North Carolina audit finds misuse of university-issued credit cards

RALEIGH, N.C. (AP) — Workers within a Fayetteville State University office misused school-issued credit cards or failed to document card transactions for purchases or travel sufficiently, valued in all at several hundred thousand dollars, according to a North Carolina state audit released Tuesday.

State Auditor Jessica Holmes’ agency also sent its findings related to Fayetteville State’s Office of Strategic Communication to the State Bureau of Investigation to review for potential criminal wrongdoing. The office creates and carries out messaging to prospective students, faculty, donors and others. The audit also cited separately conflict-of-interest concerns because the university paid businesses owned by then-office workers.

The school, one of 17 in the University of North Carolina system, agreed with the audit findings and recommendations in its response attached to the report. Two office employees cited in the report are no longer working at the university, and “we have since then taken intentional steps to ensure that such violations do not occur again,” Chancellor Darrell Allison wrote.

The audit, which covered Jan. 1, 2022, through Aug. 31, 2023, found that office workers incurred over $692,000 in purchasing card or travel card transactions that were either unallowable, lacked sufficient documentation or both. The former associate vice chancellor for the office and the school’s ex-director of digital strategy were assigned travel cards, auditors wrote. The two of them and a former assistant vice chancellor for marketing and creative services were cited for the questionable purchase card transactions.

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Unallowable purchases included payments to individuals and consultants, for computer hardware and software, and for gifts. Unallowable travel expenses included lodging within 35 miles (55 kilometers) of the university, along with spending to arrive two days before a business-related conference in New York, the audit said.

Auditors also found Fayetteville State paid $165,750 over the same period to businesses owned by the associate vice chancellor, the digital strategy director and two other now former workers. The former employees failed to disclose the business in which they had a financial interest as required, the audit said.

None of the former office employees in the audit are identified by name.

Allison wrote in his response that the school will “actively explore all options” to seek payback for unallowable expenses, improve employee training in using the cards and increase card monitoring. The school has hired a new internal audit director and an administrator to oversee purchasing and contracts and is updating conflict-of-interest policies and procedures, he said.