December 9, 2005
|FROM:||Neil Kerwin, Interim President
We approach the end of the fall semester, which has been one of the most momentous in the university's history. Before we are completely overtaken by work and holidays, I want to reflect on recent developments and what lies ahead in the coming months.
For the first time, American University had finalists in both the Marshall and Rhodes scholarship competitions and also for the first time, two AU students were Rhodes finalists in the same year. Kyle Taylor and Forrest Dunbar, our two finalists, distinguished themselves and the university during the Rhodes competition. Natalie Hand is our first Marshall Scholar since 1995. We are proud of the remarkable accomplishments of these three students and we admire the discipline, drive and talent they displayed during the rigorous selection processes. We are equally proud of and we appreciate the faculty who taught and mentored them, along with the staff in the Office of Merit Awards and elsewhere who worked hard to prepare them.
Activities continue related to board reform. On December 1, board chair Gary Abramson and vice chair Tom Gottschalk, with the assistance of counsel, submitted their response to the questions posed by Senator Charles Grassley on behalf of the Senate Finance Committee. Their letter was posted on both the governance and president's websites and I urge you to review it if you have not already. We will collect all comments regarding this posting and convey them to the board for review. We may receive additional communications from the senator and committee staff in the coming weeks and will inform the university community accordingly.
There are other board activities related to governance that are important to note. This week, representatives of the board's Special Committee on Governance began a series of meetings with representatives of campus constituencies, including the vice presidents, interim provost and deans, Faculty Senate, students, alumni, staff and parents. Committee chair and trustee Pam Deese has provided a meetings summary that is posted on the governance Web site. These initial sessions were to obtain the university community’s views regarding needed reforms in current governance structures and processes, and other meetings will follow. I urge all members of the AU community to work through your units or elected representatives to make your views known. The working group of representatives from each of our major constituencies is available as a clearinghouse for sharing ideas and information. Should campus organizations need assistance in obtaining information on governance practices, please notify my office and we will see that the appropriate resources are made available.
Over the past few months, a number of persons have asked questions about the university’s financial status and our internal management controls. This is understandable in light of recent events, and these questions merit a serious and detailed response that space here does not allow. But, let me state a few pertinent facts and outline subsequent planned communications.
At the November 2005 board meeting, the Audit Committee heard the report from KPMG, our external auditor. KPMG issued an unqualified opinion on the university’s financial statements, which is their highest rating. They also reported there were no material weaknesses in internal controls. The committee also heard from our internal auditor, Protiviti (the firm engaged by the board for its inquiry into the expenses of the former president), on its progress to date on a project related to the university's internal management and controls. At the fall 2004 board meeting, the Audit Committee approved an internal audit plan, which includes using a significant portion of internal audit’s time to begin a Sarbanes-Oxley review of the university’s internal controls over financial processes. Although the Sarbanes-Oxley regulations do not apply to not-for-profit institutions, the Audit Committee agreed with management that AU should continue to be proactive in applying rigorous standards of internal control across the enterprise. This began an 18-month process during which Protiviti has been reviewing, documenting, and performing detailed testing of the university’s internal controls. To date, Protiviti has reviewed and documented the following processes and found no significant internal control weaknesses: procurement and accounts payable; payroll and benefits; investments and cash management; and auxiliary services. Additional reviews are currently underway in areas such as registration, student accounts, financial aid, and overall financial reporting.
Vice president of finance Don Myers will report on the strong overall financial state of the university and the condition of financial controls at either the January or February meeting of the Faculty Senate, whose meetings are open to the university community. (The exact date will be determined when the Faculty Senate agenda for the spring semester is set).
Our budget performance for the current fiscal year with regard to revenue and expenditures requires monitoring over the coming months. Revenue from summer and fall enrollments is expected to fall short of the budget, and spring enrollment revenue is likely to be short of target as well. However, we have budgeted prudently regarding our tuition reserves, other areas of revenue appear satisfactory, and our management of expenditures appears on track. We will monitor this carefully, but as of now, I see no reason to alter the plans for the current year.
Looking ahead, we are on the cusp of the most important period in the next round of student recruitment. As of this week, the early decision pool looks strong and applications for 2006 fall enrollment for freshmen and transfers are up over this time last year. Masters applications are running behind this time last year, but we are still early in the cycle.
As I announced to campus on November 1, Al Checcio will leave his position as vice president of university relations on December 31 to assume that same position at Fordham University. After extensive discussions with Al regarding his area of responsibility and the current challenges we face, I am making a number of organizational changes. First, the Department of Athletics and Recreation will report directly to me. This is the general practice in the Patriot League and increasingly throughout higher education. Second, the university-wide communications functions that were housed in Al's division, University Marketing and Publications, will be moved to David Taylor in the President’s Office. This consolidation will promote greater consistency in university-wide messages, while assisting the campus units in communicating their accomplishments to external media and other interested parties. David already oversees Media Relations, Special Events, and WAMU 88.5 FM. These changes are effective immediately.
The core development functions -- research, major gifts, annual fund, alumni relations -- will remain intact and work closely with their counterparts in the schools and colleges. Ms. Abbey Silberman, currently director of prospect research and stewardship, will become senior director of development and serve as acting director of development. She will continue to oversee the critical research function, as well as the core development duties of the office. Abbey came to AU in 2004 with more than 15 years of experience in development and major gifts consulting which included work with Marts & Lundy (a non-profit consulting firm), Combined Jewish Philanthropies in Boston, and Harvard University. This change is effective January 1. It is critical that we maintain momentum on the Campaign for AnewAU. I will devote a significant portion of my time to development activities and work closely with Ms. Silberman, the deans and their directors of development to ensure that our resources in this area are used to best effect.
As we end the semester, I thank every member of the AU community for maintaining high standards in all areas of this university's mission. We have endured change, levels of conflict and intense public scrutiny that few institutions experience. We have shown ourselves to be strong, resilient, and driven by a deep commitment to this institution. Throughout it all, our faculty members have pursued their scholarship, teaching, and professional activities; our students have continued to learn and grow; our staff have supported these activities; and we have continued to serve our many communities. We remain focused on ensuring that American University is true to its mission. For that I thank and commend you.Best wishes for bringing the current term to a successful conclusion, and I hope that you and your family have a happy holiday season.
December 9, 2005 4:17 PM