Auditors give Palomar College finances high marks

SAN MARCOS -- An independent audit of Palomar College finances for fiscal year 2005-06 found no significant problems, prompting the auditors to grant the college an unqualified approval.

Five minor problems were discovered during the audit, though, and a senior manager for the college's auditing firm told Palomar trustees Tuesday night that the two-year community college should consider hiring an internal auditor.

"I'm pleased to say that you received an unqualified approval again," trustees were told Tuesday night by Phebe McCutcheon, senior manager for Vicenti, Lloyd and Stutzman. "We also encountered no difficulties during the audit, had no disagreements with staff and found nothing illegal."

But when Mark Evilsizer, president of the board of trustees, asked McCutcheon whether she thought there was adequate financial oversight at the college, McCutcheon said hiring an internal auditor would be helpful.

"An extra set of eyes in the person of an internal auditor would be a good thing," said McCutcheon.

In response, Bonnie Dowd, vice president for finance at Palomar, said the college plans to review some of its procedures and may consider hiring an internal auditor. She explained that current employees could not work together to fill that role because the job would be at the management level.

The five minor problems cited by the auditor were related to journal entries for expenses, back tuition owed by former students, documenting the hours of employees in federally funded programs, self-assessments for noncredit courses and allocation of costs between overlapping programs.

The auditors recommended several procedural changes where applicable. On the failure to complete certain documents and assessments, the auditors simply recommended that the district make completing these documents a priority in the future.

Auditors also warned that some federal funding for the college could be in jeopardy if a federal audit were to discover the documenting of hours problem with regard to federally funded programs.

Responses from Palomar, included in the 70-page audit, indicate that school officials have begun working on each of the problems. They said that all of the problems should be resolved during fiscal 2006-07, which runs through June 30 of this year.

Later in the meeting, Dowd said that two of the five problems have been cleared up completely, but she did not specify which ones.

One problem that will take significant effort to solve is the amount of money Palomar lists in its accounts receivable from student tuition. Palomar listed $2.8 million, but the balance found by auditors was only $780,000.

Dowd explained that the difference is based on hundreds of former students who still owe tuition.

Because Palomar no longer expects to receive much of this money, it has been removed from receivables expected to be collected, said Dowd. But the school still keeps a record of the owed tuition so that it can be collected if the delinquent students try to register for classes in the future.

Dowd said Palomar is striving to reconcile the two sets of records to comply with proper auditing procedures.

Trustee Nancy Chadwick also questioned Dowd about Palomar's compliance with new rules created by the Governmental Standards Accountability Board regarding the funding of pensions for current and retired employees.

Dowd explained that the college expects to have a plan in place for coping with its unfunded pension liabilities by summer 2007, nearly a year ahead of the June 30, 2008, deadline.

"We'll be ahead of the curve on this," added college President Bob Deegan.

In other business, trustees swore in Michelle Eichelberger as the new student trustee, and approved hiring business professor Carol Bruton and nursing professors Lori Michelangelo and Hope Farquharson. Michelangelo will be paid $81,000 per year. Bruton and Farquharson will each receive $77,000 per year.