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UA audit back before lawmakers

Posted: January 4, 2014 - 6:50pm
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ROB MORITZ PHOTO  John Diamond, former associate vice chancellor of university relations at the University of Arkansas, is set to speak to lawmakers about his allegations that UA Chancellor David Gearhart ordered him to destroy university documents.
ROB MORITZ PHOTO John Diamond, former associate vice chancellor of university relations at the University of Arkansas, is set to speak to lawmakers about his allegations that UA Chancellor David Gearhart ordered him to destroy university documents.

LITTLE ROCK — Current and former employees of the University of Arkansas are scheduled to testify this week before a legislative committee regarding financial dealings in the fundraising arm of the university.

Several witnesses were present and prepared to testify last month when the Joint Legislative Auditing Committee quietly accepted state audit findings of a multimillion-dollar shortfall in the UA Division of University Advancement without taking any testimony.

Rep. Mark Lowery, R-Maumelle, who asked he Joint Performance Review Committee to consider the audit and allow the testimony, said it was important for the principals to be heard.

“Especially since we’re talking about issues of (budgeting) process and whether the process was followed, how to improve it and all that,” said Lowery. “Joint Performance is probably a very appropriate committee for that to end up in.”

The meeting is scheduled for Tuesday at the state Capitol.

A state audit presented to the auditing committee in September found poor fiscal oversight and a failure to follow school policies and procedures in the UA’s advancement division led to a deficit of $4.19 million over fiscal 2011 and 2012 in both university and UA Foundation funds.

Also, while “revenues for the division stayed relatively constant” for both years, spending in the division rose dramatically from $7.94 million in 2011 to $13.23 million in 2012, the audit said.

The audit, requested early last year by UA Chancellor G. David Gearhart after administrators discovered that the Advancement Division had overspent its $10 million budget in 2012, found that account receivables posts made by the division “partially obscured the deficits in the financial statements.”

The report found no evidence of intentional misappropriation of resources for personal gain, and that the “primary driver of accumulated deficit balances was the addition of staff with no permanent funding.”

During the September meeting, fired UA spokesman John Diamond testified under oath that he was told by Gearhart and others to destroy documents related to the budget shortfall in the advancement division. Gearhart disputed the accusations.

The audit findings, as well as the conflicting testimony of Diamond and Gearhart, were forwarded to Washington County Prosecutor John Threet, who in December issued a report that said no evidence of criminal activity was found.

Diamond, who was dismissed from his job as associate vice chancellor of university relations last summer, attended a December meeting of the auditing committee and was prepared to testify when the panel abruptly voted to accept the audit findings and prosecutor’s report without taking testimony, despite complaints by some committee members that many questions remained unanswered.

Also at the meeting and ready to testify were Brad Choate, who resigned as vice chancellor of the UA advancement division last February after the shortfall became public, and Joy Sharp, the division’s former budget director who also stepped down at the end of February.

After that meeting, Choate and Diamond both told reporters they were disappointed they didn’t have a chance to talk to the committee.

“It’s a shame not to get all the facts out there, it’s a real white wash,” Choate said at the time. “There’s a lot of information that has not come forward … this stifled getting all the facts out.”

Choate said he had been “under a gag order for 18 months” and that Gearhart sought the gag order “that included clear threats to fire me.”

Diamond told reporters the prosecutor’s investigation failed to adequately review his allegations that documents were shredded under Gearhart’s orders.

Rep. Terry Rice, R-Waldron, co-chairman of the Joint Performance Review, said last week that Choate, Diamond, Sharp and Gearhart have each agreed to attend Tuesday’s committee meeting and testify. Jean Schook, UA associate vice chancellor for financial affairs, and Don Pederson, UA vice chancellor for finance and administration Don Pederson, also have said they plan to attend and to be available for questions if needed.

“All six were invited and voluntarily said they would be there and voluntarily testify,” Rice said. “We look forward to that and maybe we’ll get some questions answered. Transparency to me doesn’t hurt anybody. I hope that they will be at the meeting to answer questions, if needed.

“I hate to have them all come back a second time, but if that’s what it takes, that’s what it takes.”

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