LEXINGTON, Ky. (Nov. 13, 2020) — A University of Kentucky internal audit has uncovered more than $250,000 in misappropriated funds by two former employees in the College of Education, UK officials announced Friday.
The two employees are no longer at UK, the internal audit has been referred to law enforcement officials for their review and the college’s financial operations will be directly overseen by the Office of the Provost.
Those measures are part of a series of reforms being undertaken in the College of Education as well as financial and business processes throughout the institution.
“The University of Kentucky is a nearly $5 billion enterprise. We are the largest employer in the region by far and one of the largest in the state,” said Provost David W. Blackwell in announcing the findings of the audit. “We must demonstrate to each other and all those we serve that we will be responsible stewards of the resources we generate and those with which we are entrusted. In those rare circumstances when that trust is violated, we must move swiftly — and communicate transparently — about where problems occurred and how we are moving to correct them. That is what has happened here. It is what will — and must — occur as we move forward as Kentucky’s university.”
The internal audit can be found here.
- UK Internal Audit (UKIA) was contacted in March, after a desktop computer and files of an administrative support official in the College of Education — Stephanie Carpenter — were reported missing.
- The desktop computer and files were reported missing by Carpenter one day after college administrative officials inquired about inappropriate activity on her procard (a university credit card).
- Carpenter was an administrative support associate in the college’s Science, Technology, Engineering and Math (STEM) Education department. Carpenter was suspended within days after the review began, and she resigned from the college days later. She is permanently ineligible for rehire by the university.
- The review uncovered that Carpenter misappropriated more than $256,000 toward the purchase of Apple devices, including more than 80 iPhones; other high-tech equipment; travel expenses and other personal items over the course of her three-year tenure in the college.
- In addition, the audit found that another employee, Derita Graves, who worked in the college’s Educational Leadership department, accrued nearly $1,000 in personal expenditures. Graves was terminated from her position in July. She had previously been suspended when the audit uncovered questionable expenses on her part. Graves also is permanently ineligible for rehire by the university.
- The audit found that both Carpenter and Graves were able to make unauthorized purchases for three primary reasons:
1) The college’s primary business officer failed to enact proper business internal control procedures despite a number of previous reviews that recommended operational reforms. That position has been eliminated as part of restructuring the business office to ensure correct processes.
2) Preapproval from a supervisor for making procard purchases was not required, as policies dictated.
3) Approval documents, including signatures, for purchases were often forged and were not monitored, as policies required, within the college’s financial system.
Reform measures to be enacted:
Blackwell said a number of reform measures in the college will be quickly enacted to restore trust and ensure “that the resources we generate and the funds with which we are entrusted are managed appropriately and with the integrity we expect of ourselves and each other.”
College of Education Measures
- The Office of the Provost will immediately assume direct oversight of the college’s business office and will enable and support a new structure for management of its fiscal affairs. This direct supervision will be indefinite until the new structure is implemented and confidence is restored.
- A new assistant dean for finance and administration will be hired in the College of Education, reporting directly to the dean of the college and Associate Provost for Finance and Operations Lisa Wilson in the Office of the Provost.
- The primary business officer position within the College of Education has been eliminated as part of the reorganization of the college’s finance and business operation and an evaluation of major job responsibilities of other business staff throughout the college is underway.
- Blackwell will work with College of Education Dean Julian Vasquez Heilig on the transition of the college’s financial operations. The vast majority of the inappropriate activity occurred under previous college leadership. Vasquez Heilig came to UK last year and has pledged his commitment to the reorganization, which will include required training for college leadership with any financial responsibilities. Formalized development of business officers within each unit of the college will be undertaken to ensure that processes and procedures are followed uniformly.
- All purchasing responsibilities will be segregated to ensure that the appropriate cost reconciliations can be completed and verified by someone other than the person who made the expenditure in question.
- An immediate inventory of all IT equipment will be conducted. Further, the procurement of all IT equipment will be centralized within the college and monitored by the Office of the Provost.
Eric N. Monday, executive vice president for finance and administration (EVPFA), announced a number of measures UK is taking across the institution to ensure increased consistency regarding policies and procedures and greater coordination with central administration. These steps include:
- Training programs for all business officers at college, department and unit levels throughout the university will be expanded, actively monitored, and be mandatory.
- The EVPFA will meet with the senior business officers from each college, department, and unit throughout the university on a monthly basis to ensure improved coordination and consistency with policies and their implementation.
- The central administrative units of the university — Human Resources, University Budget Office, Information Technology Services, Facilities Management, Purchasing and University Financial Services — will be implementing additional monitoring and steps to ensure greater coordination of the business functions throughout the institution.
“When someone does not perform to the standards we expect and demand, there will be consequences. Further, we will move in a transparent and comprehensive fashion to ensure that the behavior is not repeated,” Monday said. “The vast majority of people in our community are committed to practices consistent with our policies and procedures. We cannot allow the actions of a few people to tarnish the work and commitment of an entire community.”
The University of Kentucky is increasingly the first choice for students, faculty and staff to pursue their passions and their professional goals. In the last two years, Forbes has named UK among the best employers for diversity, and INSIGHT into Diversity recognized us as a Diversity Champion four years running. UK is ranked among the top 30 campuses in the nation for LGBTQ* inclusion and safety. UK has been judged a “Great College to Work for" three years in a row, and UK is among only 22 universities in the country on Forbes' list of "America's Best Employers." We are ranked among the top 10 percent of public institutions for research expenditures — a tangible symbol of our breadth and depth as a university focused on discovery that changes lives and communities. And our patients know and appreciate the fact that UK HealthCare has been named the state’s top hospital for five straight years. Accolades and honors are great. But they are more important for what they represent: the idea that creating a community of belonging and commitment to excellence is how we honor our mission to be not simply the University of Kentucky, but the University for Kentucky.