ARKADELPHIA -- Henderson State University Foundation officials -- who announced last week inaccuracies in donor accounts -- said with certainty Monday that no money was missing.
But they were unsure how much of an effect the inaccuracies had on student scholarships or operating costs, foundation board Chairman Johnny K. Hudson said Monday.
"Potentially, yes -- as far as looking at the number of dollars for scholarships available," he said. "So it could have some effect on them, but it will not in the future."
The foundation made public the inaccuracies in the donor accounts Friday, saying in a news release that interest accrued from endowed gifts went to other accounts it shouldn't have. The inaccuracies led to some "understated" and "overstated" donor accounts, the news release said.
An accounting firm that the foundation retained in December looked into misallocations of the accrued interest after the foundation's current executive director, Jennifer Boyett, thought she found irregularities in individual accounts about six months ago, Hudson said. Officials had traced the misallocations back to the 1990s, Boyett said Monday.
The foundation, which formed in 1982, helps provide scholarships at the 3,625-student campus, promote development of education objectives and the physical plant, improve faculty and staff, and give aid to the university, according to its Internal Revenue Service form. The foundation awards some 300 scholarships annually and receives about $1 million a year from donors, Boyett said.
On average, the current endowment is about $15 million, said Boyett, who has served as the foundation's executive director since October 2013 and is HSU's vice president for advancement.
Foundation officials were sure no money was missing because the individual accounts added up to the amount in the general ledger, Hudson said. When asked how the misallocation occurred, Hudson said, "Just mismanagement." He added that there was no criminal wrongdoing. Clark County Prosecuting Attorney Blake Batson also said no case on the matter had been referred to his office.
"We are disappointed in the management of Foundation funds by its former long-serving Executive Director, and we have corrected the previous irregularities," Hudson said in Friday's news release. "Also, it is important to note that the former Executive Director is no longer employed by nor has any formal association with the Foundation or Henderson State University."
At a news conference Monday, Hudson would not name the executive director, saying it was a "personnel matter."
Officials said the former executive director retired in February 2013, before the board learned of the irregularities.
"He understands there have been some problems," Hudson said of the former executive director, who he said had been with the foundation since "day one."
"He knows that we're here to correct them. He's sorry it happened."
The foundation also contracted with an accounting firm during those times, but the firm only did annual audits and did not look at the day-to-day financials, Boyett said. An audit committee is searching for a new accounting firm, which Hudson said he hopes to have in place by May. The foundation also plans to hire a "credentialed staff accountant to oversee day-to-day financial activities," Friday's news release said.
The foundation has put into place other measures to ensure accurate accounting practices and said that it will be transparent with its donors.
It's created a new investment policy, which is published on its website. It will take 1.5 percent of all accrued interest from the endowed accounts and use that for administrative fees, mostly for operating the foundation.
It will also send annual reports to donors that will include the account's activities that year. The foundation is also planning to roll out this fall a scholarship reception bringing together the donors and scholarship recipients, Boyett said.
The foundation had sent more than 6,000 letters to all of its donors, informing them of the misallocated money, Hudson said. He added he's gotten back positive responses from the donors.
"We feel like it's important that no matter what you've given that you know what's going on and what the issues have been and how we've addressed it, more importantly," Boyett said. "We're looking forward to moving forward from this, and talking with donors and being sure that they're assured that their donations are being treated the way they expect them to be."
Metro on 03/24/2015