Minnesota Office of the Legislative Auditor
Financial Audit Division

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Report Summary
Northland Community and Technical College

Financial Audit For the Period
July 1, 1995, to December 31, 1996

 

Public Release Date: August 29, 1997 No. 97-45

Background

Northland Community and Technical College is part of the Minnesota State Colleges and Universities System (MnSCU). MnSCU began operations on July 1, 1995, when the state of Minnesota merged the community colleges, state universities, and technical colleges into one system of higher education. MnSCU consolidated Northland Community College and the Thief River Falls campus (one of six campuses) of Northwest Technical College in July 1995 to form one combined college. The college finances its operations through student tuition, fees, and state appropriations. Dr. Orley Gunderson is the president of the consolidated college.

Scope and Objectives

Our audit scope covered the period from July 1, 1995, through December 31, 1996, and reviewed internal controls as of June 1997. We audited general financial management controls; tuition and fees revenue; payroll expenditures; bookstore operations; purchases and operating expenditures; and state grants. We reviewed the college's internal controls over federal student financial aid for fiscal year 1997. In addition, we reviewed the college's relationship with the foundation.

Conclusions

The overall financial management at the college lacked basic controls such as timely bank account reconciliations, proper recording of financial activity, and adequate monitoring of operations. The business office was understaffed and employees had not received adequate training in financial systems and procedures. We were also concerned that the college had an environment that permitted the existence of some potential employee conflicts of interest and possibly other inappropriate conduct by certain employees, including the vice president.

The college did not have an adequate separation of duties in most financial management areas, including tuition and fees, purchasing, bookstore operations, and financial aid. The lack of controls over tuition receipts resulted in the college undertaking an investigation into alleged financial and academic improprieties in its Management Division. In general, the college needs to strengthen procedures in all of these areas.

The college had good controls over payroll expenditures. For financial aid, controls provided assurance it complied with program eligibility requirements. The college did not, however, comply with federal cash management and reporting requirements, and we noted control weaknesses over financial aid disbursements. The college had an appropriate relationship with the Northland Community and Technical College Foundation and the Joint Powers Board.

In its written response, Northland Community and Technical College agreed with the audit report findings and specified a correct action plan to address the issues contained in the report.

 

Office of the Legislative Auditor ♦ Room 140, 658 Cedar St., St. Paul, MN 55155