Review of Selected Areas of Financial and Property Administration of Federal City College

Published by the Government Accountability Office on 1971-10-27.

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

                             LM095494           31

                           COMPTROLLER     GENERAL         OF   THE   UNITED   STATE!5         -
                                         WASHINGT0N.D.C.          2.M48   -


     ,I-, Dear Mr. Scherle:
    /           By letter   dated July 12, 1971, you requested’ that the
          General Accounting Office review selected             areas of financial
          and property    administration      of Federal City College, Washing-
          t&n- Technical   Insti.tyte,     and District    of Colmbita Teachers
      ’ Coilege.      This  is    our  report  on  Federal   City College.    In   ‘j :
    _’ ac”cor-dance with an agreemnt           reached with your office,      the
          report is based on two earlier          reviews at Federal City Col-
          lege cormpleted in August 1969 and March 1971, respectively.
              Reviews at Washington Technical    Institute   and District
       of Columbia Teachers College are in process.        A report on our
       findings    at these two institutions  will be issued to you as
       SQO~ as possible.
               Our reviews showed that college funds were being aain-
       tained ila three commercial bank accounts.       We believe that
       the enabling legislation      for the college required    that the
       funds deposited in two of the accounts be deposited          in the
       U.S. Treasury.      Although establishment   of the other accost
       was authorized     by law, the funds deposited in it were not con-
       trolled    and accounted for in the same mnner as other obliga-
       tions and disbursements      of the District  of Cofumbia, contrary
       to reauirements.

              Section %03a[9) of the District   of Columbia Public Edu-
        cation Act, as amended, approved November 7, 1966 (31 D.C.
        Code 160a(9)], provides,   in part, that:
              “The Board is vested            with         the following                 powers and

              “To accept services   and mormeys, including    gifts or
              endowments, from any source whatsoever,      for use in
              carrying  out the purposes of this title.       such

                                   50 TH ANNIVERSARY                  1921- 1971

or in the collegels   U.S. Treasury trust account.    The presi-
dent stated that no formal solicitation   program for gifts had
been initiated  by the college or by the corporation.       He indi-
cated that the corporation   planned to organize a solicitation
campaign but that the college had no such plans.          I
      In enacting section 103aC9) P the Congress prescribed        the
method by-which gifts might be received,        deposited,  and ex-
pended by the Board of Higher Education to help-meet the finan-
cial needs of Federal City College which, under the same stat-
ute, had been placed under the control       of the_ Board.   Thus
the Congress restricted    by statute   the namer in which gifts
might be accepted by the college.       Accepting such gifts in the
name of the corporation    was at cross-purposes      with the statute
and therefore    should not be continued.
Student    Government Association     Fund
       Section 103a(7) of the District         of Columbia Public   Educa-
tion   Act, as amended9 states that:
       “The Board is vested with      the following    powers and

       “To fix, from time to time,. fees to be paid by
       students attending    the Federal City College.
       Receipts from such fees shall be deposited into          a
       revolvirzg fund in a private    depository  in the
       District,  which fund shall be available,     with-
       out fiscal  year limitations,    for such purposes
       as the Board shall approve.      The Board is
       authorized  to make necessary rules respecting
       deposits into and withdrawals      from such fund.”
       Section   105.bf   the act states     that:
       “All obligations     and disbursements    for the pur-
       pose of this title     shall be incurred,     made, and
       accounted for in the same manner -as other obli-
       gations and disbursements       for the District   of
       Columbia and, except as provided in paragraph (9)
       of section 103 of this title,       under the direction
       and control    of the Commissioner.s’
        On Dedember 19, 1968, the Board of Higher Education autho-
rized the Student Government Association     to charge a studeirt
activity    fee no higher than $7.50 a student for each quarter.


.   Our review   showed that the           Board authorization  concerning    the
    charging   of student  activity          fees had made no reference    to
    procedures   for the collection            or disbursement of the fees.

             Our examination      of the accounting        records     of the Student
     Government     Association       in October    1970 showed that the records
     consisted     of checkbooks,        canceled   checks,    bank statements,         and
     paid and unpaid       invo$cks.       A formal    set of books was not main-
     tained.     We were infcrmed         by the accountant        of the Student
     Government     Association       that no record      of obligations      incurred
     had been kept and that disbursements               had been made on the
     basis    of invoices     and had not been supported            by purchase     or-
    *ders or receiving        reports.
             We found no evidence      in the legislative      history    of the
    District      of Columbia   Public   Education     Act that funds accumu-
    lated     under subsection    103a_(7) were intended       to b_e excepted
    from the accounting        and control    requirements     stipulated    by
    section     105 of the act.
            Thus, under the language          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        of the District     of Columbia.
           We discussed      these matters    with the college     president
    who indicated      a willingness     to help the students      establish
    adequate    accounting      records but who did not agree that the
    funds should be under the control            of the Commissioner.         He
    stated   that he had requested         the District's   Office    of Munici-
    pal Audits     to make an audit      of the Student   Government       Associ-
    ation   Fund.
           Subsequent         to our discussion          with the president,          we were
    informed     by the District's           Associate       Director      for Municipal
    Audits    that,       before    his Office      could start        its audit,     most of
    the existing          records    were stolen       and that therefore          the audit
    had not been made.              On January      14, 1971,- we were informed           by
    a college       official      that all     financial      activities       of the Stu-
    dent Government           Association      had been temporarily            assumed by

‘ B-167006                                        _-.   -

 the college's         financial  office pending a policy decision of
 the chairman         of the Board of Higher Education as to their
 Federal       City   College   extension   courses                /
            Section 103a(6) of the District-   of Columbia Public Educa-
 tion       Act, as amended,_ -states, in part, that:      _
            "The Board is vested with the following    powers and

            "TQ fix, from time to time, tuition   to be paid by
            students attending  the Federal City College.    aa*
            Receipts from the tuition  charged students attend-
            ing the college shall-be  deposited to the credit
            of the General Fund of the District   of Columbia."
        On February 20, 1969, the Board of Higher Education
 approved a fee to be charged for extension courses on the ba-
 sis of the number of hours that the classes met. We found
 that extension course fee receipts had been deposited in a
 private bank account and that disbursements    had been made for
 the purpose of paying the classroom expenses and the salaries
 of extension course instructors.
        During our first  review we advised the chairman of the
 Board of Higher Education that, in our opinion,     the fees
 charged for attending    extension courses were, in fact, tuition
 and should have been deposited in the General Fund of the
 District    of Columbia.
       In commenting-on our opinion,     the chairman stated that
 these courses were a service to the community which the col-
 lege administered   but for which the participants      bore the
 costs . He concluded that the payments would be more properly
 considered fees than tuition.     The chairman indicated      that,
 if the payments were required to be deposited in the U.S.
 Treasury,  they would be unavailable      to pay the expenses of
 the courses since the conjectural     nature of the courses would
 make requests for appropriations     for them very difficult,
 which would make it virtually    impossible    to provide this com-
 munity service.


              On April 28, 1970, the District  Corporation Counsel
    issued      an opinion that the extension  course payments were
    tuition      and should be deposited in the U.S, Treasury.
          In October 1970 we discussed this matter with’the’presi-
    dent of Federal City College.      He stated %hat the college did
b   not agree wi%h the position    of the District     Corporation     Coun-
    sel.   He sta%ed  also %hat the   funds  in question    were   being
    kept in the private b-&k accotawts pending the outcone of a
    request for another decision    from the District      Corporation
    Counsel,                                             -   -

          We are in agreement with the position      taken by the Dis-
    trict  Corporation  Counsel.  The term tttuitiontt    is defined as
    a fee charged to a student at a college or university         for
    (1) the privilege   of a%%endance at the ins%i%u%ion and (2) the
    price of, or payment for, ins%ruc%ion.
           If %here is no expres; intent    to the contr<ry,   words used
    in a statute    are intended to be given their common meaning.
    Therefore we believe that paymanes made to the college for
    instruction   in extension   courses are tuition   payments and, as
    such, are for deposi% in the General Fund of %he District        of
    Columbia pursuant to subsection      103a(6] of the ace.
          During our first  review we concluded that the college had
    not exercised  %he control necessary to provide reasonable en-
    surance that the correct    amount of tuition   had been paid.     We
    found that the amount of tuition    due from each student had
    been determined a% %he time of regis%ra%ion and had been based
    on the number of hours applied for.      Generally  this amount was
    paid by the s%udent.    At the time of payment, a tuition      pay-
    ment record and receipt    card was prepared.
          After regis%ration   a summary listing was prepared showing
    courses and credit hours for each s%udent.      This listing,  how-
    ever, was no% later adjusted to show %he credit hours added
    or dropped nor was the amount of tui%ion paid reconciled      with
    the listing.    Also %he tuition payment record and receipt    cards
    were no% prenumbered and tuition    deposi%s did not list either
    the individual   payers or the amounts paid.    Further we found
    that the tui%ion had been waived in at least 24 instances.



                        During our second review we found that Federal City Col-
                lege had made some pmgress in improving the control               over
                tuition     collection    and that further  corrective     actions had
                been planned.         For the fall 1970 quarter,     the tuition- payment
                record and receipt        cards were prenumbered and the tuition        de-
                posit tickets        showed the payers and the amounts paid.        College
                officials     -informed us that tuition    was no longer waived, and
                during our review we found no evi-denee that waivers had been
                granted.                  . -

                        For the fall 19 70 quarter,   the college prepared a consol-
                idated computer listing      showing courses, credit hours, and
                total payments for each student.         This listing   showed also
                cases where the total tuition       had been deferred.      The listing ,
                however, did not show a comparison of the amount of tuition
                owed with the amount of tuition       paid.   Also,   at the time     of
                our review,    we were informed by a college official        that the
                listing    had not been revised to show courses a@ed or dropped.
                        Our exatination    of 108 randcmly selected student tuition
                payment record and receipt       cards prepared during the fall
                1970 quarter showed that the c~imputer listing       contained numer-
                ous errors.       For example, some students for which there were
                tuition    payment record and receipt     cards were not shown in
                this’ listing     and other students 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  fees,
                and health insurance payments --it was not practicable       for the
                college,    or for us,   to ascertain whether   all tuition due  ac-
                tually   had been collected.
                        We were informed by college officials            in December 1970
                that many changes -in tuition        collection     procedures were planned
                for registration      for the winter 1970 quarter.           They stated that
                the students would be required to preregister,               after which the
                college would bill       the students.       The officials    indicated   that
                the amounts billed       would have to be paid regardless           of course
                changes.      They indicated     also that the-method of handling
                course changes had not been determined.               We were informed that
                the computer listing        prepared for the winter 1970 quarter would
                compare    the amount of tuition       owed with the amount of tuition


            - * B-167006                                    _

                     Our reviews showed that the college had not maintained
               adequate accounting     controls    over its supplies       and equipment.
               Our first   review showed that (1) equipment asset coats,@
               accounts had not been established,           (2) reliable    inventories
               of supplies    and equipment had not been taken, and (3) a list-
               ing of persons authorized        to requisition     supplies had not been
               prepared.              . -
                       Our second review showed that deficiencies        (1) and (2)
               still    existed.     That review showed also that,-although     a
               listing     of persons’ authorized  to requisition    supplies  had been
               prepared,      college employees not OA the list had made 69 percent
               of the requisitions       during the period August 21 through Septem-
               ber 28, 1970.
                      IA Decetier  1970 a contract   was awarded to a private     firm
               to take an inventory     of the supplies  and equipmmt.      The
               college anticipated    that, after the inventory     was taken, it
               would be able to maintain adequate control       over its supplies
               and equipment.
               FUND CONTROL
                       The District’s     Office of Municipal      Audits reviewed the
               status of the collegeCs appropriated            funds and the procedures
               for controlling        such funds and, on June 20, 1969, issued a
               report which stated that the college’s             control of allotted
               funds was inadequate because (1) the responsibility               for con-
               trolling     obligations     against allotments     was not clearly    fixed,
               (21 the obligations        were incurred without knowledge of the
               availability       of gunds, (3) the monthly financial       plan and
b              status reports were not maintained,           and (4) the established
               procedures      for obligating     funds were not followed.
                      In October 1970 we were informed by an official                of the
               Office of Municipal        Audits that his Office had not determined
               whether any actions had been taken by the college on those
               deficiencies.       Our second review showed that, as recommended
               in the internal       audit report,     the college had established
               budgetary and fund controls           to correct    the deficiencies
               noted.     Although    we  did  not   examine   the   application    of these
               controls,     we believe    that the system established           was adequate
               to control     appropriated      funds.


             - * B-167006

                       Ira accordance with m agreenent reached with your office,
               this report is based on data availab%e to us at the tine of
               our past reviews and has not beegl updated.    Also District   com-
               ments have not been ob%ained on %he ma%%ers discussed fn this
                     We plan to make. 00 fur%her distribution  05 this report
               unless copies are specifical%y    reques%ed, and then we shall
               make distribution  only a%%er your agreement has been obtained
               or public announcement has been made by you concerning     the
               contents of the report.
                                               Sincerely   yours 3

                                               Comp%rolHer General.
                                               of the united seatas

               The HonorabBe Wfl%iam J. Scherle       -
         ,     Holaw of Representatives