University of Arkansas audit raises questions beyond the allegations of destroying documents | Arkansas Blog

Friday, September 13, 2013

University of Arkansas audit raises questions beyond the allegations of destroying documents

Posted By on Fri, Sep 13, 2013 at 4:59 PM

Don't miss Benji Hardy's earlier report on today's Legislative Auditing meeting. Hardy follows up with a post over on his Nightwriter Blog at Legislative Digest. The headlines focused on the accusation that Chancellor David Gearhart had given directives to destroy relevant documents, but, Hardy writes, "the drama overshadowed equally important testimony that occurred earlier in the meeting."  

[I]f a division of the U of A can make up budget shortfalls by drawing on a Foundation account, why have a budget at all? Sen. Dismang asked Schook, “so you’re pre-spending money that you’re planning on getting in the future and then billing someone for the expense?” Schook said that the division would accumulate expenses ongoing throughout the year in an account that’s considered a “vendor” paid by the Foundation. “I’m not sure how you’d do that without distorting entries,” Dismang responded, and asked Legislative Audit to clarify. Roger Norman of the auditing staff replied, “it appears to us that the more you expended, the more revenue you recognize.” (Emphasis added)

Dismang then asked if this practice of booking accounts receivables would continue in the future; Schook said that the school respectfully disagreed with Legislative Audit’s conclusions but would defer to its report’s recommendations and change UA accounting practices. “[The practice] does not materially misstate the facts either way,” she said. “I’d contest that comment,” said Dismang. “They were material for this particular entity.”

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