LINCOLN — State Auditor Mike Foley didn't know it was possible for an airline ticket to cost more than $15,000 until his office started auditing the University of Nebraska's purchasing card program.
The audit not only discovered such a ticket, it also found that the first-class, round-trip, Omaha-to-Beijing airfare had been purchased by the university in violation of its own policy.
“That was shocking,” Foley said, after releasing the audit report Thursday. NU promised to improve its controls.
University officials said the airfare purchase was approved by top officials at the University of Nebraska Medical Center and covered through a private endowment.
Dr. Rodney Markin, senior associate dean for clinical affairs, used the ticket to attend an October 2008 symposium at a partner university in Xi'an, China, where he was to be a presenter.
Markin flew first-class because of recent neck surgery, said Don Leuenberger, UNMC vice chancellor for business and finance. The ticket cost extra so it could be changed.
Foley cited the purchase of first-class tickets as examples of the “significant deficiencies” that his office found in university control over the purchasing cards.
While he called the audit findings “serious,” he did not allege any fraud, embezzlement or intentional misuse of the cards.
“There's nothing here that's being referred to the attorney general or law enforcement,” Foley said.
He said he believes that all the transactions involved public money, even though the funds came from a variety of sources, including private ones.
The $40-million-a-year purchasing card program provides selected employees with Visa debit cards, commonly called P-cards, to make business purchases from approved vendors. The cards draw on university funds.
The program saves money by eliminating the need to process invoices and issue checks. Each campus sets dollar limits on transactions, and each purchase must be reviewed by a second person.
The audit examined about 1,600 of the nearly 215,000 transactions made with the cards during the 18 months that ended Dec. 31, 2008. In that sample, the audit found instances of:
ŸQuestionable purchases, such as a $628 fountain pen from Borsheims, a $219 golf club and an unopened $250 Nintendo Wii game system.
The pen was purchased by the medical center's alumni association as a gift for a guest lecturer. The Wii was for use by the medical center's physical therapy department. The golf club was purchased by the University of Nebraska-Lincoln men's golf coach for use by the team.
ŸPurchases of first-class airline tickets, in violation of university policy, worth more than $283,000. Markin accounted for several of the first-class tickets. Leuenberger said most were flight upgrades using miles Markin had accumulated on his personal credit cards.
ŸPurchases of gift cards in violation of university policy, largely done at the medical center, along with some by the University of Nebraska at Omaha and the University of Nebraska at Kearney. Many of the cards were used for an employee recognition program at the medical center.
ŸUse of the cards to obtain cash advances, in violation of policy, at UNO and UNK. In four instances, the advances were used to buy meals for athletic teams while on the road.
ŸMultiple small transactions made to get around the dollar limits on the cards, a practice used at all the campuses.
Foley praised the response of the NU Board of Regents' audit committee.
Regent Jim McClurg, the audit committee chairman, said the review was useful because it “identified ways we can improve business practices, strengthen internal controls and reduce risk of fraud and abuse.”
University officials said they will strengthen controls over the program, including reinforcing and re-examining policies and guidelines, increasing oversight of card use and reconciliation, reviewing proper procedures with employees and improving documentation.
David Lechner, NU vice president for business and finance, said he will work with business and finance officials from the four campuses on developing a core policy, with modifications to meet each campus' needs.
He hopes to eliminate exceptions to the revised policy but not lose the benefits of the purchasing card program.
Lechner said the program saves an estimated $67 per transaction and yields more than $500,000 annually in rebates for the university.
Contact the writer:
402-473-9583, martha.stoddard@owh.com
Copyright ©2012 Omaha World-Herald®. All rights reserved. This material may not be published, broadcast, rewritten, displayed or redistributed for any purpose without permission from the Omaha World-Herald.
