Grant Money Use Being Scrutinized

The increased scrutiny, prompted by a UNC employee's arrest for embezzlement of grant funds in December 2000, adds to the list of misspending deterrents set by the University.

UNC's Contracts and Grants Department and Dispersement Services now review purchase cards -- which work like credit cards but are restricted in what they can buy -- to check that all of the transactions match and that all accounts are reconciled.

"There are checks and balances to keep the use of money honest, and it can show up in receipts," said Ernie Seneca, deputy press secretary for the governor's office of the preventative measures. "Paper trails can be followed."

Gov. Mike Easley released a memo last week reprimanding state agencies for not handling theft and misspending properly after more than $800,000 was lost due to mismanagement in 2002.

The two departments periodically audit a sample of the accounts and documents attached to the accounts as a check against inconsistencies in bookkeeping. They issue a report of their findings, particularly if there are irregularities in accounting or procedure.

Along with the new monitoring reports, purchase-card users must sign a card holder's agreement to safeguard against the misspending of funds. "State materials are supposed to be used for state purposes -- period," Seneca said.

Phyllis Petree, director of the UNC Internal Audit Department, said misallocation of research funds was not a University-wide problem. "I think it's working well now," she said of the improved review policy.

The restrictions hold an important place in the administration of research funds because UNC is a leader in the research field. The University was ranked 21st in the nation for total research and development expenditures at public universities and colleges in 2000. Researchers can use purchase cards to pay for supplies, equipment and other approved expenditures.

MBNA, the bank that issues the cards, blocks payments to any company or vendor that is not approved for research money. For example, the card number could not be used to pay for a hotel room or for a meal at a restaurant, where the card would be declined. But the card would be accepted by a medical supply company to pay for equipment.

Once the cards have been issued to the department where the research is being conducted, the cards are allocated to the grant-winners by the department. The department head usually is the one who approves expenditures and reviews purchases and also can match the transaction to the card holder and accounts.

Card recipients also must go through a training course that teaches the researcher what types of charges are accepted and under what accounts to file the transactions before they are approved for a card. The use of purchase cards started about four years ago, and new monitoring reports began to be issued for card holders about two years ago.

Staff Writer Rob Leichner contributed to this article.

The University Editor can be reached at udesk@unc.edu.