Audit finds poor management in UA division


LITTLE ROCK — Poor fiscal oversight and a failure to follow school policies and procedures in the University of Arkansas’ Division of University Advancement led to deficits of $2.14 million in 2011 and $4.19 million in 2012, according to a legislative audit released Tuesday.

UA Chancellor G. David Gearhart asked for the state audit after administrators discovered that the division had overspent its $10 million budget last year.

Brad Choate, vice chancellor of the division which oversees university fundraising, stepped down at the end of February after the shortfall became public. Razorback Foundation Executive Director Chris Wyrick replaced Choate.

Joy Sharp, the division’s budget director, also stepped down at the end of February.

The audit findings are to be presented Friday to the Legislative Joint Auditing Committee. The findings also have been turned over to Washington County Prosecutor John Threet.

The audit report said “no evidence of intentional acts to misappropriate resources for personal gain have been discovered,” and that the “primary driver of accumulated deficit balances was the addition of staff with no permanent funding.”

The 48-page audit report found that account receivables posts made by the division “partially obscured the deficits in the financial statements.” Also, while “revenues for the division stayed relatively constant” for both years, spending in the division rose dramatically from $7.94 million in 2011 to $13.23 million in 2012, the report said.

“Other matters discovered,” the audit said, “were noncompliance with generally accepted accounting principles and university policies and procedures; deficiencies in internal controls; and a lack of oversight by (Choate).”

The report concluded that Choate “did not exercise proper fiscal oversight of Advancement and did not comply with university policies and procedures.”

State auditors recommending a number of changes, including that computer login credentials not be shared among personnel and that university policies not be overridden by the vice chancellor of the division.

Auditors also recommended that the university budget all anticipated revenues for the division and that policies and procedures be established for the payment of vendors.

The university, according to the audit, agreed with the bulk of the audit findings, except those in which auditors suggested university officials withheld information from them during the audit.

Wyrick said in a statement released by the university Tuesday afternoon that “mistakes were made before I assumed leadership of the division and we have identified those errors.”

“The recommendations received as a part of the audit report will only enhance that effort,” he said, noting that new procedures and policies are being implemented, while others already in place are being improved.

Gearhart said “no taxpayer dollars or private funds were lost, not one penny.”

“All expenditures were for legitimate university needs in preparation for a major capital campaign,” the UA chancellor said. “The division, unfortunately overspent its projected budget.”