Kansas University’s School of Business mostly spent its differential tuition funds appropriately, but should take measures to fix cumbersome accounting practices, according to an audit released Thursday morning.

University leaders said the audit affirmed that the school’s funds had been appropriately spent, except in the case of $60,000 — or one-fifth of 1 percent — of the $31 million generated overall.

“It confirms the fact that we have used these funds consistently with the original proposal,” which was laid out in June 2004, said William Fuerst, KU’s outgoing dean of its School of Business.

Fuerst announced in September that he would step down from his position at the end of the academic year.

The report also notes that the original proposal was quite broad, and a number of different interpretations could be made as to whether the expenditures aligned with the intended purposes.

Differential tuition is an extra course fee paid by students enrolled in that school’s courses in addition to the normal tuition rates.

The audit was conducted after by a group of master’s degree students raised concerns that the school was not spending its share of differential tuition funds according to the original proposal that established the differential tuition fee for the school.

Months of back-and-forth dialogue between students and administrators followed.

KU Provost Jeff Vitter said the audit report should lay to rest any other concerns that the students may have.

“If anyone has further questions about it, I don’t think anything is going to change that person’s opinions,” Vitter said.

‘Cumbersome’ combination

According to the audit, the internal budget for the School of Business does not differentiate between general fund spending and differential tuition spending, making monitoring the funds “cumbersome.”

That’s a particularly noteworthy conclusion, considering that the business school “is probably the one school within the university that should have a premier accounting system,” said David Cantrell, an MBA student who has been critical of the school’s handling and spending of differential tuition funds. “Instead, it probably has the worst.”

Cantrell, who served on a committee that worked directly with the accounting team, was careful to describe the findings as a “report” and not an “audit,” because the numbers involved were not certified. He maintains that the accounting firm used a “very, very liberal” interpretation of the original agreement’s requirements, one that allowed KU to say its spending had been proper.

“This answers nothing nothing,” Cantrell said. “Nothing.”

KU officials said they sent copies of the report to members of the Kansas Board of Regents for their review. Gary Sherrer, chairman of the board, said Thursday afternoon that while he hadn’t yet had a chance to review the information, he would look into and beyond the documents to see that KU lives up to its end of the bargain.

“I want to look beyond their press release, and I guarantee I will read every word,” Sherrer said. “It’s a very important issue, on two grounds. One, it’s a great deal of money. And secondly, the students agreed to this with certain expectations of the value, and I think the students have to feel that the value’s being received, because they paid for it.”

Fuerst said the school would address the recommendations made in the report to make reporting of expenses easier.

The audit also mentioned that the original proposal called for differential tuition to increase according to a higher education inflation index, but that it had instead been increasing by a flat 6 percent rate.

That’s a higher rate than inflation, but KU officials said the change from the proposal was tied to university-wide tuition and fee increases aligned with the university’s tuition compact that guarantees four-year rates for students.

KU also released a report generated by the provost’s office detailing the rest of the $76 million in differential tuition collected since the 2003 fiscal year.

Vitter said that it showed that, university-wide, funds were spent appropriately and in accordance with the respective school’s proposals.

Restoring oversight

At the business school, students have complained that a student committee intended to monitor the funds had been disbanded. The audit was unable to reach a clear reason for why the committee dissolved in 2006.

“It was an oversight that’s been corrected now,” Vitter said.

Fuerst said a new oversight committee already had met once, and future meetings are planned.

“Could we have avoided the controversy by having a mechanism in place?” Vitter asked. “I think the answer is yes.”

The business school audit was completed by the accounting firm BKD, the same company that completed an audit into allegations of ticket mishandling at Kansas Athletics. The business school audit was completed at an estimated cost of $50,000, though final bills have not been received. The provost’s office used private donations to fund the audit.

For 2010-11 at KU, the differential tuition fees range in cost from a low of $16.50 per credit hour for the School of Journalism to a high of $211.50 per hour for the School of Law.

In the business school, undergraduates pay $102.40 per hour and master’s students pay an additional $84.30 per hour.