A legislative audit concerning deficit spending at the University of Arkansas at Fayetteville raises serious concerns, UA trustees and other leaders said Tuesday.
“I was surprised and disappointed and dismayed at the lack of oversight in the Advancement Division,” said Ben Hyneman of Jonesboro, chairman of the Audit Committee of the UA board of trustees. But he said he was glad to see that “there was no personal gain.”
“I’m sure we’re going to look at all those recommendations,” he said by telephone of the audit findings. “We want to have a good audit trail.”
Prosecuting Attorney John Threet of the 4th Judicial District in Fayetteville said his office received a copy of the audit report Tuesday, as well as a letter forwarding it there for review. Threet declined to release the letter until his office’s investigation is concluded but said the university was free to release it.
The Arkansas Democrat-Gazette requested the letter Tuesday afternoon from spokesmen for the Fayetteville campus and UA System office but had not received a copy by Tuesday night.
Hyneman said that while he takes the audit findings “very seriously,” the fact that the report was forwarded to prosecutors is “not really” a concern.
“I’ve seen other instances where we turn a file over to the prosecutor just out of a sense of fiduciary responsibility,” he said, adding that prosecutors don’t always find a case to pursue. “I consider that to be part of the process.”
Trustee C.C. “Cliff” Gibson of Monticello said of the 48-page audit: “On the surface, it appears to be troubling and calls for concern.”
“No one at least has been shown to have personally profited,” Gibson said. He added that while “sloppy record keeping” may have contributed to the deficit, there was no evidence of criminal activity.
“If you can’t find anybody taking anything, then it could be for a multitude of reasons - it could be mistakes, or it could be that people are overworked.
“There’s a lot of bookkeeping, though, that needs to be straightened out,” Gibson said. “Apparently that Choate guy had other things to do than approve expenditures. … That’s a job-performance issue, not a criminal issue. And I think that’s an important issue for the people of Arkansas - that it’s not a bunch of crooks.”
Gibson was referring to the former vice chancellor for the Advancement Division, Brad Choate. A university treasurer’s internal inquiry found that Choate had given his computer log-in credentials for high-dollar transactions that he was supposed to approve to his budget director, Joy Sharp.
Both were fired late last year but were allowed to work other assignments through the end of the fiscal year, which was June 30.
Trustee David Pryor of Little Rock, a former governor and U.S. senator, said he had read Tuesday’s audit but wanted a few more days to gather more information before commenting.
“I want to be fair, and I want to be open and transparent,” Pryor said by phone. “I’m going up Thursday to the meetings,” he said, referring to a series of meetings of the trustees within the next few days.
“I would rather wait until after those meetings to comment, I really would,” Pryor said. “And after these meetings, I will probably have a comment. I hate all this has happened. Anyway, I just hate it. It is something I hope to work through. I don’t want to say anything I would regret.”
Other trustees had similar sentiments Tuesday.
“I really don’t want to make a comment at all until after the legislative hearing and our board meeting,”said the board’s chairman, trustee Jane Rogers of Little Rock.
“If I make any public comments, it will not be until after the legislative meeting on Friday and the board meeting ends [on] Friday or Saturday,” trustee Jim von Grempof Rogers said via an iPhone message. “I’m just now reviewing the audit.”
Outside the university system, the audit also raised concern.
Former state Sen. Sue Madison, D-Fayetteville, said:“There should be some further questions about why those in charge of budget didn’t wave some flags” earlier.
Madison, a former co-chairman of the Higher Education Subcommittee of the Legislative Council, said the audit suggested that Don Pederson, UA vice chancellor for Finance and Administration, “more or less signed off” on the report to legislative auditors “and said nothing because there was no fraud.”
Madison said she was disturbed by the lack of record keeping and documents for the auditors to review.
“It sounds to me like there’s a FOIA [Freedom of Information Act] issue there,” she said. “Why weren’t they saved?” In the future, she said, “I would hope [university officials will] be more transparent about keeping records.”
Lynn Fisher, a former university employee who had served as a spokesman for the Fulbright College of Arts and Sciences, said the audit raised questions that she’d like to ask Chancellor G. David Gearhart.
“How can he claim any transparency at all after firing the only person sensible enough to insist on it, John Diamond?” Fisher wrote of the university’s former chief spokesman, who was fired and has contended that his willingness to work with the media was behind his dismissal.
“And how can UA alumni and donors have any faith in such a broken accounting system, which apparently lacked oversight for at least two years?”
“I, and no doubt others, got canned because we, too, believe in honesty and responsiveness to press inquiries,” Fisher wrote in an email.
Gov. Mike Beebe “has faith that the UA board of trustees will take any additional actions that they feel are necessary” in light of the audit report, said his spokesman, Matt DeCample. “The university already has taken some steps,” DeCample noted.
Beebe is still reviewing the audit and could not yet comment more specifically on its findings, DeCample said.
As for the prosecuting attorney’s office, Threet said it is not unusual for legislative auditors to ask for a review of such reports. The Division of Legislative Audit sometimes forwards audits that deal with policy issues, rather than matters of criminal law, he said.
Threet also said the letter to his office made no recommendation on whether auditors believed there had been any criminal wrongdoing.
Deputy Prosecuting Attorney Dave Bercaw will determine whether the report merits further investigation and“at some point determine if any charges need to be filed,” Threet said.
“We’re looking at it [the audit report] as far as any criminal action that can be sustained in court,” Threet said. “We’re looking at it at a much stricter, or higher, level” than the auditors had to do.
Because this audit seems lengthier than most his office deals with, Threet said he expects the review will take more time than usual.
“It will take him [Bercaw] as long as it takes to be thorough,” Threet said.
“I cannot give you a timeline on that.”
Front Section, Pages 8 on 09/11/2013