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Cash comingling, ethics lapses at SDSU

State audit finds lack of disclosure and honesty training risks fraud

Clay, Winner, Sanders
Clay, Winner, Sanders

An audit of San Diego State University by state investigators has discovered big gaps in the way the hallowed institution tracks and discloses conflicts-of-interests, ethics training, and cash donations.

According to the report to the state university system’s board of trustees, San Diego State has been unacceptably lax with staffers who pick up private cash on the side to pay for their research.

California law requires that all such contributions be thoroughly disclosed on so-called 700U forms and made available to the public for review, but that’s not what has happened at SDSU, according to the audit.

"The campus did not have written conflict-of-interest policies and procedures for non-governmental sponsors that included requirements and responsibilities for reviewing statement of economic interest forms, managing conflicts of interest, and enforcing disclosure requirements," the audit revealed.

In her response to the report, the SDSU official in charge of policing conflicts pled ignorance of the current state of the law, explaining, "the campus had experienced turnover in the key positions responsible for conflict-of-interest policies and was therefore unaware that the [California State University system] had imposed more restrictive language on the conflict-of-interest requirements than those set forth by the State of California Fair Political Practices Commission form 700U guidelines."

Auditors also reported lapses in the way the university has educated its staff about legally required ethical behavior.

"The campus did not always provide ethics training to [principal investigators] involved in San Diego State University Research Foundation contracts and grants. We reviewed the training for five PIs working on non-governmental grants, and we found that three PIs had not completed the CSU-required ethics training."

Inadequate training, said the audit, "increases the risk of non-compliance with CSU, federal, and state regulations and increases the risk that errors, inconsistencies, misunderstandings, or misappropriation may occur."

In addition to those failings, auditors reported that Aztec Shops, a so-called auxiliary organization controlled by the university, didn't adequately keep track of travel expenses that staffers charged to the non-profit.

"We reviewed ten travel disbursements, and we found that none required a travel authorization form documenting advance approval of travel and related expenditures to be incurred,” the report said. “The absence of documented travel approval increases the risk of errors, irregularities, and misappropriation of funds.”

Associated Students, another SDSU auxiliary organization, was also singled out for the sloppy manner in which money was accounted for at the student newspaper and campus entertainment venues.

"The Daily Aztec received cash receipts even though it had not been formally approved as a cash-handling location," the report said. "Additionally, checks at the Daily Aztec were not restrictively endorsed immediately upon receipt."

"The [Associated Students] finance director stated that the petty cash was commingled with change funds at the [Aztec Recreation Center] and Viejas Arena because it was easier to manage as a single fund instead of two separate funds.

“He further stated that the Daily Aztec received cash receipts even though it had not been formally approved as a cash-handling location due to oversight, and checks were not restrictively endorsed upon receipt because the Daily Aztec had undergone staff changes, and the new employee was unaware of the need for immediate endorsement of checks."

Accounting and disclosure issues also plagued the university’s two major fundraising and spending arms, the San Diego State Research Foundation and the Campanile Foundation.

Campanile did not have proper procedures in place to ensure that matching gifts to the foundation "were designated in accordance with donor intent." According to the report, the foundation's chief financial officer maintained that oversight was adequate, but "in the cited instances, the reviews were not documented."

"Insufficient administration of matching gifts increases the likelihood of misdirected funds and campus exposure to liabilities from non-compliance with corporate donor policies."

Members of Campanile’s board include ex–San Diego mayor Jerry Sanders, former Union-Tribune editor Karin Winner, developer Mark McMillin, and downtown lobbyist Nikki Clay, who with husband Ben oversaw the controversial Balboa Park centennial committee.

The university's research foundation was called out for failing to obtain I-9 immigration forms, verifying the identity, immigration status, and employment authorization of those it employs. "New hires at the Research Foundation did not always sign I-9 forms at the time of hire, and the Research Foundation did not always certify I-9 forms within three business days of new employees’ first day of work."

"The Research Foundation associate director of [human resources] stated that despite efforts to educate the academic community regarding the need for completion of I-9 forms within three business days, faculty members sometimes allowed individuals to begin work at their facilities before HR had been notified of the hire, and new hires sometimes failed to report to the centralized HR department in a timely manner."

Noted the auditors: "Untimely completion and certification of employment eligibility increases the risk of fines and penalties." In a letter attached to the audit report, SDSU officials did not dispute the auditors' findings and promised to rectify the situation.

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Clay, Winner, Sanders
Clay, Winner, Sanders

An audit of San Diego State University by state investigators has discovered big gaps in the way the hallowed institution tracks and discloses conflicts-of-interests, ethics training, and cash donations.

According to the report to the state university system’s board of trustees, San Diego State has been unacceptably lax with staffers who pick up private cash on the side to pay for their research.

California law requires that all such contributions be thoroughly disclosed on so-called 700U forms and made available to the public for review, but that’s not what has happened at SDSU, according to the audit.

"The campus did not have written conflict-of-interest policies and procedures for non-governmental sponsors that included requirements and responsibilities for reviewing statement of economic interest forms, managing conflicts of interest, and enforcing disclosure requirements," the audit revealed.

In her response to the report, the SDSU official in charge of policing conflicts pled ignorance of the current state of the law, explaining, "the campus had experienced turnover in the key positions responsible for conflict-of-interest policies and was therefore unaware that the [California State University system] had imposed more restrictive language on the conflict-of-interest requirements than those set forth by the State of California Fair Political Practices Commission form 700U guidelines."

Auditors also reported lapses in the way the university has educated its staff about legally required ethical behavior.

"The campus did not always provide ethics training to [principal investigators] involved in San Diego State University Research Foundation contracts and grants. We reviewed the training for five PIs working on non-governmental grants, and we found that three PIs had not completed the CSU-required ethics training."

Inadequate training, said the audit, "increases the risk of non-compliance with CSU, federal, and state regulations and increases the risk that errors, inconsistencies, misunderstandings, or misappropriation may occur."

In addition to those failings, auditors reported that Aztec Shops, a so-called auxiliary organization controlled by the university, didn't adequately keep track of travel expenses that staffers charged to the non-profit.

"We reviewed ten travel disbursements, and we found that none required a travel authorization form documenting advance approval of travel and related expenditures to be incurred,” the report said. “The absence of documented travel approval increases the risk of errors, irregularities, and misappropriation of funds.”

Associated Students, another SDSU auxiliary organization, was also singled out for the sloppy manner in which money was accounted for at the student newspaper and campus entertainment venues.

"The Daily Aztec received cash receipts even though it had not been formally approved as a cash-handling location," the report said. "Additionally, checks at the Daily Aztec were not restrictively endorsed immediately upon receipt."

"The [Associated Students] finance director stated that the petty cash was commingled with change funds at the [Aztec Recreation Center] and Viejas Arena because it was easier to manage as a single fund instead of two separate funds.

“He further stated that the Daily Aztec received cash receipts even though it had not been formally approved as a cash-handling location due to oversight, and checks were not restrictively endorsed upon receipt because the Daily Aztec had undergone staff changes, and the new employee was unaware of the need for immediate endorsement of checks."

Accounting and disclosure issues also plagued the university’s two major fundraising and spending arms, the San Diego State Research Foundation and the Campanile Foundation.

Campanile did not have proper procedures in place to ensure that matching gifts to the foundation "were designated in accordance with donor intent." According to the report, the foundation's chief financial officer maintained that oversight was adequate, but "in the cited instances, the reviews were not documented."

"Insufficient administration of matching gifts increases the likelihood of misdirected funds and campus exposure to liabilities from non-compliance with corporate donor policies."

Members of Campanile’s board include ex–San Diego mayor Jerry Sanders, former Union-Tribune editor Karin Winner, developer Mark McMillin, and downtown lobbyist Nikki Clay, who with husband Ben oversaw the controversial Balboa Park centennial committee.

The university's research foundation was called out for failing to obtain I-9 immigration forms, verifying the identity, immigration status, and employment authorization of those it employs. "New hires at the Research Foundation did not always sign I-9 forms at the time of hire, and the Research Foundation did not always certify I-9 forms within three business days of new employees’ first day of work."

"The Research Foundation associate director of [human resources] stated that despite efforts to educate the academic community regarding the need for completion of I-9 forms within three business days, faculty members sometimes allowed individuals to begin work at their facilities before HR had been notified of the hire, and new hires sometimes failed to report to the centralized HR department in a timely manner."

Noted the auditors: "Untimely completion and certification of employment eligibility increases the risk of fines and penalties." In a letter attached to the audit report, SDSU officials did not dispute the auditors' findings and promised to rectify the situation.

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Comments
3

Hilarious photos, once again: Jaqui Kennedy, Queen Elizabeth I and the Garden Gnome. Plus, they seem pretty corrupt -- um, non-compliant -- even by the standards of SDSU's own auditors. But since SDSU is the cradle of San Diego's governing class, they will all get a pass.

June 20, 2014

The majority of these incidents appear to be failure of employees to comply with internal paperwork requirements, not actual misconduct.

June 20, 2014

Is there an echo on the internet? Jenjen says what I just said: they will all get a pass.

June 21, 2014

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