WRAL News obtained overdue audits analyzing the financial state of Saint Augustine’s University for Fiscal Years 2022 and 2023.

Most of the findings revolve around a lack of oversight and insufficient internal controls, which in turn led to documentation discrepancies and unfollowed protocols for major transactions. The audit also outlines newly-formed teams and changes in procedures to prevent similar issues from happening.

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As part of its fight for accreditation, the university needs to prove it's in good financial standing. Interim President Marcus Burgess said the university needs to provide three completed audits for FY 2022, FY 2023 and FY 2024 by December.

"These audits are crucial. Being able to pay for those three [audits] enables us to be compliant when it comes to SACSCOC, but more importantly, it gives an opportunity to write loans," Burgess previously told WRAL.

"In the opinion of the university's management, the university has taken the necessary steps to become compliant with the SACSCOC accreditation standards and thus will be successful in the reaffirmation process," the audit documents said.

For both 2022 and 2023, the audits detail several issues, including:

  • Lack of controls of effective policies/procedures over financial reporting and timely recording of major transactions.
    • Certain people within the business office could both create and post manual journal entries to the general ledger.
      • Certain significant contracts were not appropriately approved and did not adhere to appropriate procurement policies.
        • Inaccurate accounts payable.

          In a now-dismissed lawsuit, a group of concerned alumni and supporters of the university, known as Save SAU, accused the board of some of the issues detailed in the audits, including not following bidding procedures for construction projects, violating bylaws and breaching their implied duties.

          The coalition also accused the chairman of the board, Brian Boulware, of benefitting from a brokerage fee paid by the school on a $7-million loan.

          "A member of the Board of Trustees was entitled to a $28,000 finder's fee upon the University's execution of the line of credit agreement. This fee was provided to the University, directly from the financial institution on the board member's behalf, and will be recorded as private gift revenue during fiscal year 2024," the audit documents said.

          Following the lawsuit’s dismissal, the attorney general’s office confirmed it is investigating the allegations made regarding the conduct of the board of trustees.  

          Boulware denied the allegations made against him and the board.

          The audit goes on to list corrective actions planned or in place at the university:

          • Management created monthly financial statements and month-end close procedures.
            • University has established a more rigorous/proactive approach to journal entry review  and performance.
              • Certain personnel within the Business Office no longer have capacity to write and post manually to the ledger.
                • University will begin to form a cross-functional team comprised of personnel from the Business Office, Internal Audit and accounting divisions that will keep track of invoice due dates and identify discrepancies/inaccuracies in records.
                  • New Enterprise Resource Planning system to help manage processes in a centralized platform.
                    • Internal policies being put in place to meet audit deadlines.

                      In July, Burgess told WRAL the audits would be costly to the university. About a month later, the university announced a line of credit starting at $7 million from Durham-based Gothic Ventures. According to the loan terms, the university spent $650,000 on the two audits by Bank, Finley, White & Co.

                      Loan money also went toward employee payroll and student account reimbursements.

                      “As of November 8, 2024, the university has unpaid payroll withholdings and taxes outstanding for the years 2022, 2023 and 2024 of approximately $8.4 million, excluding interest and penalties,” according to the audit documents.

                      The documents also detail issues found in a 2021 audit, which highlights multiple instances of checks/wire transfers of more than $350,000 without proper approval. This resulted in "over $10 million of cash disbursements that were unsupportable and were not apparently recorded in the general ledger."

                      WRAL reached out to the university about its remedies for the issues listed in the audits. We have not immediately heard back.

                      A decision on the university’s accreditation is expected next month.

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