Audit Committee Meeting

May 13, 2004

Regents Present: Nancy Paul, Chair, Blanche Parks, Maggie Warren

Staff Present: Jerry Farley, Wanda Hill, Ron Wasserstein, Tom Ellis, Denise Ottinger, Chris Leach, Rhonda Thornburgh

Guests Present: Brad Koehn of Berberich Trahan & Co., P.A., Andrea Klotz and Abe Cole of BKD, LLP

Minutes of the March 18, 2004 meeting were approved as distributed.

FY 03 Audit Fee -

Regent Paul explained our auditing firm, Berberich Trahan, has requested an adjustment on their fee for last fiscal year. The audit was unusual in that it involved many extra hours due to the new requirements and standards for GASB35 and the conversion of fixed assets. The additional fee requested is commensurate with 75% of the additional billable hours. The committee approved payment of an additional $25,000 to Berberich, Trahan & Co. for the extra hours involved in preparing the FY 03 audit.

FY 04 Audit Engagement and Arbitrage Letters -

President Farley noted one of the duties of the Audit Committee is to engage the auditor, therefore, it is appropriate for the committee to approve the engagement letter. We are now in the fourth year of a four year agreement with Berberich Trahan. He indicated the auditors will review the standard accounting procedures of the University, however, specific areas can be reviewed if the committee would like to have them do so. The committee approved acceptance of the engagement and arbitrage letters.

Internal Control Consultant Report -

BKD, LLP was engaged by Washburn to evaluate the effectiveness of internal controls over financial reporting and transaction processing at the University. A draft internal control report was distributed.

After expressing their thanks for everyone's help to work though the internal control process, Abe Cole and Andrea Klotz, from BKD, LLP reviewed their findings. BKD personnel assessed the transaction flow through Human Resources and Payroll, cash handling, procurement, reimbursements, accounts receivable, asset accountability, expenditures, journal entries, transfers, and adjustments to the financial statements.

Although BKD found no material weaknesses or reportable conditions they did offer suggestions and opportunities for improvement in several University processes. Many of the comments were standard. The suggestions included quarterly review of terminations, pre-numbering of payroll checks, creation of a formal HR and payroll policy and procedures manual, segregation of duties, and documentation of policies.

A finalized report will be done and will be available to the Board.

Regent Paul will report on the Internal Financial Control at the May 14 Regents meeting.

Conflict of Interest Policies -

Regent Paul said she was contacted by some Board members who were concerned about the requirement to report compensation received by Regents and/or their families.

Regent Warren commented completing the form will challenge Board members and employees to think about potential conflicts.

Regent Paul will ask the Board members for their input on the disclosure statement so a recommendation can be made at the June Board meeting.

Meeting was adjourned.

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