Lack of records hinders UA probe, reports say

A lack of financial records hampered an investigation into multimillion-dollar deficits run up by the University of Arkansas at Fayetteville’s Advancement Division, according to two audit reports released Tuesday.

The division’s former budget director, Joy Sharp, left few records behind when she was demoted and moved to Human Resources on Sept. 4, after the discovery of one of the deficits, according to the investigations.

“The Division of Legislative Audit staff experienced difficulty obtaining Advancement financial records, which potentially limited the scope of this review,” according to its report.

A second, simultaneous audit by UA System auditors said, “We never received any budget files for the Advancement Division … We determined that financial documentation was not sufficiently available to audit the decentralized budgeting controls within the Advancement Division in accordance with generally accepted auditing standards.”

An internal treasurer’s report and both audits found that Sharp provided inaccurate and inadequate reporting of the division’s financial status. During an interview, Sharp told legislative auditors she “lacked the skills to perform her job duties.”

Sharp has repeatedly declined to comment.

Sharp’s actions led to deficits of $2.14 million in fiscal 2011 and $4.19 million in fiscal 2012, according to the audits, when the division’s spending should have been about $10 million annually.

Chancellor G. David Gearhart requested the audits Feb. 5, saying the UA had been inundated with requests under the Arkansas Freedom of Information Act and the audits would provide transparency.

During a news conference after the audits’ release Tuesday, Gearhart expressed frustration about the lack of records. Before becoming chancellor in 2008, Gearhart headed the Advancement Division for a decade.

Gearhart said Brad Choate, who succeeded him as Advancement chief, stopped requiring regular budget spreadsheets shortly after he arrived on campus.

“For whatever reason, he chose not to continue them,” said Gearhart. “It was our bible that we lived by. … Why they didn’t keep it up, I don’t know.”

According to the audits, Choate said he had budget meetings and there were budget reports, but he couldn’t produce any for auditors.

Choate and Sharp were allowed to work through June 30, when they were “dismissed” from the university, Gearhart said. The chancellor said there was no theft involved so he allowed them to work until the end of the fiscal year.

Legislative auditors referred three items they flagged while investigating the Advancement Division to the Washington County prosecutor for further review.

Gearhart said no public or private money was “lost” as a result of the deficit. The money went to hire additional staff to ramp up for a major fundraising campaign, the chancellor said.

Both audits indicate Sharp, the budget director, didn’t maintain proper budget records for the Advancement Division. But the audit findings differed on computer records.

“The computer she used was reissued to another employee,” according to the legislative audit. “However, this computer’s hard drive contents were not ‘imaged’ or backed up for future review or use.”

At a news conference Tuesday, Don Pederson, the UA’s vice chancellor for finance and administration, said that wasn’t the case.

“Her computer was backed up to a server on campus,” he said. “When we went looking for information to try to understand what had happened, we didn’t find any information useful about it. And that really was the case for the materials in her office and on her computer.”

Gearhart added, “There were very little records available for us to inspect. She also claimed that she had very little information on her computer.”

Pederson said information about Sharp’s computer backup was given to auditors from the UA System.

“I don’t know what they communicated to Legislative Audit about it,” he said.

According to the UA System audit, “On March 7, 2013, the new assistant vice chancellor for advancement stated that she did not have any financial files left by [Sharp] except what was retained on the university’s [information technology] system.”

The only Advancement Division files on that information technology system dated from 2009, according to the audit.

The legislative audit noted, “It was the University’s practice not to retain payment authorization forms,” although auditors did find some from fiscal 2012 placed “haphazardly” in boxes and about 20 other forms from fiscal 2010 and 2011.

The UA has a records retention policy, which says individual departments “normally” serve as their Office of Records. Any document created as “a record of business activity” is considered an official document and can’t be destroyed without the consent of the Office of Record, according to Rule 218.0 under policies and procedures for the Fayetteville campus.