Eastern Michigan University admits errors and outlines changes

Saturday, September 11, 2004

In Friday's response, the university agreed with the Auditor General's recommendations, and also admitted:

It failed to submit the needed paperwork for state approval for University House on time and with accuracy. When the paperwork was filed after the project was completed, it listed the cost at $3.5 million. The university has now filed a form listing the project cost at $5.3 million.

The university refinanced debt to help pay for the house, gaining $2 million that was used for the project. But $250,000 of that was needed to pay additional interest, forcing EMU to use student tuition and state money to cover the difference. The university had promised that no state money or student tuition funds would be used for the original $3.5 million project. This $250,000 was paid back from money gained from royalties, Beaghan said.

The response outlined changes for the future, including:

nThe cost of all construction projects will now include all work on the site. From the beginning, the officials said University House cost $3.5 million, but this didn't include $1.8 million for much of the landscaping, the commercial kitchen inside the house, cost of the land and more. The university, according to the state audit, spent another $700,000 on costs related to University House, such as the cost for the university's own audit of the project.

nBetter oversight by the Board of Regents. A more comprehensive report on all construction projects costing $50,000 or more will be given to regents at each meeting. Regents meet five times a year.

The new position of construction accountant was created and the job opening has been posted. This person will keep track of construction budgets, Beaghan said.

A senior manager inside the business office will oversee project finances.

Use and finance statements, the paperwork the state requires for all construction projects over $1 million, will be filed.

More rigorous accounting standards will be used.