Audit review: K-State president Wefald gave too much leeway to his deputies

TOPEKA | Former Kansas State University President Jon Wefald gave too much power to deputies who operated with too little oversight, according to a final review of financial irregularities identified in a recent audit.

“It was clear there was an awful lot of power invested in too few people,” current President Kirk Schulz told the Kansas Board of Regents today.

Schulz briefed the Regents on what actions have been taken in response to the June audit, which revealed undisclosed payments, conflicts of interest and accounting irregularities and potential tax problems at KSU and its Athletics Department.

A task force including faculty, alumni, students and university officials reviewed the audit and submitted four conclusions and recommendations.

The first was that Wefald gave too much power to his key deputy, Bob Krause, and that Krause failed to manage the funds under his control. Funds were commingled between departments, key expenses weren’t approved, transparency was lacking and record keeping was often sloppy, the report concluded.

The committee’s report recommended a more robust system of checks and balances, transparency and communication between different layers of university leadership. Many of the reforms have already been adopted, Schulz said.

“We’re doing things better than we were a year ago,” said Schulz, who replaced Wefald after he retired, the same week the audit was released.

An outside accounting firm was hired to investigate 13 payments for which no paperwork could be located. The auditors concluded that nine of the expenses were for legitimate Athletic Department expenses, including payments to approved contractors.

The other four expenses related to the use of university aircraft; in each case the auditors found that the passengers and reasons for travel were for athletic competitions or appropriate, approved events. The auditors recommended that the athletics department create a more detailed policy for the use of university aircraft.

Members of the Kansas Board of Regents praised Schulz for his work to correct the issues identified in the audit. But they said they wanted yet another update next April to ensure the reforms suggested in today’s report have been implemented.

“It’s one thing to say ‘these were the things that need to be changed,’” said Regents member Donna Shank. “But I would like to know at some point that those things were done so we can really truly put this behind us.”Actions already taken include:

* A change at the Athletics Department that requires the Board of Directors to review each compensation package. The audit found secret payment arrangements crafted by an individual athletics official.

* The university’s chief financial officer now reviews almost every transaction made by the Athletics Department.

* A more centralized campus legal department, instead of five or six separate legal offices.

This story was originally published November 19, 2009 at 12:02 PM with the headline "Audit review: K-State president Wefald gave too much leeway to his deputies."