Community Colleges Activities Classification Structure

Michigan Office of the
Auditor General
Thomas H. McTavish, C.P.A.
Auditor General

EXECUTIVE DIGEST #3250097

Community Colleges Activities Classification Structure


INTRODUCTION	This report contains the results of our compliance audit of the Community Colleges Activities Classification Structure for the colleges' fiscal year 1995-96 (July 1, 1995 through June 30, 1996).

AUDIT PURPOSE	This compliance audit was conducted as part of the constitutional responsibility of the Office of the Auditor General and was required by Act 293, P.A. 1996, the annual appropriations act for community colleges.

BACKGROUND	The activities classification structure (ACS) was developed in response to Section 8, Act 419, P.A. 1978 (a section of the community college appropriations act for fiscal year 1978-79). Uniform data reporting requirements were developed for use in making State budget and appropriation decisions. Act 117, P.A. 1984, provided for a funding formula to be used to determine State aid for each community college. The funding formula is based on ACS information, such as full-time equated students, contact hours, expenditures, and other activity measures. For fiscal year 1995-96, Act 128, P.A. 1995, continued with the reporting requirements as established in Act 117, P.A. 1984. Act 128 requires the colleges to annually report to the Department of Education (DOE) certain information on ACS forms.

AUDIT OBJECTIVES AND CONCLUSIONS	Audit Objective: To determine whether the ACS information reported to DOE on the ACS forms was in accordance with the provisions of the annual appropriations act (Act 128, P.A. 1995), the ACS Manual for Michigan Community Colleges, the Manual for Uniform Financial Reporting of Michigan Public Community Colleges (MUFR), and DOE's annual instructions. Conclusion: In our opinion, the seven community colleges at which we reviewed the accuracy of selected ACS information were in general compliance with the reporting requirements. However, the community colleges did not accurately report some information and did not retain all supporting documentation for audit (Findings 1 through 12). These reporting discrepancies were not considered material and may not necessarily have a direct dollar impact on the community colleges' funding. However, it is important for comparative analyses that all community colleges report their enrollment and other ACS data in a consistent manner that adheres to the provisions of the annual appropriations act for community colleges (Act 128, P.A. 1995 for fiscal year 1995-96), the ACS Manual for Michigan Community Colleges, the MUFR, and DOE's annual instructions. Several of our audit findings pertain to more than one college; therefore, we have included a summary of audit findings by college, as supplemental information, to identify the specific colleges involved.Also presented as supplemental information is a schedule of other reporting exceptions. These reporting exceptions represent instances of noncompliance that have been determined, after consultation with DOE, to have a minimal, if any, impact on the funding formula and the ACS Databook.

AUDIT SCOPE	Our audit scope was to examine the financial and other records supporting the activities classification structure information reported by seven community colleges for their fiscal year ended June 30, 1996. Our audit was conducted in accordance with Government Auditing Standards issued by the Comptroller General of the United States and, accordingly, included such tests of the records and such other auditing procedures as we considered necessary in the circumstances. The following community colleges were included in our audit: Bay de Noc Community College Gogebic Community College Kellogg Community College Montcalm Community College Muskegon Community College Oakland Community College St. Clair County Community College

AGENCY RESPONSES	Our audit includes 12 findings and 13 corresponding recommendations. We discussed our audit findings, along with the other reporting exceptions presented as supplemental information, with the management of each community college. The colleges' responses indicated general concurrence with our findings.