The Wharton Graduate Association uncovered widespread financial discrepancies in MBA student organization funding dating as far back as 2017, forcing over 100 graduate clubs to begin the school year with no cash balance.
In September, the WGA Finance Team sent a letter to the Wharton Clubs and Conferences Leadership division informing clubs that their starting cash position would be zero for the 2023-2024 financial year, meaning that they would receive no rollover funds from the previous year. The letter, which was obtained by The Daily Pennsylvanian, cites a wide range of financial issues uncovered during an audit over the summer.
"We have made this decision with the utmost seriousness and have done so only after exhausting all possible alternatives," the WGA Finance Team wrote.
The MBA student organizations and conferences governed by the WGA generate money through membership fees, tickets to club-organized events, sponsorships from corporations, and other income sources. Clubs access their funds through two WGA accounts, one of which flows through University entities and follows nonprofit regulations, and the other which is derived from revenue from conferences, events, and sponsorships.
However, the WGA uncovered a "disconnect" in the amount of money clubs and conferences thought they had versus what was actually in their accounts, WGA Chief Financial Officer and Wharton MBA candidate Loyd Bradley acknowledged in an interview with The Daily Pennsylvanian.
Records definitively proved a financial discrepancy involving payment processors, financial software, and bank balances that began slightly before COVID-19 at the earliest, but possibly earlier, he said. Screenshots shared with the DP from a WhatsApp conversation between chief financial officers in the WGA indicate that the issues "stemmed back" as far as 2017, according to one text message.
While the process for resolving financial disputes between the WGA and clubs over funding is typically informal, the findings of the audit prompted a significant response from the WGA, Bradley said.
Although he did not specify or estimate the dollar amount making up the discrepancy, the WGA reported $5.6 million in revenue and $6.1 million in expenses in the fiscal year ending June 2022 — a net loss of $438,057, according to nonprofit tax disclosures.
In response to a request for comment, Wharton Vice Dean of Graduate Student Affairs Maryellen Reilly wrote that the school would support WGA while respecting its status as a 501(c)(3) nonprofit separate from Penn.
"This discrepancy was discovered by the students and reported to the MBA Program Office for our awareness," Reilly wrote. "Earlier this fall, we provided guidance to WGA leaders about how to transparently communicate their findings and next steps with club and conference leaders."
At the root of the discrepancy and the WGA's decision to halt rollover funds was a number of systemic issues, according to Bradley and the letter obtained by the DP.
For example, syncing errors between Bill.com — the platform where students are reimbursed and vendors are paid — and QuickBooks — the financial software that reports account balances — led to a difference between the expected balance in an account and the actual balance.
Bradley acknowledged that Bill.com and QuickBooks were showing false balances but said that these issues have been fully resolved.
The WGA also discovered "extreme delays" in submissions for expense reimbursements. The lack of a concrete reimbursement policy led to funds being deposited into the incorrect accounts, leading to liability issues. Money that was erroneously deposited into University accounts fell under University regulations.
Delayed reimbursement requests by clubs led to organizations budgeting without considering the impact of potential outstanding reimbursement requests, according to the finance team.
There were also spending issues reported between WGA funding — including Bill.com reimbursements and WGA sponsorships — and Wharton sponsorship funding, which is reimbursed using the University's dedicated software.
Bradley — who oversaw the audit process and helped decide the WGA's new financial policy — said that the WGA previously had an accounting team but that "[they] weren’t necessarily pleased with that." Because of this, the WGA decided to work with Penn to hire a new controller employed by the University.
He said he expects that future audits and additional steps will prevent similar financial discrepancies from happening again.
Multiple previous WGA board members did not respond to requests for comment. 2020 Wharton MBA graduate and former WGA Chief Financial Officer Sergio Giralt declined to comment, while 2022 Wharton MBA graduate and former WGA President Phillip Ross said he was “not aware of anything related to the issue" during his tenure in 2021.
The WGA finance team wrote at the beginning of the fall semester that the WGA had ended its relationship with a previous employee and would work with the University to hire a new financial controller to help manage WGA finances and prevent further issues.
It is unclear if the position has been filled. MBA Program Director of Student Life Eddie Banks-Crosson reiterated that the WGA operates separately from Wharton in a statement to the DP.
“We provide historical context, institutional knowledge, and defined operational support to help WGA leaders engage the MBA student body via 100+ clubs and conferences," Banks-Crosson wrote.
The letter shared with the club and conference leaders outlines additional steps taken by the WGA to amend the issues.
Alongside the hiring of a new controller, the WGA is taking steps to sync financial software so it shows accurate balances, provides weekly financial reports to club leaders, reviews outstanding reimbursements, and includes more transparency regarding club and conference spending.
The WGA did have to account for clubs that did not have equal budgets, as a result of differing dues and sponsorships.
When asked about graduate-level clubs that receive multi-thousand dollar sponsorships from companies and individuals, Bradley said that the WGA “decided to honor any sponsorships that were intended to be for this academic year" using funds from its restricted account.
According to the WGA finance team, the issues affected the most "organized and proactive" clubs which had already incurred expenses based on the money they thought they had at the start of the current fiscal year.
“Absolutely, there are some people that are not happy with this decision," Bradley said. "This decision definitely was not one of the most popular decisions but was the right decision."
He added that it is difficult to lead peers and said he hopes these decisions will lead to clubs conducting better negotiations with vendors, holding valuable events, and re-evaluating the ticket prices they charge.
"There are some clubs and conferences that are not extremely happy with the decision, but the vast majority I would say are okay with what’s going on, and they are up for the challenge," Bradley said.
Editor's Note: The Daily Pennsylvanian previously reported that Bradley attributed part of the lack of oversight to the previous accounting team. This has been updated to reflect Bradley's original statement that "[we] weren't necessarily pleased with [the previous accounting team]."