Wednesday, May 30, 2007
A&T audit finds financial abuse
Misuse of funds. Forgery. Nepotism. Widespread overspending and poor oversight.
These were among the findings of internal auditors called in to investigate financial irregularities at N.C. A&T, according to a report obtained by the News & Record on Friday.
About $2 million has been misappropriated, overspent, illegally solicited or misused in recent years, auditors allege. Among the report's recommendations: an investigation into possible criminal conduct.
Velma Speight-Buford, the chairwoman of the A&T Board of Trustees, said some of the report's findings reflect on former Chancellor James Renick's "management and leadership style," but the board ultimately is responsible for the problems.
"I personally take responsibility for the board not doing its job," she said Friday. "The board was not asking questions."
Among the audit's key findings:
* Employees in the Division of Information Technology and Telecommunications (ITT) misappropriated $87,514 between May 2004 and February 2006 by diverting IBM rebates into an account at the A&T Foundation.
* The report alleges that Rodney Harrigan, the former vice chancellor for the division, misused rebate funds and approved spending on "highly questionable purchases," including a beach cottage rental, holiday celebrations, tickets to athletic events and theater memberships for him and his wife.
Harrigan was arrested in December and charged with obtaining property by false pretense and embezzlement of state property.
* The mother of Harrigan's executive assistant received a vendor contract after the vice chancellor "assisted the Bid Committee with evaluating the vendors." The committee originally ranked the woman third for the job, but after the vice chancellor's input, the assistant's mother was bumped to the top spot and selected.
The mother was later prepaid $18,000 for work that she hadn't performed, a claim supported by falsified documents, the report says.
* Employees in the ITT Division solicited and accepted money from vendors in violation of state law and university policy, the report alleges, with nine vendors giving $1,750 over an eight-month period.
* The former program manager of a naval research grant for the College of Engineering misused as much as $500,000, approving large stipends for tuition, travel and fees that benefited herself and family members.
The manager paid a $66,733 stipend to her husband for the 2005-06 academic year — triple the highest stipend paid prior to his entry in the program.
She told auditors her husband's costs were higher, in part, because "he found the housing arranged by the Navy to be inadequate."
He instead stayed in a Courtyard by Marriott for $5,500 a month, "almost three times more than the amount of the next highest fellow's lodging," the report states.
The report alleges that the program manager, who was fired, also forged the signatures of the dean and assistant dean of the College of Engineering and used grant money for one or both of her daughters to attend conferences in Jamaica and California.
And, according to the report, the manager overspent the grant's budget for a symposium by $17,000, including buying 200 laptop bags, 192 embroidered golf shirts, 500 Aster pens, 150 duffel bags and other items. Some of the items were recovered from her home after she was terminated.
Computer equipment and other electronics bought with grant money, worth $11,583, remain missing.
The university has started a criminal investigation into the manager's actions.
* Throughout the university, numerous grant funds were overspent or not spent for their designated purpose. A large number of A&T's 500 grant funds had incorrect balances.
"During our review we observed the deterioration of sound operating process and the lack of sufficient management oversight and review necessary for strong institutional research compliance," the report says.
* A sample review of 12 state operating funds found $896,588 in excess expenditures in 49 accounts.
* Employees allegedly used procurement cards to charge a variety of prohibited items, including Phil Chang Golf Tournament clothing for $1,053.
* $240,000 in proceeds from a Pepsi contract were improperly deposited into the Chancellor's Discretionary Fund in 2003 and 2004.
* $55,142 in pay increases were given to five administrators near the end of Renick's tenure at the university. One employee received a $17,250 raise in violation of UNC system policy.
The News & Record obtained the report, dated May 18, from the UNC system after A&T officials refused to release it to the newspaper.
The university, in a response to the audit report, said it has already taken steps to correct some of the failings, including:
* Requiring all signatures be made in writing, not with a signature stamp.
* Providing comprehensive training for staff members who work with grants and contracts.
* Putting policies in place to ensure that no one person has control over all aspects of a financial transaction.
* Providing regular updates on polices regarding conflicts of interest, the use of procurement cards and the acceptance of gifts and favors.
The A&T Foundation also has developed new policy guidelines and documentation for the use of unrestricted funds.
And the Board of Trustees plans to "place a considerable amount of attention on governance, board ethics and fiduciary effectiveness" during its retreat in August.
The university's response to the report acknowledges that the breadth and magnitude of the findings "threatens its viability."
"Early on, we realized that we had a serious problem of ethical behavior...," the response states. "It is abundantly clear that the condition we are trying to rectify here developed over time and reflects failures at several specific levels."
Attempts to contact Renick and interim Chancellor Lloyd V. Hackley on Friday were unsuccessful.
Transparency and clean audits will be key to regaining any trust that has been lost among A&T's constituencies, said Jeff Davies, the chief of staff for UNC General Administration.
"Clearly there are some serious things noted in the audit that needed to be addressed," Davies said Friday.
"The important thing here in my mind is that people have come forward and identified the problems, and once they are identified they can be fixed."
Speight-Buford said she hopes the university can get back on track.
"There are some things in there that shouldn't have happened," she said. "Well, none of it should have happened."
Posted by da rattler at 7:54 AM