To strengthen its oversight of payments made from the CERF trust account, San Josť State should immediately take the following action: establish procedures instructing departments to demonstrate that each payment request is for the support and development of CSU self-supported instructional courses and programs. These procedures should include, at a minimum, the following:
- A requirement for departments to attach copies of documents such as purchase orders, work orders, and contracts to their requests for payments to demonstrate that direct costs for services or activities benefit self-supported instructional courses and programs; these documents should be easily traceable to those courses and programs.
- A requirement for departments to demonstrate that they assign indirect costs to self-supported instructional courses and programs according to a methodology that represents a reasonable and equitable distribution.
- A requirement for departments to retain documentation to support the development of the methodologies they use to distribute indirect costs to self-supported instructional courses and programs.
- A definition for reasonable and equitable distribution using one of the three common methods identified in the State Administrative Manual or methods developed by the campus and approved by the Chancellor's Office.
SJSU has fully complied to audit recommendation #26. The Academic Affairs Division (AAD) has put in effect their Guidelines, posted to the Academic Planning and Budgets website; training for Deans, Chairs and analysts have been completed.
Specifically, this recommendation is in 4 parts as follows:
a) A requirement for departments to attach copies of ...
b) A requirement for departments to demonstrate that they assign...
c) A requirement for departments to retain documentation support...
d) A definition for reasonable and equitable distribution..."
For (a), AAD specifically requires that "For direct costs of services or activities benefiting self-supported instructional courses and programs, such as in purchase orders, work orders, and contracts... the documentation should be easily traceable to those courses and programs, and attached to requisitions. They should also be kept on file and will serve as the basis to support the top-down cost apportionment calculation by AAD."
For (b), AAD specifically states "In order to ensure that direct costs and indirect costs of self-supported instructional courses and programs, e.g. purchase orders, work orders and contracts... are reasonably and equitably charged to CERF, AAD will apportion costs throughout the year in a manner that resembles the enrollment split of state-support enrollment vs. self-support enrollment, as per the principle of allocation in these Guidelines. Please note that this action ensures that SJSU also complies to Recommendation(d).
For (c), AAD specifically states "Departments are responsible for retention of documentation to support the development of the methodologies used in the submission of fee proposals. The pro-forma distribution of indirect costs to self-supported instructional courses and programs should follow the principle of allocation as outlined in these Guidelines and must be retained on file as required in the State Audit Report."
For (d), see (b) above
The Vice Provost of Academic Budget and Planning is taking the lead to develop the new allocation model for direct/indirect costs, which will be ratified jointly by Finance and the Division of Academic Affairs, and then implemented in all SJSU colleges. The AVP of Finance will then instruct all campus personnel to include documentation of allocation as appropriate along with all requests for payments.
- San Josť State University Central Finance has re-iterated to campus departments that attachment of full documentation continues to be an important required AP procedure, and that, whenever appropriate and possible, departments' charges against CERF should reflect the benefits to CERF programs.
- The College of International and Extended Studies is working with San Josť State University Central Finance to revise the corresponding instructions to campus departments - to be completed by end of May 2014.
- San Josť State University Central Finance has re-iterated to campus departments that they need to retain full documentation of their methodology for indirect costs of self-supported programs.
- The campus has developed a method for allocating costs to CERF that is reasonable and equitable, as detailed in the submitted documentation of the return of funds from NextGen to CERF (as per audit recommendation #25)
Agency responses received are posted verbatim.