UW-Madison’s housing division has made several changes to its financial practices after an external review prompted by an alleged theft by a former employee flagged more than a dozen issues needing attention.
The Division of University Housing has developed a new database to better track its university-issued credit cards, will conduct regular reviews on who is allowed to use an internal product purchasing system, and provided more oversight on how staff verify refunds for students of university housing, among other changes.
The financial review, conducted by risk advisory firm Experis Finance between May 2017 and August 2017, started after university officials discovered alleged theft by the housing division’s former purchasing manager.
Kevin O’Donnell was charged in March with 12 felonies for stealing $113,890 from the housing division through fraudulent housing refund checks, unauthorized personal purchases on credit cards and funneling cash through fake businesses between July 2014 and February 2017, according to a criminal complaint. He was terminated in March 2017.
“All that we can do can never ultimately eliminate (fraud), but hopefully with changes in our policies and procedures, it made it extremely difficult for someone to be able to do that in the future,” said Jeff Novak, director of university housing.
The review provided recommendations on 17 financial practices, which were categorized by severity. Nine were listed as high — a category the firm said could be characteristic of “systemic weakness(es) in internal controls.” Six practices were noted as medium severity and two as low.
The recommendations focused on four areas: purchasing cards, an internal product purchasing system, refunds to campus housing tenants and general accounting practices.
Thirteen of the recommendations have been acted on, and the implementation of the remaining four, which are unrelated to the theft, are in progress, Novak said.
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University officials said the University of Wisconsin System Office of Internal Audit also made recommendations relating to purchasing cards, check handling and online purchasing.
Laura Morris, former chief financial officer for the Wisconsin Housing and Economic Development Authority, said she noticed suspicious financial activity involving O’Donnell after she began her job in January 2017 as director of business services for university housing.
Previously, the housing division’s purchasing manager — the position O’Donnell held — was able to use a university credit card and verified the purchases on other employees’ credit cards, Morris said.
“The person who is in charge of the (purchasing card) program for housing has no authority to purchase any more,” she said. Instead, the manager oversees and coordinates purchasing, Morris said, and transactions are now verified as legitimate by individual managers.
The Division of University Housing also requires more staff to approve the issuing of refund checks to university housing residents, Morris said. O’Donnell allegedly created 74 fraudulent checks to current or former students and signed them over to himself.
The housing division operates the campus’ 19 residence halls, three apartment complexes, seven dining locations and the Eagle Wings childcare center.
The financial review cost $44,800, Novak said.
“It is my sincerest hope that the actions of this one individual does not reflect poorly on the rest of our staff who are conscientious, hardworking and deeply committed to our students and the university,” Novak said.