Report slams Sowela Tech's financial reporting - KPLC 7 News, Lake Charles, Louisiana

Report slams Sowela Tech's financial reporting

By Brandon Richards - bio | email

LAKE CHARLES, LA (KPLC) – A legislative audit report found several significant problems with the financial reporting at Sowela Technical Community College.

The report said Sowela does not have adequate internal control procedures in place to ensure the school's annual fiscal report is prepared in an accurate and timely manner. The report also said the school had "ineffective controls over reconciliation of federal cash" and "inadequate controls over student receivables."

The report found several incorrect financial statements. For instance, the school's operating expenses were understated by nearly $900,000. Accounts payable for federal Pell Grants were overstated by $814,249, while "tuition and fees were understated by $814,249." The audit said local and state grants and contracts "were overstated by $458,434."

The audit also chided the school for delaying the release of its annual financial report (AFR). The report was due on August 25th, but the AFR was not sent until September 14th.

The audit said Sowela "did not place sufficient emphasis on controls over federal cash bank reconciliations." For instance, Sowela "could not provide support for adjusting entries made at year-end totaling $832,829 to cash."

The audit also said Sowela failed to establish adequate control procedures when it came to student billing. For instance, four of 28 student accounts had receivable balances totaling $2,504 that were not recognized in the financial records.

Sowela Chancellor Dr. Andrea Lewis Miller said the findings, while accurate, were unacceptable.

"We've put tins in place to make sure it doesn't happen again," said Miller.

Miller said many of the problems can be blamed on a shortage in staffing and inadequate software. Miller said Sowela does not have integrated software like other colleges. Miller said the current software requires a lot of manual labor.

 Miller said the recent budget cuts have made the situation even worse.

"The budget cuts have had a huge impact on our ability to replace people in a timely manner," said Miller. "We lost people over the last year and a half and so that has created a problem for us."

Miller said the school has already taken steps to correct some of the problems and has plans in place to correct the rest of the issues by the end of 2010. Miller said the school has hired a controller to replace the Director of Finance, a position that was never filled. Sowela has also contracted with a CPA firm to assist the school with its AFR.

Miller also pointed out that the audit was considered an unqualified audit (versus a qualified audit), which means circumstances at the school were generally regarded as being well off, though not perfect.

To read the audit for yourself, click here.

Copyright 2010 KPLC. All rights reserved.  

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