B-167006 Dear Senator Spong: Reference is made to your letter of September 9, 1970, requesting that we review the progress made by Federal City College in correcting the deficiencies discussed in our August 12, 1969, report. The status of the matters covered by our prior mpo~t are discussed in detail in the, subsequent sections of this report, AlxlIINISTRATION OF CERTAIN FUNDS In our prior report, we stated that three bank accounts had been opened in commercial banks in the name of the Federal City College. We took the position that the enabling legislation for the college required the funds that were deposited in two of the accounts to be deposited in the U.S. tieasury and the funds deposited in the other account to be con- trolled and accounted for in the same manner as other obligations and disbursements of the District of Columbia. During our current review, we found that the college has not changed its administration of these accounts as discussed below. In our prior report, we stated that the Board of Higher Education authorized the establishment of an account Tn a comnercial bank (The Federal City College: Urban Higher Education Fund) into which gifts were deposited. We concluded that the Board of Higher Education did not have the legal authority to authorize the deposit of gifts to the college in a private commercial bank account. . The Chairman of the Board of Higher Education initially agreed with our conclusion, but has subsequently changed his position. In commenting on our prior report, by letter to you dated September 26, 1969, he stated that this fund is a wholly separate and independent corporation chartered in the District of Columbia on December 30, 1968. He stated also that the Board of Righer Education did not aut!orize the creation of the corporation, but it did welcome it, and permitted the corporation to use the name of the college in its corporate name and members of the Board to serve on the corporation's Board of Directors. Further, he stated that this corporation is similar in purpose and structure to foun- dations associated with many major universities and colleges and that B-167006 monies deposited into the fund were not the college’s, but monies given to the corporation. Our review of the corporationfs charter showed that the President of Federal City College is also the corporation’s President and that the former Chairman of the Board of Higher Education is the SecretElry of the corporation. The purposes of the corporation are to (1) seek gifts and grants of money, (2) make gifts and grants to the college, ( 3) sponsor, pronote, and carry out educationaL functions of the college, and (4.) establish fellowships, scholarships, axd grants at the college. The President of Federal City College informed us that when an individual desires to contribute to the college, the individual is told that he can have his gift deposited in either the corporation’s fund account 01” tie college’s Treasury trust account. We noted that the college has TV active Treasury trust accounts--one for specific purposes and one for unspecified purposes--into which gifts are deposited. Also, the presfdent informed us that to date no formal solicita- tion program has been initiated by the college or the corporation. He indicated that in the near future the corporation is planning an organized solicita%i.on campaign but that no such plans ere now being made by the college. Section 103a (9) of the District of Columbia Public Education Act, as amended, approved November 7, 1966, 31 D,C. Code 1603a (91, states: The Board is vested with the following powers and duties: * %- # Q 3% WToaccept services and moneys, including gifts or endow- ments, from any source whatsoever, for use in cxrqing out the purposes of this title. Such moneys shall be deposited in the Treasury of the United States to the credit of a trust fund account which is hereby authorized and may be invested and reinvested as trust funds of the District of Colmbia, The disbursement of the moneys from such trust funds shell be Zn such amounts, to such etient, and in such manner as the Board, in its judgment, may determine neces- saruy to car~“y out the pwyposes of tkis title.” 2 B-167006 It is readily admitted by the Board that one of the purposes of the corporation is to attract prospective donors who desire to assist the college but who wish to contribute to a fund that is not super- vised by the District or Federal Goverrxnent, In enacting Section 103a (91, the Congress prescribed the method by which gifts might be received, deposited, and expended by the Board of Higher Education to help meet the financial needs of the Federal City College which, under the same statute, was placed under the control of the Board. Thus, the Congress has restricted by statute the manner in which gifts may be accepted by the college. The acceptance of such gifts in the name of the corpora- tion is at cross purpose with the statute and, therefore, should not be cmontinued. Student Government Association Fund Section 103a (7) of the District of Columbia Public Education Act, as amended, states: Vhe Board is vested with the following powers and duties: WTo fix, from time to time, fees to be paid by students attending the Federal City College. Receipts from such fees shall be depos2ted int;a a revolting fund in a private deposi- tory in the DMxict, which fund shall be available, without flscd yesr limitation, for such purposes as the Board shall approve o e Board is authorized to make necessary rules respecting deposits into and withdrawals from such fund.“I Sect&on 105 of the act states: n&XL obligations and disbursements for the purpose of this title shall be incurred, made, and accounted for in the same manner as other obligations and disbursements for the District of Columbia and, except as provided in paragraph (9) of see- tion 103 of this titPe, under th.e direction and control of the Commissioners.~t In our p&or report, we stated that the Board of Higher Education au~orized the Student Government Association to charge a student aetiv- ity fee no higher than $7.50 per student per quarter. The Board authorf- zation concerning the &a~ging of student actitity fees made no reference 4x1 procedures for the eollelction or disbursement of the fees. 3 B-167006 We stated that It appears that obligations and disbursements of student activity fees were not incurred, made, and accounted for by the Student Government Association in the same manner as other obligations and dis- bursements for the District of Columbia and under the control of the Commissioner. Although the Chairman of the Board of Higher Education originally agreed with our finding and indicated that ayl accounting system to con- trpl the fees and a resolution to regulate the proper expenditure of such monie& was needed, he subsequently reversed this position in his letter to you dated September 26, 196?, !I'he chairman stated that he has serious doubt that the Congress intended section 105 to be applica- ble to the f?.xnds in question., He stated that neither the Board of Higher Education nor the administration has deemed it necessary or appropriate to specify or regulate the purposes for which the funds are spent e During our c-e& review, we examined the accounting records of the Student Gove ent Association and found that the records consisted of oheok books, canoeled checks, b& statements, and pajd and unpaid invoices. A formal, set of books was not maintained. We were informed by the Student Government Association accountant that there was no record of obUgalions incurred and that disbursements were made on the basis of invoices end were not supported by purchase orders or receiv- ing reports. We discussed these matters with the college president who indi- cated a willingness to help the students establish adequate accounting records but did not agree that the funds should be under the control of the Commissioner. He stated that he has requested the District’s Office of Municipal Audits to perform an audit of -I&e Student Government Association fund, Subsequent to our discussion with the president, we were informed by the District~s Associate Directors for MunicLpal Audits that before his office could start its audit, most of the existing records were stolen and, therefore, the audit was not made. On January 14, 1971, we were informed by a college official that all financial activities of the Student Government Assooiation have been temporarily assumed by the college~s finance offEce pending a policy decision of the Chairman of the Board of Higher Education as to their disposition. ,We found nothing in the legislative history of the act that shows that an exception was intended for funds accumulated under subsection 103a (7) . Moreover, section 105 imposes this requirement for all funds B-L67006 with me exception--gifts made to the college under subsection 103a (91 --and it must b’e assumed that in making one specific exception the Congress intended to limit exceptions to the one specificaLLy provided for. Thus, under the 1 e of section 105 of the act, the Student Government Association Fund must be accounted for in the same manner as other obligations and disbursements of the District of Columbia and must be under the direction and control of the Commissioner. In our prior report, we stated that on February 20, 1969, the Board of Higher Education approved a fee to be chazrged for exI;ension copses based on the n-bar of hours that the class meets, We found that e&en- sion eoslrse fee receipts have been deposited in a private bank account snd disbursements have been made for the purpose of paying the salaries of extension course instructors ayld claesroom expenses. We took the position that fees charged-for attending extension courses were in fact $tition and should have been deposited in the General Fund of the Dis- triet of Columbia in the U.S. Treasury, as Qrotided by subsection 103a (6) of the DistrLct of Columbta Public Education Act, as amended, The Chairman of the Board of Higher Education initially agreed with cmr posit3.on. However, in his September 26, 1969, letter to you he (1) stated that these eowses are a setice to the commtity which the college administers but ,the participants bear the costs and (2) concluded that the payments would be more properly considered fees than tuition. He indicated that, if the payments were ,requ.ired to be deposited in the Trsaszry, they would be unavailable to pay the expense of the courses since the conjec sl nature of the courses would make requests for appropriations for them very difficult, thus, making it tirtually impos- sible to provide this community service. On April 28, 1970, the DisLrict Corporation Counsel issued an opinion on this matter which stated that these extension course payments ape tuition and should be deposited In the U,S. Treasury. During our review ~9 discussed this matter with the President of Federal City College who stated.that the college does not agree with the position of the District Corporation Counsel* He stated that the fmds in questioa.aJPe be%ng kept in the private bank accounts pending the outcome of a recent request for another decision from the District corporation Colmsel. ‘1, B-167006 ,! , We are in agreement with the position taken by the District Corporation Counsel that the charges imposed in these programs are tuition rather than fees and are, therefore, for deposit into the Treasury. The term %tition" is defined as a fee charged a student at a college or university for (1) the privilege of attendance at the institution and (2) the price of or payment for instruction. If there is no express intent to the contrary, words used in a statute are intended to be given their commonmeaning. Accordingly, 5-t is our view that payments made to the college for instruction in exten- sion courses are tuition payments and as such are for deposit to the General Fund of the District of Columbia pursuant to subsection 103a (6) of the act, TUITION COLLECTION !)I! In our prior report, we stated that the college did not exercise the control necessary to provide reasonable assurance that the correct smounlt of tuition was paid. tJe found that the amount of tuition due from each student was de?ermined at the time of registration and was based on the number of hours applied for. Generally, this amount was paid by the student. At the time of payment a tuition paynent record and receipt card was prepared. After registration, a summary listing was prepsped showing courses and credit houm for each student, This listing, however, was not later adjusted to show the credit hours added and dropped nor was the amount of tuiLion paid reconciled to the listing. ALSO, the ttition payment record and receipt cards were not prenumbered and tuition deposits did not list either the individual payers or the mounts paid. Fu.%her, we found that the tuition was waived in at least 24 instances, Subsequent to our prior report, Federal City College has made some progress in improving the control over tuition collection and further corrective actions are planned. For the fall 1970 quarter, the tuitiour payment record and receipt cards were prenmbered and the tuition de- posit tickets showed the payer and the amount paid. College officials informed us that tuition is no longer waived and during our review, we found no evidence that waivers had been granted, Also, for the fall quarter, the college prepared a consolidated computer listing showing coursesJI credit hours, and total payment for each student. This listing showed cases where the total tuition had been deferred, However, the listing did got show a comparison of the amount of tuition owed with the amount paid. Also, at the time of OUT B-167006 review, we were informed by a college official that the listing had not been revised to show courses added and dropped. Our exaxLnati.on of 100 randomly selected student tuition payment record and receipt cards showed that the computer listing contained numerous errors. FOP e le, some students for which there were record and receipt cards were not shown in this listing and other stu- dents were shown in the listing as having paid no tuition when in fact they had. Since the listing contained many errors and included only a total for fees collected--tuition, student activity fee, and health insur- ance payments-4.t was not practicable for the college or for us to ascertain whether aI1 tuition due was actually collected. We were informed by college officials that many changes in tuition collection procedures are planned for the Pegislcration for the next quarter. They stated that the students will be required to preregister after which the college till bill the student. The offkxkls indicated that the amount billed till have to be paid regardless of cow"se changes. They indicated also that the method of handling course changes has not been determined, Also, we were informed that the computer listing pre- pared for t3Bis qucrhes will compare the amount of tuition owed and the amount paid. THE ACCOUNTABILITY FOR In ous prior report, we stated that the college did not maintain adequate accounting control over its supplies and equipment. We pointed out that (1) equipment asset control accounts had not been established, (2) reliable inventories of supplie s and equipment had not been taken, and (3) a listing of persons authorized to reqtisition supplies had not been prepared. 0~s current review showed that a listing of persons authorized to requisition supplies had been made. Copies of th%s listing were on hand at the two storage locations, Our examination of all requisitions for supplies for the period August 21, 1970, through September 28, S97C9 showed that out of a totd of 29 reqtisitions 2.0, or about 69 percent, were signed by persons not on the authorized list, All of the unauthor- ised individuals were employees of the college. In December 1970, a contract was awarded to a private firm to take an inventory of the supp3Les and equipment. The officials indicated 7 B-167006 that af’ter the inventory is estab2lshed, they till be able to m&&tin adequate control over inventories. Based on our current revtew, we conokude that the college has not, at this time, established adequate control over its supplies and equip- ment ve fi?awther corm e that until such control has been established, the unt of futwe 1 es9 if any, coot be identified. In ow prior report, we stated that the DistrSct of Columbia Office of Mwraioipd Auidilts made a retiew of the status of the eollege!s appro- e procedures for controlling such funds, Their re- eolkegefs control of allotted funds are inadequate lity for controlling obligations against allotm merits ~81s not cl d, (2) obligations were incurred without ty of funds, (3) monthly financial plan and were not maintained, and (4) established procedures for ds were nc& followed, We we233 f ed by 8~1 official of the Office of Mticipal Audits that h&3 offfc not determined whether my actions have been taken by the college on these deficiencies. Our ctxrrent review showed that, as reeomended the internal audit repox%, the college had established budgetary eontxwls to correct the deficiencies noted. Although we did not e ne into the application of these controls, we believe that the system established is adequate to control appropriated funds@ The practice, as noted in our prior repox%, of providing financial assistance to students attending neighboring colleges has been discontinued. We did not req,st DJ.strict cements on this report. Since the administration of certain funds by the college is not in accordame with the enabling legislation, we suggest that the report be furnished to the CoIvamissfoner, Mstrict of Columbia Government and the Chairman, Board of Wigher Edmation, for appropriate corrective action. . We plan to make no further distribution of this report unless copies me spe&Y.cally requested, exd then only' after your agreement has been obtained or public announcement has been made by you concern- ing its contents. Sincerely yoUrs, Comptroller General of the United States The Honorable W$uia B. Spoq, Jr. Utited States Senate
Follow-up Review of Selected Areas of Financial and Property Administration of Federal City College, District of Columbia Government
Published by the Government Accountability Office on 1971-03-15.
Below is a raw (and likely hideous) rendition of the original report. (PDF)