Audit clears research foundation

Friday, Nov. 26, 2004 | 9:24 a.m.

A special audit investigation into possible financial wrongdoing by the UNLV Research Foundation has found no evidence that any improper transactions occurred, university system officials said this week.

"It doesn't show anything," Interim Chancellor Jim Rogers said. "There's nothing significant. Nothing happened and everything is alright."

Officials ordered the audit this past summer after Anthony Flores, UNLV's former vice president for finance, alleged that President Carol Harter and other top administrators had been discussing ways to improperly funnel federal grants through the foundation to avoid giving back a percentage of the money to the state.

Most federal grants include money to cover overhead costs such as facility maintenance and administration. The Nevada Legislature requires each institution to return 25 percent of that money to state coffers, system officials said. At UNLV, that amounts to more than $1 million a year.

The audit, performed by the system office, investigated all grant and contract transactions at the research foundation between January 2002 and June 2004 and looked at all transactions between the research foundation and UNLV.

The audit report makes some recommendations for ways to improve the research foundation's operations, but finds that no grant money was improperly funneled and that the research foundation never accepted any money for indirect overhead costs.

The grants directed to the research foundation were federally earmarked to help establish the foundation and could not have gone to the university, Gerry Bomotti, vice president for finance, said. Based on recommendations in the audit, UNLV is working to develop stronger policies for how grants are split between the university and the research foundation, and how overhead costs are handled for grants that go to the research foundation but include a sub-award for UNLV.

Past grants of that nature did not collect overhead costs for either the foundation or the university, Bomotti said.

The audit report also recommends that university officials better define the relationship between UNLV and the independent research foundation and that the foundation improve its accounting procedures as its paperwork was not well organized.

Flores has alleged the university was trying to use the research foundation, a separate nonprofit entity, as a way to avoid what administrators called the "tithe."

Flores reported the allegations to the university system after he had been demoted in June. He filed a lawsuit against the University and Community College System of Nevada in August after UNLV officials began termination proceedings against him. He alleges Harter demoted and then fired him because he repeatedly told her her plan to divert the funds was not feasible.

E-mail records provided to the Sun by Flores and the university show that administrators did discuss ways to avoid the tithe, but Rogers said the audit backs their claim that they never went forward with the plans.

In August, Harter told the Sun she had discussed the possibility of funneling more grants through the research foundation but dropped the idea after Flores and others told her it was cost- and time- prohibitive to set up the necessary overhead cost rate for the foundation.

At that time Harter, who was out of town all this week, defended the e-mail conversations on the grounds that it was her job as president to think creatively about ways to bring more research money into the university.

Regent Doug Hill, chairman of the audit committee, said he found those conversations to be "completely inappropriate," but because the audit found no evidence of actual wrongdoing, he did not expect the committee to take any action at Thursday's meeting.

Flores' case is scheduled for a court hearing on Dec. 17. His attorney, Adam Levine, said the e-mail documents "speak for themselves" in backing Flores' allegation that he was retaliated against for telling Harter no.

System attorneys declined to comment on the case because it is still pending.