MEMO

TO:   Board of Regents

FROM:    Sheila M. Stearns, Commissioner of Higher Education

RE:   Commissioner of Higher Education Response to University of Montana Athletic Deficit Special Panel Recommendations

DATE:    July 2, 2004

Recommendation Number 12, Page 19.

(1)     The panel recommends that the Board of Regents ask the legislative auditor's office to prepare a comparison between the internal audit functions of the University campuses and those in peer states; the structure, staffing, audit focus, and reporting lines of the internal audit departments among the different University units.

(2)     The Board of Regents may want to consider establishing an audit oversight committee.

Commissioner's Response:

(1)     The Commissioner agrees with the recommendation that the Board of Regents requests assistance from the Legislative Audit Division to compare internal audit functions of the University campuses and those in peer states, including the structure, staffing, audit focus, and reporting lines of the internal audit departments among the different units. The Commissioner will review and may modify this proposal after input from the Legislator Auditor.

(2)     The Commissioner agrees the Board may want to consider establishing an audit oversight function to its committee structure. Board of Regents ITEM 123-110-R0504, Amendment of By-Laws; Creation of Standing Committees, places Board audit oversight responsibilities with the Budget Committee (renamed Budget and Audit Oversight Committee if this item is approved).

Recommendation Number 21, Page 30.

The panel suggests that follow-up review by the panel may be appropriate after a year.

Commissioner's Response:

The Commissioner is seeking input to this suggestion from Panel Chairman, Diane Barz. The scope of any follow-up review by the panel should be defined prior to convening the panel.

Recommendation Number 32, Page 55.

(1)     The Board of Regents should engage in public discussion and provide feedback on the athletic reports submitted in November each year

(2)     The policy on negative fund balances should be reevaluated to acknowledge deficits but remove the current disincentive to report problem areas.

Commissioner's Response:

(1)     The Commissioner agrees with the recommendation and suggests the annual athletic reports be put on either the Board's agenda or the Budget Committee's agenda each January.

(2)     The Commissioner will seek feedback from Campus CEOs in regard to Board Policy 901.11 - Negative Fund Balances and provide a response to the Board at the September meeting.