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UNT finances off by $23 million

Profile image for By Jenna Duncan / Staff Writer
and Holly Hacker / The Dallas Morning News
By Jenna Duncan / Staff Writer and Holly Hacker / The Dallas Morning News

The University of North Texas has potentially overstated its financial position by $23 million since 2012 due to misreporting, according to documents released by the university.

Audit investigations by both the UNT System’s internal auditors and Deloitte & Touche report that a journal entry was made to account for unresolved collections and were represented as accounts receivable, according to the documents, which were obtained by the Denton Record-Chronicle through an open records request.

The catalyst for both investigations was an anonymous complaint to the State Auditor’s Office in 2012 that suggested the entry had been made to “hide thousands of unreconciled transactions” since 2004, according to the reports.

It’s the latest financial problem to affect UNT. The campus may also have to repay the state millions of dollars in a separate matter for misusing state funds to pay some employee benefits.

The audits were released the same day as a UNT Board of Regents meeting where Chancellor Lee Jackson outlined current financial issues with the Denton campus and the UNT System, and spelled out a plan of action to combat these issues.

Jackson’s plan says the UNT vice president for finance and the controller are responsible for overseeing adjustments to the journal entry to comply with generally accepted accounting principles. The issue should be reconciled by May 31, according to the report by Jackson.

The report by Deloitte says the journal entry was made Aug. 1, 2012, and recorded miscellaneous accounts receivable, including cash and cash equivalents, accounts receivable, accounts payable and state appropriations. For that fiscal year, the university’s budget was $520 million.

“Because they’re a public institution and receive state and federal funds, they have to be open with everybody,” said Jim Smith, a former chairman of the Texas Society of CPAs and managing director of a Dallas accounting firm. “They have a transparency obligation to everyone from whom they receive money or benefits.”

The Deloitte report also says the university overstated how much cash it had by $5.9 million. Smith found that particularly troubling.

“What happened to the money?” he asked. The report didn’t explain, he said.

Most of these unresolved accounts are from before September 2010, according to the complaint.

Additionally, the then-vice president for finance, controller and senior director of financial reporting and operations were aware of the entry. It does not appear they or others aware of the situation benefited financially from the errors, Jackson said.

The journal entry investigations are one aspect of the financial problems at the university that were recently uncovered, and Jackson said Thursday that UNT has had inappropriate revenue estimates since 2011, if not earlier.

“I saw UNT miss its budget estimates for several years,” Jackson said. “They were attributed to enrollment miscalculations. It may also be that they relate to the failure to receive some state benefits appropriations that were predicted or projected.”

UNT has already admitted using state funds improperly for some employee benefits. In those cases, UNT used inappropriate estimations of the benefits. The scope of those issues will not be concluded for several months.

A third problem outlined in Jackson’s letter is inadequate financial management procedures. While updates to the practices have been underway the past few years, the upgraded software and required training won’t be complete until next year, he said.

This is the first time Jackson has fully outlined financial issues and a plan of action since the university first acknowledged problems in finance in February.

Three top finance officials all resigned Feb. 13. Andrew Harris, vice president for finance and administration and Jean Bush, senior vice president for finance, resigned from the Denton campus. Carlos Hernandez, who was serving as vice president of finance at UNT Dallas but was previously controller and associate vice president for UNT Denton, also resigned that day.

The next week, Jackson announced the system had hired outside auditors to look into financial irregularities and had alerted the State Auditor’s Office, which is also now investigating the issues with state-funded benefits.

Previously, university and system officials estimated the full scope of issues would be realized by June 30, and Jackson said he expects UNT President Neal Smatresk should have a better understanding of the budget shortfalls and a plan of action in the near future.

“I believe he is getting closer to having a true picture of the current year, FY14, operating budget at UNT,” Jackson said. “I think he’s confident that it can be addressed with reasonable, non-draconian operating budget management.”