YSU tightening control on university credit cards after fraud discovery

YOUNGSTOWN

Youngstown State University plans tighter controls for employee use of university credit cards following discovery of fraud by an employee.

Since the fraud was discovered last year, the university’s controller’s office has instituted additional monitoring measures, according to an analysis of card procedures done by Packer-Thomas Certified Public Accountants & Business Consultants, Youngstown, YSU’s internal auditors.

Review of the report was part of YSU Trustees’ Audit Committee meeting Tuesday.

The employee, Jeffrey Butts Jr., 41, of Clermont Avenue Northeast in Warren, has since resigned and been charged with misusing a university credit card. According to a criminal complaint, Butts, who worked as an administrative assistant in the Islamic Studies department, used the card to funnel more than $16,000 in cash to himself.

The monitoring measures now in place include reviewing all cardholders’ statements and forms each month for compliance and reasonableness of expenses.

“While we agree that the procedures performed above are good internal controls to detect noncompliance and possible fraudulent transactions, they are very cumbersome, costly (estimated to be approximately $70,000 a year), and time consuming,” the accountants’ analysis says.

One suggestion in the analysis is implementation of preventive controls versus detective to “keep errors and irregularities from occurring in the first place.”

The bank that services the purchasing card program released additional monitoring controls that the university also can use for detective control.

But university personnel haven’t been trained on the new monitoring tools, the report says.

“The thought process is that detective controls that can be monitored using system parameters will help identify high risk transactions which then can be flagged for further review,” it says. “We recommend using system parameters wherever possible in an effort to help eliminate the need for reviewing 100 percent of procurement card transactions.”