Report 2014-121 All Recommendation Responses

Report 2014-121: University of California, Davis: It Has Not Identified Future Financing for the Strawberry Breeding Program nor Collected All Available Revenues (Release Date: June 2015)

Recommendation #1 To: University of California, Davis

UC Davis should ensure that the strawberry program is adequately funded. To address the strawberry program's recent loss of funding, the university should consider allocating more of the strawberry program's patent income back to the program itself. In addition, UC Davis should regularly reassess the appropriateness of the strawberry program's royalty rates charged to licensees and adjust the rates as needed to support the program.

Agency Response*

The Strawberry Breeding Program (SBP) has established a budget approved by the CA&ES dean's office and the Plant Sciences department. The $1.2 million annual budget for 2015-16 and 2016-17 is funded entirely with strawberry patent revenue. A copy of the budget is provided. Financial activity is recorded in UC Davis Kuali accounts 3-PATDVS2 and 3-PATSJK2 (summary of financial activity for July 1, 2015-March 31, 2016 provided). As the SBP evolves to full maturity over the next few years, if the net strawberry patent revenue allocated from the campus to the Plant Sciences department and CA&ES dean's office are insufficient to fund the full SBP budget, the campus will partner with the college and department to resolve the difference.

Additionally, a royalty rate assessment has been completed by InnovationAccess. Assessment documentation provided.

  • Response Type†: 1-Year
  • Completion Date: April 2016
  • Response Date: April 2016

California State Auditor's Assessment of Status: Fully Implemented

UC Davis provided documentation supporting its statement that it is now using its strawberry breeding program's (strawberry program) patent revenue to fund the strawberry program. In addition, UC Davis provided documentation showing that it has finished assessing the appropriateness of the strawberry program's current royalty rates.


Agency Response*

The strawberry program has recently submitted a budget demonstrating adequate support for the strawberry program to the CA&ES Dean's office for review. The campus budget office will participate in reviewing the strawberry program budget as part of the follow-up to the audit (note: the budget office does not routinely review individual program or department budgets).

Progress to date regarding assessment of the strawberry program's royalty rates is in the form of focused (ongoing) discussion at InnovationAccess in furtherance of the corresponding UC Davis Action (as set forth in our May 22, 2015 letter). We anticipate the process will be completed by December 31, 2015. Over the next several weeks we will continue to take steps toward such completion.

  • Response Type†: 6-Month
  • Estimated Completion Date: 12/31/2015
  • Response Date: December 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

The department, along with all departments on campus, are in the process of evaluating year-end financial results from 2014-15 along with budgets for 2015-16. The department is working with the dean's office to prepare a multi-year budget to demonstrate adequate support for the strawberry program. The campus budget office will review the budget as part of the follow-up to the audit (note: the budget office does not routinely review individual program or department budgets). It is anticipated that a budget plan will be available for the budget office to review by late October.

With regards to reassessing the appropriateness of royalty rates - Progress to date for this recommendation is in the form of focused (ongoing) discussion at InnovationAccess in furtherance of the corresponding UC Davis Action (as set forth in our May 22, 2015 letter). We anticipate the process will be completed by December 31, 2015. Over the next several months we will continue to take steps toward such completion.

  • Response Type†: 60-Day
  • Estimated Completion Date: 12/31/15
  • Response Date: September 2015

California State Auditor's Assessment of Status: Pending


Recommendation #2 To: University of California, Davis

The department should prepare a balanced budget for each fiscal year that details how it will fund the strawberry breeding program. In addition, it should begin comparing actual income and expenses to the budget periodically to ensure that the program is operating in a cost-efficient manner and is adequately funded.

Agency Response*

The Strawberry Breeding Program (SBP) budget has been established. The Plant Sciences department completes a quarterly "budget versus actual expense" analysis. Analysis for the first three quarters of fiscal year 2015-16 provided.

  • Response Type†: 1-Year
  • Completion Date: April 2016
  • Response Date: April 2016

California State Auditor's Assessment of Status: Fully Implemented

UC Davis provided a copy of its budget for fiscal years 2015-16 and 2016-17. UC Davis also provided documentation showing that it is comparing budgeted vs actual costs quarterly.


Agency Response*

The Strawberry Breeder and Plant Sciences Department Chair have developed and submitted a budget request to the CA&ES dean's office on October 30, 2015. The CA&ES dean's office plans to review this budget request in the next couple weeks and hopefully reach a conclusion by the end of December 2015.

Once the budget is finalized it will be used to perform the budget to actual analysis of the first two quarters of fiscal year 2016.

  • Response Type†: 6-Month
  • Estimated Completion Date: 1/31/2016
  • Response Date: December 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

- The CA&ES dean's office has been working with the Plant Sciences department chair, chief administrative officer, and new strawberry breeder Steve Knapp to develop a balanced budget for the Strawberry Breeding Program. As of September 15, 2015 a rough draft budget has been developed. It is currently under review and expected to be finalized by October 15, 2015.

- Plant Sciences has developed a budget to actual worksheet for the Strawberry Breeding Program. It will be reported quarterly for periods July-September, October-December, January-March and April-June.

  • Response Type†: 60-Day
  • Estimated Completion Date: 12/31/15
  • Response Date: September 2015

California State Auditor's Assessment of Status: Pending


Recommendation #3 To: University of California, Davis

To better enable it to effectively monitor and report the financial condition of the strawberry program, UC Davis should implement its plan to begin accounting for the strawberry program's financial activities separately from those of the breeder in fiscal year 2015-16.

Agency Response*

Plant Sciences has moved the Strawberry Breeding Program financial activities into a unique Kuali Organization, separate from those of the breeder. Kuali ORG "ASBP" is the Strawberry Breeding Program ORG code which is a subordinate ORG under ORG "FSJK" which is Steve Knapp's ORG. We will provide the Organization Detail report in support.

  • Response Type†: 60-Day
  • Completion Date: July 2015
  • Response Date: September 2015

California State Auditor's Assessment of Status: Fully Implemented

UC Davis provided a report from its financial system, which shows that it created a subordinate organization code for the strawberry program. If UC Davis uses this new code appropriately, it will be able to account for the the strawberry program's financial activities separately from those of the breeder.


Recommendation #4 To: University of California, Davis

UC Davis should collect all late fees that its licensees owe.

Agency Response*

UC Davis Innovation Access performed an analysis of the appropriateness of late fees, the process for determining whether to assess late fees, and the process by which late fees might be assessed as associated with payments from UC Davis strawberry program licensees. The analysis is based on the following considerations: (1) background; (2) process for determining late fee collection; and (3) implementation of late fees. Based on an on-balance assessment of the considerations listed above, the assessment of late fees may be appropriate in certain circumstances.

The full analysis is provided for your information.

  • Response Type†: 1-Year
  • Completion Date: June 2016
  • Response Date: June 2016

California State Auditor's Assessment of Status: Will Not Implement

UC Davis provided a copy of its analysis of the appropriateness of late fees, which outlines its procedures for waiving late fees. However, we stand by our recommendation that UC Davis should collect all late fees that its licensees are contractually obligated to pay, as this funding could be used to support the strawberry program.


Agency Response*

Progress to date for this recommendation is in the form of focused (ongoing) discussion at InnovationAccess in furtherance of the corresponding UC Davis Action (as set forth in our May 22, 2015 letter). We anticipate the process will be completed by June 30, 2016. Over the next several weeks we will continue to take steps toward such completion.

  • Response Type†: 6-Month
  • Estimated Completion Date: 6/30/2016
  • Response Date: December 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

Progress to date for this recommendation is in the form of focused (ongoing) discussion at InnovationAccess in furtherance of the corresponding UC Davis Action (as set forth in our May 22, 2015 letter). We anticipate the process will be completed by June 30, 2016. Over the next several months we will continue to take steps toward such completion.

  • Response Type†: 60-Day
  • Estimated Completion Date: 06/30/2016
  • Response Date: September 2015

California State Auditor's Assessment of Status: Pending


Recommendation #5 To: University of California, Davis

If UC Davis considers providing future discounts on royalty rates, it should structure the agreements to ensure that it receives a commensurate benefit during the entire time that licensees receive discounts.

Agency Response*

We continue to agree with this recommendation. Discount strawberry royalty rates are not envisioned at this time. Accordingly, there is no current action to be taken.

  • Response Type†: 60-Day
  • Completion Date: July 2015
  • Response Date: September 2015

California State Auditor's Assessment of Status: Resolved


Recommendation #6 To: University of California, Davis

UC Davis should develop a risk-based audit plan to begin periodically reviewing the financial records of master licensees and licensed nurseries to ensure that they are accurately reporting all of their sales of licensed strawberry varieties and paying the university all the royalties it is entitled to. To encourage compliance, UC Davis should notify all master licensees and licensed nurseries that it will begin auditing the sales records of selected licensees.

Agency Response*

A cost-benefit analysis of implementing a licensee auditing program was completed by UC Davis Innovation Access February 12, 2016. (This analysis is provided to you separately.) The results of the cost-benefit analysis suggest that wholesale auditing of strawberry licensees would not be advantageous or an appropriate expenditure of funds at this time. However, for certainty and in response to CSA's recommendation for periodic auditing, UC Davis will conduct strawberry licensee audits as follows:

- Beginning in fiscal year 2017, and in each of the following three fiscal years, UC Davis will audit a strawberry licensee.

- The selection of licensee will be in view of licensee reporting, field representative input, input from others in the strawberry program, and cost-benefit considerations associated with auditing.

- After the 4th audit (conducted in fiscal year 2020), UC Davis will consider the benefits derived and any cost recoveries made from the audits and reassess this approach.

  • Response Type†: 1-Year
  • Completion Date: June 2016
  • Response Date: June 2016

California State Auditor's Assessment of Status: Pending

Although UC Davis provided its cost-benefit analysis of auditing its strawberry program licensees, the analysis did not provide any reliable evidence for its conclusion. However, UC Davis stated that it will conduct audits of the strawberry program beginning in fiscal year 2017. As a result, we look forward to the results of those future audits.


Agency Response*

Progress to date for this recommendation is in the form of focused (ongoing) discussion at InnovationAccess in furtherance of the corresponding UC Davis Action (as set forth in our May 22, 2015 letter). We anticipate the process will be completed by June 30, 2016. Over the next several weeks we will continue to take steps toward such completion.

  • Response Type†: 6-Month
  • Estimated Completion Date: 6/30/2016
  • Response Date: December 2015

California State Auditor's Assessment of Status: Pending


Agency Response*

Progress to date for this recommendation is in the form of focused (ongoing) discussion at InnovationAccess in furtherance of the corresponding UC Davis Action (as set forth in our May 22, 2015 letter). We anticipate the process will be completed by June 30, 2016. Over the next several months we will continue to take steps toward such completion.

  • Response Type†: 60-Day
  • Estimated Completion Date: 06/30/2016
  • Response Date: September 2015

California State Auditor's Assessment of Status: Pending


All Recommendations in 2014-121

Response Type refers to the interval in which the auditee is providing the State Auditor with their status in implementing recommendations made in an audit report. Auditees must submit a response regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year or subsequent to one year.

*Agency responses received after June 2013 are posted verbatim.


Report type

Report type
















© 2013, California State Auditor | Privacy Policy | Conditions of Use | Download Adobe PDF Reader