FAYETTEVILLE -- Missing documentation over five years of a federally funded program at the University of Arkansas, Fayetteville led auditors to conclude that a potential $1,571,984 liability exists.
The University of Arkansas System audit team examined UA's Student Support Services grant program, which is funded by the U.S. Department of Education. The program aims to help low-income and first-generation college students.
Auditors said the potential liability resulted from a lack of documentation that should have existed for students in the program.
"In effect, the University did not have verifiable records to support all of the 325 students reported annually to the [U.S. Department of Education] as participants for each of the five grant years (GY) under audit," the audit report states.
Rather than documentation for 1,625 participants, auditors found 248 verified participants over the five-year period that ended in 2019-20, the report states.
The nine-page report released Tuesday to the Arkansas Democrat-Gazette by the UA System describes unsuccessful efforts to get helpful information about the missing documentation from the former program director, who submitted her resignation in July 2019.
"From our review, she stated the data existed; however, she did not provide meaningful transitional assistance to locate the required program documentation," the report states.
The report also states that "it appeared the former Program Director did not retain the supporting documentation in paper or electronic format as required."
UA disclosed in November 2019 to the U.S. Department of Education that the grant program was being investigated, the report states. The potential liability as calculated by auditors is based on the program's annual budget, which ranged from about $347,000 to $400,000 over the five years under audit.
"The budget included approximately 82% for the department's payroll and related benefits, 11% for grant aid and program operations, and 7% for administrative costs. As of the date of this report, a resolution has not been communicated and any actual amounts required to be returned would ultimately be determined by the" U.S. Department of Education, the report states.
UA spokesman John Thomas said the former program director earned a salary of $82,010 at the time her employment ended.
Auditors recommended that UA "implement a periodic monitoring procedure of required program documentation to ensure the documentation is adequate and proper record retention occurs."
UA's response, included in the audit report, states that "semi-annual inspections of hard-copy and electronic program data" will be done each year.
The 10-person University of Arkansas System board of trustees accepted the report at a meeting held Sept. 18 in which Cliff Gibson, a trustee and attorney from Morrilton, called it "one of the strangest things I've seen, and just, from my view, this is more of the university being a victim of someone."
The audit report goes into some detail about how the former program manager "made implications, including discussions with" university police that documentation "might have been inappropriately removed" from program offices.
Auditors spoke with police in March. While campus police had installed security cameras and monitored activity "for the time periods they discussed with the former Program Director," only a housekeeper was observed, the report states.
But police "provided footage of the former Program Director and another female entering the SSS program offices on July 27, 2019 at 6:57 p.m. with a dolly and collapsed banker boxes, and at 8:58 p.m., leaving the offices using the dolly with what appeared to be four full banker boxes," the report states.
This was days after the director had submitted her resignation, which requested a final working day of Aug. 2, 2019, and last day of employment of Aug. 23, 2019, the report states.
The former director, along with her attorney, agreed to a phone conference with auditors in June, the report states.
"We explained the vast majority of the files supporting the current grant periods were not located where she suggested. She said she did not know what happened to the files after she left the position, but some of the student services records could be located in binders in the 'PI's office and office 63.' We later searched the areas and did not locate the binders," the report states.
Asked about the video showing her with the banker boxes, the former program director "stated they included important items, that were still in the file cabinets, that she was transporting to the off-site storage," and that "she could not recall all of the box contents," the report states.
Auditors noted the purchase of a shredder and asked the former program director if it had been used to shred program documentation.
"She stated the previous shredder had burned out and she did not shred the supporting documentation," the report states.
Trustees also approved a separate internal audit of UA's technology procurement, but the UA System declined to release that audit report to the Democrat-Gazette, as well as another internal audit report of a University of Arkansas at Pine Bluff program.
UA System spokesman Nate Hinkel said the two reports were being withheld under Ark. Code Ann. § 25-19-105, which exempts "undisclosed investigations by law enforcement agencies of suspected criminal activity" from public disclosure.