The San Jose State Associated Students Board of Directors discussed the 2020-21 university financial audit during a Wednesday Zoom meeting.
A financial audit is an examination of a company's accounting records and books conducted by an outside professional to determine whether the company is maintaining records with generally accepted accounting principles, according to Merriam-Webster.
Jim Westbrook, A.S. associate director for finance and business services, said consulting firm RSM US LLP, the leading U.S. audit and tax service provider, began the audit in March and concluded in the first months of the Fall 2021 semester.
“The process essentially ends in mid-September and the results of the audit are submitted to the [California State University] Chancellor’s office, not only for A.S but for all CSU systems, universities and auxiliaries,” Westbrook said.
According to the audit report, A.S.’ total net position increased by $2.3 million from 2020-21 primarily because of the Paycheck Protection Program loan forgiveness of $915,000 and a reduction in expenses because of reduced services provided during the pandemic.
Total net position is the value of the position subtracting the initial cost of setting up the position, according to Nasdaq, a stock market index.
The paycheck program is a U.S. Small Business Association (SBA) loan that helps businesses keep their workforces employed during the COVID-19 crisis, according to the U.S.SBA’s webpage.
From 2020-21, A.S. revenues and expenses decreased by $271,000 and $1.6 million respectively, according to the audit report.
Expenses decreased because of increased student scholarships and grants, decreased student club expenditures, reduced student organization funding and student club expenditures, all of which stemmed from a lack of activities while the campus was closed, according to the report.
Main contributors to the revenue decrease include low student club receipts, decreased Print and Technology Center fees and reduced capacity at the Child Development Center and parent fees, according to the report.
Westbrook said financial protocol adheasure was analyzed in the audit.
“The auditors remotely do a lot of preliminary work, reviewing our policies and procedures that the board has established or management has put in,” he said. “They do some testing to make sure that what we say in our procedures are being practiced.”
A.S. President Anoop Kaur voiced concern about terms used by Westbrook related to internal control deficiencies.
“In their statement, toward the end, they added that they had limitations and therefore cannot look at deficiencies and internal controls,” Kaur said. “So, there might have been some.”
Internal control deficiencies are shortcomings that exist when the design or operation of a control doesn’t allow management or employees, in the normal course of performing their assigned functions, to prevent, detect and correct financial statement mistakes on a timely basis, according to a Wednesday presentation by Kristan Livingston, RSM US senior audit manager.
Livingston said there were no significant or material deficiencies found in the audit.
“But, there is a scope limitation on that we're not doing an exhaustive search of every control, every process,” she said. “That's not the purpose of our audit. The purpose of our audit is to issue an opinion on the financial statements, making sure it’s fairly stated.”
