The 2012 spending deficit for the University of Arkansas at Fayetteville's fundraising division was higher than officials previously reported — $4.19 million instead of $3.37 million, according to state auditors who released their investigative report Tuesday.
The Division of University Advancement also showed a $2.14 million deficit a year earlier, fiscal 2011, the report said.
In addition, the university treasurer's office incorrectly recorded bookkeeping entries for money owed to the university, called accounts receivable, in 2011 and 2012, which "partially obscured the deficits in the financial statements," according to the report.
The 43-page report was posted Tuesday on the website for the Arkansas Division of Legislative Audit. That division and auditors for the University of Arkansas System prepared the report.
It was previously reported that the fundraising division of the University of Arkansas overran its roughly $10 million budget by about one-third in fiscal 2012. School officials didn’t discover the problem until six days after the end of that fiscal year, on July 6, 2012, according to UA documents.
Legislative Auditor Roger Norman's office is the first independent agency to investigate how the spending overrun happened.
Chancellor G. David Gearhart didn't announce the deficit publicly until Dec. 3. He issued a statement then saying the Advancement Division had overspent its budget by more than $3 million and the division’s vice chancellor, Brad Choate, and budget officer, Joy Sharp, had been reassigned.
Gearhart said then “the funds were properly used for advancement activities” and “filled staffing needs.” But, he said, the division had been “miscalculating the funding levels necessary to support those positions” and “using anticipated investment revenues to meet current budget obligations.”
Questions continued into this year concerning how the unbudgeted dollars were spent and why no one noticed the deficit earlier. On Feb. 5, Gearhart invited auditors from the Division of Legislative Audit and the University of Arkansas System to take a look.
The Arkansas Democrat-Gazette sued UA on Feb. 11, requesting the university treasurer’s report into the overspending that was completed in October but had not been released to the public. Four days after the suit was filed, on Feb. 15, Gearhart’s office released the report by treasurer Jean Schook. It cited “overwhelming” evidence of “lack of management oversight, noncompliance with university policies and procedures and deliberate efforts to disguise poor financial management.” That report criticized two employees: Choate and Sharp. UA ended their employment June 30.
Read tomorrow's Arkansas Democrat-Gazette for full details.