be allowable costs under either the grant requirements or the contract with the golf association. $667,203 of grant funds were paid to another not-for-profit organization for a program intended to provide personal development to teenagers and minority groups. Funds were paid directly to the organization with the intent of assisting in the institution's recruitment program. The organization awarded scholarships at its discretion without any review or input from institution personnel and institution records did not evidence review by institution personnel to determine that funds spent were used for allowable grant purposes. Additionally, three quarterly reports submitted by the not-for-profit organization to the institution regarding use of funds did not provide sufficient information as to what the funds were spent for or what results had been attained through the program for the students served, nor did institution records evidence that institution personnel reviewed and assessed the adequacy of the reports.





The institution's procedures were not adequate to ensure that funds provided to the not-for-profit organizations were used for allowable grant purposes.

Page 9 of 10

Effect Recommendation

When unallowable costs are charged to the program, the institution may be required to return disallowed costs. The institution should enhance its procedures to ensure that grant funds are used for allowable purposes. Such procedures should require documented oversight by institution personnel, including a review to assess the adequacy of required reports. In addition, the institution should document the aIJowabifityof amounts charged to the grants and consult with the grantor agency as to the resolution of the questioned costs. The University entered into an agreement with the Orlando Minority Youth Association (OMYGA), a non-profit organization. The basic objective of this association was to introduce the city at-risk youth to the sport of golf, which in turn, would assist in developing their social and life skills. The program also included an educational/study component to prepare students to grow in almost every aspect of life. It is the University's understanding that the golf course is only used by this association. $667,203 of grant funds (discretionary) was for a partial funding of an agreement with the Professional Opportunity Program for Students. In this agreement, it was stipulated that funds were to be used for scholarships. Per the agreement with the Professional Opportunity Program for Students, $667,203 of grant funds (discretionary) was stipulated for scholarships which was a part of the $700,000 scholarship budget. The University agrees to strengthen its procedures to ensure the proper monitoring of all contractor agreements.

FAMU Response and Corrective Action Plan

Estimated Corrective Action Date FAMU Contact and Telephone Number

June 30,2012 Teresa Hardee (850) 599-3211

End of Preliminary and Tentative Findings


Notes for the Preliminary Operating Budget

(A) These non-recurring funds were added back in 10-11 to restore a part of the budget reductions. (B) The New Florida Initiatives and University Research Commercialization Grants were non-recurring for 10-11.

(C) The Federal Stimulus Funds were non-recurring for 10-11 and are being
deducted for 2011-12. (D) The Targeted Student Assistance Funds were non-recurring for 10-11 and are being deducted. (E) In 10-11 we received 7 months allocation for Health Insurance increase and the Life Insurance decrease. This is the remaining allocation for 5 months. (F) Adjustments to the Student Fee Trust Fund Based on the BOGformula. (G) Budget Reduction (H) The Student Financial Assistance Funds were transferred to the Florida Student Assistance Grant Program (FSAG). (I) Student Fee Trust Fund Adjustment based on the In-State/Out-of-State actual student enrollment.

(J) The legislature restored part of the deduction in (A).
(K) We received funds for the transition space at the Hansel Tookes Recreation Center ($573,000) and $216,000 for Crestview. These funds are allocated for operations and maintenance.

(L) 8% tuition increase authorized by the legislature. (M) 7% Tuition Differential authorized by the legislature. (N) The 3% share of the Florida Retirement to be paid by employees. (0) Adjustment for students paying tuition using the Florida Prepaid Program. (P) State funds cannot be used for portion of the President and his administrative staff salaries that exceed $200,000.
(Q) Funding for the Targeted Student Assistance Program. These are pass-

through funds and are non-recurring and will be deducted in 2012-13 fiscal year.


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