The News & Observer

December 10, 2007

Audit: Fayetteville State mismanaged money

A state audit released today had 17 findings of financial mismanagement at Fayetteville State University.

The audit showed students were affected by the university's poor control over its financial systems. Some students received financial aid refunds twice. Students were not billed on time. The university inaccurately calculated students' need for financial aid, made errors in eligibility decisions and distributed financial aid to students who were not making academic progress, the audit said. The university also created a "debt forgiveness program" and then issued credit to students, but without any established criteria to determine who would get the credit.

The findings listed major inaccuracies in financial statements, unauthorized purchases, irregular reconciliation of bank accounts and poor procedures to implement a new accounting system. Too many employees had access to the financial system, the report said. Gross errors in financial statements included understating tuition and fee revenue by $2.2 million and overstating sales and services revenue by $1.4 million. Expenses for supplies were understated by $1 million.

The university responded that it had already solved some of the problems and will work to correct the rest.

Findings issued today may help explain the shakeup in top management at FSU this past summer. Former Chancellor T.J. Bryan resigned abruptly in July after meeting with the UNC system officials to discuss the ongoing audit.

Vic Hackley is now leading FSU on an interim basis. Hackley was interim chancellor at N.C. A&T State University earlier this year, where he alerted UNC officials to financial fraud and abuse at the Greensboro campus.

State Auditor Les Merritt said in a statement that he was encouraged by past efforts of UNC system leaders to correct financial problems. "We are confident that with their commitment, Fayetteville State will have better footing as we move towards next year's financial audit."