Complete 2012 forensic audit documents - Kansas Bioscience ...

Furthermore, the required supporting documentation for purchases made on the American
Express cards was not always present and the clear business purpose of all expenses was not
always stated. These issues were much more prevalent with regard to expenses charged to the
American Express cards than expenses reimbursed to KBA staff or BOD. In the future, 93
management should ensure that KBA staff know the requirements for the use of the cards and
enforce those requirements.
KBA’s Response:
KBA management has taken BKD’s recommendation a step further. KBA credit cards are held
by only the president and the CFO. Under the direction of the president or CFO, travel and other
approved expenses for staff members may be charged to these cards.
Double Payments of Expenses
In reviewing the expense reports and American Express statements, we noted the following
instances of the double payment of expenses.
Expense reports for BOD member David Franz in May 2007 and for Tom Thornton in April
2007 were processed by KBA staff twice resulting in the individuals being reimbursed twice.
These were reviewed by KBA staff and verified as double payments. There were a number of
issues that appeared to cause confusion during that time frame that possibly contributed to the
inadvertent double payments of $680.36 to David Franz and $1,674.93 to Tom Thornton.
First, the COB of KBA, who was in charge of approving these individuals’ expense reports,
turned over in June 2007. Chairman Clay Blair, who was in charge of approving both of these
individuals’ expense reports at the time, resigned on June 8, 2007. At least seven days before his
resignation, KBA employee Ashley Tyrrell tried to contact Chairman Blair to obtain approval for
both of the aforementioned expense reports. 94 The checks had already been cut at this point, as
they were dated May 30, 2007. Chairman Blair eventually signed these checks, but apparently
did not sign the expense reports. Subsequently, the unsigned expense reports were provided to
the new Chairman of KBA board, Sandra Lawrence. Chairman Lawrence signed the expense
reports on June 20, 2007. A second set of checks was issued on June 21, 2007.
Second, KBA changed banks in that time frame and the expenses were inadvertently paid out of
both bank accounts. A UBS bank account was used through May 2007 and a US Bank account
was used beginning in June 2007. In both instances, the original reimbursement check was dated
May 30, 2007, written out of the UBS account, and the second reimbursement check was dated
June 21, 2007, written out of the US Bank account.
93 KBA’s American Express cards were cancelled during the billing cycle ending May 17, 2011. On May 10, 2011,
KBA’s BOD authorized staff to secure new purchasing cards in the names of the CEO and CFO with a limit not to
exceed $25,000. A US Bank VISA account was opened in September 2011 with cards issued to David Vranicar,
Interim President & CEO and Jan Katterhenry, former CFO/COO. Upon Jan Katterhenry’s resignation, her card
was cancelled. Subsequently, a US Bank VISA card was issued to Ruth Saale, Interim CFO. The limits on Mr.
Vranicar’s and Ms. Saale’s cards are $15,000 and $10,000, respectively.
94 Ashley Tyrrell email dated June 1, 2007 at 1:48PM to Jan Katterhenry indicates Ms. Tyrrell contacted Mr. Blair’s
assistant Chris to check on the status of the approval. According to the email, Chris indicated approval would be
taken care of on Monday, June 4, 2007. Clay Blair formally resigned June 8, 2007.
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