oversight

The Student Support Services Project Administered by Marian College, Fond Du Lac, Wisconsin.

Published by the Department of Education, Office of Inspector General on 2000-03-27.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

         AUDIT OF THE STUDENT SUPPORT SERVICES
       PROJECT ADMINISTERED BY MARIAN COLLEGE,
                FOND DU LAC, WISCONSIN




                                  FINAL AUDIT REPORT




                              Control Number ED-OIG/A05-90045
                                         March 2000



Our mission is to promote the efficient                   U.S. Department of Education
and effective use of taxpayer dollars                     Office of Inspector General
in support of American education                          Chicago, Illinois
                                            NOTICE
Statements that financial and/or managerial practices need improvement or recommendations that costs
questioned be refunded or unsupported costs be adequately supported, as well as other conclusions
and recommendations in this report, represent the opinions of the Office of the Inspector General.
Determinations on these matters will be made by the appropriate U.S. Department of Education
officials. In accordance with the Freedom of Information Act (5 U.S.C. §552), reports issued by the
Office of the Inspector General are available, if requested, to members of the press and general public
to the extent information contained therein is not subject to exemptions in the Act.
Table of Contents
Audit of the Student Support Services Project Administered by
Marian College, Fond du Lac, Wisconsin
Control Number ED-OIG/A05-90045

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Audit Results

          Marian Paid Support Services Staff for Time Not Spent on Support
          Services Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

          Marian Recorded and Claimed Excess Salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

          Marian Claimed Excess Indirect Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

          Marian Could Not Support Achievement of All Grant Objectives . . . . . . . . . . . 7

          Marian Did Not Have Adequate Controls Over Support Services
          Purchases, Travel Expenses, and Maintenance of Participant Files . . . . . . . . . 10


Appendix A
          Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A1


Appendix B
          Objectives, Scope, and Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B1


Appendix C
          Statement on Management Controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C1

Appendix D
          Auditee's Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D1
                          Executive Summary
Marian College (Marian) of Fond du Lac, Wisconsin, did not always administer its Student Support
Services (Support Services) project according to applicable law and regulations. Our audit of the
Support Services project from September 1, 1993, through August 31, 1999, disclosed that Marian:

‚       granted Support Services staff 23 days of leave in excess of Marian’s official leave policy,

‚       recorded and claimed more salary expenses than the amount it paid to the staff,

‚       claimed indirect costs in excess of the allowable amount,

‚       did not achieve all its grant objectives and could not provide documents supporting every
        objective it reported it achieved, and

‚       did not have adequate controls over Support Services purchases, travel expenses, and
        maintenance of participant files.

We recommend that the Assistant Secretary for Postsecondary Education instruct Marian to refund
$77,959 for:

‚       granting 23 days of excess leave ($39,531),

‚       recording and claiming more salary expenses than it actually paid ($34,142), and

‚       claiming excess indirect costs ($4,286).

In addition, we recommend that the Assistant Secretary instruct Marian to maintain documents
supporting the objectives it claims to have achieved and develop and consistently follow controls over
purchases, travel expenses, and maintenance of participant files.

Marian concurred with the first three findings. It partially concurred with the fifth finding and did not
concur with the fourth finding. Marian has initiated corrective action on many of the recommendations.
However, Marian did not concur with some specific recommendations. Specific comments and the
auditors' responses are included after each finding. Due to the voluminous number of attachments
included with Marian's written comments, we have included as an appendix only those sections that
directly address the findings and recommendations. We will forward supporting documentation that
Marian provided to the program office under separate cover. We made minor changes to the report
based on Marian's comments.

                                                       1
For additional information on Marian and the Support Services program; our objectives, scope, and
methodology; Marian’s management controls; and Marian's comments on our draft audit report, see
Appendices A, B, C, and D, respectively.




                                                    2
                                  Audit Results
Marian Paid Support Services Staff for Time Not Spent on Support Services
Activities

Support Services Staff Paid   Marian overcharged the Support Services grant and used
for Leave in Excess of        Federal funds to pay Support Services staff members for time
Marian’s Official Leave       they did not spend on grant activities Each year Marian offered
Policy                        Support Services staff 23 days of leave in addition to the sick
                              and vacation days each staff member earned under Marian’s
                              official leave policy. Support Services staff may use all 23 days
                              during the grant year, but may not carry unused days over to
                              the next grant year. Marian started offering the 23 additional
                              days of leave in June 1994.

                              We interviewed each Support Services staff member. Each
                              staff member was aware that they could use 23 days of leave in
                              addition to the days they earn under Marian’s official leave
                              policy. However, Marian did not maintain official records
                              showing Support Services staff’s use of the additional days of
                              leave.

Support Services              Office of Management and Budget (OMB) Circular A-21
Employees’ Compensation       (J)(8) states, in part, that compensation for personal services
Should Conform to Marian’s    includes salaries, wages, and fringe benefits. These costs are
Policy                        allowable to the extent that the total compensation to individual
                              employees conforms to the established policies of the institution
                              and is consistently applied, provided that the charges for work
                              performed are supported.

                              Marian’s official leave policy states that vacation leave is
                              earned and accrued at the rate of

                              C       12 days per year during the 1st year of employment,
                              C       18 days per year during the 2nd through the 5th year of
                                      employment, and
                              C       24 days per year afterwards.

Marian Overcharged the        Assuming a standard work week of 5 days and a standard
Grant                         work year of 52 weeks, the 23 days of additional leave are


                                            3
                                    for                    on
                           approximately 9 percent of the total number of work days
                           (260) available in a given year. We applied 9 percent to the
                           total salary and fringe benefit costs Marian recorded for the
                           period September 1, 1994, through August 31, 1999, and
                           determined that Marian overcharged the grant $39,531.

Contracts Show Staff Are   Marian's contracts with Support Services staff run from July 1
12-Month Employees         of one year through June 30 of the following year. The
                           contracts do not mention the additional leave. We were told
                           that a Marian official agreed to grant one project counselor the
                           additional 23 days of leave in June 1994. Once the Marian
                           official made the agreement with the counselor, all Support
                           Services staff were offered the additional leave.

RECOMMENDATIONS            We recommend that the Assistant Secretary for Postsecondary
                           Education instruct Marian to:

                           1.      refund $39,531 (9 percent) of the salaries and fringe
                                   benefits charged to the grant during the period
                                   September 1, 1994, through August 31, 1999; and

                           2.      cease the practice of offering the 23 additional days of
                                   leave to Support Services staff.

Auditee Comments           Marian concurred with the finding and stated it will refund
                           $39,531. Marian also provided a copy of the policy
                           memorandum, dated July 7, 1999, provided to Support
                           Services staff in which the Vice President of Student Services
                           stated that Marian was suspending the additional 23 days of
                           leave.

Auditor Response           We did not make any changes to the report. Suspending the
                           additional 23 days of leave will provide reasonable assurance
                           that Marian does not pay staff for time not spent on grant
                           activities.




                                          4
Marian Recorded and Claimed Excess Salaries

Marian Recorded and           From September 1, 1993, through August 31, 1999, Marian
Claimed More Salary Than      recorded and claimed $410,579 for Support Services’ staff
the Amount Actually Paid to   salaries. However, Marian actually paid only $376,437,
Support Services Staff        resulting in Marian drawing $34,142 of Federal funds in excess
                              of actual salaries paid during the six-year period.

                              Title 34 Code of Federal Regulations (Title 34 CFR) 74.28
                              states, in part, that a recipient may charge to the grant only
                              allowable costs resulting from obligations incurred during the
                              funding period. Also, Title 34 CFR 75.702 states, in part, that
                              a grantee shall use fiscal control and fund accounting
                              procedures that ensure proper disbursement of and accounting
                              for Federal funds.

Marian Drew Funds Based       In July of each year, Marian determined how much in salary
on Estimated, Not Actual,     expenses it would charge to the Support Services grant during
Salaries                      the coming year. Marian determined the monthly amount by
                              taking the annual salary stated in each Support Services staff
                              member's contract and dividing the total by 12. Marian then
                              recorded this amount in the general ledger and drew down
                              Federal funds. This policy did not provide for Marian to make
                              regular adjustments to its general ledger to correct any changes
                              or differences between estimated and actual salary expenses.
                              Also, this policy did not provide for making adjustments to
                              account for staff turnover.

RECOMMENDATIONS               We recommend that the Assistant Secretary for Postsecondary
                              Education instruct Marian to:

                              1.      refund $34,142, and

                              2.      develop policies and procedures to ensure the salary
                                      amount recorded agrees with the actual salary paid.

Auditee Comments              Marian concurred with the finding and stated it will refund
                              $34,142. Marian also implemented a policy to make Support
                              Services staff salary transfers on a monthly basis using the
                              actual payroll and fringe benefit expenses for the month.


                                           5
Marian Could Not Support Achievement of All Grant Objectives

Marian Could Not Provide   In its grant proposal, Marian stated it would achieve 11
Support for All the        objectives during the 1997-1998 grant year. In its
Objectives It Claimed to   performance report dated November 25, 1998, Marian
Achieve                    reported achieving 1 objective and making progress toward
                           achieving 9 of the remaining 10 objectives. However, the
                           documentation Marian provided was not sufficient to show that
                           Marian achieved (or did not achieve) 3 of the 11 objectives.

                           Title 34 CFR 74.51(d)(1) and (2) states, in part, that the
                           performance reports must generally contain a comparison of
                           actual accomplishments with the goals and objectives
                           established for the period and the reasons why the recipient
                           did not meet established goals, if appropriate. Also, Title 34
                           CFR 74.51(a) states, in part, that recipients are responsible for
                           managing and monitoring each project, program, sub-award,
                           function, or activity supported by the award. Finally, Title 34
                           CFR 646.20(a)(2)(i) states, in part, if any application for a new
                           grant proposes to continue to serve substantially the same
                           population it is serving under an expiring grant, the Secretary
                           evaluates the applicant on prior experience in delivering
                           services under the expiring grant.

Department of Education    The Department of Education awarded Marian $180,000 for
Did Not Have Sufficient    the 1997-1998 grant year and $187,200 for the 1998-1999
Information to Determine   grant year to provide services to Support Services participants
Marian’s Grant Amount      through 11 objectives. During 1997-1998, Marian expended
                           less than $150,000 and could not provide sufficient evidence
                           that it fully or partially achieved all of its objectives. Had
                           Marian reported, as required by Title 34 CFR 74.51(d), that it
                           did not achieve all its objectives, the Department of Education
                           may not have funded the 1998-1999 award in its entirety.

Controls Over Monitoring   Marian employed four different Project Directors during the
and Maintenance of         1995 through 1998 grant years The Project Directors and
Documentation Need         Marian officials overseeing the project did not closely monitor
Strengthening              the Support Services office’s progress toward achieving the
                           objectives. Also, Marian did not have written policies or
                           procedures for maintaining supporting documentation.
                           Consequently, Support Services did not consistently compile

                                         7
                                                          of
                   documentation to support achievement of objectives at the time
                   it completed the performance report.

RECOMMENDATIONS    We recommend that the Assistant Secretary for Postsecondary
                   Education ensure that Marian:

                   1.      develops and implements written policies and
                           procedures to monitor progress towards the
                           achievement of its performance objectives, and

                   2.      maintains documentation, as described in the grant
                           proposal, to demonstrate the degree to which it
                           achieved the objectives.

Auditee Comments   Marian disagreed with the finding. It stated that it met 9 of the
                   11 objectives. Marian also stated that it already has
                   implemented written policies and procedures to monitor
                   progress toward achievement of objectives. It also stated that
                   it maintains documentation to support achievement of
                   objectives. Marian acknowledged that it did not achieve 2 of
                   its 11 objectives, and stated it was granted permission to
                   change 1 of its objectives. Marian provided additional
                   documentation which it stated would support that it met 9 of the
                   11 objectives and show that it has written policies and
                   procedures.

Auditor Response   We made minor changes to the finding based on Marian's
                   comments. Based on our review of the additional
                   documentation to support achievement of the objectives, we
                   believe that Marian has documentation sufficient to determine
                   whether it achieved 8 of its 11 objectives. However, we still
                   believe Marian needs to maintain additional documentation.
                   The additional documentation should closely follow the support
                   Marian describes in its grant proposal.

                   Marian developed a policies and procedures guide for
                   administering the grant after we requested written policies and
                   procedures. The guide describes the documentation needed to
                   demonstrate whether Marian meets its objectives. Following
                   the guide consistently will provide reasonable assurance that

                                8
Marian Could Not Support Achievement of All Grant Objectives
                                 Marian monitors the Support Services project and maintains
                                 sufficient documentation.




                                              9
Marian Does Not Have Adequate Controls Over Support Services
Purchases, Travel Expenses, and Maintenance of Participant Files

Marian Lacked Support for     Marian did not always have adequate documentation for
Purchases, Travel             Support Services purchases, travel expenses, and participant
Expenses, and Participant     files. Of the 70 purchases and travel expenses totaling $30,878
Eligibility                   that we tested, Marian officials could not provide receipts and
                              other documentation sufficient to fully support 35 (totaling
                              $14,116).

                              Additionally, many participant files did not contain
                              documentation to support the students' eligibility for Support
                              Services. We reviewed 35 of 115 participant files. However,
                              in 26 files, we could not determine if the participant was a
                              citizen, national, or permanent resident. Also, in 11 files, we
                              were unable to determine the participants' qualifying factor
                              (low-income, first generation, or disabled).

Accounting Records Must       Title 34 CFR 74.21(b)(2) and (7), and 74.53(b), state, in part,
Be Supported by Source        that the recipient’s financial management system shall provide
Documentation                 for records that adequately identify the source and application
                              of funds for federally sponsored activities and effective control
                              over accountability for all funds, property, and other assets.
                              Also, the system shall provide for accounting records that are
                              supported by source documentation. These financial records,
                              supporting documents, statistical records, and all other records
                              pertinent to the award shall be retained for a period of three
                              years from the date of submission of the annual report.

                              Title 34 CFR 646.32(b) states, in part, that a grantee shall
                              maintain participant records that show the basis for the
                              grantee’s determination that each participant is eligible to
                              participate in the project.

Marian Does Not Have          Marian does not have adequate assurance that $14,116 in
Assurance All Expenses        purchases and travel expenses solely benefitted Support
Benefitted Eligible Project   Services participants. Additionally, Marian cannot demonstrate
Participants                  that the participants served were eligible for those services.




                                           10
Written Policies and    Marian has written policies and procedures for purchases and
Procedures Not Always   travel expenses. Under these policies and procedures, Support
Followed or Lacking     Services staff were issued credit cards in their names. Staff
                        could then make purchases and book travel using the credit
                        cards. Marian's business office paid Support Services
                        expenses using the statements received from the credit card
                        issuer. However, Marian did not ensure that Support Services
                        staff obtained receipts prior to paying the obligation. Marian
                        did not have written policies and procedures for maintaining
                        participant files.

RECOMMENDATIONS         We recommend that the Assistant Secretary for Postsecondary
                        Education ensure that Marian develops and implements policies
                        and procedures to maintain required:

                        1.      source documentation for purchases and travel
                                expenses, including original receipts; and

                        2.      documentation showing participant eligibility.

Auditee Comments        Marian concurred that it did not have adequate controls over
                        purchases and stated that it implemented new policies and
                        procedures. However, Marian disagreed that it did not have
                        adequate controls over participant files.

Auditor Response        We did not make any changes to the report. The additional
                        documentation that Marian provided did not include information
                        to show if 26 participants were citizens, nationals, or permanent
                        residents. Also, the additional documentation did not allow us
                        to determine 11 participants' qualifying factors (low-income,
                        first generation, or disabled).




                                     11
Background
Marian College   Marian is a coeducational, private, nonprofit, Catholic, liberal
                 arts college located in Fond du Lac, Wisconsin. It was opened
                 as a school for teacher education on September 8, 1936. In
                 1941, the State of Wisconsin empowered Marian to grant a
                 bachelor's degree in Elementary Education. In 1960, the North
                 Central Association of Colleges and Schools accredited Marian
                 for teacher education. Marian provides undergraduate,
                 graduate, and degree completion. Marian also offers selected
                 classes in Appleton, Green Bay, Janesville, Madison,
                 Milwaukee, Neenah, Racine, Sheboygan, Watertown,
                 Wausau, and West Allis, Wisconsin.

                 Marian first received a Support Services grant for the four-year
                 period from September 1, 1993, through August 31, 1997
                 (grant number P042A30388) The awards for the four grant
                 years were $82,437, $83,388, $105,302, and $105,302,
                 respectively. Marian received a second Support Services grant
                 for the four-year period September 1, 1997 through August
                 31, 2001 (grant number P042A70832). The awards for the
                 grant years ending August 31, 1998, and 1999 were $180,000
                 and $187,200, respectively.
The Student Support      Support Services provides grant funds annually for projects
Services Program         designed to (1) increase college retention and graduation rates
                         for eligible students, (2) increase the transfer rates of eligible
                         students from 2-year to 4-year institutions, and (3) foster an
                         institutional climate supportive of the success of low-income
                         and first generation college students and individuals with
                         disabilities. At least two-thirds of the participants must be
                         individuals with disabilities or individuals from low income
                         families who are first generation college students.

                         Title IV of the Higher Education Act of 1965, as amended,
                         authorizes this program. The program is also governed by the
                         regulations contained in Title 34 CFR 74, 75, and 646. All
                         regulatory citations in the report are to the codification in effect
                         as of July 1, 1997.

Objectives, Scope, and Methodology
Objectives and Scope     The overall objective of our audit was to determine if Marian
                         administered its Support Services grant according to applicable
                         regulations. We started our audit with a survey. Our specific
                         survey objectives were to determine if, for the period
                         September 1, 1997, through August 31, 1998, Marian (1)
                         accounted for and completely and accurately reported on the
                         use of Support Services program funds, (2) claimed only
                         expenses that were allowable and adequately supported, (3)
                         claimed expenses that did not exceed the approved budgeted
                         amounts, and (4) demonstrated that it provided only eligible
                         services to the number of eligible students required under its
                         agreement with the Department of Education.

                         Because our survey disclosed that Marian claimed expenses
                         that were not allowable, we expanded our scope to include the
                         periods September 1, 1993, through August 31, 1997, and
                         September 1, 1998, through August 31, 1999. We also
                         refined our objectives to focus on whether Marian (1) granted
                         the Support Services staff leave that exceeded Marian’s official
                         leave policy; (2) recorded and claimed more salary than the
            -              ,   , and
                                    amount actually paid to the Support Services staff; and (3)
                                    claimed indirect costs in excess of the allowable amount.

Methodology                         To achieve our survey objectives, we reviewed

                                    1.      background information such as school catalogs and
                                            organization chart;

                                    2.      the A-133 audit report prepared by Marian's
                                            independent public accountant for the period July 1,
                                            1997, through June 30, 1998, and the related working
                                            papers;

                                    3.      bank statements;

                                    4.      accounting records related to Marian’s system for
                                            requesting, accounting for, and using grant funds;

                                    5.      administrative records related to Marian's determination
                                            of the eligibility of services rendered, selection of
                                            project participants, and submission of required
                                            reports;

                                    6.      documents supporting 38 judgmentally selected
                                            purchases and 32 judgmentally selected travel
                                            expenses; and

                                    7.      35 (of 115) randomly selected Student Services
                                            participant files.

                                    We also interviewed school personnel and Marian’s
                                    independent public accountant.

                                    To achieve our refined audit objectives, we reviewed (1) all
                                    pay vouchers for all Support Services staff (2) leave records
                                    for all Support Services staff, and (3) accounting and
                                    administrative records.

Reliability of Computer-            To achieve our objectives, we extensively relied on Marian’s
Processed Data                      computer-processed data. We assessed the relevant general
                                    and application controls and found them to be adequate. We
also conducted tests of the data. Based on these assessments
and tests, we conclude the data are sufficiently reliable to be
used in meeting the audit's objectives.

We performed field work at Marian in Fond du Lac,
Wisconsin, from June 7, 1999, through July 1, 1999, and
September 20, 1999, through September 22, 1999. We
completed the remaining work in our Chicago office. We
performed our audit according to government auditing
standards appropriate to the limited scope audit described.
Statement on Management Controls
Statement on Management   As part of our audit, we made an assessment of Marian’s
Controls                  system of management controls over Support Services. The
                          purpose of our assessment was to determine the level of control
                          risk; the risk that material errors, irregularities, or illegal acts
                          may occur. We completed the control risk assessment to assist
                          us in determining the nature, extent, and timing of substantive
                          tests needed to accomplish our audit objectives.

                          To make the assessment, we identified the significant Support
                          Services’ management controls and classified them into the
                          following eight categories:

                          C       Requesting, accounting for, and using grant funds

                          C       Determining the eligibility of services rendered

                          C       Selecting project participants

                          C       Submitting required reports

                          C       Determining participant financial need

                          C       Purchasing

                          C       Claiming travel expenses

                          C       Monitoring staff time charged to the projects

                          Because of inherent limitations, a study and evaluation made for
                          the limited purpose described above would not necessarily
                          disclose all material weaknesses in the control structure.
                          However, our assessment disclosed significant weaknesses in
                          Marian’s system of management controls. These weaknesses
                          had a material effect in Marian’s ability to administer its
                          Support Services project according to laws and regulation.
                          See Audit Results for descriptions of the weaknesses.
Auditee Comments
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