Neb. auditor questions university credit card uses

University of Nebraska employees racked up questionable and perhaps even personal expenses on credit cards that are paid with public dollars - partly because of "significant deficiencies" in university oversight, according to an audit released Thursday.

State Auditor Mike Foley pointed to a $15,300 roundtrip ticket to China last year charged by a professor at the University of Nebraska Medical Center. Others on the same trip paid less than $1,500 per ticket. Foley also mentioned the purchase of a $628 fountain pen.

"I think there's some examples of extravagance here," he said when releasing the audit of the credit-card program.

Foley said the audit revealed a lack of control over use of the cards, resulting in unauthorized and improperly documented purchases. He said he did not quantify a total. The audit covered about 2 percent of card transactions over an 18-month period ending late last year.

University officials acknowledged a need to beef up training and change some policies regarding the credit cards that are used to purchase about $40 million worth of goods and services annually. But they said they saw little evidence that the cards were being used inappropriately.

"A lot of (the audit findings) are because people didn't put their sheets of paper together properly to document," what they purchased, said David Lechner, the university's vice president for business and finance.

Lechner said it was clear some policies weren't being followed, however, and "we welcome these observations and we're going to make it better." A university-wide task force will address the audit's recommendations.

The cards are used by about 2,600 university employees to buy an enormous range of work-related items. University officials say they save millions annually, in part by reducing the need to buy and store items that were sometimes never used under a previous system.

Foley did not disagree that the system is more cost-effective, but pointed out several ways in which it lacks oversight.

In some cases, the same person who used a university credit card was also in charge of reviewing whether the purchases were appropriate - a violation of policy. With some cash advances made with the cards, Foley said, "there was little or no documentation on how the cash was used."

Some of the biggest examples of questionable spending Foley cited were by Medical Center employees. Don Leuenberger, vice chancellor for business and finance at UNMC, also said the problems revealed by Foley were more related to documentation than freewheeling and questionable spending.

"I saw very little (in the audit) that said the transaction was not an appropriate purchase," he said.

Much of the dispute between Foley and university officials centers on the definition of "public" dollars, and is illustrated by the $15,300 plane ticket.

The ticket, bought last year by Dr. Rodney Markin, a UNMC professor, was paid for with money that came to the university from private donors, Leuenberger said, and so was not inappropriate. He made a similar argument regarding the $628 pen given to a speaker who came to the school, which he said was paid for with money from UNMC alumni.

Foley says that because every dollar that flows into the university's accounting system becomes public money regardless of its source, such purchases are inappropriate.

Leuenberger also disputed the claim that the purchase of a business-class ticket violated policy, saying such tickets can be bought on overseas trips of at least eight hours.

Foley said an accounting policy that applies to all state agencies, including the university, prohibits the purchase of non-coach airline tickets.

Despite that, auditors found more than $283,000 worth of first-class airline tickets were bought during over an 18-month period ending in December 2008. Twenty of those cost more than $5,000 apiece and 10 cost more than $10,000 each.

Leuenberger added that Markin needed a business-class seat for the China trip because he had had neck surgery just three weeks beforehand.

"It's interesting all this new evidence surfaces long after university had this report in draft form," Foley said when told of the neck surgery.

Markin didn't respond to a message from The Associated Press

University of Nebraska Regent James McClurg, chairman of the regents' audit committee, praised the audit, saying it "identified ways we can improve business practices, strengthen internal controls, and reduce risk of fraud and abuse."