APNewsBreak: Audit finds trouble at black sorority
Mar 22, 2012, 9:54 PM
Associated Press
WASHINGTON (AP) – A financial audit of the nation’s oldest black sorority found significant accounting problems including a secret set of books used by top officials to divert money, findings that bolster some claims in a lawsuit.
The audit of the Chicago-based Alpha Kappa Alpha sorority, which was completed in December and provided to The Associated Press, also found two former top officials continued to use sorority credit cards after their service ended, failing to appropriately document tens of thousands of dollars in charges. A pending 2009 lawsuit against the organization and officials including its former president, Illinois resident Barbara McKinzie, contains similar allegations.
The audit by the Illinois-based accounting firm Ragland & Associates covers the year 2010 and is an annual audit paid for by the society. It finds that in that year McKinzie and two other top officials secretly created a second set of financial books to get around the sorority’s accounting policies.
“The intent was to divert and misappropriate AKA funds,” according to the audit, which found nearly $1.7 million in payments made without authorization.
Approximately $282,000 in credit card charges on the second set of books appear to be fraudulent, including personal charges the sorority wasn’t reimbursed for, the audit found.
A sorority document written in response to the audit says the sorority discontinued the use of the second set of books in December 2010 and is currently developing written travel and entertainment policies that govern credit card use.
Alpha Kappa Alpha said in a statement Thursday that it is pleased to have the audit’s findings and that the sorority has made “great progress in enhancing the organization’s operational policies and procedures,” including taking steps suggested in the audit.
“We remain committed to preserving the assets of the organization and to continually reviewing and strengthening our operations. The audit’s findings are essential to that process,” the statement said.
McKinzie’s lawyer, Dale Cooter, said he had not seen the audit but said his client “did not create a fraudulent set of books.”
The pending lawsuit against the sorority, filed in the District of Columbia by sorority members, alleges McKinzie improperly used a sorority credit card for personal items including jewelry, designer clothing and lingerie. In court papers filed in March, McKinzie denies that she used the credit card inappropriately.
The lawsuit was initially dismissed in early 2010, but it was reinstated last August by an appeals court, which said the dismissal was premature. It seeks to recover allegedly misused money as well as punitive damages.
The lawsuit also includes an allegation about two wax statutes the sorority paid for during McKinzie’s tenure as president, from 2006 to 2010. One of the two statues commissioned for the National Great Blacks in Wax Museum in Baltimore was of McKinzie. The lawsuit alleges thousands of dollars over and above the cost of the statues went unaccounted for.
AKA was founded in 1908 at Howard University in Washington and has a worldwide membership of over 200,000.
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