An analysis of several high-dollar financial accounts during the administration of former Kansas State University president Jon Wefald found numerous instances of questionable transactions.
In fact, auditors said they couldn’t get all the information they requested — including supporting documentation for 13 selected cash disbursements by the Athletics Department worth $845,000.
The report also recommended that documents detailing newly-rehired KSU football coach Bill Snyder’s contract, reported at $1.85 million, be “put through a financial as well as legal review to make sure that the Athletic Department is in compliance with all appropriate accounting and tax laws with regard to the payment of Mr. Snyder’s compensation.”
The analysis was conducted for the Kansas Board of Regents by auditing firm Grant Thornton LLP. It was done to assist the new administration at KSU, the regents said. Regents had held the report confidential, but then decided to release it during a meeting Friday in Wichita.
The report focused on nonstate-funded accounts, including the Kansas State University Alumni Association, Intercollegiate Athletics Association (Athletics Department), the National Institute for Strategic Technology Acquisition and Commercialization, the Kansas State University Golf Course Management and Research Foundation and discretionary funds for Wefald and Bob Krause, the former vice president of Institutional Advancement.
The report said that Wefald delegated much of the authority and oversight of the various entities to Krause.
The report said transactions between the funds were sometimes blurred when they should have been treated as separate legal entities. “Our report details numerous instances where transactions between the various entities did not meet this standard,” auditors said.
It said that conflicts of interest are inherent in the structure of the National Institute for Strategic Technology Acquisition and Commercialization. Officers of the group are allowed to own stock and serve on the boards of incubated companies, according to the report.
The Athletics Department and Golf Course Management and Resource Foundation entered into transactions with employees “that may result in favorable tax treatment to that employee in situations where it may not be warranted ... ,” the report said.
The report also focused on a $500,000 loan approved by Krause between the Athletics Department and former KSU Athletic Director Tim Weiser. The loan agreement indicated that the borrower didn’t have to justify or explain the purpose of the loan and that it should be approved by the lender making a written request for the loan. “These are not standard clauses in even the most informal of lending agreements,” the report said. The loan was paid back on July 14, 2008, from funds the Athletics Department owed Weiser under his separation agreement, according to the report.
Krause has recently come under fire for approving a $3.2 million deal with former football coach Ron Prince. This transaction was not covered by the new analysis.
The regents have requested that KSU’s new president, Kirk Schulz take corrective actions.
“I have the utmost confidence in his ability to effectively carry out this task,” said Regents Chairwoman Donna Shank.
Schulz said release of the report would help rebuild confidence in the school.
“There is nothing we can do about the past. However, steps have been taken to ensure these situations do not happen again,” he said.
Similar reviews are being conducted at Kansas University and Pittsburg State University, whose current chief executives also are retiring.