The evaluation, which is performed annually for each of the universities in the Connecticut State University system, comes amid continuing financial troubles for the state university. Earlier this year, a special report found the institution's reserve funds almost entirely depleted, leading to a no-confidence vote by employees in former President John Clark who was then replaced by interim-President Paul Beran.
Performed by the state's Auditors of Public Accountants for the 2020-2021 fiscal year and released Oct. 6, the audit's findings include the mishandling of gift card distributions to employees participating in a Lyme disease research program and the failure to properly account and deposit money earned from ticket sales for WCSU football games, or to perform timely background checks on new employees.
University spokesperson Paul Steinmetz called the annual audit "an important part of the operational integrity for state institutions," adding "we respond to each issue and correct it."
"Many of the issues have to do with paperwork practices by individuals and are easily corrected," he said in a statement. "In the case of this audit, although it contained 16 instances that needed to be addressed, they were minor and, in fact, have already been corrected with the employees involved."
According to the audit, however, state officials found three "significant" findings linked to noncompliance with state procurement policies, misuse of university purchasing cards by employees, and the mishandling of electronic storage devices.
Rotua Lumbantobing, a professor of economics and president of the WSCU chapter of the American Association of University Professors, said the university spokesperson's comments seemed "irresponsible."
"They do this annually. OK, so why do we just ignore it annually? Is there a reason? This is an audit, it's very important," she said. "Under this report it is disturbing because there are so many problems of internal controls, it's like the left hand doesn't know what the right hand is doing, and vice versa."
"It sounds like the fiscal affairs department, did not, at least in this fiscal year, did not have a handle or any control whatsoever — it's just people running around and spending money," added Lumbantobing.
PROCUREMENT CONTROLS 'INSUFFICIENT'
Through the inspection of 25 non-payroll transactions, totaling roughly $2.8 million, and their accompanying purchase orders in the amount of about $5.3 million, the auditors found poor procurement practices, including five instances where "purchase orders were not approved by an appropriate official."
In two of those transactions, totaling $134,810, the audit found goods were ordered prior to the creation and approval of purchase orders; in another, "the university could not provide purchasing requisition and purchase order to support a $93,280 purchase."
Additionally, in five other purchases totaling $586,298, the university failed to follow procurement policies which require price comparisons and documentation of why one vendor was selected out of submitted requests for proposals; and in a single $79,739 purchase, "the university did not provide adequate documentation to support its sole source justification for selecting a certain vendor," according to the audit.
In one of the university's four capital projects, the audit found a vendor was paid $1.57 million through a purchase order, despite having never signed a contract documenting the agreement for services
"It appears that the university's internal control procedures were insufficient to prevent these issues from occurring," the report concluded, adding similar finds were included in the last two audits covering the fiscal years between 2015 and 2019.
PURCHASING CARD 'NONCOMPLIANCE'
In another key section of the report, the auditors reviewed $46,913 in university credit card purchases out of a total $3.2 million recorded in the 2020-2021 fiscal year and found numerous irregularities in the use of university credit cards by six employees and three departments, including one case in which a cardholder, "made several prohibited donations to non-profits with whom the cardholder has a potential conflict of interest."
According to the report, the employee, who works in the Office of Institutional Advancement, sent $9,050 in donations to nonprofit organizations "while serving as a member of the organizations' board or advisory council."
The auditors also flagged instances where purchases were made with a university purchasing card by someone other than the designated cardholder, or purchases were made without "sufficient support that they were properly requested, reviewed, authorized, approved, executed, or documented in accordance with purchasing guidelines."
In 11 instances totaling $35,348 in purchases, the auditors found cardholders "did not sign, date, or promptly complete" the required reconciliation process.
According to the report's findings, the array of noncompliance issues, found in the previous five audits of the university, ultimately lead to "less assurance that purchases were made for a legitimate state purpose."
HARD DRIVE DISPOSAL 'WEAKNESSES'
In a third, previously unreported area of the evaluation identified as "significant," the state auditors found the university could not provide "adequate documentation to verify that it sanitized and disposed of seven electronic storage devices," and "noted several instances in which storage devices were removed from equipment but not sanitized for more than a year after the university disposed of the equipment." Additionally, the university could not "specifically identify which computer hard drives were sanitized."
The report pointed to the state university system's procedures for disposal of surplus property which requires universities to "purge all hard drive data from computers and other electronic storage devices" prior to their disposal in order to reduce the risk of "unauthorized persons or parties (obtaining and misusing) confidential data, such as student and employee information.
A 'CHRONIC' LACK OF CONTROLS?
Included in the audit are responses to each of the 16 findings from university officials who asserted staffing shortages as an overriding reason for the lack of internal control over the cardholder purchasing errors and for the failure of its Information and Technology Department to properly wipe the electronic storage devices, which it said is now following a "more thorough process" for clearing hard drives and recording the action.
They also told the auditors the individual who used their card to donate to the nonprofits had obtained "sponsorships that show WCSU's support in the community," adding the employee would "be instructed to provide better documentation that spells out the intent of these types of sponsorships."
On its procurement "insufficiencies," the university pointed to policies put in place in August 2021 and, most recently, a policy effective in June designed "to ensure appropriate requisitions are received in advance of engaging a vendor or good," according to the audit, and that, "construction contracts had been issued to vendors for signatures to ensure limited risk and liability is imposed to (the university) for capital improvement projects."
Ten of the 16 findings in the audit appeared on at least one previous audit, including the discovery that the university did not properly track or determine proper eligibility for gift cards awarded to employees participating in a Lyme disease research program — that finding also appeared in audits dating back to 2018; and that the university did not properly track WCSU football game ticket receipts — a finding reported in multiple audits filed between 2013 and 2019.
In response, the university said it created a policy to address the gift card program in the spring of 2020 but only communicated it to the university community in March of this year. For the football tickets, the university declared that, "beginning with the Fall 2022 season, unsold football tickets will be submitted to the Controller for inspection and will be formally recorded," according to the audit.
For Lumbantobing, the repetition of the findings, "makes them even more disturbing because there is a chronic problem of lack of internal controls."
"I don't know what the bottom line is because this is a 'spot check' audit, but it just makes me wonder how much impact that actually has on the bottom line meaning on the decline of reserves between 2011 and 2021 — the more than $26 million — just these bad practices," she said, adding, "and there is a lack of accountability."
Steinmetz said the audit and the decline in reserves "are two separate issues."
"One is related to paperwork controls that we have addressed since the audit. The decline in reserves is a result of fewer-than-predicted number of students enrolling," he said. "We are doing the work to correct that as well."
UPDATE: This story was updated with an additional comment from spokesman Paul Steinmetz.
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