State audit identifies issues at Three Rivers Community College

POPLAR BLUFF, Mo. -- The results of the state audit were delivered Monday after a review lasting more than a year of business practices at Three Rivers Community College.

Missouri State Auditor Susan Montee went over the final audit before an audience of about 50 people at the Rutland Library on the college campus. The 44-page document based on fiscal years 2006, 2007 and 2008.

Findings in the audit made reference to improper bidding, lack of controls, no plan to reduce substantial operating losses with on-campus housing and the Early Childhood Learning Center, no formal capital assets policy, inadequate budgeting broken down by department, computer security issues, insufficient review of tuition rates and other issues.

Three Rivers trustee Randy Winston asked Montee if any of the discoveries included malfeasance. She said the audit does not look for that, as she does not have enforcement power but rather is there to help enhance internal controls by offering recommendations and putting "a little public pressure" on entities throughout Missouri.

Winston asked if most of the findings have already been rectified throughout this review process, which began in May 2008. Montee said yes, adding that most of the time colleges come out "on the right track."

The report noted the college had little oversight when bookstore funds were misappropriated to the tune of about $130,000 before charges were brought against the bookstore manager.

Montee said the college has a policy that states no more than $2,000 should be kept on campus overnight, yet in May of last year about $2,800 was stolen during a break-in of the business office. The campus enhanced its surveillance system following the unresolved incident.

A state law may have been violated with more than $1,300 spent at a local gas station owned by former board member Bill Swafford, whose term ended in April of 2006. Montee said competitive bidding must be sought to prove that a decision is made based on "the right price not because they are related, parties."

Contracts with various entities were not located, including one for the E.K. Porter Distance Learning Center that is owned by the Three Rivers Foundation, although the college pays insurance on the building. The college also provides office space for the not-for-profit organization, yet there is no formal agreement, according to the report.

The college will "enter into contracts concerning facilities" according to the college's written response within the final audit, and "expenditures will be monitored and measured for their effectiveness."

Other items, such as former college administration's failure to collect commissions from a cafeteria vendor that continued to provide services without a contract for three years, were taken care of as recent as the college board meeting Thursday.

The auditor suggested that the college consolidate its banking, since there were 15 different checking accounts as of a year ago. The college's response stated that bidding would be done since banking services have indeed expanded.

In regard to the state's child care assistant program, the college failed to bill the Missouri Department of Social Services for aid in the amount of $39,000 from 2005 to 2008. Montee said it is unclear whether there will be a reimbursement at this point, even though the college had made contact with officials in Jefferson City in recent months.

For various athletic and theater events held on campus, the college has not established a procedure to account for the revenue. Montee said tickets need to be numbered or else there is "no way to check that the right amounts are turned over."

Montee noted that beginning in 2005, the college spent more than $800,000 in startup costs for new extension centers, along with the legal fees related to a rental dispute with Southeast Missouri State University. Three Rivers dropped the lawsuit more than a year ago and started a new relationship with the regional university with a new articulation agreement, the report stated.

The state auditor said the Missouri Department of Higher Education previously did not have the authority to arbitrate disputes between colleges, but General Assembly has modified that law, which may reconcile such discrepancies in the future.

Montee said closed college board meeting minutes were not properly documented from July 2005 to April 2008, with the exception of one instance, but she said that the college has retained its minutes since then.

The audit found the college had been issued a total of 72 credit cards as of May of last year, 43 of which were gas cards. While no unauthorized purchases were found, Montee said the college "was lucky."

College president Devin Stephenson said he pulled all the credit cards from other administrators July 1, the day he began. He said the college is implementing a system with tighter regulations.

The college owned 18 vehicles as of a year ago, Montee said, yet there were no usage logs besides those for fleet vehicles. She noted that the former college president and current athletic director were provided vehicles for unlimited use, including personal. The "fringe benefit" is fine, she said, but according to the Internal Revenue Services, it needs to be reported on W-2 forms.

The audit notes that Dr. John Cooper was president during the time of the investigation and was terminated by the college board July 3, 2008. Three of the four vice presidents underneath him at the time have resigned or retired and the executive positions have been condensed and filled thereafter.

As a reaction to the overall picture, Stephenson said that although he does not benefit now from the negative publicity of past conduct, the "external review" could not have come at a better time, "when we are already examining administrative and structural weaknesses."

"In the days and weeks ahead, the new administration at Three Rivers will continue to study these findings and further implement college-wide improvements to policies, procedures and practices," Stephenson said in a prepared statement. "In the college's quest to become a premier higher education institution, the new administration, board of trustees, faculty and staff will proactively work together to be exemplary guardians for the best interests of students, employees and the citizens of the Three Rivers designated service area."

The full audit can be viewed on the web at www.auditor.mo.gov/press/2009-71.pdf.