Until recently, the Student Association Comptroller’s office, the on-campus bank that processes organization’s checks, handled its business very differently. People in the office routinely left a box of blank checks out next to a safe that was often unlocked.
Records and interviews show that auditors have uncovered numerous problems with how the Students’ Association manages hundreds of thousands of dollars in student fees, irregularities that in some cases have continued for years.
The problem was so bad that two years ago, KPMG, the university’s auditor, threatened to refuse to certify the University’s and Students’ Association’s end-of-year statements if the books did not improve, according to current Students’ Association Comptroller Lauren Smith.
“In the past four years, auditors have always found a problem,” said Student Body President Taylor Russ. “When you don’t have someone professional accounting for all the money, this is what happens.”
The Comptroller’s Office is the on-campus bank that manages the funds the Students’ Association receives through the fees all students pay each semester with their tuition. The university gives the Students’ Association a little more than $50 per full-time student, totaling around $900,000 each year. It allocates this money to several accounts, including one with roughly a half-a-million dollars for annual student organization budgets. The Senate Finance Committee oversees all allocations, with final say coming from the senate.
A student comptroller and part-time bookkeeper manage the Comptroller’s Office, but there is no full-time accountant on staff. SMU Student Senate runs the Comptroller’s Office. Senate represents the Students’ Association, which consists of all full-time students.
To improve the flawed system, Russ said the Students’ Association plans to hire an accountant who will devote 75 percent of his or her time to the Students’ Association and 25 percent to the Dean of Student Life’s Office. He said the Association’s portion of the salary will be around $35,000.
“There needs to be more oversight,” former Student Senate adviser Thomas Hailey said. “Hiring a CPA has been one idea to help.”
Jennifer Jones, director of student activities and multicultural student affairs and the current Student Senate adviser, said the office is still looking into the idea of hiring an accountant, but it has made no final decision. Russ said there will be an accountant by June or July.
In the meantime, university administrators imposed some changes.
However, ask the people currently responsible for the money about the system and they give a different answer each time.
Senate Finance Chair Micah Nerio says there is a separate account for the student fees that graduate students pay.
There isn’t.
Senate records show that last spring, the Senate considered two resolutions that would create a separate fund. Both pieces of legislation received negative recommendations from Senate’s executive committee and later failed to pass on the Senate floor.
Smith thought the Student Senate allocated $105,000 more than it actually gave out in the annual budget process. Senate did over-allocate money, but it did not go to the annual budget process. It went to the Chartered Organization and the Senate funds.
Russ said none of the organization’s money is sitting around. In fact, an undesignated account known as the residual account held $200,000 until this year when, due to accounting errors, Senate spent around $180,000, according to Smith. Around $20,000 still sits in the account.
“The shady thing about residuals was you could use it on whatever you wanted,” Smith said. “The oversight was the adviser, student body officers and comptroller.”
There may be a lot of confusion, but students aren’t entirely to blame. The Students’ Association’s record keeping and software were unable to keep up with the complicated system of accounts and contributed to numerous bookkeeping problems, said Smith.
Many organizations maintain at least two accounts: one for funds appropriated from the annual budget process and another for the organization’s checking account. Larger organizations like Student Foundation, Program Council or Student Senate maintain as many as 10 or more accounts because of Senate policies pertaining to the annual budget process. Individual committees within these organizations and large events they put on submit separate budgets from the organization.
To further complicate the matter, these accounts only exist in the Students’ Association’s accounting software. At the bank, the balances are lumped into larger accounts. Senate calculates the individual account balances from the comptroller’s records.
If someone incorrectly records a transaction, it can leave one account with a negative balance.
While this is not technically a problem at the bank because the master account is not overdrawn, it is a problem when closing the books for the fiscal year. The comptroller’s office cannot close accounts in the negative, so to write off “bad debt,” the comptroller moves money from the Students’ Association’s undesignated account to cover the debt and pay the negative accounts.
This contributed to the decline from more than $200,000 in the undesignated account a year ago to about $20,000. Smith said Student Senate wrote off $100,000 of debt last year, but, thinking it had more money to spend than it did, compounded the problem. The money the Comptroller should have moved stayed in other accounts in the system and appeared as available funds, which Senate allocated or spent on other projects.
The university has stepped in to help the Students’ Association with its bookkeeping. The comptroller must now meet regularly with the SMU Student Affairs Financial Officer Melanie Graves to go over accounting. The Comptroller’s Office also changed its policies because of the auditor’s recommendations.
Smith said the audit recommended locking up blank checks, keeping the safe locked at all times, requiring two signatures on each check request and tightly controlling money that was changing hands. To prevent fraud, one person shouldn’t make deposits, write checks and reconcile the accounts.
“If it’s the same person doing all three, someone could take $20 out of a deposit and cover for it when reconciling,” Smith said. “No one else would see it or be checking.”
To prevent the over-allocation of money to Senate’s funds, Russ said he will sign off on the final numbers before the Students’ Association allocates money.
