(The Center Square) — The nonprofit Institute of Women and Ethnic Studies had potentially hundreds of thousands in fraudulent transactions on their latest audit.
The Louisiana Legislative Auditor’s Office reported on the institute’s financial statements for the year ended Dec. 31, 2023.
The institute received nearly $1.8 million in government grants, with the majority (nearly $1.5 million) coming from the U.S. Department of Health and Human Services.
The contract audit by Bohemia, New York-based accounting firm Cerini & Associates found mostly no exceptions in the internal controls, except one major material weakness. During the audit procedures, it was noted that funds had been misappropriated by the institute’s chief operating officer.
Total potentially fraudulent transactions totaled $334,930, and the misappropriation is believed to have occurred starting late 2021 and continued through late 2023.
The unauthorized conduct by the institute’s chief operating officer happened in five different ways.
One was the use of an institute credit card for unapproved and personal items. The second was payments of personal expenses by submitting vendor bills for payment from the institute. A third way was payment of vendors and purchases for the official’s husband’s birthday party and their anniversary party.
Fourth, the official received excess payroll by increasing their salary without authorization, taking a bonus and “extra nontaxed” payment, and adjusting accrued vacation hours for payment. The last method was purchasing gift cards with an institute credit card for apparent personal use.
Formal charges have not been brought against the chief operating officer, which was a decision the institute made even after the investigation was completed. There is also no restitution or insurance claims filed. The official is no longer employed with the institute.
The audit says it is inconclusive whether or not any of the misused funds were federal funds or came from other grantees.
Auditors say the chief operating officer was able to do this by requiring the accounting staff she supervised to submit items for input, then the same official would have power to approve them.
The chief operating officer approved check requests and was not authorized to use the credit card for purchases but she had access to the credit card number through administrative staff under her supervision. The official did not have signatory power for bank transactions, but in her role could approve payments for purchases and expenses.
A contributing factor was also that the official misrepresented her reporting of financial activities to the board treasurer.
The auditor’s office recommended that the policies and procedures surrounding this misappropriation be reviewed in detail to ensure future effectiveness, security, oversight, and separation of duties.
During 2024, management has reviewed and updated their policies and procedures to match the auditors recommendations.
All duties have been segregated across roles such as purchasing (administrative manager), payment processing (finance assistant and finance director), bank reconciliation (operations manager) and bank account access and purchase approvals (chief executive officer).
