Operation Varsity Blues and Internal Audit

When news broke regarding the college admissions scandal back in March, I couldn’t help but think: where were the internal auditors?

Thirty-three parents of college applicants are accused of paying more than $25 million to William Rick Singer, who used the funds to fraudulently inflate entrance exam test scores and bribe college officials. Among the accused parents are well-known actors and prominent businesspeople. Federal prosecutors allege the scheme involved two major practices: parents bribing test administrators to facilitate cheating on college and university exams, such as the SAT or ACT, and parents bribing coaches and administrators by fabricating elite sports credentials. Through an internal audit of the admissions and enrollment function, these instances could potentially have been identified prior to Operation Varsity Blues.

At the university level, the risks associated with cheating on college admissions exams cannot be controlled, but admissions and enrollment personnel should always take time to review the SOC reports of third-party providers to ensure appropriate Complimentary User Entity Controls are in place. In this instance, Internal Audit could have tested the control environment surrounding the admissions function as it relates to the reliance on standardized tests, ensuring that the university not only has the appropriate controls in place, but that they are operating effectively and efficiently.

An athletic scholarship should be vetted by an individual independent of the sport, who would review the offer to validate that the athlete is indeed elite and meets academic requirements. The review would include evaluating the athlete’s profile and confirming information with his or her high school. Internal Audit would provide that review, and also perform real-time audits by attending practices and validating that all athletes on scholarship are present and active.

In addition, regular reporting of legacy acceptances, due to stature or donation, should be conveyed to the university’s board of trustees. If it’s the university’s practice to accept for admission relatives of significant donors in order to ensure future donation flow, these should be reported on regularly. Internal Audit could have reviewed the admissions rate of donors and their relatives, which would have identified exceptions to the university’s requirements. Reviewing reporting of legacy admissions could also help identify trends.

It’s time for universities to take a greater focus on the high risk area of admissions and enrollment to mitigate the occurrence of such a scandal happening at their institution. Internal Audit should focus on current practices and make recommendations when necessary to help the university improve its processes. IA should look to be a trusted business advisor as university management looks to make changes to its current control environment.

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