LITTLE ROCK — The state’s annual audit of the University of Central Arkansas uncovered a number of bookkeeping errors and noted $4,500 in property missing from the president’s home and office.
The Arkansas Legislative Audit Division on Wednesday released the 65-page report,which cited a “material weakness” in the school’s internal financial controls.
Material weaknesses are listed in the audit as flaws in the accounting system that could allow errors in the university’s financial statements to go overlooked.
“Although the University has policies to properly record and classify transactionsin the financial statements, the internal control system did not prevent or detect misstatements,” the audit says.
“When these errors were brought to the attention of the University personnel, the financial statements and notes were corrected.”
Some of the mistakes found included:
In the statement of net assets, the accounts-receivable balance was understated by $560,000.
In the statement of net assets, the accounts-payable balance was understated by $150,000.
In the statement of revenue, expenses and changes in net assets, “other income” was unreconciled by $58,352.
Interest of $87,905 paid ona bank note was incorrectly recorded.
The audit also noted that $3,400 in sterling silverware was missing from the president’s home. It was first reported missing during an inventory check in March 2009.
The incident report did not indicate a break-in orforced entry, the audit said.
A $1,128 computer printer was also reported missing from the president’s suite in Wingo Hall in the audit.
However, UCA spokesman Jeff Pitchford said last August that a printer first reported as missing had been sent to the state to be sold. It had not been properly reported as inventory being “retired,” Pitchford said at the time.
Pitchford said Wednesday that no one knows what happened to the missing silverware.
He said the case was still open with the police the last time he checked, but he didn’t think that officers were actively investigating the missing property.
“It’s just missing,” he said.
The audit covered the fiscal year that ended June 30, 2009. UCA, like all Arkansas universities, is audited annually.
Deputy Legislative Auditor Larry Hunter said Wednesday that auditors have uncovered similar reporting errors at other Arkansas institutions. He said the audit will be formally discussed at the May meeting of the Legislative Joint Auditing Committee.
Diane Newton, UCA’s vice president for finance and administration, said Wednesdaythat some of the bookkeeping mistakes resulted from deliberate decisions the university made - but that auditors disagreed with - and not outright accounting errors or omissions.
For example, the $560,000 understatement of the university’s net assets accounts-receivable balance was tied to a $700,000 outstanding loan made to the Oxford American magazine, which is housed on the UCA campus.
Newton said the magazine lacked the ability to repay the entire loan in 2009. So university bookkeepers thought it was proper procedure to reflect only the amount the magazine could realistically repay, $140,000, in the total amount owed the university.
Since the audit, the university has adjusted its books to reflect the full amount owed, Newton said.
Newton said other findings were the result of human error.
For example, she said, the $58,352 in unreconciled “other income” was revenue that employees improperly coded. She said the university is now using more automation in its bookkeeping to reduce such mistakes.
Newton said the university has also created board and employee committees to provide more oversight over the preparation of UCA’s financial statements.
Arkansas, Pages 9 on 04/08/2010