Update—Our March 2012 Report said that boards and audit committees must hold management accountable for implementing and maintaining effective processes and internal controls. We also issued a report card on universities’ internal controls over financial reporting. This report includes the results from our March 31, 2012 financial statement audits and an update on the report card. Our next report will include the results of our audits at the colleges and technical institutions.
Athabasca University improved its processes to prepare accurate financial statements, but we make two new recommendations on enterprise risk management systems and conflicts of interest. For a University providing online learning, these new recommendations together with our five outstanding recommendations on information technology are critical to achieve its objectives cost-effectively. Thus, on the internal report card (see page 106), we concluded that Athabasca University needs to significantly improve its internal controls.
The University of Calgary considerably improved its internal control environment, and continues to implement an enterprise risk management system. It also improved its process to produce accurate financial statements. But these improvements delayed the preparation of complete and accurate financial statements.
The University of Alberta and University of Lethbridge continue to have effective processes to prepare accurate financial statements, and they continue to implement our recommendations.
This report is based on findings from our March 31, 2012 financial statements audits of the University of Alberta, University of Calgary, University of Lethbridge, Athabasca University, and the Alberta Innovates Corporations—Bio Solutions, Energy and Environment Solutions, Health Solutions and Technology Futures. We did not identify any recommendations for the Alberta Innovates Corporations and Alberta Enterprise Corporation.
Internal controls—a report card
To effectively govern, boards need accurate and timely financial information—throughout the year, not just at year-end. To effectively manage, management needs the same information. We see a direct correlation between a strong yearend process to prepare financial statements and the ability to prepare quality financial information throughout the year. We evaluated the following key indicators of effective financial processes and internal controls:
- the time it took institutions to prepare complete and accurate year-end financial statements
- the quality and number of draft financial statements we received
- the number of errors our audit found
- the number and type of recommendations in our management letters and public reports