In a Board of Trustees meeting Wednesday, the audit committee asked the University’s interim president to ask the Department of Labor for a time extension to comply with the department’s preliminary audit findings.
After a motion was made to restrict KPMG, the firm FAMU solicited to help collect and organize information requested by the DOL, Castell V. Bryant agreed that the University’s next step would be to phone State of Florida Auditor General William O. Monroe to ask for extra time to comply with the audit report.
The auditor’s office originally gave the University 30 days, until April 14, to respond to its findings.
“I think we need to contact the Department of Labor to let them know that this project has been put on hold based on all the discussions and new developments that have come into play,” Bryant said.
The board agreed that KPMG should only continue legwork that satisfies items No. 1 and 2 of an objective memo submitted to the committee.
Item One of the addendum drafted by KPMG states the firm must obtain an understanding and perform a walk through of the (University) payroll processing system. Item Two states that KPMG should meet with FAMU representatives to enhance the understanding of exempt (salary) and non-exempt (hourly) employee classification, as well as determine their objectives of the project.
Earl Fagan, forensic director of KPMG, said, “The nature and how the Department of Labor wants the information and the way the University is presenting the information must be in line.”
He said a problem KPMG has faced when analyzing the information gathered thus far at the University is “not having a population of employees accurately assessed to complete the report.” KPMG is still receiving documentation from departments and schools outlining areas that have payroll discrepancies.
“Eighteen divisions at the University have sent in documents,” Fagan said. “KPMG cannot quantify who all non-exempt employees are until we receive all the documentation.”
The Department of Labor has required the University examine two years of information, but Fagan said KPMG’s search for some employees has led back to seven years of discrepancies.
He said the University has to go back to when the discrepancies first appeared inaccurate.
Because the University has not officially hired KPMG, the board said the firm should not proceed any further with the project until there is a vote to move ahead.
Some board members were hesitant to allow the project that KPMG started to continue to be carried out by the firm.
Trustee Pamela Duncan said a lot of money has been spent for KPMG services in the past and she wondered what the firm had done to satisfy those commitments.
Another trustee, Laura Branker, asked if there were other auditing firms that could aid the University in complying with the DOL’s requests within the 30-day period.
Rufus Little, vice president for audit compliance, responded by saying the National Alumni Association did consider another company to conduct the project.
“Bronson and McKinnon said they would not be able to complete such an extensive project in the time given,” Little said.
The cost to bring KPMG to the University to help meet DOL compliance was raised in the meeting.
W. George Allen, chair of the University board audit committee, asked company representatives to clarify the total cost of KPMG’s services.
Fagan referred the Board to the service fees portion of the KPMG draft that stated estimated fees outlined in items one through four of the five-part project. Fees were set up not to exceed a total of $300,000 for the months of March and April.
The outlined costs for services in the month of March alone would total $50,000.
Items Three and Four of the project include providing observations and comments of classification of FAMU employees and a phase of assessment of FAMU payroll to track employees and update payroll files.
“It is currently an open-ended contract, and I am not comfortable with this,” Allen said.
Item Five, the last part of the agreement, consisted of KPMG providing a summary report and related findings.
Mary Diallo, trustee and faculty senate president, wanted to know what the KPMG team was working on as of Wednesday.
“KPMG is assisting the University with the requests of the Department of Labor,” Fagon said. “KPMG has done work under a former contract with the University, and we are currently providing service for points one and two under the new contract proposal.
Beyond audit checks and balances, the board briefly addressed the possibility of the Board of Governors sending a task force to the University to assess the administration and Board of Trustees.
Duncan asked how the task force would operate and if it would be housed on campus.
Challis Lowe, chairwoman of the board, said, “The short answer is ‘no, we don’t have the answer.’ “
“The task force has not been appointed,” Lowe said. “Assuming it is going to go forward under the Board of Governors, it would go forward under the Board of Governors’ Audit Committee.”
The next Board of Trustees meeting is scheduled to take place April 13 in Jacksonville. The meeting will include an audit committee workshop. For more information about the University Board of Trustees contact the Office of the President at (850) 599-3225.