During Union’s 2024 fiscal year (the 2023-2024 academic year), a financial audit conducted by KPMG found that Union had accurate financial statements, but issues with internal controls and federal compliance. The audit did not find that the college had committed fraud. John Cozzolino, Union’s Vice President of Finance, has told Concordiensis that the college has corrected the errors found in the audit.
According to Cozzolino, “For the fiscal years ended June 30, 2024 and 2023, Union College received an unqualified independent audit opinion on its financial statements. That type of opinion is the best result an organization can receive upon the completion of an audit.” An unqualified audit is an auditor’s statement that Union’s financial statements are presented fairly and are compliant with Generally Accepted Accounting Principles (GAAP).
“As part of the audit process, several internal control deficiencies were identified and reported. However, none of those deficiencies rose to a level that prevented the College’s auditor from issuing that unqualified opinion.” Cozzolino said.
The audit raised material weakness concerns about the college’s internal controls, specifically the risk of major errors going undetected. It also found significant deficiencies in fixed asset tracking and material noncompliance with following federal regulations.
The audit found that the college had not properly removed $183 million in fully depreciated fixed assets from its financial statements, which include land, buildings, machinery, and equipment. College officials discovered the issue while implementing the Workday ERP system.
Additionally, the audit found that the college overcharged the federal government for indirect cost expenditures (IDCs), which cover general administrative expenses associated with federal grants. “During our audit we found 3 out of 15 samples selected for our compliance testwork, the College used an incorrect IDC rate,” the audit explains. “In utilizing a higher rate, the College effectively inflated the administrative costs charged to the federal grants.”
Similarly, the college charged an incorrect fringe rate, which covers employee benefits. “During our audit we found 5 out of 20 samples selected for our compliance testwork, the College charged an incorrect fringe rate. After inquiry of management, we noted during the first quarter of the period under audit, the College charged a fringe benefit rate of 19.9%, instead of the actual rate of 18.65%.” The college then charged the correct fringe rate for the remaining three quarters of the fiscal year.
The auditors also found that the college had not followed its own policies for properly conducting an inventory of its research and development equipment purchased with federal funds. The college had also made errors in properly reporting changes to student enrollment status to the National Student Loan Data System.
