June 10, 1998 Dr. E. James Hindman, President Angelo State University P.O. Box 11007, ASU Station San Angelo, Texas 76909 Dear Dr. Hindman: Angelo State University (University) has a management control system in place to ensure that the University’s resources are used as intended. The objective of this audit was to evaluate the existing management control systems within the University to identify strengths and weaknesses. While our work did not identify significant control weaknesses, we did note opportunities for improvement in management systems for financial aid, contracting, human resources, and fixed assets. In addition, we noted several areas that we felt deserved recognition: • The University’s Office of Technology has made significant efforts towards Year 2000 compliance. The University has contracted with the Disaster Recovery Center to use its mainframe, which is Year 2000 compliant. In addition, the Office of Technology reviewed all computers and software to determine compliance with Year 2000, and it implemented a plan to update all noncompliant computers and systems. Conversion of student records began in the fall of 1997, while conversion of the accounting system is planned for the summer of 1998. • In addition to the Management Control Audit, we performed a Historically Underutilized Business (HUB) compliance audit. The University appears to be making a good-faith effort to use HUB contractors. The specific results of this work will be presented in a separate audit report. Summary of Issues: The Financial Aid Department should follow its procedures for awarding and collecting emergency tuition loans. The Financial Aid Department (Department) did not follow certain monitoring procedures for student eligibility and repayment of emergency tuition loans. The Department has established criteria for awarding and collecting emergency loans, which totaled $335,000 during fall 1997. SAO Report No. 98-043

June 10, 1998 Dr. E. James Hindman, President Angelo State University P.O. Box 11007, ASU Station San Angelo, Texas 76909 Dear Dr. Hindman: Angelo State University (University) has a management control system in place to ensure that the University’s resources are used as intended. The objective of this audit was to evaluate the existing management control systems within the University to identify strengths and weaknesses. While our work did not identify significant control weaknesses, we did note opportunities for improvement in management systems for financial aid, contracting, human resources, and fixed assets. In addition, we noted several areas that we felt deserved recognition: • The University’s Office of Technology has made significant efforts towards Year 2000 compliance. The University has contracted with the Disaster Recovery Center to use its mainframe, which is Year 2000 compliant. In addition, the Office of Technology reviewed all computers and software to determine compliance with Year 2000, and it implemented a plan to update all noncompliant computers and systems. Conversion of student records began in the fall of 1997, while conversion of the accounting system is planned for the summer of 1998. • In addition to the Management Control Audit, we performed a Historically Underutilized Business (HUB) compliance audit. The University appears to be making a good-faith effort to use HUB contractors. The specific results of this work will be presented in a separate audit report. Summary of Issues: The Financial Aid Department should follow its procedures for awarding and collecting emergency tuition loans. The Financial Aid Department (Department) did not follow certain monitoring procedures for student eligibility and repayment of emergency tuition loans. The Department has established criteria for awarding and collecting emergency loans, which totaled $335,000 during fall 1997. SAO Report No. 98-043

June 10, 1998 Dr. E. James Hindman, President Angelo State University P.O. Box 11007, ASU Station San Angelo, Texas 76909 Dear Dr. Hindman: Angelo State University (University) has a management control system in place to ensure that the University’s resources are used as intended. The objective of this audit was to evaluate the existing management control systems within the University to identify strengths and weaknesses. While our work did not identify significant control weaknesses, we did note opportunities for improvement in management systems for financial aid, contracting, human resources, and fixed assets. In addition, we noted several areas that we felt deserved recognition: • The University’s Office of Technology has made significant efforts towards Year 2000 compliance. The University has contracted with the Disaster Recovery Center to use its mainframe, which is Year 2000 compliant. In addition, the Office of Technology reviewed all computers and software to determine compliance with Year 2000, and it implemented a plan to update all noncompliant computers and systems. Conversion of student records began in the fall of 1997, while conversion of the accounting system is planned for the summer of 1998. • In addition to the Management Control Audit, we performed a Historically Underutilized Business (HUB) compliance audit. The University appears to be making a good-faith effort to use HUB contractors. The specific results of this work will be presented in a separate audit report. Summary of Issues: The Financial Aid Department should follow its procedures for awarding and collecting emergency tuition loans. The Financial Aid Department (Department) did not follow certain monitoring procedures for student eligibility and repayment of emergency tuition loans. The Department has established criteria for awarding and collecting emergency loans, which totaled $335,000 during fall 1997. SAO Report No. 98-043

June 10, 1998 Dr. E. James Hindman, President Angelo State University P.O. Box 11007, ASU Station San Angelo, Texas 76909 Dear Dr. Hindman: Angelo State University (University) has a management control system in place to ensure that the University’s resources are used as intended. The objective of this audit was to evaluate the existing management control systems within the University to identify strengths and weaknesses. While our work did not identify significant control weaknesses, we did note opportunities for improvement in management systems for financial aid, contracting, human resources, and fixed assets. In addition, we noted several areas that we felt deserved recognition: • The University’s Office of Technology has made significant efforts towards Year 2000 compliance. The University has contracted with the Disaster Recovery Center to use its mainframe, which is Year 2000 compliant. In addition, the Office of Technology reviewed all computers and software to determine compliance with Year 2000, and it implemented a plan to update all noncompliant computers and systems. Conversion of student records began in the fall of 1997, while conversion of the accounting system is planned for the summer of 1998. • In addition to the Management Control Audit, we performed a Historically Underutilized Business (HUB) compliance audit. The University appears to be making a good-faith effort to use HUB contractors. The specific results of this work will be presented in a separate audit report. Summary of Issues: The Financial Aid Department should follow its procedures for awarding and collecting emergency tuition loans. The Financial Aid Department (Department) did not follow certain monitoring procedures for student eligibility and repayment of emergency tuition loans. The Department has established criteria for awarding and collecting emergency loans, which totaled $335,000 during fall 1997. SAO Report No. 98-043

June 10, 1998
Dr. E. James Hindman, President
Angelo State University
P.O. Box 11007, ASU Station
San Angelo, Texas 76909
Dear Dr. Hindman:
Angelo State University (University) has a management control system in place to ensure that
the University’s resources are used as intended. The objective of this audit was to evaluate the
existing management control systems within the University to identify strengths and weaknesses.
While our work did not identify significant control weaknesses, we did note opportunities for
improvement in management systems for financial aid, contracting, human resources, and fixed
assets.
In addition, we noted several areas that we felt deserved recognition:
•
The University’s Office of Technology has made significant efforts towards Year 2000
compliance. The University has contracted with the Disaster Recovery Center to use its
mainframe, which is Year 2000 compliant. In addition, the Office of Technology
reviewed all computers and software to determine compliance with Year 2000, and it
implemented a plan to update all noncompliant computers and systems. Conversion of
student records began in the fall of 1997, while conversion of the accounting system is
planned for the summer of 1998.
•
In addition to the Management Control Audit, we performed a Historically Underutilized
Business (HUB) compliance audit. The University appears to be making a good-faith
effort to use HUB contractors. The specific results of this work will be presented in a
separate audit report.
Summary of Issues:
The Financial Aid Department should follow its procedures for awarding and collecting
emergency tuition loans.
The Financial Aid Department (Department) did not follow certain monitoring procedures for
student eligibility and repayment of emergency tuition loans. The Department has established
criteria for awarding and collecting emergency loans, which totaled $335,000 during fall 1997.
SAO Report No. 98-043

Dr. E. James Hindman, President
Angelo State University
June 10, 1998
Page 2
While criteria state that the student should have a demonstrated ability to repay the loan and a
good repayment history, we found no evidence that the Department verified these requirements.
One student was issued a new loan while still in default for a previous loan. In addition,
collection efforts are not consistent with the Department’s documented policies. The
Department does not always adhere to established time frames when distributing past-due notices
to students, or delinquent accounts to collection agencies. Since the University funds emergency
loans, no federal programs are affected by this noncompliance. However, failing to enforce
criteria potentially reduces the funds available for other eligible students. Policies should be
followed regarding the awarding and collection of emergency tuition loans.
The University should enhance oversight of contract agreements.
In some instances, contracts were not appropriately reviewed and approved. Two contracts had
billing errors totaling approximately $32,750. In one instance, the contractor overpaid the
University, and in the other, the University underpaid the contractor. Although in these cases the
errors were favorable to the University, they could potentially create a liability for failure to
adhere to the contract agreement. Furthermore, since approval for these billings was given
without adequate information or review, errors could have resulted in the University overpaying
the contractor. In addition, the Texas State University System (System) policies require that the
Board of Regents (Board) approve all vending machine contracts. One vending machine
contract worth approximately $7,200 did not have Board approval. Contracts, related payments,
and receipts should be reviewed and approved by appropriate personnel.
The University should review the performance of faculty using a
standardized policy and standardized criteria.
The University does not have a standardized policy to evaluate faculty. The importance of
effectively managing faculty is underscored by the fact that associated salaries totaled
approximately $11 million, or 44 percent of the University’s total budget, in fiscal year 1998.
Evaluations are used to support management decisions related to compensation and tenure.
General professional standards and expectations should be clearly communicated to all faculty.
Currently, each department head independently develops methods for assessing faculty
performance. As a result, faculty evaluations between departments are not based on consistent
factors. To promote equity, evaluation standards should be developed for faculty and a
standardized form should be used.
The University should require periodic physical inventories.
Existing controls over fixed assets should be enhanced. The University currently uses an annual
self-reporting inventory system. Under this system the departments responsible for the item

Dr. E. James Hindman, President
Angelo State University
June 10, 1998
Page 3
report whether or not they still have the item. In fiscal year 1997 the University’s Internal
Auditor identified control weaknesses, such as interdepartmental property transfers that were not
reported or tracked. To further mitigate the risk of property being misused or stolen, we
recommend the University establish a policy requiring a periodic physical inventory by
employees not responsible for the item.
University management agrees with our findings and recommendations. Their detailed
responses are attached.
The audit team thanks Angelo State University faculty and staff. The team especially thanks the
internal auditor and executive management for their professionalism and prompt response to
information requests during the audit. If you have any questions, please feel free to contact Eric
Corzine, the project manager, or Valerie Hill, the audit manager, at (512) 479-4700.
Sincerely,
Lawrence F. Alwin, CPA
State Auditor
rmn
attachment
cc:
Texas State University System Board of Regents
The Honorable George W. Bush, Governor
Members of the Legislative Audit Committee

ANGELO STATE UNIVERSITY
MANAGEMENT’S RESPONSE
May 28, 1998
Angelo State University agrees with the four recommendations included in the May 21, 1998, State
Auditor’s Management Control Audit. Angelo State University accepts the recommendations and believes
that their implementation will improve the management and operation of the University. Our response to
each audit recommendation follows the order of the recommendations in the report.
1. The Financial Aid Department should follow its procedures for both the award and
collection of Emergency Tuition Loans.
The policy and procedures manual will be updated to reflect current procedures regarding the
collection of emergency loans. At this time, we have already added a section to the emergency loan
application where ability to repay is indicated.
In regard to the statement about issuing a new emergency loan to a student who had a defaulted
previous loan: In this case, the person was waiting for VA benefits to begin, and was to make
payment with these funds. Since this can often be a lengthy wait, an additional emergency loan was
made to enable the student to remain in school. We will change the wording in our policy and
procedures manual to indicate exceptions can be made based on mitigating circumstances.
2. The University should enhance oversight of contract agreements.
Appropriate procedures have been implemented to make sure contract billings are properly reviewed
and verified before the billings are approved for payment. All future contracts will be reviewed by
the appropriate Vice President to make sure that the contracts requiring Board approval are properly
approved by the Board.
3. The University should review the performance of faculty using a standardized policy
and criteria.
Faculty members at Angelo State University are evaluated on a yearly basis. A cumulative evaluation
is undertaken of faculty who are applying for tenure, promotion, or step increases during the year of
their application. Evaluations are conducted at the departmental level and are reviewed by the dean
of the appropriate college, and the Vice President for Academic Affairs before being forwarded to the
President (in the case of tenure, promotion, and step increases, the evaluations become part of a
dossier that is also reviewed by the University Tenure and Promotion Committee). Evaluations
address the three areas of faculty responsibility: teaching, scholarship, and service. As stated in the
management audit recommendation, each department uses its own format in reporting evaluation
information.
During the 1998-99 academic year, the Vice President for Academic Affairs will convene a group of
faculty and academic administrators to develop a standardized reporting form for faculty evaluations.
4. The University should require physical inventories to be performed periodically.
The University will establish a policy that will require a periodic physical inventory by the Property
Manager’s Office.
SAO REPORT NO. 98-043
ATTACHMENT