The University of Texas School of Law is working to improve its financial oversight and controls after an internal audit found that an ex-facilities employee committed a nearly $1.6 million fraud.
Former facilities director Jason Shoumaker was indicted last year on charges of theft, money laundering, and abusing his official capacity at the university. An audit conducted by the university’s Office of Internal Audits and an outside law firm found that the law school ignored warning signs of fraud, failed to flag unusually large payments to vendors, and failed to track whether paid-for vender services were actually provided.
Law school dean Ward Farnsworth apologized to the school in a September 13 email, and promised that the law school is working on implemented the 17 recommendations issued in the auditor’s report, as well as taking additional steps to prevent fraud.
“One important conclusion of the audit is that I myself did not establish adequate controls over this employee,” Farnsworth wrote. “For this, I have apologized to the university, and I apologize to you. The well-being of this wonderful institution has always been my highest concern as your dean.”
In an August 30 letter to Farnsworth, University of Texas Provost Maurie McInnis implored him to “to develop and implement a strong system of control and oversight.” To aid this initiative, the law school will fund a continuous audit of its internal business operations for the next year, directed by UT’s Office of Internal Audits.
“You did not ensure his compliance with our policies regarding essential documentation and appropriate processes,” wrote McInnis. “The lack of oversight allowed the employee to continue a pattern of misappropriation of funds resulting in significant loss to the university.”
Audit Recommendations
Among the recommendations included in the audit report are:
- Ensure employees do not engage vendors without Project Management and Construction Services approval.
- Ensure purchasing duties are separated and provide assurance that improprieties are prevented and detected.
- Ensure employees receive training on procurement card policies and guidelines and restrict usage when violations occur.
- Establish monitoring controls to ensure employees submit weekly time reports.
- Establish controls to ensure travel expenses align with UT travel policies and are in support of official university business.
- Ensure employees are aware of and complete financial disclosures and conflict of interest statements.
- Ensure employees are aware of reporting requirements when involved in a consensual relationship.
- Validate education credentials and work experience for employment candidates.
- Validate education credentials and work experience for employment candidates.
- Educate staff about prohibitions on political activity.
“In addition to the recommendations, our office will strengthen fraud prevention and detection efforts across campus and promote the avenues for reporting suspected fraud, waste, and abuse,” wrote Sandy Jansen, chief audit executive of the University of Texas, in her audit report. 