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View Full Version : KSU Den of Thieves?


Boon
06-20-2009, 10:44 AM
Hey, it's an engineering school not an accounting school. Right???

http://www.kansas.com/news/story/860919.html



Kansas State audit finds financial irregularities

BY DAVE HELLING
Kansas City Star

A scathing audit of Kansas State University reveals a pattern of undisclosed payments, conflicts of interest, poor accounting and possible tax problems for the school, several of its former employees and its athletic department.

The audit, released by the Kansas Board of Regents on Friday, describes thousands of dollars paid to companies owned by current and former university employees. They include football coach Bill Snyder; former athletic director Tim Weiser; and Bob Krause, a former vice president for institutional advancement and former athletic director.

Auditors found that some of those payments could result in additional tax liability for the university and may violate Internal Revenue Service regulations. But the report stops short of concluding that any payments or other irregularities were illegal, and notes that virtually all the money came from private donations, not taxpayers.

New K-State president Kirk Schulz said he welcomed the regents' decision to release the audit, which is dated April 27. The board discussed it in closed session Friday.

K-State officials and regents said the audit, prepared by Grant Thornton LLP, would be the basis for a thorough examination of the university's financial controls. Schulz is expected to make recommendations to the regents by October.

The 34-page report details a $2.4 million shortfall in the university foundation's scholarship fund in 2007. It also found questionable spending on fees, travel and fringe benefits, plus a $500,000 loan from the athletic department to Weiser in 2008 that he was not required to "justify or explain."

Thirteen payments totaling $845,000 to Snyder, Weiser, Krause and others had no supporting documentation, auditors said.

The report was prepared as an "exit analysis" of former K-State president Jon Wefald, who left this year. Similar audits are under way for the University of Kansas and Pittsburg State University, whose presidents also recently departed.

Auditors made several recommendations to improve oversight of the athletic department at K-State and other entities affiliated with the university to improve "structure, formality and transparency."

Wefald said Friday that he was most troubled by the lack of documents for the $845,000 in payments.

"I think we should do everything we can to uncover that," he said.

Wefald added that that he gave Krause too much authority, a decision he now regrets.

"He did do a lot of good," Wefald said. "But Bob had too much to do. I probably delegated too much authority to him. I wouldn't do that again."

Krause could not be reached for comment. He recently resigned from his job on the university's Olathe Innovation Campus following revelations of previously undisclosed contractual obligations of more than $3 million to a company owned by former football coach Ron Prince. Kansas State is now suing to declare that agreement -- which was not mentioned in this audit -- void.

Weiser, now deputy commissioner for the Big 12 Conference, declined to comment on the audit until he could read it.

"I was not aware they were going to release that," he said from the College World Series in Omaha.

Snyder was traveling on Friday and said he wanted to thoroughly review the report before commenting.

Regent Gary Sherrer of Overland Park said he was disappointed by the practices revealed in the audit.

"Breathtaking," said Regent Dan Lykins in response to the findings. "We are going to be looking at things differently now."

While the audit was not limited to K-State athletics, much of its focus involved decisions made by Krause involving the athletic department in recent years.

The department, the audit found, maintains a bank account outside the purview of the university's controller, primarily to pay the department's travel costs.

But auditors found that roughly 5 percent of the payments made from the account -- about $100,000 each year since 2005 -- were not for travel, but for contract payments to companies linked to K-State officials, such as Snyder's SSM Inc., Weiser's the Weiser Way, and Krause's Horizon Ranch.

The payments, auditors said, could cause the university tax problems.

As of the end of last year, auditors said Snyder is owed $900,000 in deferred compensation from payments due after he quit as coach in 2005. He returned as head coach three months ago.

Other concerns cited in the audit:

The Kansas State University Foundation, which provides funds for scholarships, had a $2.4 million deficit in 2007. The athletic department eventually replaced part of the shortfall.

"We questioned the athletics department's responsibility for involvement in this transaction and were told that as the athletics department fell under the purview of Mr. Krause, Mr. Krause elected to solve the issue in this manner and that the athletics department clearly did not have any responsibility for the payments. Per President Wefald, this arrangement was negotiated with his knowledge and approval," according to the audit.

Wefald had access to a $385,000 discretionary fund from which a few transactions "did not appear to be an appropriate use... or was missing." Among those payments: $1,191 to pay for Kerry Wefald, his daughter-in-law, to fly to New York as part of an arts program.

"Various monthly payments made in 2005 and 2006 in the $700 to $800 range to RB Enterprises Inc. carries no explanation at all," auditor found.

While citing many problems, the audit also noted many of Wefald's accomplishments, including increased enrollment at K-State. Wefald announced his retirement from the university in May 2008 and officially stepped down this month.

When asked Friday whether he thought the report tarnished his 23-year tenure at K-State, Wefald said: "That would be for others to judge. I think we did a lot of great things here. We made a few mistakes here and there."

mikeyis4dcats.
06-20-2009, 10:58 AM
It is a mess, but it would be very interesting to see the results of similar audits of other universities.

Boon
06-20-2009, 11:15 AM
It is a mess, but it would be very interesting to see the results of similar audits of other universities.

Probably find that they pay the athletes instead of the suits.
Seems to be the formula for success.
KSU should try it!

Stewie
06-20-2009, 11:49 AM
And this didn't include Prince's deal?

I'm sure the boosters were glad to hear that tax dollars weren't involved. It was just their donations that went straight into someone's pocket for personal use. It's a grand scheme.

leviw
06-20-2009, 12:13 PM
It is a mess, but it would be very interesting to see the results of similar audits of other universities.

Maybe I'm wrong, but I don't think other universities will have to release their audits.

Pitt Gorilla
06-20-2009, 04:05 PM
It will be interesting to see how Snyder was involved with that payment.

mikeyis4dcats.
06-20-2009, 05:46 PM
It will be interesting to see how Snyder was involved with that payment.

what does it matter? It was made compliant to his contract. It was not compensation above what was due. in fact, the audit shows he still is owed over 900k from his previous stint in deferred compensation.


The ONLY possible issue for anyone is the tax implications, however there is ZERO indication either way as to if appropriate taxes were paid by Weiser, Snyder, and the rest.

Payment to private LLCs is commonplace for coaches. Many structure their contracts such that all non-base salary is paid to LLCs.

mikeyis4dcats.
06-20-2009, 05:47 PM
Maybe I'm wrong, but I don't think other universities will have to release their audits.

No idea. I'm just wondering for an institution of this size, how commonplace discrepancies and lax practices are.

58kcfan89
06-20-2009, 06:28 PM
Gawd, all the crap that's happened in Wefald's last few years has seriously tarnished his legacy in my mind.

I can't believe some of the places my tuition money goes....

EyePod
06-20-2009, 06:55 PM
Wefald had access to a $385,000 discretionary fund from which a few transactions "did not appear to be an appropriate use... or was missing." Among those payments: $1,191 to pay for Kerry Wefald, his daughter-in-law, to fly to New York as part of an arts program.

First, what an idiot. 2nd, she should have just went to this engineering school instead of art school.

Coach
06-21-2009, 01:12 AM
I guess I see what Bill meant by "Soothing the waters."