That is just so weird. I would think accreditation bodies would set a standard.
Also, completely deleting a failed course from a transcript seems like a lack of academic integrity. --I don't mean integrity as in lying outright or moral soundness, but rather not presenting a complete picture.-- And for that reason I would think accreditation bodies would demand it.
But again, I don't know either way, it just seems different than what I would expect.
University of Colorado has Course Forgiveness, you are allowed 10 credits for a Baccalaureate Degree program. The grade will still appear on your transcript, but they will not count it into your GPA.