IG: "Reasonable belief" former FSCJ Pres Steven Wallace violated ethics law

Lax oversight, poor documentation, and possible ethics violations- all part of the preliminary findings released in the Inspector General’s review of the Florida State College at Jacksonville Foundation.

The review began in October 2012, when Governor Rick Scott called on Inspector General Melinda Miguel to look in to the Foundation’s spending. Scott was concerned about the appropriateness of those expenses and whether they in fact benefited FSCJ. WOKV has obtained the preliminary results, as well as a range of recommendations to solve some of the highlighted problems.

While most of the focus of this report is on the FSCJ Foundation, former President Steven Wallace takes considerable heat, with the IG citing the potential he violated ethics code.

Documentation

One of the central themes behind the problems in the report is poor documentation of expenses.  That includes reimbursements paid without itemized receipts, incomplete requests, etc.

The IG also struggled to determine the beneficiary of many expenses, therefore making it difficult to determine whether the college was in fact benefiting.  She used underlying documentation to determine the President and Trustees were beneficiaries to some questionable spending, including memberships to the Epping Forest Yacht Club and University Club.

Oversight

The IG finds there is “no single, comprehensive policy that provides guidance” for receiving, recording or reporting Foundation expenses.  Some of the policies that are in place actually conflict with one another.  As such, a more streamlined and uniform policy manual was recommended.

The state also called on FSCJ to reestablish an internal auditing function, which has apparently lapsed over time.  Additionally, they found most accounting duties at this time are under one person, and note that could lead to the potential for fraud or error. As such, this is one arena the IG wants disbursed rather than streamlined.

Possibly in part as a result or the lack of internal auditor, there was inconsistent use of internal controls over expenses.  Out of a sampling of documents tested by the IG, less than a third, on average, had the proper controls exercised.

Further looking at finances, oversight of the President’s expenditures were virtually non-existent, according to the IG.  She says any approval seemed to come from people serving under Wallace or the Foundation’s Executive Director, rather than the Board of Trustees of the College or the Board of Directors for the Foundation.

Ethics

Both the IG and independent review done by private companies have concluded FSCJ needs to offer more ethics training to employees.  The IG says there was no reaffirmation of the ethics code, and no opportunity for periodic ethics training.  The extent of ethics training appears to be the Code of Conduct received by every employee when they are first hired.

Former President Steven Wallace

Perhaps the most serious finding in this report is the IG finding “reasonable belief that the former College President may have violated” Florida ethics codes.  She says Wallace served in many civic organizations with the College or Foundation paying membership, donations, etc.

Additionally, Wallace traveled to locations including Ireland, Thailand, Belgium, China, and Costa Rica at little cost to him, his wife, the College or the Foundation. As President of a public college, Wallace was required to report any gifts or financial interests, but none were found.

The IG also cites nearly $41,000 paid as reimbursements to Wallace from the Foundation for expenses, including meals, that were not sufficiently documented.

Moving forward

In addition to the many recommendations cited here, the IG believes Wallace should be referred to the Florida Commission on Ethics in order to determine any ethics laws which may have been violated.

FSCJ now has 20 days to respond to the IG report. In a statement issued to WOKV, Interim President Willis Holcombe says they are studying the findings and plan to respond in the allotted time. He declined further comment until they’ve had time to dive in to the findings.

Florida Governor Rick Scott believes that FSCJ is now moving in the right direction. In a statement issued to WOKV, he says the report “exposes egregious and irresponsible actions” by Wallace.  He says the new leadership both in the President’s officer and among Trustees, however, will help restore trust in the college.