The University of Colorado Foundation spent exorbitant amounts on travel and meals, overstated its assets by miscalculating gifts, and used some donations for purposes not intended by donors, a state audit released Tuesday said.
Among the examples of inappropriate spending described in the audit was a $678 charter flight for a 25-mile trip from Englewood to Broomfield to pick up football coach Gary Barnett. The audit also showed foundation employees spent up to $110 per person on meals and took limousine rides that cost four times what a taxi would cost.
CU and foundation leaders acknowledged that the audit, which covered spending between 2001 and 2005, was embarrassing and exposed some problems but billed it as a “road map to reform.”
The audit – requested a year ago by then-CU president Betsy Hoffman – included 21 recommendations that will redefine the relationship between CU and its fundraising arm and hold the foundation, which is private and not subject to guidelines that would govern a state agency, to stricter expense reporting.
CU president Hank Brown called them “21 very helpful recommendations.”
“Our intention is to adopt every single one of them in their entirety,” he said.
The audit marked the first time the 38-year-old foundation’s financial books were scrutinized publicly.
Its criticisms included expense reporting by foundation employees. Auditors found that employees did not provide receipts for $28,000 in credit card purchases, including a $1,200 reimbursement to one employee.
It also showed extensive spending for office lunches and meetings – about $48,800 in 2004.
“We question the appropriateness of holding frequent meetings outside the office and charging the foundation for these meals,” the audit said.
Five foundation employees paid almost $1,300 for one night in hotels for board meetings held within 35 miles of their homes, the audit said. And the foundation spent $120 on a limousine to take an employee and a board member from the airport to a hotel. A taxi would have cost $30, the audit said.
Also, the audit cited a $260 expense for theater tickets for the spouses of a foundation employee and board member who were traveling on business.
“I’m especially concerned about the theater tickets,” said Rep. Fran Coleman, D-Denver, a member of the Legislative Audit Committee. “Including the family members is pretty darn hard to explain.”
The audit also was critical of the foundation’s “advancement account,” which held about $600,000 to $830,000 per year transferred from the university to the foundation. The foundation used the money to reimburse university employees, often the president, for donor events and travel.
Hoffman ordered the account closed, effective in July.
The account paid $4,200 for seven alcohol purchases for events that did not qualify as official university functions where alcohol is allowed, 13 meals totaling about $500 for traveling CU staff and their spouses that exceeded limits under state fiscal rules, and $1,600 for limousine services for university officials.
Ahead of the audit’s release, CU and the foundation crafted a new agreement that will prohibit the foundation from directly reimbursing university employees for travel or other expenses. The foundation is not required to follow state fiscal rules on spending, so the advancement account was a way to circumvent those rules.
For example, in 2002 and 2003, the university asked the foundation to pay about $5,000 per year for membership dues to a male-only golf club for basketball coach Ricardo Patton.
Brown said the most important audit recommendation was that the university stop transferring money to the foundation and then allow the foundation to reimburse university staff.
A draft of the pending agreement between the foundation and CU says the foundation cannot accept gifts-in-kind, such as computers or artwork, for the university.
“It’s a change of mind-set of how the university does business,” Brown said. “It’s an understanding that we live under a spotlight.”
State Sen. Ron Tupa, D-Boulder, questioned why the foundation did not have the proper oversight of employees and spending “so you don’t have an audit that is somewhat embarrassing.”
Foundation president Michael Byram said the foundation has moved away from accepting “gifts-in-kind” in the past couple of years and that he instituted a strict travel policy last month.
The foundation did not have adequate documentation for $82,900 in donations to determine how donors wanted their money spent, the audit said.
The audit also criticized the foundation’s acceptance of gifts, including $5.75million in property for its Boulder office.
The foundation also accepted a Learjet in 2002 that was recorded as an $830,000 gift. It sold the jet for $100,000 two years later.
Hoffman requested the audit after criticism last year about the foundation’s use of donor money. CU and the foundation must report to the state auditor’s office by March on their progress implementing the recommendations, state Auditor Joanne Hill said.
Hill also is investigating CU’s football program. That audit is expected in December.
Staff writer Jennifer Brown can be reached at 303-820-1593 or jenbrown@denverpost.com.
Some of the 21 audit recommendations
expenses, and the foundation should stop reimbursing university employees directly.
including requiring itemized receipts and prohibiting first-class
and nonemployee travel.
pre-approval for high-dollar credit card expenses.
documenting donors’ verbal instructions and contacting donors for clarification
if necessary.
