Reference no: EM132618716

This isn't the first, or probably even the last college or university to have such a division in public education and a private training program servicing local or regional companies. Two of the universities I have been associated with in my past also ran into this issue when the state auditors came calling. One of the two institutions charged all costs for the department (including faculty salaries and facilities) to the private training program, making the university's graduate engineering program look more profitable than it actually was, and bilking the companies out of thousands of dollars. Here is my follow-up question to you for this topic:

Problem 1: Can we all agree that this practice is unethical, but is it also against GAAP and legally prosecutable? If you agree with either or both parts of  statement (GAAP and legality), explain your rationale, including with GAAPs the university may be in violation of. If you don't agree with one or both, there needs to be a sound reason presented.