ST A T E O F L O U ISIA N A L E G ISL A T IV E A U D IT O R

Transcription

1 ST A T E O F L O U ISIA N A L E G ISL A T IV E A U D IT O R Southern U niversity atbaton R ouge Baton Rouge,Louisiana D ecem ber15,2000 Investivative A udit D anielg.k yle,ph.d.,c PA,C FE L egislative A uditor

2 LEG ISLA TIVE A UD IT A D VISO R Y C O UN C IL M EM BER S R epresentative Edw in R.M urray,c hairm an Senator J."Tom " Sehedler,V ice C hairm an Senator R obertj.barbara Senator Foster L.C am pbell,jr. Senator Lynn B.D ean Se nator W illie L.M ount R epresenta tive R ick Farrar R epresentative V ictor T.SteEly R epresenta tive T.Taylor Tow nsend R epresenta tive W arren J.T riehe,jr. D anielg.k yle,ph.d.,cpa,c FE D arylg.purpera,c PA,C FE Und~rthe provisions ofstate law,this reportis a public docum ent. A copy ofthis reporthas been subm itted to the G overn or,to the Attorney G eneral,and to other public officials as required by state law. A copy ofthis reporthas been m ade available forpublic inspection atthe Baton Rouge ofi ce ofthe Legislative Auditor arid atthe office ofthe parish clerk ofcourt.

3 Southern U niversity at B aton R ouge D ecem ber 15,2000 Investigative A udit O fi ce of the L egislative A uditor State of L ouisiana D anielg.k yle,ph.d.,c PA,C FE L egislative A uditor

4 T able of C ontents Page Executive Sum m ary Background and M ethodology I 5 Findings and Recom m endations Em ployeesand N on-w orking StudentsReceive W ork-study FundsIntended for N eedy Students M s.ellois131otm twaspaid $44,772 in Salary ThaiShe W asn otentitled to Receive Em ployeesreceived Cash from Students A ttachm ent1-m anagem ent'sresponse A ttachm entii-appendix Attachm enti11-legalprovisions

5 DANIEl G.KYLE,PH.D.,CPA,C[E LEGISLATIVE AUDITOR OFFICE OF LEG ISLA TIV E A U D ITO R STATE O F LOUISIAN A BATON ROUGE,LOUISIAN A N ovem ber27, NORTH THIRD STREET POST OFFICE BOX TELEPHONE:(225) FACSIM ILE: (225) D R.LEO N R.T A R V ER,II,PR ESID EN T, A N D M EM BER S O F TIlE BO AR D O F SU PER V ISO R S SO U T H ER N U N IV ER SrI'Y SY ST EM Baton Rouge,Louisiana Transm itted herew ith is our investigative reporton Southern U niversity atbaton Rouge. O ur exam ination was conducted in accordance w ith Title 24 of the Louisiana Revised Statutes and w asperform ed to determ ine the propriety of certain allegationsreceived by thisoffice. This report presents our findings and recom m endations as w ell as m anagem ent's response. Copiesof thisreporthave been delivered to the University;the Honorable I)oug M oreau,d istrict A ttorn ey for th e N ineteenth JudicialD istrictof Louisiana;the United States Attorn ey for the M iddle D islrictof Louisiana;and othersasrequired by state law. Respectfully subm itted, DanielG.Kyle,CPA,CFE Legislative A uditor I)G P:EK L:SEI):d

6 E xecutive Sum m ary Investigative A uditr eport Southern U niversity atb aton R ouge The follow ing sum m arizes the findingsand recom m endations as w ellas m anagem ent's response that resulted from this investigation. D etailed inform ation relating to the findings and recom m endationsm ay be found atthe page num berindicated. M anagem ent'sresponse m ay be found ata ttachm enti. E m ployeesand N on-w orking Students R eceive W ork-study Funds Intended for N eedy Students (Page 7) Finding R ecom m endation: From January 1996 through M ay 1999, Financial Aid em ployees and studentem ployees of the FinancialA id O fi ce used the nam es of 67 stu dents w ho did not actually w ork to generate $169,317 in paychecks through the Federal W ork- Study Program. Some of these 67 students (see Appendix) shared in the proceedsw hile othersm ay have been unaw are of the paychecks w ritten in their nam es. To conceal that these students did not w ork, over 200 payroll docum ents w ere falsified and m ade partof U niversity records. W e recom m end thatthe University review itsfinanciala id and payrollproceduresand im plem entsuch policiesand procedures thatw illensure thai: (l) only those studentsthatproperly qualify forfinancialaid receive such assistance; (2) studentemployeesare paid forhoursaelually worked; (3) payrollrecordsare properly reviewed;and (4) a proper separation of duties exists that will prevent em ployees w ho have authority to add and/or change payrollvouchersfrom receiving studentpaychecks. W e recom m end thatm anagem entforthe University review the inform ation provided herein to determ ine w hether additional instances of abuse of the Federal W ork-study Program have occurred. In addition,the U niversity should seek to recoverall

7 Southern University atbaton Rouge fundspaid to students w ho did notactually w ork the hours for w hich they w ere paid. Furtherm ore,w e recom m end that lhc D istrict Attorney for the N ineteenth Judicial District of Louisiana and the U nited States A ttorney t'or the M iddle D islricl of Louisiana review this inform ation and take appropriate legal action regarding possible violationsof sta te and federallaw s,to include seeking restitution. M anagem ent'sr esponse: M anagem entconcursw ith the finding. M s.eiioisblountw aspaid $44,772 in Salary T hatshe W asn ote ntitled to R eceive (Page 16) Finding: R ecom m endation: D uring the period April 1992 through February 2000, M s.ellois B lount,form er FederalW ork-study C oordinator for Southern University, was paid $44,772 for 3,379 hours in accum ulated leave that she had not earned. A ccording to U niversity policy,itw as M s.blount'sresponsibility to initiate and com plete leave slip requests and the responsibility of her im m ediate supervisor,the director of the FinancialA id O ffice, to ensure thatm s.blountdocum ented her leave taken. Itw as also the director'sresponsibility to approve M s.blount's leave and to certify the accuracy of the em ployee's m onthly payroll. D uring the period w e exam ined, three individuals held the position of director,m s.cynthia Tarver,M s.barbara Shaffer, and M s. Debra Ephrom. A ll three failed to perform their adm inistrative dutiesaccording to U niversity policy directives. M anagem entfor Soulhern U niversity should im plem entpolicies and proceduresto ensure allem ployee leave taken isaccurately accounted for, recorded, and deducted from em ployee leave balances. M anagem entshould ensure thatem ployees are not paid for tim e not w orked w hen no available leave balance exists. By paying em ployees for tim e not w orked w hen accum ulated leave is not available, m anagem ent places the University in violation of Article 7,Section 14 of the Louisiana Constitution. In addition, the D istrict Attorn ey for the N ineteenth Judicial D istrict of Louisiana should review this inform ation and take appropriate legal action regarding these possible violationsof state law,to include seeking restitution. M anagem ent'sr esponse: M anagem ent concurs in part w ith the finding, ttow ever, m anagem ent states that the directors did not know ingly or intentionally certify incorrectpayrollrecords.

8 Executive Sum m ~ E m ployeesr eceived C ash From Students (Page 19) Finding R ecom m endation: M aoagem ent's R esponse: Former State Student Incentive Grant (SSIG) Coordinator, M s.sharon D avis, and form er Financial A id em ployee, M r.d arrel Lee,stated that they accepted cash from students. M s.d avis stated that during her tenur e as SSIG C oordinator, Septem ber 1992 to July 1998,she received an undeterm ined am ountof cash from atleastten studentsand possibly asm any as 50 students. M r. Lee stated that 11 students gave him approxim ately $2,250 in cash in exchange forthe SSIG gran t aw ards. In addition,m r.lee stated thathe applied for SSIG fun ds in the nam e of certain students w ithouttheir know ledge and thatm s.d avisw asaw are of thispractice. W e recom m end that m anagem ent im plem ent policies and procedures to ensure that em ployees do not solicit or accept fundsfrom studentsfordoing thatwhich they are being paid to do. Second,m anagem ent should review this inform ation to determ ine w hether additional insta nces have occurred. M anagem ent should ensure that grants are aw arded only in accordance w ith gr antaw ard regulations. Finally,w e recom - m end that the D istrict Attorn ey for the N ineteenth Judicial D istrict of Louisiana and the United States A ttorney for the M iddle D istrict of Louisiana review this m atter and take appropriate legalaction regarding these possible violations of state and federallaw s,to include seeking restitution. M anagem entconcurs w ith the finding and w illreissue policies and procedur esto ensure thatem ployees do notsolicitor accept fundsfrom studentsforthe perform ance of theirw ork duties.

9 Southern Ul~ivcrsity a~ba~on Ro~agc

10 B ackground and M ethodology Southern U niversity isunderthe m anagem entand supervision of the Southern University Board of Supervisorscreated by the Louisiana State Constitution of The Board isresponsible for the m anagem entand supervision of the institutions of higher education,statew ide agricultural program s,and otherprogram sthatcom prise the Southern University System. The pow ersof the Board ofsupervisorsare subjectto those vested by theconstitution to thelouisiana StateBoard of Regents. The O fi ce of file Legislative Auditorreceived severalallegations regarding the FinancialA id O fi ce of Southern U niversity. O ne allegation indicated thatstudentsw ere receiving paychecks from the Federal W ork-study Program for which they did notw ork. Southern University's FinancialA id O fice is contracted w ith the U.S.D epartm ent of Education to ~,dm inister the FederalW ork-study Program. The procedures perform ed during this investigative audit w ere designed to determ ine the propriety ofthisalegation and consisted of(1)interviewing presentand formeremployeesand studentsof theuniversity;(2)interviewing otherpersonsasappropriate;(3)examining selected documentsand recordsof theuniversity;(4)making inquiriesand performing teststo theextent we considered necessary to achieve ourpurpose;and (5)reviewing applicable state and federal law s. W e acknow ledge the assistance provided this investigation by Southern University's lnterna A uditor,the C om ptroller'so ffice,c am pus Police,and the Inform ation System sd epartm ent. The resultsof ourinvestigative auditare the findingsand recom m endationsherein

11 Southern Univcrsity albaton Rouge

12 F indings and R ecom m endations E M PL O Y E E S A N D N O N -W O R K IN G ST UD EN T S R EC EIV E W O R K -ST U D Y F U N D S IN TE N D E D FO R N EE D Y ST U D EN T S From January 1996 through M ay 1999,FinancialA id em ployees and studentem ployeesof the Financial A id O fi ce used the nam es of 67 students w ho did not actually w ork to generate $169,317 in paychecksthrough the FederalW ork-study Program. Som e of these 67 students(see Appendix)shared in the proceedswhile othersm ay have been unawareof the paychecks w ritten in their nam es. To concealthat these students did not w ork,over 200 payrolldocum entsw ere falsified and m ade partof U niversity records. Program D escription - The FederalW ork-study Program is a federally ftm ded program that allow s a studentto w ork and earn m oney to help pay for school. The University received an average of $1,000,000 to fund this program each year. The University established a low m axim um award to m ake thisprogram available to asm any needy studentsaspossible. Forthe lasttwo fiscalyears,the m axim um aw ard perstudentwas $900 per sem ester;previously,the aw ard w as $800 per sem ester. To be eligible for the progr am,students m ustapply for financial aid and m eet certain financial criteria,w hich is based on their expected fam ily contribution. Upon m eeting these criteria,students are given a W ork-study aw ard and ar e inform ed of the departm entin w hich they are to w ork. Students participating in the W ork-study program w ere paid through a system designed to ensure thalthe:studentsw ere paid forthe actualhours thatthey w orked. This system included studentsrecording their actualw ork hours on sign-in sheets,the preparation of payr ollvouchers, and the review and approvalof supervisors and the W ork-study program coordinator asfollow s: Studentsrecorded theiractualw ork hourson sign-in sheets. Students sign-in sheets,once approved,w ere used by departm entem ployees to prepare studentpayrollvouchers. O nce the supervisor and departm enthead approved the payrollvouchers,they w ere forw arded to the FinancialAid O ffice. A fterreceiptin the FinancialA id O ffice,the payrollvouchersw ere forwarded to the Inform ation System sd epartm entto be keypunched. The FederalW ork-study program coordinator and her staf corrected keypunch errors w ith directaccess to the com puterized payrollsystem. O nce errors had been cor ected,the FederalW ork-study program coordinatorgave herapprovalto generate the paychecks.

13 Soufl~em University atbaton Rou O ur investigation revealed that certain individuals of the W ork-study section of the Financial Aid Office (M s.ellois Blount,M r.darrellee,m s.sharon Davis,and M s.sandra Perry) participated in a schem e calling for students,w ho did notw ork,to receive paychecks if they returned a portion of the paycheck to the em ployees. To accom plish this schem e, these individuals circm nvented the internalcontrolsystem,prepared false docum ents, and perform ed theirdutiesin an im properm anner,som etim esw orking in collusion w ith each other,asfollow s: 2 FinancialA id em ployees responsible for review ing studenlfinancialrecords to determ ine eligibility, im properly approved ineligible participants. Il addition, these individuals enlisted departm entem ployees w ho w ere w illing to carry nonw orking studentson theirstudentpayrolls. N ext, students w ere solicited into the program w ho w ere w illing to return a portion of theirunearn ed paychecksto the individualsin return fornothaving to w ork. U sing com puter access,these individuals set up students in file Federal W ork- Study Program. Then,falsified sign-in sheets and payrollvouchers w ere prepared and the payroll vouchersw ere sentto the Inform ation System sd epartm entto be keypunched. The Federal W ork-study program coordinator gave approval to generate the studentpaychecks. The paychecksw ere then picked up from the Com ptroller'so ffice by one of these individuals. The individuals then gave instructions to the students to cash their paychecksand return the agreed-upon portion of the proceeds. In som e instances, how ever,students w ho w ere friendsand/orrelativesw ere notrequired to return a portion of the proceeds. In otherinstances,studentchecksm ay have been cashed ordeposited w ithoutthe student'sknow ledge.

14 F~ndm ~sand Rccom m cndations T H E SC H E M E Em ployees Solicited Students Iv U sing Com puter Setup Students on the Federal W ork-study Program Falsified Payroll V ouchersand Sign-in Sheets SentPayroll V ouchers to Inform ation System s D epartm entto Be G ave Approval forw ork- Study Paychecksto Be G enerated Picked up PaychecksFrom Com ptroller's O fi ce G ave Students,. ~ Instructionsto Cash Their Paychecks Collected Cash From Students The non-w orking students" w ages w ere charged to the follow ing U niversity departm ents: Com m unity Service, Athletics, Intram ural, Engineering Technology, Financial Aid, and Com puterscience. The University em ployees involved,based on their ow n statem ents or the statem ents of others as detailed below,included M s.elloise Blount,M r.d arrellee,m s.sandra Perry,M s.sharon D avis,m s.shirley A lexis Bell,M r.robertjones,m r.m oses D upre,and M r.richard W ilson. In addition,tile nam esof 67 studentsw ere used asdetailed in the appendix. M s.ellois Blount - M s.blount,former FinancialA id em ployee,w as the FederalW ork-study program coordinator w ithin the Financial A id O ffice during the period of our exam ination, spring sem esterjanuary 1996 through spring sem ester M ay M s.blountinform ed us and ourinvesli~,ation revealed thatm s.blount(l)recruited studentswho did notwork,(2)instructed employeesto add studentswho did notwork to the payrolls,(3)created false payrollvouchers, and (4)collected cash from students.

15 Southern University atbaton Rouge M s.b lountstaled thatshe recruited students w ho did notw ork. O urinvestigalion revealed that M s.b lountrecruited num erous studenls as detailed in the appendix. M s.blounladded non-w orking studentsto the payrollherself and instructed anolherem ployee to add non-w orking students to the payroll. Though procedures required payr ollvouchers,itw as nolnecessary to have a physicalpayrollvoucher to create a paycheck. M s.sharon [)avis,form er FinancialA id em ployee,stated thatm s.blountinstructed herto add non-w orking studentsto the payrollthrough direclaccess,thereby creating paychecks w ithoutsupporting payrollvouchers and/or sign-in sheets. H ow ever,in m ostinstances,falsified payr ollvouchers w ere placed in University files effectively concealing thatthe students did notw ork. In addilion,m s.blount stated that, after receipt by the Financial Aid O ffice, she added students to blank lines on approved payrollvouchers. 11

16 Southcm Um vcrsity atbaton Rouge M s.b lountstated thatshe recruited students w ho did notw ork. O ur investigation revealed that M s.b lountrecruited num erousstudentsasdetailed in the appendix. M s.blountadded non-w orking studentsto the payr ollherself and instru cted anotherem ployee to add non-w orking students to the payroll. Though procedures required payrollvouchers,itw as notnecessary to have a physicalpayrollvoucherto create a paycheck. M s.sharon D avis,form er FinancialA id em ployee,stated thatm s.b lotm tinstructed her to add non-w orking students to the payrollthrough directaccess,thereby creating paychecks w ithoutsupporting payrollvouchers and/or sign-in sheets. How ever,in m ostinstances,falsified payrollvouchers w ere placed in University files effectively concealing thatthe students did notw ork. In addition,m s.blount stated that, after leeeipt by the Financial A id O fi ce,she added students to blank lines on approved payrollvouchers.

17 Findingsand Recom m endations M s.blount prepared false payroll vouchers including non-w orking students and two of her relatives. M s.blountstated thatshe prepared entire payr ollvouchersand subm itted the falsified vouchers to generate paychecks. M s.blount identified 37 payr ollvouchers that she falsified totaling $33,083. A ccording to Iris.Ellois Blount,som e of these falsified payr ollvouchers included M s.candice Blount and M s.zenolia Blount,her daughter and sister-in-law. M s. Candice and Zenolia Blount'sw agesw ere charged to m ultiple departm ents. Supervisorsof those departm entsstated that M s.candice Blount and M s.zenolia B lount did not w ork. From M arch 1997 through M arch 1999,M s.candice Blountreceived 33 paycheckstotaling $12,091and from January 1997 through August1998,M s.zenolia Blountreceived 24 paycheckstotaling $13,601. One studentinform ed usthatm s.candice Blountmxanged forher(the student)to receive a $536 W ork-study paycheck for w hich she did no w ork. The agreem ent w as that she w ould treat M s.candicc and M s. Ellois Blount to dinner. The student estim ated that she spent approximately $2(10 att.j.ribsand Bennigan'srestaurants from the proceedsof herw ork- Study paycheck. M s.b lountcollected cash from the studentsshe personally recruited. Four studenlsinform ed us thatthey gave approximately $19,816 in cash directly to M s.blount. In addition,m r.darrel Lee,form erfinanciala id em ployee,estim ated he gave $10,640 in cash directly to M s.blount, w hich he stated w as hershare of the am ountthathe collected from the students he recru ited. 11

18 Southern University albaton Rouge M r.darrell,ee-m r.lee (1)recruited studentswho did notwork,(2)instructed employeesto add studentswho did notwork to the payrolls,(3)received studentpaychecks,(4)created false payrollvouchers,and (5)collected cash from students. A ccording to M r.lee,som etim e in 1996,M s.b lountapproached him aboutrecruiting students w ith the idea thattbe students did nothave to w ork if they returned a portion of their W ork- Study paychecks. M r.lee stated thatthe generalride w as thatthe students had to return half of the paycheck proceeds. M r.lee adm itted thathe instructed M r.m osesd upre,d epartm entof A thleticsem ployee,to add non-w orking studentsto hispayroll. Furtherm ore,he adm itted thathe picked up these students' paychecks. In addition,m r.lee identified 52 payrollvouchersthathe and M s.blountfalsified totaling $45,776. M r.lee identified 18 studentsthathe personally recruited and from whom he collected approxim ately $18,433. He stated thatof the $18,433 he collected,he kept$7,793 and gave M s.elloisblountthe rem aining $10,640,w hich w ashershare. M s.sandra Perry - M s.perry (1) collected cash from students,(2) negotiated students' paychecks,and (3)deposited students'paychecksinto herpersonalbank account. M s.sandra Perry w as a student w ho w orked for M s. Ellois Blount in the W ork-study section of the FinancialA id O ffice. H erdutiesincluded processing W ork-study payrollvouchers. Tw o student,sidentified M s.perry asthe individualw ho w entw ith them to the bank w here they follow ed her instructions to endorse and cash their W ork-study paychecks. According to the students,m s.perry gave the tw o students$100 each from theirpaycheck proceedsand keptthe rem aining $675. From anotherparticipantin the schem e,m s.perry received 11 non-working students'paycheckstotaling $5,052,which M s.perry deposited into herpersonalbank account. Tw o of the stu dents interview ed,and w hose paychecks M s.perry deposited,stated they w ere unaw are of the existence of the paychecks. Three of the 11paychecks,totaling $1,880,w ere issued to M s.perry'sdaughter,m s.anntionette Perry. The payrollvouchers thatcreated the three paychecksw ere from tw o departm ents. The departm ent's supervisors,d r.ibiba D abipi,h ead of Engineering Technology,and M r.a lvin A llen,com puter Science em ployee,stated thattheir signatures on the payrollvouchers w ere forged and thatm s.anntionette Perry did notw ork the hoursshow n on the payrollvouchers. From O ctober 1996 through M arch 1999,M s.sandra Pen-y received 40 W ork-study paychecks m ade payable to hertotaling $15,805. O f this am ount,$3,090 w as charged to the Engineering Technology W ork-study payroll. How ever,d r.d abipistated that M s.sandra Perry did not work in hisdepartment. Themajority of herw ork-study wages,$12,715,wascharged to the FinancialA id O ffice.three financiaiaid em ployeesm s.linda Car,M s.carolyn Brow n 3am es, and M s.o reather Lee sta ted thatm s.sandra Per y w as frequently absentfrom w ork. Tw o of these em ployeesconcurred flaatonce the m onthly W ork-study payrollvouchersw ere com pleted, M s.sandra Perry w ould rarely show up forw ork tm tilthe nexttim e the payrollvouchersw ere due.

19 Fin dingsa~d Recom m endations M s.sharon Davis-M s.davis,formerfinancialaid employee,(1)instructed employeesto add sludenlswho did notwork to the studentpayroll,(2)created false sign-in sheetsand falsified payrollvouchers,and (3)collected cash from a student. M s.davis staled th atshe transferred to the FederalW ork-study Program in th e fallof 1995 under the supervision of M s.ellois Blount. She stated that,w hen she arrived,non-w orking sludenls w ere already being added to student payrolls. She explained that after a w hile she becam e com fortable w ith this process and that she added tw o non-w orking students. She confirm ed th atshe requested M r.d upre to add tw o non-w orking studentsand she stated thatone of the two sludenis gave her $20 to $30 from each paycheck. M s. D avis identified her handw riting and staled thatshe know ingly added non-w orking studentsto blank lineson payroll vouchers afterthey w ere received in the FinancialA id O ffice. In addition,she stated thatshe took sign-in sheels containing the nam e of a non-w orking student to M r.d upre for him to approve,w hich he did. M r.d upre,departm entof Athleticsem ployee,stated thatatthe requestof M s.d avis,he added two non-w orking studentsto hispayr oll. The tw o studentscollectively received $9,432. One of these tw o studentsconfirm ed thatm s.d avissetherup on the W ork-study payr olland told herif anyone asked w here she w orked she w as supposed to tellthem thatshe w orked form r.d upre in the D epartm entof A thletics. The studentalso stated she did notw ork and thatshe gave cash to M s.d avisfrorn m ostof her 14 paychecks. M s.shirley AlexisBell-M s.bell,formerfinancialaid employee,(l)added studentswho did nolwork,(2)created false payrolvouchers,(3)received studentpaychecks,and (4)added herself to the studentpayroll. M s. B ell added non-w orking students to the Engineering Technology W ork-study payr oll. D r.d abipistated that,during the fallof 1998 through the spring of 1999,M s.b ellprepared 11 of his deparlm enl's W ork-study payr oll vouchers. A ccording to D r.d abipi,these vouchers included the nam esof 12 non-w orking students. These 12 stu dentsreceived paycheckstotaling $14,889. A ccording to Dr.Dabipi,M s.bellpicked up these paychecks. Tw enty-seven of the paycheckstotaling $10,362 w ere given to M r.robertjonesand to M s.sandra PetTy forthem to negotiate. W e spoke w ith fourof the 12 students,allof w hom stated thatthey did notw ork. In addition,m s.belladded herself to the W ork-study payr olland received $778 in W ork-study paychecks. Records indicale thatatthe tim e she received the paychecks,she w as a full-tim e em ployee of the University on leave w ithoutpay and w as perform ing her studentteaching at Scotlandville High School. Studentteaching records indicate thather teaching hours w ere in directconflictw ith the hourslisted on the W ork-study payr ollvouchers. M r.robert,iones-m r.jones,a formerw ork-study student,(1)deposited students'paychecks into hispelsonalbank account,(2)recruited studentswho did notwork,(3)received students' paychecks,and (4)collected cash from students.

20 Southern University albaton Rougc M r.jones cashed or deposited students' paychecks through his bank accounts and in som e instances,w ithoutthe students'know ledge. Records indicate thathe negotiated 20 paychecks through hisbank accounttotaling $6,860. Tw o studentsconfirm ed thatm r.jonesrecruited them and accom panied them to the bank where they cashed one orm ore paychecksand gave him cash totaling $1,056. A notherstudentrecruited by M r.jonesstated thathispaym entto M r.jonesfrom two paychecks totaling $778 w asto finance a "nighton the town" form r.jones. The studentestim ated he spent between $200 and $300 on drinksand gam bling m oney form r.jones. M r.m osesdupre -M r.dupree,departmentof Athleticsemployee and supervisor,(1)falsified payrollvouchersand (2)added non-working studentsto payrollvouchers. M r.d upree staled thathe signed the nam es of M s.g lenda Rutledge,D epartm entof A thletics supervisor,and M r.m arino Casem,D epartm entof Athleticsdirector,w ithouttheirperm ission to 22 W ork-study payrollvouchersthatincluded one orm ore non-w orking students. He identified seven of the 22 payrollvouchersthatw ere broughtto him by eitherm s.candice B lount or /','Is. Ellois B lount to approve, w hich he did. The payroll vouchers w ere for M s.c andice Blountand w ere for hoursshe did notw ork. H e approved 30 studentsign -in sheets fornon-w orking students, tte identified 17 non-w orking studentsthathe know ingly added to his payrollswho had com bined paychecksof $39,812. M r.dupre denied receiving any m oniesto add the non-w orking studentsto hisstudentpayr olls. M r.richard W ilson -M r.w ilson,employee of the Departmentof Intramural,(1) falsified studentsign-in sheets and payrollvouchers and (2) added non-working students to payroll vouchers.

21 Findingsand Recom m endations M r. W ilson prepared and approved the payroll vouchers and student sign-in sheets in his departm ent, lie stated he approved 22 studentsign-in sheets w ith know ledge thatthe students did notactually w ork. Furtherm ore,he stated thathe prepared and approved 56 payrollvouchers w here he personally added one or m ore non-w orking students. A ccording to M r.w ilson,he added the non-w orking studentsatthe requestof M s.elloisblount. M s.blountdenied thatshe requested M r-.w ilson to add the non-w orking students. M r.w ilson identified 28 studentswho did notw ork and six other students about which he w as unsure as to whether they actually worked the hour's forw hich they were paid. W e confirm ed through othersources thatthree of the six students did notw ork. Therefore,31 non-w orking students w ere included on payroll vouchersby M r.w ilson.the paychecksof the 31non-working studentstotaled $42,187. M r.w ilson filrther stated thathe included,on his payroll vouchers,his nephew,m r.bryan W ilson and his niece, M s. M ichelle W ilson. He claim ed M r. Bryan W ilson w orked and M s.m ichelle W ilson did not. M r.bryan W illson received $1,694 and M s.m ichelle W ilson received $6,574 from the University asa resultof these payr ollvouchers. N ONW ORKING STUDENTS W ERE ADDED TO THE C OM M UNITY SERVICE PA Y RO Ll,~~1TIIO UT TH E K NO W LED G E O F SUPERVISO R The Baton Rouge Recreation and Parks Commission (BREC) contracted with Southern U niversity to use studentw orkers to tutor elem entary students atbrec 's recreationalcenters. M s.m ary W eatherspoon,b R EC supervisor',stated hersignatur es had been forged on 41 W ork- Study payrollvouchers and 46 studentsign-in sheets. She identified 29 students listed on her payrollvouchersw ho did notw ork forbrec. Fifte,en of the 29 studentsinterview ed inform ed usthatthey did notw ork. By causing the University to pay studentem ployeesforhours thatw ere notactually w orked and receiving a portion of the proceedsof theirpay,one orm ore of the above m entioned U niversity em ployees and one orm ore of the studentslisted in the attached appendix m ay have violated the follow ing state and federallaw s: R.S.14:67,"Theft" R.S.14:72,"Forgery" 18 U.S.C.~641,"Embezzlem entand ']'heft" 8 U.S.C.~666,"Theft From FederalProgram s Though the actionsof the individualslisted in thisreportappearto substantiate the elem entsof thelawslisted above,theactualdetermination asto whetherindividualsare subjectto formal charge is at the discretion and determ ination of the district attorney and the United States A ttorney. W e recom m end that the U niversity review its Finan cial A id and payroll procedures and im plem entsuch policiesand proceduresthatw illensure that:

22 Southern University a!baton Rouge (l) only those studentsthatproperly qualify forfinancialaid receive such assistance; (2) studentemployeesare paid forhoursactualy worked; (3) payrollrecordsare properly reviewed;and (4) a proper separation of duties exists lhat will prevent employees who have authority to add and/or change payroll vouchers from receiving student paychecks. W e recom m end thatm anagem entforthe University review the inform ation provided herein to determ ine whether additional instances of abuse of the Federal W ork-study Program have occurred. In addition,the University should seek to recoverallfundspaid to studentsw ho did notactually w ork the hoursforw hich they w ere paid. Furtherm ore,w e recom m end that the D istrict A ttorn ey for the N ineteenth Judicial D istrict of Louisiana and the United States Attorney for the M iddle District of Louisiana review this inform ation and take appropriate legalaction regarding possible violations of state and federal law s,to include seeking restitution. M S.ELLO IS BLO U N T W A S PA ID $44,772 IN SA LA R Y TH A T SH E W A S N O T E N T IT L E D T O R E C E IV E D uring the period A pril1992 through February 2000,M s.eiiois Blount,form er Federal W ork-study C onrdinator for Southern U niversity,w as paid $44,772 for 3,379 hours in accum ulated leave thai she had not earned. A ccording to U niversity policy, it w as M s.blouat's responsibility to initiate and com plete leave slip requests and the responsibility of her im m ediate supervisor,the director of the Financial A id O fi ce,to ensure that M s. Blount docum ented her leave taken. It w as also the director's responsibility to approve M s.blount's leave and to certify the accuracy of the em ployee's m onthly payroll. D uring the period w e exam ined,three individuals held the position of director,m s.c ynthia Tarver,M s.barbara Shaffer,and M s.d ebra Ephrom. A llthree failed to perform their adm inistrative dutiesaccording to U niversity policy directives. U niversity em ployeesearn annualand sick leave based on the hoursw orked and accum ulate this leave ata rale which increases w ith the num ber of years of service. There is no lim itto the am ountof annualand sick leave an em ployee m ay accum ulate. W hen em ployeesuse leave,itis deducted from theiraccum ulated leave balance. From A pril1992 through February 2000,em ployees of the FinancialA id O ffice used tim ecards and a tim e clock to record theirdaily attendance. The m onthly payrollw asprepared from these lim eeards. D aring this period,university payrollrecords indicate thatm s.blounlused 3,379 m ore hoursofleave than she had earn ed and accum ulated. Because allof herused leave w asnot properly recorded and/or deducted from her leave balance, the U niversity w as unaw are that M s.blountactually began a deficitleave balance in August1995. Furtherm ore,the University w asunaw are of M s.blount'sdeficitleave balance when itadvanced her 176 hours of leave in

23 Findingsal~d Recom m endations June Atthattim e,m s.blountalready had been paid for 1,964 hoursof leave am ounting to $26,023,to w hich she w asnotentitled. M s.blountkepta negative leave balance for overfour yearsbecause she continued to receive pay forunearned leave,she continued to m issw ork,and herleave w as notaccurately recorded. Eleven FinancialAid O fi ce em ployees confirm ed thatm s.blount's absenteeism was chronic fora num berof years. The em ployeesnoted thatm s.blount'sabsencesextended form onthsat a tim e. Em ployees stated thatm s.blountw as outfor such an extended period thatduring a period of tim e tw o studentw orkers actually operated the W ork-study section. The em ployees stated thatm s.blount's absenteeism w as com m on know ledge. They further inform ed us that they questioned whether M s.blount's accum ulated leave was sufficientto cover her absences. In addition, they further questioned w hy M s. Bloun t w as allow ed nbsences that appeared excessive. 9-M onths in Total M s.blounfstim eexllressed in days: Dayspaid Daysw orked Daysm issed ,883, Universily iecordsindicate tbalm s.blotmlactually attended work durh~g 59.5% (or ),120)of the 1,883 w orkdaysfrom A pril1992 through February M s.blount'stim e Exnressed in Hours Audited Beginning Ending Leave Leave HoursNot Le ave Balance Accrued atw ork Balance Unaudited Ending Leave Balance 9 m onthsin t (739) 1,562) 2.412) 2.840) 3.376) (3) ,180 1,052 1, (739) (I.5621 (2.412) (2.840) (3.376) {3,379) Included in thc column "FloursNotatW ork"for1997 is176 hour sof leave advanced hy theuniversity in June In addition,m s,blountwaspaid for3 hoursofannl~alleave when she departed the University on February 28,2000. From 1989 thr oug,h 1999,there were ninedirectivessentby University ofi cials(including the President of the Southern University System, the System Director of Personnel, and the ChancellorfortheBaton Rouge Campus)to University employeesrelating to payrollexplaining the responsibility of the em ployee,supervisor,and departm enthead. These directives explained thatthe employee wasto complete arequestforleave (leave slip),thattheimmediate supervisor 17

24 Southern University atbaton Rouge w as to ensure that the em ployee com pleted this leave slip, and that the departm ent head's signature indicated thathe ol-she w ould be held accountable. The prim ary reason w hy M s.blount's leave balance w asnotaccurate w as because M s.blount did nolcom plete leave slip form sforallherleave taken. In addition,her im m ediate supervisors, the successive directors of the Financial A id O ffice, failed to m ake sure that M s.blount docum ented allleave taken. Furtherm ore,the directors failed to ensure thatallof M s.blount's leave taken w as recorded on payroll docum ents. O ur exam ination period w as April1992 through Februar y 2(100,and there w ere three directors as follow s:m s.cynthia Tarver - A pril 1992 through Febru ary 1998, M s. Barbara Shaffer - M arch 1998 through Jur~e 1998, and M s.d ebra Ephrom -July 1998 through February M s.tarver failed to ensure that 1,547.5 hours of leave taken by M s.blount w as recorded. M s.shaffer,who served asacting directorforfourm onths,failed to ensure that hoursof leave taken by lvls.blountw asrecorded. M s.ephr om,directorfora 20-m onth period,failed to ensure that103.5 hoursof leave taken by M s.blountw asrecorded. M s.blountstated thatherim m ediate supervisorw asthe directorof the FinancialAid O ffice and thatthe position w asoccupied by M s.tarver,m s.shaffer,and then M s.epbrom. M s.tarvers~atcd thatshe w asnotm s.b lom at'sim m ediate supervisor. Furtherm ore:,m s.tarver stated that she assum ed that she had com petent people w ho prepared the payroll docum ents. Finally,M s.tarveralso stated thatshe had received the directivesdescribed above and thatshe failed to perform her adm inistrative duties as outlined in the directives and that she signed payrolldocum entsw ithoutreview ing the docum ents. M s. Shaffer stated w hen she w as acting director, she probably did not check M s. Blount's tim ecardsbefore signing the payrolldocum ents. She confirmed that,asacting director,she w as M s.b lount'sim m ediate supervisor. M s.ephrom stated thatwhen she signed the payrolldocum ents,she w as underthe im pression thatthose w ho plepared the payrollhad m ade certain thatitw as accurate. H ow ever,she agreed itw as her responsibility to review the payr ollbefore signing itand that,as director,she w as M s.b lount's im m ediate supervisor. It should be noted that starting in m id A pril 1999, M s.ephrom appointed M s.shafferto m onitorm s.b lount'sleave taken. The above actionsindicate possible violationsof one or m ore of the follow ing R.S.14:134,"M alfeasance in O ffice R.S.14:138,"'PayrollFraud" A rticle 7,Section 14 of the Louisiana Constitution

25 Fm ditagsand Recon~m cndations Though the actionsof the individuals listed in thisreportappearto substantiate tile elem entsof the laws listed previously,the actualdetermination as to whetherindividuals are subjectto form alcharge isatthe discretion and determ ination of the districtattorney. M anagem ent for Southern U niversity should im plem entpolicies and procedures to ensure all em ployee leave taken isaccurately accounted for,recorded,and deducted from em ployee leave balances. M anagem entshould ensure thatem ployeesare notpaid fortim e notw orked when no available leave balance exists. By paying em ployees for tim e notw orked,w hen accum ulated leave isnotavailable,m anagem entplacesti~e University in violation of Article 7,Section 14 of the Louisiana Constitution. In addition,the D istricta ttorney forthe N ineteentiajudiciald istrict of Louisiana should review this inform ation and take appropriate legalaction regarding these possible violationsof state law,to include seeking restitution. E M PL O Y E E S R E C E IV E D C A SH FR O M ST U I)E N T S Form erstate StudentIncentive G rant(ssig)coordinator,m s.sharon Davis,and form er Financial A id em ployee, M r. D arrel L ee, stated that they accepted cash from students. M s.d avis stated that during her tenure as SSIG Coordinator, Septem ber 1992 to July 1998,she received an undeterm ined am ount of cash from at least ten students and possibly as m any as50 students. M r.lee stated that11 studentsgave him approxim ately $2,250 in cash in exchange for the SSIG grantaw ards. In addition,m r.lee stated thathe applied for SSIG funds in the nam e of certain students w ithouttheir know ledge and that M s.d avis w asaw are of thispractice. SSIG grants consist of federal and state funds that are provided to academ ically qualified students to be used for educationalexpenses. Southern University's O ffice of FinancialA id determ inesthe actualam oun tof each student's aw ard and establishesthe num berof recipients selected. The schedule of studentsrequesting SSIG grants isprepared and sentto the Louisiana Office of StudentFinancialAssistance (OSFA) for approval. W hile M s.davis was SSIG coordinator,grantchecksm ade payable to the studentsw ere prepared by O SFA and sentto the U niversity'so ffice of FinancialA id. C ASIIPAll)TO M R.LEE AND ]VIS.D AVIS Six students stated thatthey gave cash to M r.lee in exchange for SSIG grantaw ards. O ne studentsta led thatshe gave cash to M s,d avis butdid notsay itw asin exchange for SSIG grant proceeds. M r. Lee - Six students stated that they had an agreem ent w ith M r. Lee to give him (M r.lee)approximately half of the grantproceedsin exchange forhishelp in getting the grantawards. This am ounted to approxim ately $3,750. Inform ation supplied by these six studentsis asfollow s:

26 Southern University atbaton Rouge SSIG Checks Received bv the Six 8tuden Studentreceived six checks:two in 1992 two in 1993,and two in Studentreceived three checks: two in 1996 and one in Studentreceived one check in Studcntreceived one check in Studentreceived one check in Studentreceived one check in Total Tota lof Checks $2,800 1, Cash Proceeds Returned to M r.t.ee $1, M r.lee disagrees w ith the students and stated thathe received approxim ately $2,250 flora ll students in exchange for helping them receive $13,400 in grants during the period Septem ber 1992 to June M s.d avis-one studentstated thatshe gave M s.davis$200 from the cash proceedsof hertw o 1996 SSIG checkswhich totaled $1,200. M s.d avis confirm ed thatthe student had given herthe cash. H ow ever,m s.d avisw asunable to recallthe nam esof the olher 10 to 50 studentsw ho gave hercash norw asshe able to recallthe am ountsthey paid her. Several of tile students interview ed sta ted they did not prepare or sign the SSIG application/w orksheet. M r. Lee adm itted that, in m any of these cases, he com pleted the docum ents. M 1.Lee also stated thatm s.d avisw asaw are of the application/w orksheetswhich he had created because she saw him preparing them for severalstudents. These actionsindicate thatone orm ore of the follow ing lawsm ay have been violated R.S.14:67,"Theft" R.S.14:134,"M alfeasance in O fi ce 18 U.S.C.~641,"Embezzlementand Theft Though the actionsof the individuals listed in thisreportappearto substantiate the elem ents of thelawslisted above,theactualdetermination asto whetherindividualsare subjectto formal charge is at the discretion and determ ination of the D istrict A ttorney and the U nited States A ttorney. W e recom m end lhatm anagem entim plem entpolicies and procedures to ensure thatem ployees do not solicit or accept funds from students for doing that w hich they are being paid to do. Second,m anagem entshould review this inform ation to determ ine w hether additionalinstances have occurred. M anagem ent should ensure that grants are aw arded only in accordance w ith grantaw ard regulations. Finally,w e recom m end thatthe D istricta ttorn ey tbr the N ineteenth 20

27 Findingsand Recom m endations JudicialD istrictof Louisiana and the United StalesAttorney forthe M iddle D istrictof Louisiana review this m atter and take appropriate legalaction regarding these possible violations of state and federallaw s,to include seeking restitution.

28 Southern University atbalon Rouge

29 A ttachm ent I M anagem ent's R esponse

30 SOUTHERN U NIVERSITY AND A & M C OLLEGE SYSTEM BA'ION ROUGE,LOUISIANA (225) Bator~Rouge,New Orleans, Shreveport/BossierCity LO UISIANA O flqce ofthe President (225) D ecem ber12,2000 Fax Num ber (225) D r.1-)anielg.k yle,cpa,cfe Legislative A uditor 1600 N orth T hird Street P.O.B ox B aton R ouge,la D ear D r.k yle I am w riting in reply to your investigative audit report on Southern U niversity at Baton Rouge. The Southern U niversity System appreciatesthe professionalm anner in w hich your office conducted the audit that w as referred to you by our Intern al A udit Section. D r. Leon Tarver, System President, has recused him self from review ing this m atter because his w ife,m rs.cynthia Tarver,is referenced in one of yourfindings. W e have interview ed the em ployees of the Financial A id office as w ell as other em ployees of the University. The Southern University System concurs w ith audit finding N o. 1, "Em ployees and N on-w orking students received w ork stu dy funds intended for needy students". W e also concur w ith your recom m endation that the D istrict A torn ey for the N ineteenth Judicial D istrict of Louisiana and the U nited States A ttorney for the M iddle D istrict review this case and take appropriate legal action regarding possible violationsin the use of state and federalfunds. In addition,w e have advised the em ployeesassociated w ith the theftof these fundsto consultw ith their attorn eys. W e have also notified them thattheirem ploym entw ith the University willbe term inated. The Southern U niversity System concurs in partw ith auditfinding N o.2,"m s.ellois Blountw aspaid $44,772 in salary which she w asnotentitled to receive".m s.blount w as prim arily responsible for the initiation and com pletion of leave slip requests. It w as also the responsibility of hersupervisor,the D irectorof FinancialA id,to approve her]cave and certify the m onthly payroll. "An EqualEdusat~one,IO ppo~tum ty tnstdutton

31 D r.d anielg.kyh.,cpa,cfe D ecem ber Page 2 O urreview indicated thatthere w ere payrollperiods during w hich M s.blountfailed to subm it leave requests to the D irector of Financial A id upon her return to w ork. There w ere also payrollperiods in w hich the U niversity's H um an Resources O ffice did notpostthe leave requeststhatw ere subm itted by the O ffice of FinancialA id. W e interview ed the three directors cited in your report for failing to perform their adm inistrative dutiesin certifying M s.blount'spayroll. O urreview indicated thatthe directors should have taken a m ore direct and aggressive role in addressing M s. B lount's excessive absenteeism. W e did notfind,how ever,thatthe three directors intentionally or know ingly certified incorrectpayrollrecords. O ne of the directors, noting M s.b lount's excessive absences,w rote herrem oving her from the position as D irector of the StudentW ork Study program. A successor reassigned M s.b lountto other duties upon herretu rn to w ork. She also,on atleasttw o instances,w rote preterm ination letters to M s.b lount. The directors indicated they w ere not aw are that M s.blounl had been advanced sick leave in 1997 because the requestfor advance sick leave w as approved directly by the H um an R esources O ffice. Further,the Southern U niversity H um an Resource O fi ce,w hich is responsible for tracking em ployee leave balances, m aintains a m anual system of recording leave balances. Payroll and leave registers, consequently, have not been provided to departm ental directors for the last few years. A new and autom ated H um an R esources System is presently being im plem ented by the Southern U niversity System to im prove the efficiency of m aintaining payrolland leave records of allu niversity em ployees. This system w ill provide accum ulated and used leave balances to the em ployeesand supervisorseach pay period. W e concurthatthe D istricta ttorn ey forthe N ineteenth JudicialD istrictof Louisiana should seek restitution of the fundspaid to M s.b lountto w hich she w asnotentitled. W e concurw ith yourauditfinding N o.3,"em ployeesreceived cash from stu dents." W e also concur w ith your recom m endation that the D istrict A ttorney for the N ineteenth JudicialD istrictof Louisiana review thism atter and take appropriate legal action regarding these possible violalionsof state law.,6"~outiteti,~ ~rnivt~itsi'fy S YSTEM

32 Dr.DanielG.l~vle.CPA.Ct'~" D ecem ber Page 3 The U niversity w illalso re-afi rm and re-issue policies and procedures to ensure that em ployees do not solicitor accept funds from students for the perform ance of their w ork duties. Ourm anagem entreview of the operations of the financialaid ofi ce is currently on going, as w e anticipate m aking additional recom m endations m enhance the adm inistrative operationsand efficiency of thatofi ce. Sincerely, R S/rdc S OI~'TI-1E/RN l rnivp?,i.~ I']W S YSTISM 25

33 26 Southern l.lniversity alb alon R ouge

34 A ttachm entii A ppendix

35 A ppendix SO UTH ER N UN IVER SIT Y" FED ER A L W O R K -STU DY PA YR O LL CH EC K S Exam ination Period -Spring Sem ester1996 Through Spring Sem ester1999 Colum n A C olum n B Colum n C Colum n D Aaron,N ikia Tim one A cey,sabrina D aw n A ndrus,m ia Angelle Ballard,N issan Beal,K arol B ell,shirley A lexis Blackbtm l,cerrissa Blount,Candiee Blount,Zenolia Bow ie,teresa L. Brister,G regory Brow n,k enneth D. Davis,Quida D orsey,.sylvester Fontenot,Em ily Fontenot,Jeanette G atlin,ruby H all,m aurice D. Hall,M yoa H arden,a nyz 1lines,Christopher ttooper,o rlan Ivy,N icolle Jackson,A ndra Jackson,Jacquel Jackson,Tonika Jacobs,K elly Jenkins,K yllie Jenkins,O rante' Jenkins,Sharhonda Jolm son,a pril Johnson,R am a 3ones,R obcrl K indrick,robin N. $3, , , , , , , , , , , , , , , , , , , , ,