University provides explanations to remain “transparent” after state audit shows questionable spending

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(THE PICKET) – Shepherd University officials have posted details of a West Virginia legislative audit in an effort to be transparent and informative about state criticisms that proper procedures weren’t followed in University spending.

Sylvia Manning, interim president
Sylvia Manning

“Because concern has been spreading, and because the information generally available has been limited and sometimes erroneous, we need a broadly accessible avenue for communications,” Interim President Sylvia Manning wrote in a Wednesday afternoon email to students, staff, faculty, alumni and friends of the University. “We have therefore set up a page on our website where visitors may find all the information: both the auditor’s report cited and what Shepherd’s response has been.”

The following link is a copy of the 12-page auditor report and correspondence between the university: http://www.legis.state.wv.us/Joint/Postaudit/reports.cfm

“We have two intentions here: to come into full compliance with all state regulations and to be as transparent as we know how with the various groups we serve, including all of you,” Manning wrote. She added that the University would update the page as more information became available.

The Picket reported the auditor complaints and Shepherd official responses provided in the new webpage on Monday, Oct. 19, and again on Tuesday, Oct. 20.

According to the webpage, University officials have moved quickly to take corrective action and to present evidence when the purchase card, or credit card, buys cited by the state audit were justified and legitimate. Purchase card buys are described as p cards by the state of West Virginia and the University.

Tom Segar
               Tom Segar

Acting vice president for enrollment management Tom Segar took questions about the audit during a Tuesday evening Student Government Association meeting. Referring to written notes, Segar frequently added his thoughts on the matter.

“This is a case where the initial findings were reported to the media without the university being able to respond…this is our response to the madness,” Segar said during the Oct. 20 meeting.

Listed below are the complaints made by the state auditor and the University’s explanations.

“Auditor’s Concern: Meals, not associated with team travel, were purchased on P-cards. One specific employee purchased over $1,000.oo in meals that were not flagged as unallowable, the majority of which appeared to be personal. The same person had multiple transactions that were flagged and subsequently reimbursed; however, the repeat offender continues to have a P-card.

Shepherd’s Response: Internal Investigation Ongoing”

Meals for athletics were purchased on P-cards for amounts averaging as much as $48.00 per meal.

“Auditor’s Concern: Meals for athletics were purchased on P-cards for amounts averaging as much as $48.00 per meal.

Shepherd’s Response: The limited information provided by the Legislative Auditor made no effort to analyze whether any of the specific food charges were outside of the appropriate payment of team travel expenses for food.  We are auditing the identified charges to clarify that issue and will supplement our report on this issue.”

“Auditor’s Concern: A dinner for two at Hollywood Casino’s Final Cut Steakhouse in Charles Town, WV was purchased on a P-card at a cost of $95.00, including tip, but the hospitality form lacked enough information to show the benefit to Shepherd.

Shepherd’s Response: The former University president hosted a hospitality dinner for a visiting national scholar in 2012 at the Hollywood Casino in Charles Town. The Casino is a vital component of the local economy, as well as the State’s tax revenues. The Casino is an active and dynamic good corporate citizen of the Eastern Panhandle, contributing to a wide assortment of charities and community improvement initiatives. The University does not feel that a very occasional patronage of the restaurant for the purpose of hospitality of out-of-state visitors is in any form an improper extravagance. The standard practice of the University president has been to omit names from the hospitality form that is provided to the procurement office. The procurement staff had been told that a record of the names is preserved in the President’s Office records and inspection can be provided as needed, but the meetings of the University President are sometimes sensitive and so this effort at discreetness has been utilized. The University will document the visiting scholar by separate cover.”

Referring to his written notes at the SGA Tuesday meeting, Segar said, “Yeah, let me share with you what that was…yeah so I want to be accurate and read this to you. It was a visiting scholar; I believe it was probably associated with the common reading program. I don’t have the name of the person…the past president was hosting. It is not unusual for this to happen.”

“Auditor’s Concern: Condoms, K-Y Jelly, and Vital Erotic Shots (a sexual enhancer) were purchased under the description “RA Program” and the purchase was approved for payment.

Shepherd’s Response: The auditors mis-assumed that the purchase of sexually-related items by a Residence Hall Director in November and December, 2012, were for a personal use.  In a university residence life program, it is a common programmatic component to distribute sexually related personal hygiene items to students.  The University considers the purchase/distribution of any sexual enhancement items, even if it was only $10 of the total purchase, to have been a mistake.  The Residence Life program now uses a comprehensive internal software system in which the Residence Life Staff log all of their proposed purchases in advance.  This will help ensure that the 2012 mistake is not repeated.”

“We use (condoms), it’s a good thing,” Segar said. “It is not unusual for the program to use K-Y Jelly. What did stand out was that the program also included something called, wait for it, Vital Erotic shot for $2.87…two of them, so I imagine that was probably a give away.”

Segar eluded that the Vital Erotic shot was an “energy drink” and his recommendation when giving away “energy drinks” to know the ingredients.

“…But it doesn’t mean the university spend thousands and thousands handing out sexual enhancers to students,” Segar said.

“Auditor’s Concern: A sterling silver covered platter costing $95 was purchased for “music, opera: props” according to the P-card log. Its current location is unknown. The same P-card holder, no longer employed by Shepherd, also purchased groceries, clothing, and fuel under the description of “music, opera.”

Shepherd’s Response: All of the items identified in the report were purchased by the Theater Technical Director in winter 2013.  The former technical director left the University earlier this year for other career opportunities.  The University is attempting to recover the supporting documentation as to these purchases.

“Auditor’s Concern: A car was rented for 1 1/2 months, costing $1,150.94; however, Shepherd has state cars available for use. The car was initially rented for one month at a cost of $789.99. The receipt had “Admission Recruiting” written on it and a Travel Settlement form was attached documenting only one (1) night of travel. The car rental was extended for an additional week and four days at a cost of $360.95. Except for the rental receipt, no other documentation was provided.

Shepherd’s Response: The University disputes that the rental car charges of the Admissions Office were extravagant or improper. Several years ago the University made a business decision to significantly reduce the size of its motor pool usage by faculty and staff to reduce costs and concluded that it could save money by having the Admissions Office recruiters use rental cars. This was not a reckless decision by a cardholder; this was a calculated business decision arising from comprehensive cost-analysis calculations. Even when the Admissions recruiters are not traveling on overnight trips, their day-trips are high mileage and are cost effective for such rentals.

Segar told the SGA that it’s not unusual for admission counselors to be on the road for long periods. “That reflects the admission cycle…that is how long admission counselors are on the road recruiting student. This is typical. They are on the road right now,” he said.

 “Auditor’s Concern: Shuttle service from All Star Limousine in the amount of $372 to and from Dulles, $145 from “H Washington to Shepherdstown on 11/27” and $145 from “H Washington to Penn Station on 11/28” were made; however, no other details were given.

Shepherd’s Response: The shuttle service in November 2012 was provided for a visiting lecturer to be transported from regional transportation centers to Shepherdstown, and returned. While we would treat employee use of that shuttle as excessively extravagant, our staff felt that it was a reasonable arrangement for the visitor to our campus.”

“Auditor’s Concern: A down payment was charged to a P-card for a two bedroom townhouse at Nemacolin Woodlands Resort in Farmington, PA at a cost to the State of $380.41 (50% of the total charge). The stay was for a Saturday and Sunday in April 2013. Except for the mail confirmation, no other information was provided.

Shepherd’s Response: The University has confirmed that the charge was for the golf team to make use of the townhouse for all team members, during a golf tournament.  We are working to recover the appropriate documentation as to this expense.”

“Auditor’s Concern: A wine tasting and tour for eleven people at Breaux Vineyards in Purcellville, VA was paid for with the P-card. Documentation lists the event as the Council of Public Liberal Arts Colleges (COPLAC) Conference; however, no other information was available including a list of those participating in the tour.

Shepherd’s Response: The University hosted the annual national COPLAC conference in June 2013.  As a component of the multi-day conference, Shepherd structured several optional visits to several tourist destinations of our greater Eastern Panhandle community.  Ten COPLAC senior administrators participated in the vineyard tour, along with the Shepherd administrator who used his P-Card to pay for the tour, which cost less then $27 per participant.”

During the SGA meeting, Segar commented on this expense.

“We actually didn’t pay for that out of Shepherd money. People paid Shepherd for the (entire) conference. We in turn took their money and paid for that experience,” he said. “It was not state money used to sponsor a bunch of our friends to just drink wine. Again, this is not an uncommon practice.”

“Auditor’s Concern: Shipping was expedited, often for amounts above the price of the item being shipped. This practice was consistent with specific P-card holders who appeared to have no regard for the excessive amounts being charged to the State.

Shepherd’s Response: Internal Investigation Ongoing.”

 “Auditor’s Concern: Other miscellaneous items included payment for two missing hotel pillows totaling $110 that should not have been the responsibility of the State to reimburse, travel insurance, books for personal use, computer games, and valet parking.

Shepherd’s  Response: The employee who paid for two missing hotel pillows was not paying for pillows that he personally lost. The employee is the soccer coach for both our men’s and women’s soccer teams. When the teams have stayed in a hotel and checked out and the hotel insists that something was missing and charges the credit card, the University has to absorb that expense unless one or more students confess to responsibility for the missing items, but in this case no one did. The Audit Team assumed that an employee used her P-Card for “computer games.” In reality, the P-Card purchase was of crossword and Sudoku puzzles that were published in the student newspaper, The Picket. The University expects to demonstrate that none of the book purchases highlighted for review were personal use. The University has already confirmed that the Kindle purchases (two of the three items highlighted) are part of the Kindle collection of the Scarborough Library, not a personal use. Travel insurance:  still under review. Valet parking: Still under review.  The Legislative Auditor has cited three hotel stays in which valet parking was utilized.  It appears the total cost to the university of choosing valet rather than regular parking was an aggregate of less than $50.”

“Auditor’s Concern: Two Shepherd employees were allowed to circumvent their established P-card transaction limits on three separate occasions by splitting one purchase from a vendor into two or more payment transactions for the purpose of spending more than they were authorized to spend.

Shepherd’s Response: The purchases from Best Buy remain under review.  The transactions in question involve the large-screen televisions that hang in the Dining Hall for students to watch while eating. The purchases from Weiss Brothers Industrial Supply were purchases of diverse assortments of products used by the housekeeping unit of the Facilities Department.   The Department’s view was that if the cardholder bought $6,000 of toilet paper, toilet cleaner, and gloves for workers, that the cardholder could proceed to also buy $4,000 of trash can liners and paper towels on the same day from the same vendor, as a separate transaction.  We will work with the State Auditor to establish clearer understandings of their expectations for such transactions.”

During the SGA meeting, one student questioned if Shepherd University was in any (legal) trouble or if it was just the “media being the media.”

“It’s the media being the media,” Segar said.

“I thought so,” said the student.

Segar continued that the University has been through worse situations and reminded the attendees of a 2012 incident that resulted in the termination of a Shepherd employee.

Todd Bowman is a staff writer for The Picket. He can be reached at tbowma04@rams.shepherd.edu or on Twitter @todd_bowman87.