Thursday, May 1, 2003

In North Carolina, Community Colleges' and State's Accounting Systems Are Incompatible By FLORENCE OLSEN When officials of the North Carolina Community College System bought a new financial-accounting system, someone apparently forgot to read the fine print. The $51-million system uses a different accounting method than does the state government. Now the state auditor is criticizing financial misstatements that stem from what an administrator says was "miscommunication on both sides" when the colleges bought the new system. And the colleges are scrambling to adjust their new system to meet the state's requirements. "In a nutshell, we purchased the Datatel Colleague software, which has an accrual-based accounting system, and the State of North Carolina operates on a cash basis," says Saundra W. Williams, vice president for administration for the community-college system. So far, eight of the system's 59 institutions are using the new software, which is part of a larger Datatel system for managing finances, human resources, and student records. Differences in the way the two accounting methods allocate cash caused financial discrepancies, which the state auditor reported in February. Since then, the auditor, the community-college system, and the contractor hired by the college to install the Datatel system have been working on an automated fix for problems that staff members are now handling manually. The contractor is Affiliated Computer Services, of Dallas. At this point, the community-college system has no plans to halt the Datatel project, Ms. Williams says. "The state has invested a lot of dollars, and we're just going to move on," she says. "To be honest with you, we can't spend a lot of time pointing fingers." Accrual-based systems are better equipped to handle new accounting standards set by the Governmental Accounting Standards Board, says Susan Menditto, manager of accounting and finance programs for the National Association of College and University Business Officers. The board is the standards-setting body for governmental accounting, and its rules extend to public colleges and universities. North Carolina, however, still requires all state agencies and colleges to use cash-basis accounting. It is one of the few states that still use cash-basis accounting. Entries in a cash-accounting system are made within the accounting period in which bills are paid and payments are received. Entries in an accrual-accounting system are made within the accounting period when revenues are earned and expenses are legally incurred, even if bills have not actually been paid. Ms. Williams, who was not in charge of administration at the time the new accounting system was purchased, says the request for bids that the community colleges initially released may have not been clear in its requirements. The request for bids asked for a system that met the requirements of the Governmental Accounting Standards Board, "and that happens to be accrual," she says. But the solicitation also said the new accounting system had to be able to generate cash-basis reports, and it named the specific reports. "We were asking for cash reports that would be generated from a cash system," Ms. Williams says. Getting the reports that the state needs is not impossible with the system that the colleges have purchased, but the system is not set up for it. "You could certainly produce cash-basis reports with an accrual system," Ms. Menditto says. With some additional programming, the problem will be fixed, Ms. Williams says. "We have no idea what it's going to cost." "We have eight colleges out there that can do their job," she adds, "but they're having to go through some very, very tedious and manual work-arounds to get it done." The colleges that have been using the Datatel Colleague system are Caldwell Community College and Technical Institute, Catawba Valley Community College, Central Piedmont Community College, Guilford Technical Community College, Mayland Community College, Pitt Community College, South Piedmont Community College, and Wayne Community College. According to Jayne Edge, vice president of strategic planning and marketing for Datatel, the community-college system, Affiliated Computer Services, and Datatel reached agreement late Wednesday on a plan for generating the reports required by the state. Easy-to-print version E-mail this article

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