Wright State University released an “unflattering” 108-page audit Friday that identifies problems at the school and its research arm in the wake of a federal investigation, but trustees quickly noted that many of the issues identified – conflicts of interests, lack of controls – have been fixed over the past two years.
“All the good, the bad, the ugly. It’s all here,” said Wright State University trustee president Michael Bridges of the audit and 764-pages of attachments released Friday.
The federal investigation, which began in 2015, focuses on possible violations of H-1B visas, or temporary work visas. H-1B visa fraud carries a maximum penalty of 10 years in prison and a $250,000 fine, and companies have paid millions of dollars to settle visa fraud allegations.
Gov. John Kasich’s press secretary Emmalee Kalmbach said the trustees were right to conduct the audit once the depths of the university’s problems became apparent.
“We’re currently in the process of reviewing its findings but what’s clearly evident is the previous administration’s disturbing, long-running practice of seeking to prop itself up by cultivating a regime of secrecy that allowed it to conceal problems from key leaders. It’s incumbent upon this era of university leaders to turn the page, restore confidence and commit itself to the transparency and accountability essential to healthy organizations,” Kalmback said.
Dennis Andersh, director of the Wright State Research Institute, which was a focus of the audit, said “we are committed to transparency. We are committed to compliance…We are committed to living within our means. That was not the case before.”
He said WSRI has made changes including upgrades in compliance, operational efficiencies, and budget cuts and the institution has recently won $35 million in contracts to conduct research for federal entities such as the Office of Naval Research, DARPA and AFRL.
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The school paid more than $360,000 for the forensic accounting firm Plante Moran to do the audit.
Some issues and concerns found in the audit were:
• Use of H-1 B Visa workers sponsored by the university being utilized at off-campus businesses that were essentially reimbursing the university for the work, potentially in violation of the law.
• Personnel procedures being bypassed, which allowed fewer than a dozen positions to be hired at the Wright State Research Institute without going through the more rigorous hiring processes at WSU.
• Lack of proper documentation on multiple grants and contracts,
• WSARC charging overhead rates less than what were approved by the Defense Contract Audit Agency, making certain contracts less efficient and resulting in some unrecoverable costs.
• Conflicts of interests on some affiliated entity contracts and individuals.
• Problems with some poor internal controls and compliances.
WSU Trustee Doug Fecher said WSRI suffered from a culture that coveted winning research contracts at any cost and lacked controls and transparency. Only a handful of people knew the full scope of WSRI operations and trustees weren’t in the loop until they were briefed on the Plante Moran audit in 2015. He admitted that the audit and budget cuts hurt the university’s reputation. “We will get past this.”
Fecher acknowledged that the university failed to trim expenses when its revenues fell over the past three or four years. If action had been taken earlier, “to be honest, we wouldn’t be where we’re at today.”
The federal probe “may be concluded in the coming fiscal year 2018 which may require the university to make payments in settlement of the investigative claims,” according to a board resolution directing university attorneys to take appropriate action against involved employees.
Over the last several months, the university administration and trustees received and acted on recommendations in the report, largely resolving the issues identified, the reports says. Beyond the recommendations of the Plante Moran report, several other improvements have been made in the management of the university. The list of both sets of updates includes:
• The university has upgraded its compliance program, including the addition of a new director of research compliance.
• Expanded the university’s legal team to keep pace with compliance demands.
• Improved administrative accountability by splitting oversight duties previously held by just the provost, empowering the provost with academic oversight and the president with operational oversight responsibilities.
• Implemented new uniform contract review procedures for purchasing.
Board of Trustees Chairman Michael Bridges said that today’s announcement represents a path forward for the university.
“Wright State University has seen its fair share of turmoil during recent times,” Bridges said. “As we look ahead to the next 50 years as a campus community, the release of this audit report represents one more step toward putting the university on firm footing.”
Trustees said they did not release the report sooner because they did not want to interfere with the federal visa investigation.
“We didn’t want to obstruct anything in terms of their work,” Bridges said. “We have been very desirous and yet we had to wait patiently for this time to come.”
Trustees said the report released today names several people but asked that judgment be withheld as some who are named may not necessarily have done something wrong.
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