Reference no: EM132838016

Eastern University, located in central Canada, prides itself on providing faculty and staff with a competitive compensation package. One aspect of this package is a tuition benefit of $4,000 per child per year, for up to four years, to offset the cost of college education. The faculty or staff member's child can attend any Canadian university, including Eastern University, and receive the tuition benefit. If a staff member has three children in university one year, then the staff member receives a $12,000 tuition benefit. This money is not taxed to the individual staff or faculty member.

• Eastern University pays the benefit directly to the other university where the faculty/staff member's child is enrolled (or reduces the amount of tuition owed by the faculty/staff, if the student is attending Eastern University) and then charges this payment to a benefits account. This benefits account is then allocated back to the various faculties and departments based on total salaries in the faculty or department.

Problem 1: Critically evaluate the pros and cons of Eastern University's present method to accountfor tuition benefits. What changes would you recommend?