Audit: UT overstated pledges by $6.4 million, lacked internal controls

KNOXVILLE - The state comptroller this morning released a state audit of the University of Tennessee showing the Advancement Services office and Athletic Department overstated pledges by $6.4 million and recommending tighter internal controls on handling of donors' checks.

Among unfulfilled pledges was a promised donation of $1 million pledge that officials recorded as an actual pledge. UT declined to identify the donor.

The audit states that the problems were caused by "the failure of Advancement Services and Athletic Development personnel to understand the importance of their role in accounting for pledges and in financial reporting and to properly communicate to ensure coordination of recording and reporting on pledges," according to the financial and compliance audit of UT for the year ended June 30, 2008.

"The staff members accounting for pledges apparently did not have adequate accounting knowledge to ensure accurate financial reporting, and supervisors did not provide adequate oversight by external accounting personnel to ensure accurate financial reporting."

UT uses two separate systems to process donor pledges:

-- Advancement Services uses the Alumni and Development Information System (ANDI) to maintain records of all university gifts and pledges.

-- The UT Knoxville Athletic Department uses the ADvantage system to account for gifts and pledges for the Athletic Department.

Athletic Department pledges and gifts are initially entered into the ADvantage system and then are subsequently added to the ANDI system through a "multi-step data transfer process," the audit states.

The audit lists several internal control weaknesses, including a lack of monthly reconciliations between the two systems. Auditors found 10 donors with pledges totaling $800,000 recorded in ADvantage that were missing in ANDI.

In addition, the audit said Athletic Development staff opens mail, and with the help of additional workers, process gift checks in the Athletic Department's system. The comptroller states that a "walkthrough" of UT's operation found student workers who assist in processing gift checks were working in a different area from where checks are processed in the ADvantage system, according to the audit.

"Therefore checks and receipts were transferred from one work area to another without adequate security safeguards," the audit states. "In addition, as checks were received in the mail, receipts for checks were not immediately written, nor were the checks immediately logged. The failure to establish immediate control over these unsecured checks could lead to their loss or misappropriation."

The audit recommends that UT use a single system to account for pledges, instead of the separate systems used by Advancement Services and the Athletic Department, and that policies are revisited to make sure doubtful pledges are properly written off.

UT concurred with the finding but said it continues using "two separate departments to enter pledge data into two separate systems."

To avoid problems, UT said Advancement Services' staff and Athletic Department personnel will reconcile their two systems monthly to make sure pledge information is accurate and any differences are reconciled.

UT will develop written control procedures for Advancement Services and the Athletic Development to ensure proper accountability for pledges and gift receipts.

Additionally, the Athletic Department "will establish immediate control over all donor checks by preparing a daily log of mail receipts. An employee not performing cash receipting duties will reconcile the mail log with cash receipts and check deposits," the audit states.

The audit did not identify sources of any unfulfilled pledges.

A UT spokeswoman said some of the pledges were tied to the $1 billion, seven-year Campaign for Tennessee, but some pledges pre-date the campaign. No bonuses were tied to the overstated pledges, she said.

More details as they develop online and in Tuesday's News Sentinel.

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Comments » 44

golfballs03 writes:

This is Fulmer's fault.

pabashia#208095 writes:

Betcha Fulmer's fake $1M 'donation' was one of the ones singled out.

Major_Magilicutty writes:

Strange that it was exactly 1 million...reminds me of a certain pledge our beloved Fulmer made before he was terminated.

Hrmmmmm....

DennisVols writes:

Sounds like the fox was in charge of watching the chickens.
This story will only hurt donations in a tough economy. How can the university/AD be so uncontrolled with this amount of money. Someone needs to be held responsible.

Major_Magilicutty writes:

Re-reading, I see that KNS is the one planting that seed of doubt, insinuating that it was Fulmer who left the 1 million in unfulfilled pledges. Either way, tighten up boys.

volhallathunder writes:

easy call on that 1 million dollar pledge, Fulmer loved this school as long as he was coach and raking in 2.8 million a year. Now not so much.

newtonrail writes:

in response to Major_Magilicutty:

Re-reading, I see that KNS is the one planting that seed of doubt, insinuating that it was Fulmer who left the 1 million in unfulfilled pledges. Either way, tighten up boys.

Unless article has been changed, nothing is said about The Fulmer's donation. It was a joint donation over time, and I assume all of it has not been paid which is not The Fulmer's fault. And they may pay the full amount. No one on this board knows. I will say VSAF sends a letter acknowledging my puny contribution within a few days. On another note, Lane Kiffin was the featured speaker at Boys and Girls Club of Cleveland at Breakfast this AM. With price of attending, auctioned signed footballs, pictures, etc., helped raise over $20,000. for local 7 clubs in area. One Georgia fan even bought football for $300. and Lane hand delivered to him.

volhallathunder writes:

in response to DCdynasty:

(This comment was removed by the site staff.)

Wipe your mouth off, you dribbled a little.

jdcvols#230433 writes:

It is B Ray Thompson who made the pledge and didn't follow through.

DennisVols writes:

Wow it is after 4pm and all the lil gator elementary school girls got home safe so they could get on their lil pink laptops and post messages on a UT site because they are not mentally capable of finding one that suppots the gators.

19SEP09 writes:

in response to DCdynasty:

(This comment was removed by the site staff.)

Not so fast DC. You do realize that UT makes money when UF goes to a bowl game.
It's that SEC family thing.

These UT guys are biting the hand that feeds....

DennisVols writes:

UT was the only SEC Ath. Dept to not operate in the red until this year. Seems to me that the gator girls should be questioning why their program has been in the red for years now.
Must cost alot to keep bailing out and paying for lawyers when your players get arrested huh?

volingreensboro writes:

7 of the first 24 comments were by the gator lopers, really guys????? You gators are worried, and are checking for vol news so much it makes me feel better about my vol news addiction!!!!

19SEP09 writes:

in response to DCdynasty:

(This comment was removed by the site staff.)

You would think they would be more appreciative, but they just can't stand living in our shadow.

It's kinda like Fredo Corleone in the Godfather.

And we all know what happened to Fredo.

Ironcity writes:

in response to volhallathunder:

easy call on that 1 million dollar pledge, Fulmer loved this school as long as he was coach and raking in 2.8 million a year. Now not so much.

Some of you guys are complete morons. If you recall, we had an issue that involved a divorce and the removal of a name off one of our buildings because the other party would not honor the pledge of the couple. I am pretty sure that is the 1 million that is being discussed here. I find it rather amusing that some of you who have never donated a dollar to UT would question our old coach who has donated more money to this school then you have likely made in your lifetimes.

voloffaith writes:

in response to Ironcity:

Some of you guys are complete morons. If you recall, we had an issue that involved a divorce and the removal of a name off one of our buildings because the other party would not honor the pledge of the couple. I am pretty sure that is the 1 million that is being discussed here. I find it rather amusing that some of you who have never donated a dollar to UT would question our old coach who has donated more money to this school then you have likely made in your lifetimes.

Thank you Iron City for the "first" sane post on this article. Interesting that all the Coach Fulmer haters automatically assume that his pledge must be the one that didn't pay up. I had forgotten the article a few months ago about the removal of the name off the building across street from Thompson-Boling arena. I'm sure all the bashers would not be upset if they received the same treatment as they feel is ok to put on our former coach(?) Didn't think that it would be acceptable now that shoe would be on other foot as soon as it is removed from their mouths. I think the issue(on topic) is our system needs better accountability to not puff or pad numbers inconsistently. Goodday gents....

TNFootball writes:

in response to pabashia#208095:

Betcha Fulmer's fake $1M 'donation' was one of the ones singled out.

I bet you are right, and it never transpired! I would bet a nickel on it.

TNFootball writes:

in response to volingreensboro:

7 of the first 24 comments were by the gator lopers, really guys????? You gators are worried, and are checking for vol news so much it makes me feel better about my vol news addiction!!!!

I'm with the majority of Tennessee fans on here in that I ignore their posts and won't respond to them.

They love responses to their posts, and this is what drives them, so most of us deprive them of that! Most likely it is the same person anyways with more than one log-in name!

Colliervol writes:

What the accounting dept. does or doesn't do has little effect on building a football team or on me as a regular fan. Haslem and Thornton will just have to write a bigger check to cover the shortfall. Next subject.

Colliervol writes:

in response to Ironcity:

Some of you guys are complete morons. If you recall, we had an issue that involved a divorce and the removal of a name off one of our buildings because the other party would not honor the pledge of the couple. I am pretty sure that is the 1 million that is being discussed here. I find it rather amusing that some of you who have never donated a dollar to UT would question our old coach who has donated more money to this school then you have likely made in your lifetimes.

Iron, I'm also thinking that, in this economy, there are probably several big pledges that didn't get honored. Not just the one from the divorce.

RoadTrip writes:

Fellow Vols - unless I missed it in the article I saw no mention of restating the income statement from the past year. This article is about restating of pledges, which are used to project future funds that are used primarily for capital projects such as buildings and equipment. If I am correct, the previously released numbers are still valid. I am not an expert on accounting for entities like this, however, I doubt they record pledges as income before actual receipt of the money. However, if they do it that way it would be an accepted practice by all universities and colleges - including the interlopers' schools.

Now, the auto manufacturers do that when they record a sale as the car comes off the line before it is actually ordered by the dealers - and the practice is biting them on the tail...

pms151 writes:

I smell Pumpkin pie here. Somebody send Mikey a new calculator and a lesson in how not to treat your customer before their check clears.

OldSmokey writes:

in response to gatorz4:

(This comment was removed by the site staff.)

Let me be the first to apologize. For never having told you to kiss my VOL A$^!!!

pdhuff#552644 writes:

Just print more money.

Write more checks.'

Simple.

ArealVolFan writes:

These moron gator fans would like to think this is some sort of big deal, but its not. We sucked at football this year and it hurt us donation wise, and no bowl game hurts too. Fortunately for us, there is the CBS and ESPN deals that will easily erase this problem. Not to mention we are on the last year of the Adidas contract and we will be set to make more money from either them, Nike, or Under Armor. We aren't the only school having some sort of financial trouble. Florida is as well. There is an article about it.

http://www.gainesville.com/article/20...

cobbwebb writes:

in response to DCdynasty:

(This comment was removed by the site staff.)

dc- i actually like your last idea, if we did this, then the hulkster could snatch up lil urbie before the game, give him the big boot, and the patented leg drop, snap him in half, and finish him for the 1,2,3, sounds good to me! lol!

BSweet writes:

in response to DCdynasty:

(This comment was removed by the site staff.)

It's funny, I remember you posting on this site how "classy" Urban Meyer is, yet it is obvious that you and your ilk have no idea what class is. You are an embarrassment. To think, this is how you spend your days. I pity you.

BigVolinCarolina writes:

Some fuzzy math? What in the world?

This is Tennessee. We're not the State of Florida during the the 2000 Election.

vol1994 writes:

in response to gatorz4:

(This comment was removed by the site staff.)

any your comments just show how STUPID you really are.
GO to another site.

KNS- Please ban this guy.
It is a shame that this guy has to breathe the same air as the rest of us. How juvenile your comments are...
Grow up Forrest!!

bytusbk#272652 writes:

Just like the kns report yesterday about the 2.2 mil that you uf azz's jumped on to make fun of. Your still wrong in your math! the 2.2 was a projected income that did'nt happen because of no bowl game revenue and lower than expected ticket sales... The 6 million in pledged donations was due to no payment by a few, one in paticular that was mentioned in previous post about having said persons name removed from building. And lastly if you read the end of story you will see some of the 6 million not donated yet is in a 7 year billion dollar donation plan..

murrayvol writes:

in response to TNFootball:

I bet you are right, and it never transpired! I would bet a nickel on it.

I don't think FHCPF backed out on his pledge.

pdhuff#552644 writes:

in response to murrayvol:

I don't think FHCPF backed out on his pledge.

I would suspect Dupree as welching.

I doubt if TJ ever comitted to a mil.

GaytorHater writes:

in response to DCdynasty:

(This comment was removed by the site staff.)

It appears that DC buttwipe and Gatorz are the same poster

Greer_Vol_22 writes:

I blame it on "new math".

belayvol writes:

in response to gatorz4:

(This comment was removed by the site staff.)

Hold your breath. No really, hold it longer. Show that team spirit and go gator blue in the face. I know you can do it.

pdhuff#552644 writes:

in response to biggestutfan:

(This comment was removed by the site staff.)

True, if at first you don't succeed, lower your standards.

Will work eventually.

tennezz writes:

in response to gatorz4:

(This comment was removed by the site staff.)

you don`t have a dog in this hunt, so don`t worry about it! It`s not your problem, And believe it or not, You do not have the answers!

tennezz writes:

in response to DCdynasty:

(This comment was removed by the site staff.)

And the azz has spoken!

tdforvols writes:

My uncle Jed could pay this pitiful amount out of his back pocket so sorry Gator fans...the games WILL go on!

floridavolsfan writes:

in response to golfballs03:

This is Fulmer's fault.

Hammy bears no responsibility!!!

floridavolsfan writes:

in response to DCdynasty:

(This comment was removed by the site staff.)

About 375K!!!

floridavolsfan writes:

Look at the 2 basketball teams and the football team----- way under-acheiving in 2008! Hammy keeps writing checks for the under-acheivers club! Something smells...STENCH CITY!!!!! Knock-a-rockaville!!!

floridavolsfan writes:

Hammy's hiring NY Govenor David Patterson to break down film for 1.2 mil. a year!!!!

floridavolsfan writes:

Hammy needs to apply for some TARP FUNDS!!! (this is really not funny at all)!!!! Call Tim Giether now! Even better---bring him on staff!!

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