Audit Leads to A-State Procedural Changes
by Melissa Palumbo
Delta Digital News Service
JONESBORO — Recruiting T-shirts led to a change in procedures at Arkansas State.
An Oct. 11, 2018 complaint to A-State Internal Audit concerned a large order of T-shirts placed by the Office of Recruitment.
An administrative specialist entered the requisition for the shirts to Procurement Services in July. The order, consisting of 4,000 grey “visit” T-shirts for $8,800 and 1,800 red “Pack Preview” T-shirts for $26,700, totaled over $35,000. The order was miscoded as being under $20,000.
The shirts were nonrefundable due to the different patterns and colors applied.
University regulations and Arkansas law require orders above $20,000 to be bid out to vendors in the community and to receive at least three competitive bids. However, the university only obtained one bid from Running Threads, a vendor that previously worked with the university.
Initially, contact was made with both unlicensed and out-of-state vendors, which goes against university regulations.
Special Events Coordinator Teresa Dunton, a member of recruitment, had no comment.
The purpose for bids from at least three local vendors for larger orders is to allow Jonesboro businesses the opportunity to work with the university, make money and get recognition if they do good work. Choosing to only allow one, previously commissioned vendor obtain the bid took away the chance for local businesses to grow.
The vendor asked Procurement Services if the order should be split into two separate orders. This did not meet regulations as all 5,800 T-shirts were ordered at the same time for the same purpose.
Procurement Services replied, “Two separate invoices please.”
Running Threads received about $9,000 as part of the payment for the approved T-shirts before the order was caught.
The orders were approved by Dunton and Polly Marshall, director of Admissions and Assistant Vice Chancellor for Enrollment. Katie Davis, the purchasing technician for requisition and budget, stamped the orders as approved at 2:48 p.m. on Sept. 12. Davis had no comment on the approval.
Even though the orders were separated, the order containing the red “Pack Preview” T-shirts exceeded the $20,000 limit and should not have been approved at this level.
The Purchasing Technician for Requisition and Budget incorrectly wrote in red ink that both orders were under $20,000.
Executive Vice Chancellor for Finance and Administration Len Frey said the two levels of approval failed to recognize the error potentially due to employee unfamiliarity with the policies and procedures.
Every year, recruitment orders T-shirts to be distributed during events in the fall and spring semesters. This academic year, more shirts than usual were ordered to give to potential incoming freshmen in the newly finished Welcome Center.
Because of the events that launched this audit, restructuring and other changes have taken place in the Procurement Services.
“We have been working on a number of changes in the procurement area,” Frey said. “As a result of this, there have been corrective actions taking place.”
While training for personnel in the Procurement Services previously stopped, Frey said it should not have been a reason for the mistake to have happened. However, as part of the restructuring, training will be “beefed up” not only for Procurement Services, but also in other departments including Human Resources, Information Technology and security.
At the time of the order being processed, Procurement Director Lola Langley did not report to a higher level in the organization. This caused communication challenges. As a result, the procurement office immediately had Carol Barnhill, director of contract administration and strategic sourcing, begin reporting directly to Frey.
Barnhill identified the mistake that launched the audit in October, after which Frey promoted her to the first Chief Procurement Officer to identify any potential concerns in the future. Barnhill assumed the position after an announcement made Feb. 28. In addition to her responsibilities in the procurement office, she will also oversee Contract Administration and Strategic Sourcing.
Additional changes will be made to the administrative staff and leadership, and the new staff will report directly to Russ Hannah, associate vice chancellor for business and finance.
On March 13, Chancellor Kelly Damphousse announced a new 16-member Strategic Plan Steering Committee. The committee consists of members who have been working in their position for some time, like Hannah and current Provost Lynita Cooksey, as well as newly appointed individuals such as the new Vice Chancellor for Enrollment Bryan Terry.
“Something like this should not happen again,” Frey said. “Something like this should not have happened in the first place.”