Question

Harvey Hogan was in his 31^st year as Director of Athletics at Wilson College, a coeducational, private liberal arts college that offered 16 sports and was a member of the Champions Intercollegiate Athletics Conference (CIAC). Mr. Hogan was proud of the fact that, although his budget was the smallest in the conference (which consisted of 10 schools), he had always operated in the black.

    However, the college faced some serious financial issues in the current school year due to a drop in enrollment during the spring semester. As a result, the Chief Financial Officer (CFO) told all department heads that their individual budgets could NOT go over what had been appropriated at the start of the year.

     Mr. Hogan met with the coaching staff and apprised them of the financial crisis that faced the college. He asked for their help but really did not foresee a problem since the Athletics Department had never gone over budget in his previous 30 years.

     On June 30^th, the fiscal year ended and the CFO (Ms. Newman) put an emergency call into Mr. Hogan. She scheduled a meeting with him so he could explain why he was over budget by $12,000.00. She told him that 4 sports had exceeded their budgets—men’s lacrosse, women’s volleyball, men’s tennis, and football.

     When Mr. Hogan returned to his office he immediately called each coach and scheduled meetings with them. According to the women’s volleyball coach, she had failed to check her monthly computer printouts because she was “too busy coaching and recruiting” to spend time on the printout. She said she was sure she stayed within her budget and did not overspend. After some investigating by Mr. Hogan, the coach admitted that she had been asked to serve as a chaperone for the intramural flag football team which travelled to New Orleans for the national tournament. She had transferred some volleyball funds to their account to help them cover their costs. She also paid for their uniforms, but indicated that it was the first time she had ever gone over budget.

     The football coach was also shocked to learn he was over budget by $5000.00. He discovered that the company that washed the team practice and game uniforms failed to send a monthly statement as he had requested. Instead, the owner of the cleaning company waited until the end of the school year to send a bill for $5000.00. Moreover, in previous years several football student athletes who were offered grants-in-aid did not report for practice choosing to enroll at other institutions. The coach assumed this would happen again. However, every scholarship athlete reported for practice which put him over by two grants ($40,000.00). While he was still in compliance with the conference, he was above the institutions limit.

     The men’s tennis coach has always ignored Ms. Newman’s directive to turn in all receipts by June 1^st. Instead, he regularly procrastinated until as late as mid-July when he would turn in receipts for the national tournament held in May. He was $2000.00 over budget.

     Men’s lacrosse exceeded its budget because the coach, who had built a nationally ranked team, had decided to take a trip north to play several games over spring break. He had no other excuse except that he felt the tough competition would help his national ranking and bring good publicity to the college and help his recruiting.

     In addition to these problems, another serious one surfaced. The track and field coach wanted a new computer. When he was told that the request would not be approved until the next year, he worked out a deal with a local computer store. The salesperson agreed to let him get a computer and hold the bill until the next year when he was told he could purchase the computer. Unfortunately, the salesperson was fired and the store owner demanded payment immediately.

     The final frustration came when 12 dozen pairs of athletic socks arrived. The bill had no identifiers on it so Mr. Hogan could not tell who ordered them. No one would admit it and it was a mystery as to how the purchase order got through the business office without the approval of the Athletics Director, Mr. Hogan.

     In the next meeting that Ms. Newman had with Mr. Hogan, she was furious. She asked Mr. Hogan “who is in control of the Athletics Department budget—you or your coaches!” What should Mr. Hogan do?

Questions for Discussion

1. It’s now the middle of July. What can Mr. Hogan do, if anything, about what happened in the last fiscal year? (5 pts.)

2. Make a list of all of the problems you see in the situation above. (10 pts.)

3. Describe how Mr. Hogan can remedy those problems to prevent them from happening in the future. (20 pts.)

Answer 1

Answer to 1st question:

1. First of all as a director he should assure Ms. Newman that overbudgeting will not happen in future.

2. Fine the coach of Volley ball team for accepting the invitation as Chaperon without direcctor's permission.  

3. For the football team, cross check the monthly expense over the year end bill and then get it paid.

4. ask for the justification from the men's tennis course for the procrastination and make him responsible for theover budgeting.

5. Investigate for the purchase order placed without the approval of the director.

Answer for question 2:

1. Women's vollyball coach was not able to perform dual responsibility of checking monthly budgets and coaching. On that she took the extra responsibility of being a Chaperon for the football team and paid for their travell and uniforms.

2. Football team coach failed to get monthlys bills from cleaning company and paid the bills in year end which overexceeded the budget.

3. Also he does not prepared a list of non practicing grant- aid students to lower the scholarship amount.

4. Men's tennis coach has a problem of procratination.

5. The tennis coach always prcrastinated to turn on the receipts due to which if any month's expenses are going above the budget it couldn't be looked into beacuse of delay. Thus it causes an over expenditure of $2000.

6. Men's lacrosse team coach's idea was good for team publicity but he should look into the budget before plannig the trip.

7. The track and field coach was in requirement of new computers but was not allowed to buy untill next year. However he made a deal with loacl store and agreed to paid later when budget was approved. Unfortunately, the sales person got fired and th store owner was demanding a payment immediately.

8. A consigment of 12dozens of socks arrived which has no identifiers.

9. As the order was placed without approval of the director, it could become a huge problem for unauthorised purchases in the name of the organization.

Answer for question 3:

1. Each and every coach should take an approval for any extra activity apart from the team game, fund transfer to other game, for placing an order to supplier, etc.

2. Women's volleyball - The coach should not be allowed to perform any activity in other sports. So that she should maintain a balance between coaching, hiring as well as taking care of budgeting.

3. For transferring fund to other sports and for making payments/ expenses for other sports, approval from higher authority shall be obatined.

4.Football team- monthly bills should be received from the supplier / service providers to account monthly expenses as well as to track monthly budget.

5. Football team coach shall give a monthly report of students who has offered grant-in-aid but did not enrolled or comes to practice.

6. The reports helps in maintaining a budgets for the scholarships.

7. Men's Tennis- it should be made compulsory to turn on receipts on 1st on every month. It helps to reduce timely expenses and keep track of budget.

8. Men's lacrosse- The coach was not allowed to take students without diretor's permission for any trip.

9. Also the men's lacrosse coach should look into the budget before taking students to trip.

10. Track and field coach should not be allowed to place an order without approval from the higher authority.

11. By making a deal with sales person to supply computers now aand held for payments uptonext year is suspicious. There can be a collucion between the two. Thus all the orders placed should be in standard format with the approval of the approval of the higher authority.

12. There should be a specific format selecting a supplier and all the orders should be placed as pr that standard operting procedure and as per the format.

13. An SOP shall be prepared for fund transfer from one sports to other sports.

14. Monthly review meeting shall be conducted to understand the training procedure, enrollments, to discuss budgets, or any grivences, etc.

14. All the coaches should provide a monthly explaination for over budgeting in monthly review meeting.

15. Unidentified orders placed1 should not be entertained.