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California State Auditor Report Number : 2014-121

University of California, Davis
It Has Not Identified Future Financing for the Strawberry Breeding Program nor Collected All Available Revenues

Appendix

The Financial Data the University of California, Davis Provided to the Legislature for the Strawberry Breeding Program Contained Errors

In response to a request from the Legislature, in April 2014, the University of California, Davis (UC Davis) chancellor submitted a letter that included various financial reports for the Strawberry Breeding Program (strawberry program) for fiscal years 2004–05 through 2012–13. Two of these reports outlined the distribution of the strawberry program’s patent income to the strawberry program and other entities within the University of California. Figure 3 shows the distribution of the patent income that the strawberry program earned in fiscal year 2010–11, a portion of which was eventually distributed to the strawberry program in fiscal year 2012–13.

The other financial report detailed the revenues and expenses of the strawberry program. We reviewed the information in this report for the last two fiscal years (that is, 2011–12 and 2012–13) and determined that this information contained errors and inaccurately reported the financial activities of the strawberry program. Collectively, these errors caused UC Davis to understate the strawberry program’s revenues by $822,406, or 51 percent, and its expenses by $503,868, or 28 percent, for fiscal year 2012–13. Some of these errors likely occurred because the Department of Plant Sciences (department) could not easily identify the strawberry program’s revenues and expenditures. Until February 2015 UC Davis’ accounting system did not have a unique identifier to capture the strawberry program’s financial information from multiple accounts. The department also failed to include all of the strawberry program’s accounts when it prepared the report for the Legislature. In addition, the department’s chief administrative officer attributed other errors in the report to a misunderstanding with the College of Agricultural and Environmental Sciences regarding which revenues and expenses of the strawberry program the department should have included in the report. We show the strawberry program revenues and expenses that UC Davis reported to the Legislature and our corrections in Table A below.


Table A
Original and Corrected Strawberry Breeding Program Revenues and Expenses Reported to the Legislature
California Strawberry Commission (commission) Funding* February 1, 2011, to January 31, 2012 Non-California Discount Revenue Program Fiscal Year 2011–12 Patent Income Fiscal Year 2011–12 University of California, Davis (uc Davis), department of Plant Sciences Fiscal Year 2011–12 UC Davis, College of Agricultural and Environmental Sciences Fiscal Year 2011–12 UC Davis, Indirect Costs Fiscal Year 2011–12† TOTAL ALL SOURCES Fiscal Year 2011–12
Reported Reported Reported Corrected Reported Corrected Reported Corrected Reported Corrected Reported Corrected Difference
Revenue $350,000 $594,971 $306,149‡ $0 $156,679‡ $294,260 $290,948 $303,561 $319,742 $317,353 $2,018,489 $1,860,145 (8%)
Expenses
Salary 128,743 121,287 58,527 58,527 86,201 86,201 229,125 229,125 0 0 623,883 623,883 0
Benefits 41,354 57,806 23,300 23,303 46,143 46,143 61,823 61,823 0 0 230,426 230,429 0
Supplies 171,779 90,086 91,385 91,385 126,468 126,468 12,613 3,422 0 0 492,331 483,140 (2)
Equipment 0 0 0 0 0 0 0 0 0 0 0 0 0
Travel 8,124 10,090 9,482 9,482 0 0 0 0 0 0 27,696 27,696 0
Indirect costs 0 37,586 0 0 0 0 0 0 319,742 317,353 357,328 354,939 (1)
Total expenses $350,000 $316,855 $182,694 $182,697 $258,812 $258,812 $303,561 $294,370 $319,742 $317,353 $1,731,664 $1,720,087 (1%)
February 1, 2012, to January 31, 2013 Fiscal Year 2012–13
Reported Reported Reported Corrected Reported Corrected Reported Corrected Reported Corrected Reported Corrected Difference
Revenue $350,000 $423,185 $556,848‡ $862,997 $20,560 $23,004 $0 $409,840 $271,431 $375,404 $1,622,024 $2,444,430 51%
Expenses
Salary 119,064 227,148 0 14,805 0 0 230,800 431,757 0 0 577,012 792,774 37
Benefits 54,372 117,509 0 0 0 0 68,234 167,324 0 0 240,115 339,205 41
Supplies 169,385 332,744 20,537 20,537 28,481 28,481 12,175 97,218 0 0 563,322 648,365 15
Equipment 0 0 0 0 0 0 0 0 0 0 0 0 0
Travel 7,179 20,786 1,211 1,211 964 964 0 0 0 0 30,140 30,140 0
Indirect costs 0 95,322 0 0 0 0 0 0 271,431 375,404 366,753 470,726 28
Total expenses $350,000 $793,509 $21,748 $36,553 $29,445 $29,445 $311,209 $696,299 $271,431 $375,404 $1,777,342 $2,281,210 28%

Sources: UC Davis’ report to the Legislature in April 2014; accounting records from UC Davis’ Financial Information System, Kuali Financial System; and Payroll and Personnel system; and interviews with key UC Davis employees.

Note: Salmon-colored cells indicate where the figures in UC Davis’ report to the Legislature differ from the results of our audit.

* UC Davis reported these amounts based on the time period specified in the commission’s agreements with the University of California (university). Specifically, it used the February 1 to January 31 time period to ensure that it matched Strawberry Breeding Program (strawberry program) expenses with the funding the commission provided for that period. Otherwise, the university reported financial information based on a fiscal year, from July 1 to June 30.

† According to the director of the Costing Policy and Analysis unit within the Accounting and Financial Services Division, UC Davis calculates its indirect cost rates at the campus level and it does not determine the indirect costs for individual programs, such as the strawberry program. In order to provide this information to the Legislature, UC Davis estimated that the strawberry program’s indirect costs were equal to 26 percent of its direct costs. According to the senior associate vice chancellor of UC Davis’ Finance and Resource Management Division, UC Davis allocated some of the patent income from the strawberry program and other patents to pay for the indirect costs of the strawberry program.

‡ UC Davis reported these amounts based on the fiscal year that it intended to allocate the funds to the strawberry program, rather than the fiscal year when it actually recorded the funds in the strawberry program’s accounting records. For example, UC Davis delayed its fiscal year 2011–12 allocation of patent income until fiscal year 2012–13. As a result, the corrected amount for fiscal year 2012–13 patent income funding includes UC Davis’ intended allocation for fiscal year 2011–12 ($306,149) and fiscal year 2012–13 ($556,848).



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