I.

Title of the Case: The University Foundation

II. Problems Encountered:
a. Why the Board of Trustees of the University Foundation, Inc. encourages the UFI
to discontinue their services for all the projects that are related to the University’s
normal operations?
b. What did Mr. Cruz requested to his Chief Accountant, Susan Santos to prepare
after the Board meeting?
c. In addition to Susan Santos, who are the three others who should be retained by
the company? Justify your answer
d. Do you recommend any changes in the UFI salary structure for the remaining four
employees? Why?
III. Summary of the Case:
The University Foundation, Inc was primarily developed to help a University in
Metro Manila expand their resources by soliciting donations and be the investment
manager for their funds. But UFI also been practicing the collection and disbursement
functions for the University’s different units like ID card fees collection and food sales of
the University Food Service during the past decade. Because of these, 5% to 10% of the
total collected fees have been charged to the University management by the University
Foundation, Inc. That’s why the Board of trustees of the University Foundation, Inc. have
decided in their meeting, which happened during the 1st day of July, 1990, that UFI
should stop servicing all the projects that are related to the University’s normal
operations. Because of the recent BIR which stated that all the foundations should pay
taxes on income earned which includes management fees thus the UFI will be paying
income taxes regarding on these university management fees which makes the University
tax free. That’s why the Board of UFI also have decided to give these project back to the
University.
These decision of the Board of Trustees makes the University Foundation, Inc. to
have a limited functions which includes the collection of donations for scholarships,
research grants, professorial chairs, monthly disbursement to the University for
Professorial Chair Honoraria, investment of Professorial Chair and Scholarship Grant.
At present time, the University Foundation, Inc. had already handling an
approximate amount of P130 million of University funds wherein the first P1 million
income that was earned by the fund have been charged by 10% and another 5% for the
amounts earned in excess of that P1 million by the Investment Manager.
The University Secretary prepares the copies of faculty appointments that will
serve as a basis for the compensation of the University’s monthly professorial chair
honoraria and research grants. The University Foundation, Inc. also use this appointments
prepared by the University Secretary to become their basis in able for them to prepare the
list of names and amount in payroll. A check is also prepared for each of the four
campuses for the total payroll per campus wherein after receiving the check, the section
of accounting for each campuses is now responsible for preparing individually the checks
which will be given to each of the faculty members as well as to the scholars.
 The limited functions given to the University Foundation, Inc. was also redefined
by the Board of trustees stating that only four full-time administrative staff is required to
stay. This requires the UFI to fire six of their full-time staff at the same time to fire their
two part-time cashiers. During the meeting that happened on the 1st day of July, the Board
of Trustees assigned the selection of the remaining staff to the newly appointed Executive
Director, Mr. Reynaldo Cruz. Mr. Reynaldo Cruz was appointed to the position of
Executive Director only two months ago. He was very dedicated to retain Susan Santos
as their Chief Accountant. But before he do this, he need to face two uncertainties. First
is how to re-organize the ten functions of the ten full-time and two part-time employees
into four full-time positions and how he will be able to decide who among the present
employees can handle the new positions,
Mr. Cruz called their Chief Accountant, Susan Santos after the Board meeting. He
requested her to make a draft of all the job description for the remaining four positions as
well as evaluate the performance of all the present employees.
The four positions is consist of Chief Accountant which was already been given
to Susan Santos, Assistant to the Investment Officer and two Bookkeepers. While in the
Performance Evaluation, only nine employees were evaluated. And based on this
evaluation prepared by Susan Santos, employee numbers (9) nine named Shirley
Ledesma, (6) six named Soledad Trias, and (3) three named Maryann Sanchez are the
promising workers to get the last three positions.
IV. Solution:
a. The reason why the Board of Trustees encourages the UFI to discontinue their
services and return all the projects to the University because of the recent BIR
stating that all foundations are required to pay all the taxes regarding on the
income earned which includes the management fees.
b. After the Board meeting, Mr. Reynaldo Cruz called Susan Santos, the current
Chief Accountant of the company. He requested her to make a draft of the job
descriptions for the remaining four positions which includes Chief Accountant,
Assistant to the Investment Officer and two Bookkeepers.
c. Based on the Performance Evaluation prepared by Susan Santos, the three
employees that the company should retain was Shirley Ledesma, Soledad Trias
and Maryann Sanchez. These three workers got the highest in the said
Performance Evaluation. Shirley Ledesma got 29 points while Soledad Trias and
Maryann Sanchez both have 27 points.
d. Now that only four employees will be retain in the company, the work and duties
will become harder compared before because the duties will be more concentrated
to them. More work or assignment will be given to them because of the lack of
employees which may result to poor performance. In able to motivate them to
work hard, I would recommend that the company should increase their salaries as
well as other benefits like healthcare benefits, life insurance, paid vacations,
retirement plans, etc.