Chicago State University’s accounting department appears to have been poorly supervised, under-staffed and less than competent, outside experts who looked at the school’s most recent audit are saying.
The audit, released by the state Auditor General last week, pointed out 20 problem areas in everything from handling student financial aid to doling out contracts and how the school uses its credit cards and purchasing cards.
“It’s sloppy accounting from that standpoint,” says Ray Whittington, the dean of DePaul University’s business school and an expert in auditing. “It points to the lack of controls in the organization.”
Eric Sussman, a lecturer at the Anderson Graduate School of Management at the University of California, Los Angeles, says the audit – and the fact that many of the problems have been recurring for a year or more – point to incompetence, negligence or “extraordinary laziness” at the school.
“They’re not reconciling accounts. That’s kind of Accounting 101 type of issues,” Sussman says. He adds that it seems an “unbelievable irony, that a university can’t pass Accounting 101 is a little shocking.”
The most recent audit covers the last fiscal year, which ended June 30, 2008. That was the end of Elnora Daniel’s term as president. She came under fire starting in 2007 for misusing the school’s credit cards.
But the new audit indicates that even after that scrutiny, CSU continued to have problems managing its purchasing cards and credit cards during the rest of Daniel’s term, the state audit found.
The vast majority of the purchasing card transactions – 36 out of the 40 auditors reviewed – exceeded the $1,000 limit on each purchase. Those 36 purchases totaled more than $220,000.
In several cases, the auditor general found, CSU couldn’t produce paperwork and receipts to justify those large purchases.
Someone spent nearly $2,200 at the Sheridan Manhattan, a Times Square hotel where the typical room costs $250 per night or more. But there was no documentation accompanying that charge.
Other hotel stays also caught the eye of auditors because the receipts didn't explain why the room rates exceeded the limits the state sets. On the purchasing card, five hotel room charges totaled nearly $80,000 with no explanation as to why the state-mandated nightly rate limit was exceeded, the auditors found.
The charges included a total of $57,000 at Hyatt hotels, $5,600 at the luxury Plaza Ocean Club in Daytona Beach, Fla., and $600 at a New Orleans Marriott
The Illinois Department of Central Management Services sets the maximum hotel rates that state employees can get reimbursed for. In Manhattan, that rate is $110 per night; it's $90 per night for much of the rest of the country, and $149 per night in the city of Chicago.
The university was late paying a handful of charges on an American Express card by three to four months. That resulted in $101 in late fees, and a note from the auditor that “Untimely payments can result in vendors being unwilling to do business with the State and results in additional expenses when late payment fees are incurred.
CSU pointed the finger for credit card problems at Daniel, the former president who left a year ago. CSU’s Board Chairman, Leon Finney, said last week any problems that came up on the audit can’t be blamed on interim president Frank Pogue. Pogue declined to comment this week through a spokeswoman.
“Travel and credit card exceptions were errors by the former President and will not be repeated in the next audit,” the university wrote in response to the state’s findings.
Whittington, the DePaul dean, says the biggest issues in the audit relate to CSU’s financial reporting – that is, tracking how much money it has and how it’s being spent.
“It looks like there’s a lot of lack of control over financial reporting,” Whittington says. He adds, “They obviously had some incompetent people there.”
Sussman was just as critical of the university’s operations.
“This goes all the way to the top,” he says. “The board of directors, as a matter of protocol, the board of trustees, should be receiving these reports and making sure they’re rectified and addressed on a timely basis. Heads have got to roll.”
Finney said last week the board would sit down with incoming president Wayne Watson right away to start addressing the problems. Whittington and Sussman agree that CSU faces big challenges in improving its accounting.
“It seems like it’s just, their accounting department doesn’t have adequate supervision,” Whittington says.
Sussman says it will require changes to policies and better training for people in many levels of the school’s administration.
“All these findings speak toward, you need some new people,” he says. “You need to clean house.”
Daily News Staff Writer Peter Sachs covers higher education. He can be reached at 773.362.5002, ext. 18, or peter [at] chitowndailynews [dot] org.