Arizona auditor finds 'deficiencies' in Pima College financial practices

'Significant deficiencies' found in financial practices
2013-02-27T00:00:00Z Arizona auditor finds 'deficiencies' in Pima College financial practicesCarol Ann Alaimo Arizona Daily Star Arizona Daily Star
February 27, 2013 12:00 am  • 

Arizona's auditor general has turned up "significant deficiencies" in the financial practices of Pima Community College, including the improper awarding of no-bid consulting and legal contracts last year.

The college skirted the competitive bidding process and violated its own purchasing policies in four of 14 contracts auditors checked, according to the state's review of college finances for the 2012 school year that ended last June.

Because it didn't seek competing offers, the college may have paid too much for consulting work and legal services, the audit concluded.

The state also found that PCC's system for tracking employee work hours was so lax last year that the school may have given the federal government incorrect data about college payroll costs charged to federal programs.

Taken together, PCC's problems indicate "significant deficiencies in internal controls over financial reporting," the audit said.

Those deficiencies do not "allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct, misstatements on a timely basis," it said.

College spokesman C.J. Karamargin said in an email Tuesday that the college has already fixed, or is in the process of correcting, the problems the state identified.

PCC's finance staffers "work hard to prevent errors and improve processes at all times," Karamargin said.

"When a deficiency is identified we will identify the solution, set a deadline and assign a responsible person to ensure the deficiency is corrected," he said.

The audit's findings mirror the results of Arizona Daily Star investigations last year that raised questions about PCC's use of local law firm DeConcini McDonald Yetwin & Lacey without a conventional contract and about its no-bid hiring of Wisconsin consultant John Crnokrak, who claimed to be a friend of PCC's former chancellor.

PCC paid Crnokrak more than $300,000 between 2006 and 2012 to provide executive coaching for college brass.

The DeConcini law firm, which billed PCC more than $450,000 last year, has been doing work for PCC since 2003 and hasn't had a contract with the college since 2008.

College officials defended their practice of using the law firm without a contract, claiming that PCC had a cooperative agreement with another school that allowed PCC to piggyback onto that institution's contract.

The state audit cast doubt on that explanation: It said PCC's own policies "do not allow for legal services to be procured through cooperative agreements" and that the college "should not have purchased" the law firm's services in that manner.

The other unbid contracts auditors found improper were with former Pima County Supervisor Dan Eckstrom, who's been paid more than $255,000 since 2007 for consulting services to PCC, and to Munsell & Associates, an Arkansas-based firm that has received more than $636,000 since 2001 for grant-writing services.

In the matter of lax timekeeping for employee work hours, the auditors found that it was common last year for supervisors to fill out employee time sheets weeks in advance of when the work was performed.

The auditors checked 21 time sheets and found that on 15 of them, supervisors had presigned the documents days or weeks in advance of when work began.

As a result, the time sheets "may not reflect the actual amount of work" that was performed, the audit said.

"Because of this, the financial statements could be misstated, and payroll costs charged to federal programs may not be proper," it said.

Karamargin said the college has since changed over to computer-based time sheets, which should eliminate the problem.

PCC also is under scrutiny from its accreditor, the Chicago-based Higher Learning Commission, which sent a team of investigators to Tucson last month to probe complaints about the college's personnel and procurement practices.

The commission is expected to issue a report on its findings in the near future.

Contact reporter Carol Ann Alaimo at calaimo@azstarnet.com or at 573-4138.

On StarNet: Read the Arizona auditor general's report at azstarnet.com/online/pdf

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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