Current and former employees of Fayetteville State University are under investigation for allegedly making purchases that were prohibited under university policies. The charges included almost $2,000 for unnecessary business travel expenses to New York City; not having sufficient documentation for purchases; and, unknowingly paying thousands to businesses owned by employees, creating a potential conflicts of interest.

North Carolina State Auditor Jessica Holmes’ office initiated an audit after receiving allegations that staff in the Office of Strategic Communication (OSC) at the university were making unallowable purchases on their university-issued purchasing cards (P-cards) and travel cards (T-cards).

The alleged incidents occurred from Jan.1, 2022, through Aug. 31, 2023.

FinDing 1

The first finding revealed that the former associate vice chancellor for the OSC, the former director of digital strategy, and the assistant vice chancellor for marketing and creative services made P-card purchases totaling $575,123, which were unallowable per university policy.

During the review period, P-cards assigned to the three employees in OSC were used for 388 purchases totaling $619,124.

Investigators reviewed all purchases during the review period and found that the university paid for 208 (54%) purchases totaling $575,123 (93%) that were unallowable per university policy. Specifically:

  • 148 purchases totaling $464,627 were payments to individuals, consultants, or employees.
  • 26 purchases totaling $91,340 were for payment of invoices.
  • 17 purchases totaling $13,650 were for various items which were unallowable per university policy such as IT hardware or software, travel, or gifts.
  • 17 purchases totaling $5,506 were payments made for purchases on Amazon.com.

The charges match up remarkably with a list of unallowable purchases on the university’s purchasing card policies and procedures:

  • Payments to individuals, consultants, or employees.
  • Payment of invoices.
  • IT hardware or software (computers, laptops, etc.).
  • Travel. • Gifts (flowers, cards, holiday items, etc.).
  • Amazon.com purchases.

Auditors recommended that the university determine if it needs to seek reimbursement from the cardholder for any purchases made on the P-cards that were unallowable per university policy and take appropriate action to improve compliance with its policies and procedures related to P-card purchases.

Finding 2

The second finding showed that the former associate vice chancellor and the former director of digital strategy made unallowable purchases totaling $84,469 on their university-issued T-cards.

In total, during the review period, T-cards were used to pay $118,619 for 189 purchases. Investigators reviewed all purchases during the review period and found that the university paid $84,469 (71%) for 88 unallowable purchases (47%) per university policies. Charges included $71,792 paid to consultants.

In addition, $11,401 was paid for 57 unnecessary university business purchases, including $5,395 for 20 purchases of lodging within 35 miles of the university.

According to the university’s AP Policy, lodging must involve a travel destination at least 35 miles from the employee’s duty station. The university was the designated duty station for all employees included in this total.

Also, $1,843 in unnecessary travel expenses while attending a business-related conference in New York City, including:

  • $1,009 to arrive in New York City two days prior to the conference, including $270 in airline change fees and $7,396 for hotel and food charges.
  • $368 to fly first class to New York City and premium economy on the return trip.
  • $287 for rideshare (round trip) to a spa during the first day of the conference.
  • $179 for rideshare (round trip) to a single dinner.
  • $299 for a roundtrip airline ticket for the former Director of Digital Strategy’s young son to accompany her on a trip to Orlando, Florida.

Auditors’ recommendations included that the university determine whether it needs to seek reimbursement from the cardholder for any purchases made on the T-cards and take appropriate action to improve compliance with its policies and procedures related to T-card purchases.

Finding 3

Auditors say the third finding states that the trio made P-card and T-card purchases totaling $322,743 without sufficient documentation to support they were for a valid university purpose.

The purchases without sufficient documentation include $249,837 of the $575,123 in the first finding and $40,259 from the $84,469 in the second finding.

Auditors recommend that the university should take appropriate action to improve compliance with its policies and procedures related to P-card and T-card purchases and should conduct periodic random audits to ensure that purchases on P-cards and T-cards contain sufficient documentation to support a valid university purpose.

They also pointed out that the first three findings have been turned over to the State Bureau of Investigation (SBI) to determine if there is sufficient evidence to pursue criminal charges.

Finding 4

The fourth and final finding alleges that the university paid $165,570 to businesses owned by former employees in the OSC, creating a potential conflict of interest because the employees were employed by the University at the time of the payments.

Auditors noted that the former employees did not disclose to the university the businesses in which they had a financial interest.

Payments include:

  • $56,950 was paid to a business owned by the former copyrighting assistant.
  • $54,287 was paid to a business owned by the former digital content coordinator.
  • $48,733 was paid to a business owned by the former director of digital strategy.
  • $5,600 was paid to a business owned by the former associate vice chancellor of OSC.

Auditors recommended the university should determine if unallowable conflicts of interest existed and take appropriate action. They also suggested improving compliance measures with its conflict of interest policy, such as automating monthly or quarterly email reminders to financial disclosure filers to update their disclosure form if a conflict arises during the year.

In response to the state auditor’s report the university said they agree with the findings and recommendations. Upon learning of the allegations, it worked with the UNC System to improve processes within the Division of Business and Finance, the Office of Human Resources, and the Office of Strategic Communications.

The university has also conducted campus-wide retraining on purchasing and travel card policies, meetings with division units on human resources processes, reviewing the university’s conflict of interest policy and procedures, and improved its overall internal controls.

They also recently hired a veteran auditor who now serves as the director of internal audit in addition to a pending hire of an internal auditor during the 2024-2025 fiscal year, among other policies and procedures tp prevent similar abuse of university resources.