P-card abuse empties tribal office's budget
By Marley Shebala
WINDOW ROCK, Jan. 26, 2012
A December 2011 audit reveals that an employee, who worked in DED's Real Estate Department, allegedly used the card to buy designer handbags, perfume, cosmetics, Pendleton bags and blankets, jewelry, tickets to the National Finals Rodeo, ceiling fans, groceries, appliances, baby items, pet food and supplies, CDs, DVDs, video games, an iPhone, iPod, iMac, a leather coat, saddle blanket, circular saw, torch kit, entertainment center, fire pit, and men's hat, tie and coat.
The audit was among information under review this month by the Budget and Finance Committee, which is looking at ways to prevent tribal officials from using P-cards to convert money from agency budgets for personal use.
The audit, which examined financial records between October 2007 and March 2011, also found that other DED employees were not properly accounting for P-card purchases.
Auditors found that of $20,859 in tribal credit card purchases, $20,235 or 97 percent were "questionable."
Division Economic Development Director Albert Damon Jr. asked for the audit after allegations of the employee's actions were reported to him shortly after he was appointed in early 2011.
Auditors found that the employee's alleged misuse of the P-card started as soon as it was assigned to her in June 2008, and ended when she resigned in July 2010.
At that time DED was headed by Allan Begay, an appointee of Joe Shirley Jr. The Real Estate Department, which is assigned to issue and administer business-site leases, was headed by Henry Saltclaw.
On Wednesday, Damon declined to discuss the audit findings, saying the matter is under investigation.
Damon said he wanted to assure the public that P-card misuse would not be repeated under his watch, and that he only learned of the situation when he took the DED helm in early 2011.
"I had to pick up the pieces and sweep up the mess," Damon said, adding that after the employee reportedly drained her department's operating budget, money was transferred from the General Fund so the office could continue to perform its work.
The tribal auditors recommended that the employee be required to reimburse the tribe for P-card charges made for personal items.
In a Dec. 28, 2011, memo to acting Auditor General Elizabeth Begay, Damon stated that the Ethics Office reported the employee to the White Collar Crime Unit on March 2, 2011, and that an investigation was started.
Damon stated that upon receiving the audit findings he immediately had the tribal credit cards assigned to the Real Estate Department confiscated and cancelled.
"In addition, the former employee resigned from her position upon initial discovery and days earlier, the real estate department director resigned before any disciplinary action could be undertaken," Damon stated, adding that the former director, Henry Saltclaw, had authorized issuing a P-card to the employee.
Damon added that his staff has started using the recommendations of the auditor general to better account for P-card purchases by his division.
He has scheduled staff training on their proper use, and reduced the number of P-cards in circulation.
Auditors reported that 29 of the 114 DED staff were assigned tribal credit cards from March 2007 to March 2011. As of May 2011, 23 of 72 DED employees had P-cards.
Auditors noted that P-cards were intended to make procurement more efficient by eliminating the "costly and inefficient" system of using a requisition, purchase order, invoice and check payment. DED started using them in 2008.
"With P-cards, organizations can procure goods/services in a timely manner, reduce transaction costs, track expenses, take advantage of supplier discounts and eliminate petty cash," auditors stated. "However, to realize cost savings and efficiency, the P-cards need to be managed on the premise of strong internal controls."
In the case of the employee's purchases, the auditors said when they visited the Read Estate Department as part of their audit, they could not find a majority of the items she purchased with the tribal credit card.
The largest charges made by the employee were for "computer/software accessories," which amounted to about $34,000.
The second biggest category was "operating/office supplies," which totaled about $29,000, followed by charges for "cellular phones" that amounted to about $23,000 and included cell phones, calling plans, replacement phones, upgrades and accessories.
The fourth biggest category, labeled "miscellaneous," included about $15,000 worth of purchases that the employee claimed were for "gifts/awards, promotional items, donations, books, training and decorations."
Auditors reported that about $6,000 of the $15,000 was for bags, door prizes and gift cards for employee retirements, appreciation, gifts and birthdays and that more than $2,000 was for holiday decorations.
The employee also charged about $12,000 for the Real Estate Department's Internet service, propane and lease/rental fees.
The employee provided no description for about $10,000 of her P-card charges, the auditors said, so those charges were classified as "unidentified." They included purchases at Walmart, Home Depot, Target, T&R Feed and Dollar Tree.
Under "food/meals," the auditors reported that the employee charged more than $8,000 for groceries purchased at Walmart and Basha's that were served as refreshments and meals at restaurants for staff, committees and business meetings.
"Food was also purchased for staff luncheons during the holidays," auditors stated.
Under the "electronic/furniture" category, the employee purchased an electric stapler and Global Positioning System unit for $826 and office furniture and small appliances for more than $5,000.
She charged about $2,000 for fuel and Internet connectivity, which she reported as travel expenses from the Real Estate Department in St. Michaels, Ariz., to local destinations including Window Rock, Fort Defiance, Gallup and Tsé; Bonito, N.M.
The auditors said the employee provided no "supporting documentation" for tribal credit card charges and so "there is no assurance that the categorization accurately reflects the actual purchases."
They also noted that the employee used her P-card at 103 vendors. This showed that the program had no restrictions on which vendors could be used or the type of purchases that could be made with the P-card, thus increasing the risk of "misspending and misappropriation" of tribal funds, the auditors said.