SELECTED COMMUNITY COLLEGES' REPORTING OF ACTIVITIES CLASSIFICATION STRUCTURE DATA

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

EXECUTIVE DIGEST #4550001
SELECTED COMMUNITY COLLEGES' REPORTING OF ACTIVITIES CLASSIFICATION STRUCTURE DATA

INTRODUCTION
This report contains the results of our performance audit of Selected Community Colleges' Reporting of Activities Classification Structure Data for the colleges' fiscal year 1999-2000 (July 1, 1999 through June 30, 2000).

AUDIT PURPOSE
This performance audit was conducted as part of the constitutional responsibility of the Office of the Auditor General and was mandated by Act 272, P.A. 2000, 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 fiscal year 1978-79 appropriations act for community colleges). 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 data, such as full-time equated students, contact hours, expenditures, and other activity measures. For fiscal year 1999-2000, Act 109, P.A. 1999, continued with the reporting requirements as established in Act 117, P.A. 1984.

The Michigan Department of Career Development (MDCD) is responsible for the collection and analysis of certain data submitted by the colleges on the various ACS forms.

AUDIT OBJECTIVE AND CONCLUSION
Audit Objective: To assess whether colleges reported ACS data to MDCD on the ACS forms in accordance with the provisions of the annual appropriations act for community colleges (Act 109, P.A. 1999), the ACS Manual for Michigan Community Colleges, the Manual for Uniform Financial Reporting of Michigan Public Community Colleges (MUFR), and MDCD's annual instructions.

Conclusion: We concluded that the selected community colleges generally reported ACS data to MDCD on the ACS forms in accordance with the provisions of the annual appropriations act for community colleges (Act 109, P.A. 1999), the ACS Manual for Michigan Community Colleges, MUFR, and MDCD's annual instructions. However, we did identify reportable conditions relating to the calculation of the count date for credit hours, contact hours, and student headcount; student course enrollment data reporting; contact hour computations and reporting; disclosure of required data; instructional minutes computation; cost allocations and expenditure reporting; and property tax data (Findings 1 through 7 ).

These reporting errors 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 109, P.A. 1999), the ACS Manual for Michigan Community Colleges, MUFR, and MDCD's annual instructions.

AUDIT SCOPE
Our audit scope was to examine selected records supporting the activities classification structure data reported by seven community colleges for their fiscal year ended June 30, 2000. 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.

We randomly selected the following seven colleges to be audited and obtained ACS data for the colleges from MDCD:

      Bay de Noc Community College
      Gogebic Community College
      Grand Rapids Community College
      Henry Ford Community College
      Jackson Community College
      Muskegon Community College
      Northwestern Michigan College

We interviewed staff responsible for preparing and submitting ACS data at each college. We tested the reporting of current fund expenditure data at the activity, subactivity, and element levels; supporting documentation regarding general fund full-time equated positions; and data related to tuition rates and local financing. We also tested the accuracy of reported contact and credit hours and headcount totals; class lists for headcounts, including in-district and out-of-district classification, class drop and add adjustments, and registration documentation; contact hour calculations; methods for determining legal residency; and methods for classifying general fund and nongeneral fund courses. In addition, we tested supportingdocumentation for energy usage and costs and the accuracy of reported physical plant area and volume.

AGENCY RESPONSES
Our audit report includes 7 findings and 7 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 recommendations.

Full Audit Report - #4550001 - SELECTED COMMUNITY COLLEGES' REPORTING OF ACTIVITIES CLASSIFICATION STRUCTURE DATA

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INTRODUCTION This report contains the results of our performance audit of Selected Community Colleges' Reporting of Activities Classification Structure Data for the colleges' fiscal year 1999-2000 (July 1, 1999 through June 30, 2000).

AUDIT PURPOSE This performance audit was conducted as part of the constitutional responsibility of the Office of the Auditor General and was mandated by Act 272, P.A. 2000, 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 fiscal year 1978-79 appropriations act for community colleges). 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 data, such as full-time equated students, contact hours, expenditures, and other activity measures. For fiscal year 1999-2000, Act 109, P.A. 1999, continued with the reporting requirements as established in Act 117, P.A. 1984. The Michigan Department of Career Development (MDCD) is responsible for the collection and analysis of certain data submitted by the colleges on the various ACS forms.

AUDIT OBJECTIVE AND CONCLUSION Audit Objective: To assess whether colleges reported ACS data to MDCD on the ACS forms in accordance with the provisions of the annual appropriations act for community colleges (Act 109, P.A. 1999), the ACS Manual for Michigan Community Colleges, the Manual for Uniform Financial Reporting of Michigan Public Community Colleges (MUFR), and MDCD's annual instructions. Conclusion: We concluded that the selected community colleges generally reported ACS data to MDCD on the ACS forms in accordance with the provisions of the annual appropriations act for community colleges (Act 109, P.A. 1999), the ACS Manual for Michigan Community Colleges, MUFR, and MDCD's annual instructions. However, we did identify reportable conditions relating to the calculation of the count date for credit hours, contact hours, and student headcount; student course enrollment data reporting; contact hour computations and reporting; disclosure of required data; instructional minutes computation; cost allocations and expenditure reporting; and property tax data (Findings 1 through 7 ). These reporting errors 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 109, P.A. 1999), the ACS Manual for Michigan Community Colleges, MUFR, and MDCD's annual instructions.

AUDIT SCOPE Our audit scope was to examine selected records supporting the activities classification structure data reported by seven community colleges for their fiscal year ended June 30, 2000. 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. We randomly selected the following seven colleges to be audited and obtained ACS data for the colleges from MDCD: Bay de Noc Community College Gogebic Community College Grand Rapids Community College Henry Ford Community College Jackson Community College Muskegon Community College Northwestern Michigan College We interviewed staff responsible for preparing and submitting ACS data at each college. We tested the reporting of current fund expenditure data at the activity, subactivity, and element levels; supporting documentation regarding general fund full-time equated positions; and data related to tuition rates and local financing. We also tested the accuracy of reported contact and credit hours and headcount totals; class lists for headcounts, including in-district and out-of-district classification, class drop and add adjustments, and registration documentation; contact hour calculations; methods for determining legal residency; and methods for classifying general fund and nongeneral fund courses. In addition, we tested supportingdocumentation for energy usage and costs and the accuracy of reported physical plant area and volume.

AGENCY RESPONSES Our audit report includes 7 findings and 7 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 recommendations.