For the first time, MSU's external auditors will be able to reapply to retain their positions after their six-year renewable contracts expire.

Plante & Moran, an external auditing firm based in the Midwest with an office in East Lansing, was selected as the auditor for the next fiscal year on Jan. 13. The company was selected by the MSU Board of Trustees on a contract valued at $259,000 for the 2005-2006 fiscal year.

The contract is renewable for up to six years, based on whether service, price, terms and conditions are agreeable to both parties.

In the past, the board has selected a new external auditing company every six years. The change will allow a contracted firm to continue as the university's external auditors.

"The reason that policy was established was to indicate that it is good to periodically change auditors," board Chairman David Porteous said.

Porteous said the university felt it was important to have a "new set of eyes" on its finances. The number of large, quality auditing firms had declined in recent years, he said, leading to this year's policy change that allows past auditors to reapply for the job.

"If we (continue to) follow this rule, we're eliminating the opportunity of someone doing the work to continue to do the work," Porteous said.

Plante & Moran were chosen as the best fit for the university because of the company's experience with higher education, he said.

The external auditors rely on the expertise of the university's Internal Audit Department for financial reports.

"They're not really involved with individual programs," said Tom Luccock, director of the department. "They handle the external financial audit of the university. They are at a higher level."

Greg Deppong, chief accountant in the MSU Controller's Office, said the external auditors serve the important function of independence in the auditing process.

During the audit, the external company double checks the university's record books to ensure actual figures match the reported figures.

"Every year we get hundreds of millions (of dollars) in state appropriations," Deppong said. "They are there to test the transactions of the university."

The external auditors publish their opinions of MSU's financial strength every year, Deppong said, and generally find the university's financial reports free from misstatements.

Luccock said his department works with the external company to provide the firm with specific figures for a program or unit the office has recently reviewed. He said a difference in the two approaches is that the internal audit department looks at different programs every year, while the external auditors focus more on the same types of figures year in and year out.

"They are concerned with the university balance sheets, cash and accounts receivable — things like that," Luccock said. "They don't get into as much depth as we do."

Deppong said the external firm's opinion is to reassure both the state and federal governments, which provide MSU with millions of dollars in both direct appropriations and grant money, that the university is handling the money responsibly.

"You're really purchasing that opinion," Deppong said.