Audit finds HCC at risk for fraud

A state audit of Hillsborough Community College reveals month after month of "unreconciled differences" and raises questions about how well the college keeps track of revenue.

The auditors didn't uncover any fraud but said discrepancies in the college's general account and bookstore account increase the risk that fraud could go undetected.

The audit found differences between the amount of money deposited each month into the bank and the amount recorded on the college's general ledger.

In the case of the bookstore, several days' worth of electronic receipt records had been erased, preventing auditors from knowing how much money the bookstore took in on those days.

HCC officials say the problems arose from staff training and the way transactions are electronically recorded. They insist the problems have been largely corrected.

The audit, released this month, was a regularly scheduled review of HCC operations. Auditors looked at two years of general account statements, from July 2007 to June 2009, and found month after month of discrepancies.

The discrepancies fluctuated from a high of $68,906 in April 2008 to a low of $16,527 in March 2009. The most recent statements reviewed by the auditors, from June 2009, showed an unreconciled difference of $29,244.

"When unidentified differences are not resolved," the audit said, "there is an increased risk that errors or fraud may occur and may not be promptly detected or corrected. Additionally the College would have limited assurance as to the accuracy of the amount of cash available for its operations."

HCC has an annual operating budget of about $100 million.

HCC officials became aware of the discrepancy in July 2007, HCC controller Bonnie Carr said. It took months, but administrators believe they've narrowed the problem to the software HCC students used to make payments online, she said.

Initial payments were processed correctly, but problems occurred when students dropped and added classes, particularly when they hit the "enter" button multiple times.

"It seems simple, but it's a complex and complicated system," Carr said. "Our system was just not in a position to deal with adjustments of that nature or that magnitude."

The college has used a software analysis tool to track the online payments incorrectly recorded and identify the discrepancies. "We have it down in the thousands," she said.

For the bookstore review, the auditors looked at operations at stores on the Dale Mabry, Ybor City, Brandon and Plant City campuses, which recorded combined sales of about
$7.5 million for 2008-09.

The auditors requested a sample of 30 days' worth of sales, from August 2008, but records were missing for five of those 30 days.

Sales details are recorded electronically every day, but "five of the electronic journal files requested had been erased from its computer files in error and were not available," the audit said.

Bank statements showed that about $138,000 was deposited from the stores during those five days. But without the electronic files, the auditors couldn't tell how much the stores actually took in then.

"It could have been double or it could have been half that much. Without the records you don't know," state audit manager James Stultz said.

The auditors also said that cashiers voided transactions without seeking a supervisor's approval. And in several cases, receipts didn't match what cashiers had collected.

"Although requested, explanations for the reasons for the cash shortages or overages or evidence of supervisory review were not provided," the audit said. In one case a cashier was short $80. Another was over by about $45.

Carr blamed the problems on the introduction of a new payment system and inadequate staff training.

On days the electronic journal files were erased, she said, cashiers were learning a new system and erased the files by mistake.

"We have revamped how we back up records so that can't happen now," Carr said.

In its response to the auditors, HCC said cashiers had been retrained on how to void transactions and report overages and shortages.

That's important, auditor Stultz said.

"When you don't know," he said, "it leads to a vulnerability to fraud."