$10M missing from Saint Augustine's financial records, new audit documents reveal

Akilah Davis Image
Tuesday, February 27, 2024
$10M missing from Saint Augustine's financial records: Audit
New financial documents obtained by the ABC11 I-Team show a recent audit revealed money mismanagement at Saint Augustine's University.

RALEIGH, N.C. (WTVD) -- New financial documents obtained by the ABC11 I-Team show a recent audit revealed money mismanagement at Saint Augustine's University.

The report shows the HBCU has had issues with money mismanagement for years. The university learned Tuesday that its accreditation had been formally revoked and was no longer an accredited institution.

The newly uncovered audit shows during the 2021 fiscal year, the university had $10 million that was listed as "unsupported." This term is used for money documented by an auditor that's been spent and that the university cannot account for in its records.

According to the report, the university has policies in place that require authorization and approvals for wire transfers. However, this process is frequently circumvented and often disregarded.

READ | Saint Augustine's Financial Statements

Another example of what auditors call money management is there have been instances where students paid their required charges, but the university did not appropriately record the charge on students' accounts. That has caused some students to receive inaccurate account statements showing that they owed money that in reality they had already paid.

"It's sad for our children and sad for us as people," parent Andrea Parham said. "It shouldn't have gotten to this point. Now we have to figure our way out of this, if there's a way out of this."

Students who have graduated will have fully accredited degrees -- but for undergrads, it's a bit trickier.

A third example was employees misusing university-issued purchasing cards for personal purchases.

The audit found that key executives within the business office were not appropriately performing their job functions. School leaders apparently didn't learn about these problems until many months later, and so they were unable to hold the individuals accountable in a timely manner.

"I think there should be some revisiting of the circumstances that took place to get us to this point," said Parham. "I think there should be some severe consequences. It's sad, embarrassing and unfortunate."

A consultant told ABC11 last week that documents such as audits will be considered as part of the accreditation appeal process, but at this time we do not know if this documentation was presented to the recent appeals hearing by Saint Augustine's University.

"You have to believe that there is a path forward," one university president said about dealing with and getting through financial hardships.

Payroll Issues

The university has been facing payroll issues since February 9 when employees did not get paid.

This led university leaders to hold a candlelight vigil as an attempt to build back up through hope and faith. The vigil aimed to show students and staff that there is a strong community around them.

Financial Woes

ABC11 uncovered documents on Feb. 16 just how bad the financial situation at the university is.

For example, Wellfleet Insurance Company is suing the university stating it breached the contract by failing to pay premiums.

The policy took effect in August 2021 and it was signed to cover student health insurance plans. Records show the lawsuit was filed in August 2023.

Wellfleet said Saint Augustine's owes it $439,000 after making partial payments of $240,000.

ABC11 also obtained a document that revealed in October of last year the university took out a $7 million line of credit with Arkansas-based Bank Ozk, Burgess said the university only received $4.5 million of that money.

Last Monday, Burgess said that it would be a challenge to get students to the tournament because of financial constraints. He told ABC11 that the university's request for a loan from a bank was denied.

"We got denied because of the press..the negative press," said Burgess. "The financial instability. Now, on one hand, it makes sense right? We've got IRS problems. We've got problems all over the place."