June 29, 1998 Members of the Legislative Audit Committee: Southwest Texas State University, Texas A&M University - Commerce, and Texas A&M University - Galveston continue to make necessary enhancements to their control systems and overall operations, as recommended in previous audit reports. These changes will reduce the risk of wasting resources and failing to achieve goals and objectives. To determine current management control issues at Texas A&M University - Galveston, we reviewed internal audit reports for fiscal years 1996, 1997, and 1998. Texas A&M University Galveston management needs to continue the high-level of commitment to action plans, as demonstrated by (1) its initiation of a strategic planning process with a committee reviewing all non-academic services and (2) its increased promotion of student recruitment efforts. Texas A&M University - Galveston has been under reorganization in recent years and has made progress towards improving management goals in certain problem areas identified in the internal audit reports. Administrative control for its financial and accounting operations was transferred to the Vice President for Finance and Controller of Texas A&M University - College Station. A new Vice President and Chief Executive Officer was appointed for Texas A&M University Galveston. Progress towards improving management controls in certain problem areas, such as auxiliary enterprises and enrollment has taken place. Texas A&M University - Galveston continues to make the management control improvements recommended in the internal audit reports. The internal audit departments of both Texas A&M University - College Station and the Texas A&M University System continue to be involved in projects at Texas A&M University - Galveston. Based on this information, no further State Auditor activity is necessary at this time in order to allow the university time to implement planned improvements. Report No. 98-048

OFFICE OF THE STATE AUDITOR TWO COMMODORE PLAZA 206 EAST NINTH STREET, SUITE 1900 AUSTIN, TEXAS 78701 LAWRENCE F. ALWIN, CPA State Auditor June 29, 1998 Members of the Legislative Audit Committee: Southwest Texas State University, Texas A&M University - Commerce, and Texas A&M University - Galveston continue to make necessary enhancements to their control systems and overall operations, as recommended in previous audit reports. These changes will reduce the risk of wasting resources and failing to achieve goals and objectives. To determine current management control issues at Texas A&M University - Galveston, we reviewed internal audit reports for fiscal years 1996, 1997, and 1998. Texas A&M University Galveston management needs to continue the high-level of commitment to action plans, as demonstrated by (1) its initiation of a strategic planning process with a committee reviewing all non-academic services and (2) its increased promotion of student recruitment efforts. Texas A&M University - Galveston has been under reorganization in recent years and has made progress towards improving management goals in certain problem areas identified in the internal audit reports. Administrative control for its financial and accounting operations was transferred to the Vice President for Finance and Controller of Texas A&M University - College Station. A new Vice President and Chief Executive Officer was appointed for Texas A&M University Galveston. Progress towards improving management controls in certain problem areas, such as auxiliary enterprises and enrollment has taken place. Texas A&M University - Galveston continues to make the management control improvements recommended in the internal audit reports. The internal audit departments of both Texas A&M University - College Station and the Texas A&M University System continue to be involved in projects at Texas A&M University - Galveston. Based on this information, no further State Auditor activity is necessary at this time in order to allow the university time to implement planned improvements. Report No. 98-048 Members of the Legislative Audit Committee June 29, 1998 Page 2 We appreciate the time and assistance provided by the management and staff members of these universities throughout our review. Although we determined that no further State Auditor activity is necessary at this time, we will continue to monitor progress at Southwest Texas State University, Texas A&M University - Commerce, and Texas A&M University - Galveston, and will provide assistance as necessary. Sincerely, Lawrence F. Alwin, CPA State Auditor rmn cc: Dr. Jerome H. Supple, President, Southwest Texas State University Mr. William Nance, Vice President for Finance and Support Services, Southwest Texas State University Ms. Yvonne Eixmann, Director of Internal Audit and Advisory Services, Southwest Texas State University Dr. Ray M. Bowen, President, Texas A&M University - College Station Mr. William B. Krumm, Vice President for Finance and Controller, Texas A&M University - College Station Mr. Charley B. Clark, Director of Department of Internal Audit, Texas A&M University - College Station Dr. Barry Thompson, Chancellor, Texas A&M University System Mr. Richard Lindsey, Vice Chancellor for Finance and Operations, Texas A&M University System Mr. Frank R. Clark, Sr., Director of Internal Audit Department, Texas A&M University System Dr. Keith McFarland, Interim President, Texas A&M University - Commerce Ms. Mitzi Money, Assistant Vice President for Business and Administration, Texas A&M University - Commerce Dr. W. Michael Kemp, Vice President and Chief Executive Officer, Texas A&M University - Galveston