Good Stewards of Public Funds

Sierra College receives yet another clean audit

While students were going about their day on the Sierra College campus one day in November 2017, the college’s finance managers and accountants had gathered in a conference room of the Business Office, waiting to see the annual audit report from the accounting firm Crowe Horwath LLP. At the end of its 90 pages were the words they wanted to see, "Findings: No matters were reported." Using more lively words to describe the event was Vice President of Administrative Services, Erik Skinner. "Getting a clean audit is a very big deal," he said, "So, for Sierra College to have clean audits for all these years is truly impressive.”

When the audit report arrived, Skinner was serving as Deputy Chancellor for the California Community College Chancellor’s Office in Sacramento and interviewing to join Sierra in his current role. "It's great to see such careful, high quality work," he said about the efforts of the finance team at Sierra. "The audit is not something they do for a couple of weeks; they focus on it all year as they work. The clean audit reflects the culture of fiscal integrity that our employees embrace."

The audit is required once a year by state law to evaluate internal controls, compliance with federal and state programs, industry standards and District policies. An audit results in an audit opinion about whether the financial statements present fairly the financial condition of the organization and its operations. The auditors test programs and gather evidence to see if the financial statements contain errors or mis-statements. If found, these would be reported as findings of the audit.

Sierra hires as its external audit firm, Crowe Horwath LLP, which is a member of Crowe Horwath International, an accounting network comprised of 200 firms in 130 countries, to perform the annual audit. Their specialists have worked with more than 170 higher education institutions across the country. Their audit teams include partners and staff with experience in California higher education.

Linda Fisher is Director of Finance for the Sierra College District and supervises the accounting staff.  The Business Office is housed in the U Building, which once served as a student dormitory and some years ago was remodeled into functional office space with a conference room and cubicles. From here, Fisher's team provides approximately 200 documents annually for the auditors to test and review.

The audit team makes three one-week visits over the course of the year, focusing on Financial Aid programs, internal controls along with adherence to policies and procedures, and detailed testing on final year-end financial statements.

A team of five or six auditors arrives in June to test controls over transactions such as the college paying for equipment for a chemistry lab classroom, for example. "They will ask for documents such as invoices, and contracts,” said Fisher. "They want to see if the entire process is correct. Did we adhere to that contract and pay in accordance with it? They want to see clear through to the purchase order close-out and see how expenses are recorded in the financial statements."

If an auditor encounters an error, "It could be an outlier," said Skinner, "though the auditor will extrapolate through transactions, test a wider sample of documents and test again.”  This helps the auditor to determine the potential extent of an error.

Nearly a decade ago, Sierra College implemented a district wide software system, known as Banner, which tracks student, human resource and financial data. Staff in the Business Office have been able to leverage this sophisticated system to extract information in a variety of ways to meet the auditor’s detailed requests.  Information can then be requested by the auditors and documents provided in response using a secure information portal.

In late October, the draft audit report goes through a rigorous review process at various levels in Crowe Horwath’s office.  The final draft report is then delivered to the Board of Trustee’s Audit Committee in November and the audit partner and manager meet with them to review the report and answer questions.  The final report is presented for review and acceptance by the full Board of Trustees at their December meeting.

Most colleges share Sierra’s desire to be good stewards of public resources. “At well-run colleges, it’s part of the organizational DNA” said Skinner. “Some colleges see an audit as an impediment, a hassle, something to endure. But at Sierra College we have very strong fiscal management—we're always ready for the test.

“There is a focus on fiscal integrity here that permeates the organization,” added Skinner, “from the finance team to the college president, a former chief business officer, up to the Board of Trustees, everyone is dedicated to responsible use of public funds. The proof of this is in the clean fiscal audits conducted over ten years.”