REPORT ON INCAE - ROCAP ANNUAL BUDGET REVIEW MEETING, AID LOAN NO. 596-L-012. AUGUST 6-8, 1975

DISCUSSION CENTERS ON THE FINANCIAL AND MGMT PROBLEMS OF INCAE, THE INSTITUTE FOR ADVANCED MGMT TRAINING IN CENTRAL AMERICA. THESE PROBLEMS HAVE CAUSED DOUBTS ABOUT INCAE"S INSTITUTIONAL VIABILITY FOLLOWING TERMINATION OF AID LOAN. REPORTS BY AN OUTSIDE MGMT TEAM (PEAT, MARWICK AND MITCHELL) INDICATE SERIOUS DEFICIENCIES IN INCAE"S MGMT CAPABILITIES. THE REPORTS BRING INTO QUESTION THE CREDIBILITY OF INCAE DATA. IN INCAE"S VIEW, THEIR OWN ACCOUNTING SYSTEM IS PARTLY RESPONSIBLE, AS IT IS COMPLEX AND LITTLE USED OUTSIDE OF INCAE. UNDER ROCAP MONITORING, INCAE WILL MOVE TO A NEW ACCOUNTING SYSTEM AND ATTEMPT TO ADDRESS DEFICIENCIES IN MGMT. DELINQUENT STUDENT LOANS PLACE INCAE AND A $1 MILLION AID LOAN FOR SUPPORT OF THAT PURPOSE IN FINANCIAL JEOPARDY. INCAE FEELS THAT THEY UNDERESTIMATED ADMIN NEEDS IN MANAGING THE STUDENT LOAN FUND (SLF), AND ARE SEEKING ADDIT"L PERSONNEL. AN AID AUDIT REPORT OF 8/11/75 HAS RESULTED IN BETTER HANDLING OF THE SLF, HOWEVER 6/75 FIGURES SHOW 18% OF TOTAL MONIES STILL OVERDUE, AND 46% OF AMORTIZING LOAND PARTLY DELINQUENT. ROCAP HAS REVIEWED THE LOAN FUND SITUATION CLOSELY, AND RECOMMENDS CLOSING OF ONE OF INCAE"S TWO SLF BANK ACCOUNTS. INCAE WILL CONTIUNE SUBMITTING MONTHLY SLF REPORTS ALONG WITH NEW SLF PROJECTIONS FOR ROCAP REVIEW & MONITORING. DISCREPANCIES OVER AMOUNTS BUDGETED AND PAID FOR STUDENT HOUSING CONSTRUCTION MUST BE RESOLVED.