Denmark Technical College's auditor raised several red flags about finances at the school, including questioning an incentive program for recruiting students and whether unqualified students received financial aid.

In his audit for the 2008 fiscal year, accountant V.R. McConnell of Columbia identified what he calls "significant deficiencies" in the school's financial reporting.

McConnell said Thursday that the audit report speaks for itself. He said he received a letter from the president letting him know that his services were no longer needed in December 2008.

"It's probably best for me not to make any comment," he said.

The college's Area Commission announced Monday that it suspended President Dr. John Waddell without pay after another audit by the State Board of Technical and Comprehensive Education. The issue was also turned over to the State Law Enforcement Division.

Orangeburg-Calhoun Technical College Vice President of Academic Affairs Dr. Walt Tobin was appointed acting president at Denmark Tech following Waddell's suspension.

Waddell could not be reached this week despite several efforts. He was hired in February 2007.

Area Commission Chairman James Hayes said, "We as commissioners are constantly briefed in periodic meetings by the president. There were some things that didn't flow well in some of those meetings. Questions were asked and, of course, we didn't get the right answer.

"One thing led to another. We requested an audit from the state Tech Board and they had some findings. They were such that the president's suspension was in order."

Hayes said he is now awaiting the results of the SLED investigation before the Area Commission makes any further decisions on Waddell's future.

"We will move forward based upon those facts, but my desire is to see this school march in step with the programs that are in place for the people that need training to be of service to themselves, the county, state and nation," he said.

Among the audit findings was that a campuswide recruitment initiative paid a total of $52,250 in salary supplements to employees for their recruiting efforts. The effort worked, boosting enrollment.

The audit claims that the incentive/salary payments were paid using federal Title III funds and that the school was not in compliance with the Institutional Eligibility and Participation requirements listed in the 2007-2008 School Eligibility and Operations Manual.

The school paid back the money and stopped the recruitment program when it realized it inadvertently violated regulations, the school said in its response.

The audit also says the college incorrectly calculated the return of federal Title IV funds to students and the U.S. Department of Education by not including the technology fee and book fee among its institutional charges. The audit states that staff was reviewing the records of all students who were awarded Title IV funds so they could recalculate and resubmit the total amount of funds that should be returned.

Uncashed, returned student refund checks totaling $48,022 and dating back to 2001 were also held in a vault and not shown as cash and a liability payable to the Title IV program, the audit states. Also, the college was not in compliance with the Processing Aid and Managing Federal Student Aid Fund requirements listed in the 2007-2008 Federal Student Aid Handbook, the audit said.

The audit also claimed the college awarded Title IV aid to 13 students who did not have a high school diploma or GED and did not score an acceptable grade on the Ability-to-Benefit test administered by the college. Ineligible students received Title IV aid totaling $36,652, including $31,552 in Pell Grant funding and $3,250 in South Carolina Needs-Based Grant funds.

The cause was stated in the audit as "high staff turnover" in the Counseling Office's Testing Center during 2007-2008. It was recommended that the college review the internal controls determining student eligibility for Title IV awards.

The college said it did improve its controls and hired a director of counseling.

In a letter to the president dated May 1, 2009, Cassandra Weems, institution review specialist with the U.S. Department of Education, requested additional information as it pertained to the incorrect calculation of Title IV funds; the return of the $48,022 in uncashed student refund checks due to "bad addresses stored in the institution's vault," and the disbursement of Title IV funds to ineligible students.

In the letter, she states that the matter would be "forwarded to the department's Administrative Actions and Appeals Division for administrative action" if the college failed to provide the required information.

In his management letter dated Oct. 7, 2008, McConnell also claims the school was not in compliance with state procurement codes when it hired an Atlanta accounting firm.

The letter states that the college hired the firm, "to provide technical support and staff assistance in the student financial aid office without following the state procurement code. ... Additionally, the college contracted with their auditor for additional work without obtaining state Auditor's Office approval."

The audit claims that the college paid $45,205 in consulting fees to the Atlanta firm and $24,382 to the Columbia (auditing) firm "because of emergency needs in most, if not all, cases."

But the college management notes the office needed leadership immediately to avoid chaos because the student financial aid director, "retired abruptly and her longtime assistant resigned immediately before the fall registration process began."

The management letter also claims the college incurred $30,671 in expenses due to the late filing of payroll tax returns.

In a separate issue, a former data coordinator in the college's accounting and finance section has sued Waddell and others in federal court.

The lawsuit claims that audits and inspections by McConnell, Chief Financial Officer Sharon Pate and Hall in 2008, "revealed numerous irregularities (and) violations of policy."

Hall alleges in her suit that she was subjected to, "a hostile work environment, constant harassment and abuse" and ultimately her "false and pretextual removal ... in January of 2009 on a fraudulent and false reduction in force."

Waddell's attorney, Charles Boykin of Boykin & Davis, LLC in Columbia, said "The lawsuit is still before the court.

"I'm unaware of anything associated with the suspension, so there's no way I can comment on something I don't know about."

In his answer to Hall's complaint, Waddell denies her accusations and says she was simply let go as part of a reduction in force.

Hall's attorney, J. Lewis Cromer of the Cromer & Mabry law firm in Columbia, said he is encouraged by the board's swift action regarding the college's finances.

"I think it validates the concerns that my client had and also outside CPAs and others who questioned the financial practices of the school and who offered suggestions and made reports which apparently went unheeded," Cromer said.

"Joanne Hall is a courageous, knowledgeable person who with other financial advisors did their very best to protect those public funds and tried to make suggestions and make reports that would steer it in the right direction. Apparently those reports were ignored."

T&D Staff Writer Dionne Gleaton can be reached by e-mail at dgleaton@timesanddemocrat.com or by phone at 803-533-5534. Discuss this and other stories online at TheTandD.com.

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