MSU rectifies error in collecting receivables from students

11/16/2001 BOZEMAN--A decade-long accounting oversight in reconciling money students owe Montana State University resulted in a $2.3 million internal shortage, said MSU officials.

MSU’s internal auditor, Virginia Key, and recently-appointed controller Laura Humberger discovered that money that was never collected from MSU students wasn’t accurately subtracted from the university’s ledger. Key said that fiscal officers initially assumed that the discrepancy was caused by a glitch in the conversion to the university’s new accounting software, the Banner system. When in fact, the new computer system was accurately revealing the pre-existing problem.

“We now believe that, over a period of several years, the university has distributed internally $2.3 million more than actually collected,” Key said.

Key and Humberger presented those findings Friday morning to the University’s Planning, Budget and Analysis Committee (UPBAC). The university has made plans to reconcile the error internally by debiting several university accounts. In addition, the university has now instituted controls on money students owe MSU to prevent such an error for happening again.

Key explained that the error resulted from complex and varied internal accounting systems that existed on campus before the University converted to the Banner system in 1999. Another contributing problem over the period of 1997-99 was that all available accountants and bookkeepers were working to convert to the complex Banner system.

The Montana Legislative auditors visited MSU in the spring and mandated that the university reconcile the difference between the amounts indicated on the university’s accounts receivable and the amount shown on the general ledger.

Humberger came on staff in May and in August discovered that Banner didn’t cause the discrepancy. In fact, Banner was giving fiscal officers evidence that the discrepancy was located in student receivables.

Key said the fiscal officials do not believe that there was fraud involved, however many of the files that contained student receivable information prior to 1997 no longer exist.

“I see from President Gamble a real commitment to maintain the university’s integrity as we move to recruit new students, serve the students we have and provide support for our research programs,” said Humberger, who came to MSU from Anchor Gaming. “The good thing is that there is a commitment from the president to staff the university at the levels needed not to allow this to happen again.”

MSU’s fiscal officers say the $2,323,441 discrepancy will be balanced by distributing reductions to the accounts that have received uncollected funds. The reductions will be distributed to the following areas:

The university’s general operations will cover 61.93 percent of the reduction, or $1,428,961. This will cause a deficit that the university has committed to erase by fiscal year 2004. This year’s contribution to that plan will come from contingency funds built into the budget by the UPBAC committee.

Residence halls will be assessed $429,318, the Strand Union $21,570 and the Student Health Service $83,899.

A reduction of $154,597 in student fee accounts will be distributed across the board among student computer, equipment, physical education building, academic building, student building, physical education complex, IT and athletic fees.

Parking operations will be assessed $1,442 and the designated sub-fund will cover a $193,654 reduction.

The general operations fund is the only one that will experience a negative balance at the end of the current fiscal year, Key said.

Send questions or comments to Carol Schmidt: cschmidt@montana.edu. Or you can send letters to Carol Schmidt, MSU Communications Services, 416 Culbertson Hall, Bozeman, MT 59717.

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