Nebraska University administrators abuse state credit card, from Nebraska Watchdog:

In the last few years Nebraska state funds were used to buy a $628 fountain pen from Borsheims, a $750 dollar picture frame, a $219 golf club, and a $250 Nintendo Wii game. By the way the Wii was never used, the golf club can’t be found, and according to State Auditor Mike Foley the purchases, “have the appearance of being inappropriate.”

Those are just some of the findings in a 233 page audit of the University of Nebraska’s credit card system released today by Foley. Foley said the credit cards have been issued to over 2,000 University employees.

As Nebraska Watchdog first reported on Wednesday the audit has turned up questionable credit card purchases, including first class airline tickets which are strictly prohibited by the University. Foley said today that $283,000 in first class tickets were purchased by University employees between July 1, 2007 and December 31, 2008.

20 of the tickets cost more than $5,000 each, five cost more than $10,000, and one round trip first class ticket to China cost over $15,000.

According to the audit Harold Maurer, Chancellor of the University of Nebraska Medical Center, used his University credit card to purchase three first class tickets. Maurer went to China, Germany, and Hawaii. The China trip cost $11,886.46, the Germany trip cost $4,751.03 and the Hawaii trip cost $2,111.84.

The audit also notes that John Christensen, Chancellor of the University of Nebraska at Omaha, used his NU credit card to buy plane tickets to a conference in Minneapolis for his wife and son. The tickets cost $302.60 each.  According to the audit the purchases, “were not properly approved.”

Foley said the credit cards have been given to over 2,000 University employees.

The audit also revealed a technique Foley called “pyramiding” which found employees circumventing the credit card’s dollar limitations. Foley said most of the cards had a dollar limit on any single purchase but the audit discovered that employees got around the limit by dividing large purchases into several smaller purchases. According to the audit the pyramiding transactions totaled over $330,000.

The audit also found that while all credit card purchases are to be approved by two people on many occasions they were only approved by one person, the same individual who made the credit card purchase. Foley said a serious weakness in the University’s accounting controls allowed the card’s primary user to log in to the system, change their user name, and avoid the approval by a second individual.

Foley’s audit makes no mention of fraud and Foley indicated today that he believes his report will not result in any criminal charges.

In a news release issued today by the University of Nebraska, David Lechner, Vice-President of Business and Finance, called the credit card program “high reward and low risk.” Lechner stated that during the time period under review the University made nearly 215,000 purchases. But Lechner admitted the system “can be improved.” Lechner said the University will reexamine its internal controls and plan to have new policies in place by June 30, 2010.

Other glaring holes in the University’s credit card program included employees making purchases on week-ends and holidays. Employees also used the cards to make cash advances, another violation of University guidelines. According to Foley in some cases there was little or no documentation detailing how the cash was spent.

Editor’s note: to read the State Auditor’s full report click here and to read a Nebraska Watchdog report on perks at the University of Nebraska click here.