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July 13, 2004
CONTACT: Ward Mullens 734.487.4400
ward.mullens@emich.edu

EMU's response to recommendations from the Performance Audit of University House

EMU responds to recommendations by the Office of the Auditor General

Recommendation: To comply with capital outlay appropriations acts, we recommend that the University obtain approval from DMB and JCOS before using operating revenues to fund capital outlay projects.

Related:

The University agrees with the recommendation to comply with capital outlay appropriations acts and has already implemented new internal procedures to ensure compliance.

The University takes exception to the conclusion and several points within the finding, specifically:

  • The program fee was is no way related to the project
  • Additional expenses incurred for developing the property outside the project perimeter were funded by sources of funding that were within the authority of the University to commit to the project

Recommendation: We recommend that the University maintain sufficient budgetary control over expenditures related to capital outlay projects.

The University agrees with the recommendation to continue to maintain sufficient budgetary control over expenditures related to capital outlay projects.

The University takes exception to the conclusion and several points within the finding, specifically:

  • The University did exercise budgetary control and all expenses were properly budgeted and accounted for in accounts designed for these purposes. University accounting for this project was based on a long-standing definition of capital projects being defined as the structure plus a five-foot perimeter (in this case 10 feet).
  • Costs for maintaining and operating the Stonebridge property, refurbishing the Forest Avenue property and the Board audit of the project should not be included in the total cost of the construction project.

Recommendation: We recommend that the University comply with annual capital outlay appropriations acts with respect to capital outlay projects.

The University agrees with the recommendation to comply with annual capital outlay appropriations acts with respect to capital outlay projects and has already implemented procedures and controls to identify and monitor projects that require Use and Finance Statements

The University takes strong exception to the findings, specifically:

  • The increase in principal with an imputed interest rate is not relevant to the Use and Finance Statement. The University admits that it failed to file a Use and Finance Statement and that land acquisition and commercial kitchen costs should have been included on the statement

Recommendation: We recommend that the University improve its competitive bidding process for selecting contractors and awarding construction contracts.

The University agrees with the recommendation to improve the competitive bidding process and has already implemented internal controls and procedures to do so.

The University takes strong exception to the conclusion and several points in the findings, specifically:

  • The University did exercise prudent management control. The report found only one reportable condition: that relating to the bid process.
  • The University did exercise due diligence in the process of selecting a design-builder.

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Eastern Michigan University is a public, comprehensive university that offers programs in the arts, sciences and professions. EMU prepares students with the intellectual skills and practical experiences to succeed in their career and lives, and to be better citizens.

Editor's Note: Looking for an expert source for a story? Check out EMU's Eastern Experts online at www.emich.edu/univcomm/easternexperts.

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