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March 19, 2015

State audit prompts changes

Changes are being made at the University in response to a state performance audit that found that Pitt:

• Did not adequately ensure that employees of sports and academic camps who had direct contact with minors had obtained required background checks and clearances.

• Had inadequate controls over procurement card (P-card) transactions.

• Did not adequately justify a direct-source contract and did not always document that the prices paid for directed or single-source contracts were fair and reasonable.

The state’s audit, which covered fiscal years 2010-13, also found that:

• The University is in compliance with National Collegiate Athletic Association policies regarding student-athletes’ eligibility and financial aid, and

• Pitt departments implemented internal auditors’ recommendations in a timely way.

The state auditors reported that they were unable to evaluate Pitt’s policy on whistleblowing or reporting suspected misconduct because the University refused to permit auditors to review the investigations and resolutions for any of the 53 calls made to the AlertLine in fiscal years 2011-13.

According to the report, an April 8, 2014, letter to auditors from Pitt’s Office of General Counsel stated: “It was never contemplated or communicated to employees that the confidential information contained in their anonymous calls would be shared with outsiders in circumstances such as this.”

The auditors, who sought to determine whether reports to Pitt’s AlertLine reporting system were properly categorized, prioritized, investigated and resolved, stated: “Due to this scope limitation we were prohibited in our ability to review the effectiveness of the AlertLine.”

State Auditor General Eugene DePasquale presented the audit results in a March 5 media conference on campus.

The full audit report is available online at

Youth camps

With regard to ensuring the safety of minors on campus, “We found no evidence of any child being in any danger,” DePasquale said. “The process that we saw was more disjointed than anything.” Of eight sports camps auditors reviewed, six were obtaining the checks and two were not.

The audit found that prior to January 2012, Pitt “exercised no oversight and did not have policies in place” to require coaches to get background checks for camp employees and volunteers who would have contact with minors.

Beginning in summer 2012, Pitt started using special events contracts that required coaches to obtain the checks for employees and volunteers, but “the University did not ensure that the background checks were obtained,” according to the report.

In 2013, Pitt established a policy requiring the background  checks for any employee, volunteer or student who had significant likelihood of having direct contact with minors.

Now, amid new laws to protect minors in higher education, new hires must have the checks and the University is reviewing background check requirements for current employees. (See Jan. 22 University Times.)

“The University took the leadership well before today”  to take action on the auditors’ findings, DePasquale said, commending University leaders for their willingness to make changes even before the report was finalized.

P-card use

Auditors selected 25 procurement cards from 510 cards that logged more than $5,000 in purchases in FY13 and reviewed 208 transactions from those 25 cards to determine whether they complied with Pitt’s policies.

They found that 28 percent of the purchases reviewed “violated” P-card policies.

Among the findings:

• Eight cardholders made 18 purchase of items from suppliers that were not University-wide contracted suppliers although the items were available on University contracts. According to the report, several people said they got better prices this way, but procurement instructions direct cardholders to contact the contract account manager to ask about meeting or beating the alternate supplier’s price.

• Five cardholders split 24 purchases into multiple transactions to avoid card limits, including one who split a $13,379 purchase to evade a $2,000 transaction limit. That cardholder’s authorization was revoked following an internal audit review, the report stated.

The split also evaded Pitt policy requiring a minimum of three bids from qualified suppliers for all purchases over $5,000.

• One cardholder made six purchases for personal use between Dec. 12, 2012, and Feb. 14, 2013, totaling $2,642. The individual was terminated after internal auditors uncovered the fraud. (Additional review showed that employee had made 57 other personal purchases  from July 8, 2011, through Feb. 14, 2013, totaling $16,593.)

• Three cardholders didn’t maintain receipts for 11 purchases totaling $3,825. One cardholder used the card to buy items for a departmental holiday party, although P-cards may not be used for entertainment expenses.

• Two cardholders’ supervisors didn’t independently review the transactions and reconcile card activity. In part, this enabled the employee who made personal purchases on her P-card to do so undiscovered for 20 months, and enabled the split of the $13,379 purchase by another.

In its response, included in the report, Pitt stated that P-card users and reviewers are being retrained. Improved access to transaction data is making review easier and new processes are being tested.

The University noted that P-card purchases average $271, and account for about 1 percent of Pitt’s total annual expenses.

Contract compliance

Auditors’ review of a subset of professional service contracts of more than $100,000 found no conflicts of interest by purchasers.

However, the University didn’t always ensure that the prices paid were fair and reasonable and documentation wasn’t always complete for contracts that weren’t competitively bid, the report stated.

In part, auditors recommended the University adhere to its competitive bidding policy to encourage competition for the University’s business and to ensure goods and services are obtained at the best cost.

In addition, a comparison of invoices and contracts found that a vendor inadvertently overcharged Pitt $2,898. The overpayments occurred when a contract monitor approved payment without comparing the contracted rate with the invoice. The overpayment has been refunded, the report stated.


DePasquale commended University leaders for their willingness to implement changes. “I appreciate they agree with the areas that we do think they need to strengthen their internal controls,” he said, adding that his department will verify Pitt’s compliance in its next audit.

—Kimberly K. Barlow