Dive Brief:
- Three employees at Fayetteville State University regularly misused institutional funds, racking up almost $700,000 in unauthorized charges, according to a new report from the North Carolina Office of the State Auditor.
- Over the course of 20 months, staff members in the public institution's communications office used university credit cards on illegitimate purchases ranging from first class flights to Amazon orders to consultant fees.
- The state auditor referred the case to the State Bureau of Investigation, which will determine if the employees will face criminal charges, the auditor's office said Tuesday.
Dive Insight:
The trio of Fayetteville State employees spent $692,239 on unapproved purchases from January 2022 to August 2023, the audit found. A majority of that sum went to purchases that would never be approved under the university's policies. The rest of the charges lacked sufficient documentation, such as receipts or purchase orders.
Of the nearly $700,000, the staff members spent almost $166,000 at businesses owned by university employees without disclosing the potential conflict in interest.
Fayetteville State — a historically Black institution within the University of North Carolina System — cooperated fully with the investigation, according to Jessica Holmes, North Carolina's auditor. She said university leaders are also working with the state to strengthen their internal oversight policies.
The audit recommended that Fayetteville State create automated reminders about updating financial disclosure forms to be sent to employees at least quarterly. It also advised Fayetteville State to analyze the unauthorized charges and determine if it will seek reimbursement from each cardholder.
On May 14, Fayetteville State Chancellor Darrell Allison told auditors that two employees named in the report are no longer employed by the university. He went on to say that the communications office will be restructured so only one person is issued an institutional credit card for office purchases. That process was expected to be finished by the end of May.
Among other security enhancements, Fayetteville State established bank-enforced credit card controls and spending limits in line with its purchasing policy. The institution also set the goal of having an adequately staffed purchasing department by the beginning of August.
"We have a high degree of confidence that implementing these corrective actions coupled with stringent and on-going monitoring will sufficiently address the recommendations provided," Allison wrote in a letter to the state auditor.
