Dec. 16, 2003 CONTACT: Ward Mullens 734.487.4400 ward.mullens@emich.edu

Deloitte & Touche Audit Finds No Wrongdoing

Allegations of fraud were unfounded

YPSILANTI – An internal audit, authorized by the Eastern Michigan University Board of Regents and conducted by the accounting firm of Deloitte & Touche, has found no wrongdoing related to the University House. Results of the audit were released today, Dec.16.

"We are extremely pleased that the audit has shown what we have always known--that no fraud was committed and no laws were broken in the construction and financing of University House," said Philip Incarnati, chairman of the EMU Board of Regents.

"University House is an outstanding investment that will offer long-term benefits in terms of fundraising and friend raising, especially since we’ve set a target to raise $4 million in cash this fiscal year. We need to leverage the facility and the talents of the president and first lady to build that base."

The EMU Board of Regents authorized the hiring of Deloitte & Touche, Sept. 15, 2003, in response to allegations of wrongdoing concerning the construction and financing of the project.

The firm examined 27 categories of documents and interviewed 33 people, including all members of the Board of Regents, the president, University administrators, University employees, representatives of the EMU Foundation, University House contractors and other contractors who submitted bids or declined to bid on the project. Among the major findings were:

• There was no evidence that fraud had been committed or that laws had been broken.
• Investigators found no instances to indicate that any individual within the University administration acted outside the authority granted to them.
• Investigators found no unusual payments to vendors who were paid by the University for goods or services performed outside the scope of the University House project.
• No documentation was found that indicated student tuition or fee dollars or state appropriations were used to fund the University House account.
• With minor exceptions, accompanied by appropriate justification, the competitive bid process was followed as prescribed.
• There were no anomalies in the Physical Plant or the Office of the President general ledger accounts for payments to vendors, contractors and/or persons associated with the University House project.
• The investigators noted no exceptions in conformity with governmental accounting practice standards.
• The University House account budget was $3.5 million, and it covered construction of the house as well as a ten-foot perimeter. The Deloitte & Touche report shows that charges against that account are estimated to total $3.58 million.
• The president was involved in the University House project with respect to providing input on the layout, furnishings and finishings of the house, and in actively fundraising for the project. He was not involved in the development of the budget for the project.

"As a result of the audit, the Board is taking a hard look at the processes we follow," said Incarnati. "When, in the future, we approve a project, it's important to know the total cost of the project, both within the stated perimeters and beyond, and what are the sources of those funds. We'll be making changes to strengthen our system of checks and balances and to improve communication. University House is a great value for Eastern Michigan. We made a decision to move forward with this house and it's even more important today in order to position ourselves for the future."

For additional information regarding University House, go to www.emich.edu/univcomm/univhouseqanda.html.

 

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Eastern Michigan University is a public, comprehensive university that offers programs in the arts, sciences and professions. EMU prepares students with the intellectual skills and practical experiences to succeed in their career and lives, and to be better citizens.

Editor's Note: Looking for an expert source for a story? Check out EMU's Eastern Experts online at www.emich.edu/univcomm/easternexperts.

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