Audits - Credit cards misused in University of Missouri system

KANSAS CITY, Mo. -- Auditors found abuse of credit cards by employees in the University of Missouri system, a newspaper that successfully sued to get access to those audits reported Sunday.

Among the findings reported in The Kansas City Star:

A campus mail service manager charged $5,260 in groceries, laptop computer equipment and other items on her University of Missouri-Kansas City charge card. After being questioned, she made partial reimbursement.

At the University of Missouri-St. Louis College of Fine Arts and Communication, one audit found that receipts were missing for one in five credit card charges. Some with receipts, such as $1,097 for T-shirts, had unexplained business purposes.

At the University of Missouri-Columbia School of Medicine, three-fourths of 433 cardholders have monthly credit limits of $25,000, even though 93 of those employees never used the card during a six-month period. For many cardholders, the limit was 10 times what they needed.

The university system, which has campuses at Columbia, Kansas City, Rolla and St. Louis, has made a major push in recent years for employees to use credit cards, resulting in $75 million in charges last year by almost 5,300 cardholders, or an average of about $14,150 per user.

But the use of the cards, which the university system calls procurement cards, has been a favorite target of auditors. They found shortcomings in 18 of 23 audits that covered card usage in 2001 and 2002.

The Star acquired those audits and some 700 other audits and financial statements when the university system settled a long-running lawsuit with the newspaper last month. After a five-year battle, the university system agreed that the audits were public records under Missouri law.

Auditors from PricewaterhouseCoopers found undocumented or personal card expenditures, charges without receipts, scores of cards that were issued and never used, and credit limits that often far exceeded need.

Potential 'always there'

Nikki Krawitz, the university system's vice president for finance, said there were bound to be problems with so many transactions -- 335,000 in 2002.

"The potential in any large organization for misuse is always there," Krawitz said. "It's typically of a pretty small dollar amount."

Any amount of abuse is untimely, given the university system's current struggle with budget constraints. The state Legislature is looking at $89 million in cuts for the upcoming higher education budget, said Rep. Chuck Graham, D-Columbia, and past chairman of the House Appropriations-Education Committee.

Missouri Auditor Claire McCaskill, who audited the use of non-university state employee cards last year, said employers invited financial risk by issuing too many cards with credit limits that were too high.

"Credit cards are not inherently evil," McCaskill said. "They can be a cost-effective way to buy things, but because there are possible abuses, you should not give them to people who do not need them or have limits that are too high."

The system, with about 20,000 employees, had 5,286 active cards in 2002, Krawitz said. The $75 million in charges grew from about $55 million in 2001, and roughly $20 million the year before, records show.

By comparison, in Kansas, where the state Board of Regents oversees about 16,000 employees at six universities, there were 2,368 active cards at the end of March. Employees charged $12 million on the cards in 2002, a state official said.

Use of the cards is so strongly encouraged in the University of Missouri system that one department wound up with 37 more cards than it asked for.

An August 2001 audit said the University of Missouri-Kansas City Department of Campus Facilities Management requested two cards from the purchasing office to place in department vehicles for off-campus gas purchases.

Instead, the purchasing office issued cards for every university-owned vehicle -- a total of 39 cards, each with a $1,000 limit.

The department did not want the remaining 37 cards and kept them locked in an office safe. After repeated requests, the cards were canceled.

Krawitz said officials liked the card system but acknowledged it was constantly under review.

"We're trying to always improve the process," she said.

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University of Missouri system: http://www.system.missouri.edu/