Internal auditors told a University of Arkansas System Board of Trustees committee last week that work is ongoing to correct financial irregularities uncovered by a University of Arkansas at Pine Bluff audit released in February.
The Board of Trustees Audit Committee formally approved the two audit reports March 29 in Little Rock. Internal Audit Director Jacob Flournoy present the reports and told the board members that auditor Kristy Walters is working with UAPB on the implementation of a list of recommended changes, with a goal of completing the changes by the end of the fiscal year on June 30.
“So again I believe they are on target in implementing the recommendations,” Flournoy said.
Flournoy said some changes have already been made.
“There are two audits, one on internal controls at the Harrold Dorm Complex and a report on loss,” Flournoy said. “There are 20 recommendations from the internal controls report. There have been a number of administrative changes and internal controls implemented and there are some that they are still working on. In the area of approvals processes, we did recommend some additional policies for them to consider. I believe they are working on all of them. I believe they are on the same time frame that they have committed to to implement those recommendations.”
Independent reporting for Pine Bluff & Jefferson County since 1879.
The U of A System Internal Audit Department conducted a multi-year investigation of allegations of fraud and abuse of funds related to the UAPB Harrold Dorm Complex and Living Learning Center between July 1, 2008, and June 30, 2011.
Four UAPB employees, including Chancellor Lawrence A. Davis Jr.’ secretary, were fired shortly before the findings were released to the public. Davis has since announced he will resign after 20 years as chancellor effective May 25.
A criminal investigation by the Arkansas State Police is ongoing.
During the meeting, Trustee Carl Johnson said he was concerned many members of the public misunderstand the audit findings.
“I find that we are saying that $700,000 isn’t actually missing,” Johnson said. “It seems like there has been a misinterpretation out in the community that $700,000 is missing because we know where the checks have been written to. We know it is not missing. We know checks were written from Simmons Bank. They weren’t written at UAPB. They were written by the people at Simmons Bank to pay a certain bill. So I want it clear for the record we are not really saying that $700,000 is missing and that someone stole $700,000.
“It says it wasn’t going through the proper controls and that’s all,” Johnson said. “That’s what I hear you saying, and if you’re not saying it, then tell me.”
Flournoy said that the auditors questioned how some funds were accounted for at UAPB.
“There is a difference between questioned and missing,” Flournoy said. “In the loss report we said we don’t have the documentation.”
Trustee John Tyson said that Johnson should not push Flournoy to make a statement about the audit when an Arkansas State Police investigation was ongoing.
“I don’t think you can ask the auditor to make a public statement when they are under a police investigation because you have to finish the police investigation for the facts to come out,” Tyson said.
Committee chairman Ben Heineman sought to clarify.
“I think what you’ve got is when the audit was conducted and during the course of the audit, there were certain pieces of information and things that were unavailable for our auditors to be able to pin down exactly,” Heineman said. “As a result of that, they’ve issued a loss report and that loss report is for a very small amount. That is the amount they were able to authenticate that was inappropriate and they have asked for those people who have received that money to reimburse the institution.”
The loss report found that $4,219 was improperly disbursed from a Title III Endowment Agency Account without supporting invoices and receipts. The payments were made to Davis’ secretary, Rita Ticey. The auditors requested the amount be returned to the fund.
“There are a lot of unanswered questions, and that is the reason why the matter was referred to the prosecuting attorney and that they chose to implement a state police investigation to determine what happened to the rest of it,” Heineman said. “So I think it’s undetermined as to what the amount is and anything inappropriate in the matter of payroll and expenditures.”
Johnson said that his main concern was that a number of people believe that $700,000 was stolen from UAPB even though the investigation is not yet complete.
“People have called and people state that there were people who stole $700,000,” Johnson said. “I was just trying to clarify what I thought the audit was trying to say. I don’t think the audit was trying to say somebody stole $700,000. I think that, that’s my personal opinion and want to make the statement. I think what the audit report is saying is we can’t substantiate a certain amount of money because it didn’t go through the proper checks and balances and controls and that’s a big difference from someone stole money.”
Tyson said that Flournoy would not be able to say whether the $700,000 was stolen or not because the investigation is still ongoing.
“That’s my point,” Johnson said.
Heineman ended the discussion with a summary of the situation regarding UAPB, the audit findings and the ongoing investigation.
“The good news is that those deficiencies have been discovered and proposals have been made to implement a change in procedures and to reestablish authority in areas where it had once been before,” Heineman said. “Documentation will be in compliance with the board policy and with other good, sound accounting standards so that this issue won’t come up again in the future. Jacob, I think, has told us that those things are moving forward and that the staff at UAPB is in the process of making these changes and implementing them so that we can have greater confidence going forward that these things are accurate. That is the good news.”