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3 golden objects Minnesota Legislature

Office of the Legislative Auditor - Financial Audit Division

Report Summary
Lake Superior College

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


Public Release Date: May 2, 1997 No. 97-24

Background Information

The Minnesota State Colleges and Universities System (MnSCU) established Lake Superior College through the consolidation of the Duluth Technical College and the Duluth Community College Center. The technical college operated as part of Independent School District No. 709 through June 30, 1995. The Duluth Community College Center, a branch of the Arrowhead Community College, operated as part of the state's system of community colleges through June 30, 1995. The Minnesota State Colleges and Universities System (MnSCU) began operations on July 1, 1995. MnSCU merged 8 state colleges, 21 community colleges, and 34 technical colleges, including Lake Superior College, into one common system. The mission of Lake Superior College is to provide teaching, learning, and access to high quality affordable educational opportunities for diverse populations in Duluth and the surrounding region. The Chancellor of the Higher Education Board appointed Dr. Harold Erickson as the president of the college effective July 1, 1995.

Our audit scope included a review of tuition and fees, payroll, supplies, services and equipment, bookstore activities, and other grants for the period July 1, 1995 through December 31, 1996. We also audited the administration of the federal student financial aid program for fiscal year 1997.


We noted significant weaknesses in the financial management of Lake Superior College. The consolidation of the community college and the technical college and heavy concentration of duties in one key business office position contributed to the financial management problems. Problems included the failure to record complete and accurate financial activity on MnSCU's accounting system. In addition, cash was not transferred to the state treasury timely. Major controls such as the reconciling bank account activities and MnSCU's accounting records were incomplete. The college did not implement all of the recommendations related to financial controls that we presented in our last audit report (Report 96-35).

We also noted problems in most financial activities. The college has not properly administered its tuition and fees accounts receivable function. The college did not process payroll position requests timely and duplicate payments were made to some employees. The college properly administered expenditures for supplies, services, and equipment. However, the college did not have an inventory of its equipment. The college did not prepare accurate financial statements for the bookstore activities to assist it in monitoring the financial activities. In addition, shortages in bookstore receipts were not monitored or investigated by the college. The college did not record student financial aid on the MnSCU accounting system and did not properly transfer federal financial aid revenue to the state treasury for tuition and fees. The college properly administered other federal grants and gifts. Finally, the college did not have an effective relationship with its affiliated foundation.


Office of the Legislative Auditor, Room 140, 658 Cedar St., St. Paul, MN 55155 : or 651‑296‑4708