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June 14, 2005

UConn Reacting Quickly to Audit Reports

The University has implemented a number of actions that respond quickly and substantively to findings in two major audit reports completed this month concerning UConn 2000.

The reports, completed by the University’s Office of Audit, Compliance, and Ethics and the consulting firm PriceWaterhouseCoopers, were requested by the Board of Trustees late last fall after fire code violations at Hilltop Apartments, Husky Village, and Charter Oak Apartments were discovered by senior administrators.

“There is no question we had a number of very serious deficiencies,” said Dr. John W. Rowe, chairman of the Board of Trustees. “We’re better off now than we were before these disclosures, and I think people should be confident that we are on track. They should feel good about what we’ve accomplished.”

Rowe said the problems did not impair the University’s educational mission and that no new issues had been uncovered since officials aggressively moved to address problems several months ago.

President Austin said the University wants to address all the issues promptly: “It is clear there have been a number of problems, but we are working to correct them as quickly as possible and to set up structures and procedures to ensure they will not be repeated.”

Both the audits pointed out problems such as the need to restructure Architectural and Engineering Services and quickly hire a new director to replace Larry Schilling, who resigned last fall after being placed on administrative leave. Both reports suggested improved reporting structures to ensure checks and balances, and additional reviews of budget and plans.

Kenneth Michael Walker, the University’s chief audit and compliance officer, told the trustees there are several areas of immediate concern, including the need for a stronger construction project management information system for UConn 2000 and better budget oversight processes to provide accurate and timely reporting to senior management and the Board.

The University has already ordered a new software package that will assist in that effort. Other changes include an administrative review of the structure of Architectural and Engineering Services and a review of contract signing authority policies and procedures.

The University is also searching for a new executive director of Architectural and Engineering Services, who will become an associate vice president reporting directly to Linda Flaherty-Goldsmith, vice president and chief operations officer. This is intended to improve communications between Architectural and Engineering Services and senior management and senior management and the trustees.

Several mechanisms, including monthly project status meetings, a new information system with budgetary forecasting and management reporting capabilities, and new procedures for budgeting and tracking deferred maintenance funds are being implemented. The new procedures will include a four-step process to keep the trustees informed about both progress on building projects and project budgets.

Christian Hughes, a partner at PriceWaterhouseCoopers, told the Board of Trustees that “we believe measures are presently being taken to address the principal concerns identified in this report.”

Hughes noted that the PriceWaterhouseCoopers report is based on exceptions and thus identifies only areas for improvement: “It does not describe all the things that go right.”

The University has already implemented most of the components of a seven-step corrective action plan that includes the formation of the University’s new office of the fire marshal and building inspector; organizational restructuring within Architectural and Engineering Services to add checks and balances to the building process; personnel actions; improved procedures for contract approval and administration; revised project budgeting and reporting to give the administration as well as the trustees a closer look at actual and projected project costs; strengthened oversight of audit, compliance, and risk management, and legal actions necessary to recover costs.

The PriceWaterhouseCoopers audit also notes that the University needs additional staff for the UConn 2000 program. It found that UConn did not fund adequate staffing at Bechtel/ Fusco, the firm hired to assist the University with oversight of UConn 2000 and act as construction administrator on selected projects. But the report notes that paying an outside contractor to add staff may be more expensive than hiring additional permanent staff.

It also suggests that additional staffing is needed to ensure contractors’ wage compliance with state laws, as the state has imposed more wage compliance requirements on the University than on others, and that a program manager should be hired to work at the University. The University is planning to conduct a selection process soon for a firm to assist with oversight of 21st Century UConn.

The PriceWaterhouseCoopers review also found that UConn’s qualification and selection process, which was recently criticized by the state auditors, “appeared consistent with industry standards but could be improved in certain ways, such as enhanced and formalized documenting of the decision-making process.”