Minnesota Office of the Legislative Auditor
Financial Audit Division

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Report Summary
Arrowhead Community College Region and Northeast Service Unit

Financial Audit For the Period
July 1, 1995, through June 30, 1998

 

Public Release Date: September 16, 199 No. 99-50

Agency Background

The Minnesota State Community College Board established the Arrowhead Community College Region in 1981. Arrowhead received state appropriations and provided administrative and other support services to the colleges of northeast Minnesota through 1997. The Northeast Service Unit (NESU) was created in fiscal year 1998 to provide support services to six colleges. The funding structure changed in 1998 to a fee for service operation. The colleges were charged for the costs of support services provided by NESU. The presidents of the participating colleges established a council to provide administrative oversight of NESU activities. The NESU director, Ms. Sally Thompson, reports to the council of presidents. NESU provided the following services in 1998: institutional research, library services, payroll, accounts payable, purchasing, and federal grant management. In fiscal year 1999, the council of presidents decided to eliminate certain services including purchasing, accounts payable, and payroll functions. The colleges will either perform these services themselves or contract with other colleges.

Audit Scope and Conclusions

Our audit scope included the Arrowhead Community College Region employee payroll and other administrative expenditures for the years ended June 30, 1996 and1997. We also reviewed the Northeast Service Unit employee payroll, other administrative expenditures, and the charges to the participating colleges and related fees collected for the year ended June 30, 1998.

We concluded that the Northeast Service Unit properly charged the participating colleges and collected the related revenues in fiscal year 1998. However, NESU did not properly record loan receivable balances on MnSCU accounting. We found that the Arrowhead Community College Region and NESU properly recorded payroll and other administrative expenditures on the accounting system and complied with laws and regulations for the items tested.

In its written response, the Northeast Service Unit agreed with the finding and, effective immediately, all loan transactions will be accounted for within the MnSCU accounting system using the appropriate receivable object codes.

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