Higher education

University of Northern Iowa urged to tighten financial controls

Auditor investigates suspicious deposits

Bill Ruud is president of the University of Northern Iowa.
Bill Ruud is president of the University of Northern Iowa.

The University of Northern Iowa has been advised to tighten internal controls, conduct independent reviews of financial deposits, and improve the way it maintains records after the state auditor recently uncovered thousands in undeposited or improperly deposited collections in the College of Education.

Officials with the Curriculum and Instruction Department in UNI’s College of Education asked the state auditor to investigate after discovering an employee had substituted a personal check for cash collections in a deposit to the Office of Business Operations, according to an audit report released Friday.

Auditor Mary Mosiman’s team reviewed the college’s financial transactions from Jan. 1, 2012, to Oct. 31, 2014, and identified $3,128 in collections supposed to have been deposited that were not, according to the report. They also discovered collections that had not been deposited in a timely manner, and Mosiman reported finding $2,342 in checks issued by a university employee that were deposited in place of undeposited cash collections.

Collections investigators identified as improperly deposited include membership fees from UNI students participating in the Student Reading Association, tuition from those enrolled in the Literacy Clinic, materials fees from UNI students, and proceeds from campus book fairs, the report states.

“It was not possible to determine if additional collections were not properly deposited because certain records were not available for all time periods,” according to the report.

Mosiman’s office shared copies of the report with the Board of Regents Office, UNI’s Department of Public Safety, the Division of Criminal Investigation, the Black Hawk County Attorney’s Office, and the Attorney General’s Office.

Criminal charges related to this case have not been filed against the UNI employee in question — Lori K. Shannon, 46, according to online court records.

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Shannon began working at UNI in November 1992, and her duties with the Literacy Education Office included maintaining its library and processing certain financial transactions for the office like depositing fee revenue and collections from book fairs, and remitting payments, when necessary.

A faculty adviser for the university’s Student Reading Association first noted something was amiss in September 2014 when she took about $300 in membership fees to Shannon for deposit. The adviser asked Shannon if other fees she dropped off recently had been deposited, and Shannon said no and that she still had the cash, according to the report.

Shannon “then showed her approximately $700 cash she had in her desk,” the report indicated. “According to the faculty adviser, when she asked Ms. Shannon why she had kept the cash in her desk, she responded it was in case she needed it.”

The adviser told Shannon she couldn’t keep cash in her desk, and Shannon indicated she’d write a personal check and keep the cash on hand, according to the report. The adviser reported her concerns to the head of the department, who got the state auditor’s office involved.

Shannon still is listed as a UNI employee but her duties for depositing collections have been reassigned to another staff member, according to the report. She did not immediately respond to an email from The Gazette seeking comment for this story.

Following its investigation, the auditor’s office recommended — among other things — that UNI segregate duties related to gathering, preparing, and depositing collections, and that it prepare and maintain sufficient records.

Data encryption

The state auditor also recently reviewed the University of Iowa’s student financial aid system, Iowa State University’s Kuali Financial System, and UNI’s Facility Administration and Maintenance Information System.

Following all of the reviews, the state auditor recommended strengthening policies to ensure encryption of portable devices in hopes of protecting sensitive information — an issue her office has raised with the universities before.

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“Encryption software has not been installed on all laptop computers and portable storage devices which could store sensitive information,” according to the UI report. “Portable devices, including laptop computers and USB drives, present a risk to the university until they are encrypted.”

All three universities are working to improve encryption practices, according to the reports.

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