RCA Policy to Permit Groups To Have External AccountsBy Dan McGuire
Associate News Editor
Student activities will again be allowed to hold bank accounts outside of MIT under a new policy passed by the Office of Residence and Campus Activities yesterday.
The new policy ends the long-standing RCA policy that student activities may have only internal accounts at MIT. The change will allow all groups recognized by the Association of Student Activities to open outside accounts provided that they do not have a negative balance in their present internal MITaccounts.
Groups directly administered by RCA as well as larger groups supervised by the Campus Activities Complex, like the Lecture Series Committee and The Tech, are covered by the new policy.
The new policy will be tested over the course of the next week with a few student groups to see if there are any problems with the process of opening outside accounts, said Associate Dean for RCA Andrew M. Eisenmann '75.
The goal is to "have things in place so that by Sept. 16 we can accept requests to open outside accounts" from student groups, he said.
Once the new policy takes full effect, all student groups with outside accounts will be required to submit quarterly reports containing balances and account transactions for the purpose of random audits. RCA staff will handle the auditing of the transactions.
Inflexibility prompts change
One of the main reasons behind the formation of the new policy was the problem with the slowness and inflexibility of internal accounts.
"It would take a while to get a check cut," said Douglas K. Wyatt G, the president of the Association of Student Activities, who was involved with the development of the policy. "The party line was two days."
Wyatt said that the new system will make check writing more flexible because it can be done at any time and without delay.
"Now if you go on a trip you can pay on the spot" with a check instead of paying for things out-of-pocket and getting reimbursed from RCA, he said.
"I think that RCA will be getting more useful information than in the past and that there will be less of an administrative burden for groups," he said.
Eisenmann said that RCA would be flexible on which banks it would allow groups to work with. The goal is to "allow groups to pretty much shop around with the restriction that the banks be in the Boston area," he said.
Audits may require more work
The move to a less centralized banking system will require some additional work by groups, said Robert N. Clark Jr., a manager in the Audit Division.
"Before when it was mostly housed within" RCA, there was only one place that financial information was stored, Clark said. With the new system "it's going to take some closer coordination by the student group treasurers to make sure that they are doing the proper reconciliation."
Wyatt was confident that student groups would be able to handle the additional burden.
"For groups that don't keep accurate records, it might be a scramble at the end of the term" to reconcile the budget, but the process should be easy for groups that keep accurate records, he said.
Despite the previous policy that most student groups could not have outside accounts, over 100 outside accounts were being maintained as of the last student group survey, said Assistant Treasurer Robert E. Lee. That figure represents about 40 percent of all groups.
The ASA estimates that about two-thirds of student groups maintain illicit outside accounts, said Undergraduate Association Treasurer Russell S. Light '98.
Thomas R. Henneberry, director of Legal Affairs, said that MIT is liable for what happens to the accounts.
"This is money which is in many cases earning income" and yet is not being properly accounted for in internal records, he said. "It's an issue of MIT as a corporate entity being responsible for all of its vested interests and knowing what they're doing."
Lee says that many student groups are using MIT's name and tax identification number for their accounts.
Generally "if an account earns interest and it's under somebody's tax ID number, then it's taxable income," Lee said.
If the account comes under a tax ID number that's tax exempt like MIT's and "somebody represents themselves as tax exempt when they have no authority to do so, it's illegal," he said.Copyright 19,95, The Tech. All rights reserved.
This story was published on 9/6/96.
Volume 116, Number 39.
The story began on page 1 and jumped to page 10.
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