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October 5, 2007

Audit: Diamond, spa visits charged on state credit cards

ATLANTA (AP) — Authorities have opened a criminal investigation in response to an audit that found widespread abuse of state-issued credit cards in seven state agencies, and the governor is calling for better safeguards.

State auditors discovered cases of apparent fraud at Georgia Tech and Georgia Perimeter College and poor oversight, record-keeping and internal controls at other agencies, including the Department of Human Resources.

The audit, released Thursday, looked at seven of the 129 state agencies that use purchasing cards called p-cards.

Among the worst abusers, it found four university system employees who made tens of thousands of dollars in personal charges on the state cards, including a diamond ring, spa visits and car payments.

The state Department of Audits and Accounts referred four cases to state Attorney General Thurbert Baker, whose spokeswoman said a criminal investigation is open and ongoing.

Bert Brantley, a spokesman for Gov. Sonny Perdue, said Friday that the governor is concerned about the abuses.

“Although we just received the audit and are reviewing it, the governor intends to use the findings to ensure fraudulent practices are ceased immediately and the appropriate safeguards are in place,” Brantley said.

The audit redacts names of specific employees. Georgia Tech said an administrative assistant was fired as a result of the investigation and her supervisor has resigned.

Three employees of Georgia Perimeter College were placed on administrative leave and have since resigned. Officials at both schools said they are reviewing controls on state cards.

P-cards work like regular credit cards that are paid off monthly to Bank of America by the individual state agencies. Auditors said they could find no evidence that any of the employees reimbursed an agency for their purchases.

Employees can charge up to $5,000 per transaction, with credit limits ranging from $200 to $350,000, depending on the department or cardholder. Thousands of state employees have cards, which have been in use since 2006.

More than 8,400 cards are in use at the state’s 35 public colleges and universities, according to a recent university system report. Colleges and universities have been among the largest users of the cards.

Georgia Tech employees bought more than $42 million on p-cards in fiscal year 2006. Tech and UGA, plus the departments of Transportation and Natural Resources, have the most active p-card programs. DOT and UGA were not part of the sample.

University System Chancellor Erroll Davis said the cards save money and employees’ time. He said most employees use the cards responsibly.

“We may need to put in stronger safeguards,” he said. “We have already advised presidents to look at the procedures and policies. If there are some improprieties, obviously those mechanisms have failed us.”

John Abbey, director of performance audit operations for the state auditing agency, said there is no plan to broaden the audit beyond the seven sample agencies.

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