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Attorney General Demands University of Louisville Provide High-Profile Audit For Review

in Louisville, Ky., on Wednesday, June 4, 2014. Photo by Eleanor Hasken | Kentucky Center for Investigative Reporting
Eleanor Hasken
in Louisville, Ky., on Wednesday, June 4, 2014. Photo by Eleanor Hasken | Kentucky Center for Investigative Reporting

The state attorney general’s office has asked the University of Louisville to explain why it still won’t release a high-profile audit that examined the school’s financial controls.The Kentucky Center for Investigative Reporting has sought a copy of the report since April and last month filed an appeal with the attorney general following the university’s denial of a public records request.The university has claimed the audit is still a draft, and denied KyCIR’s request to review emails and other correspondence between the university and the Louisville-based firm, Strothman and Company, which conducted the review.In a letter sent to the school’s attorney, and dated June 27, Assistant Attorney General Amye Bensenhaver asked U of L officials to substantiate the university’s position on withholding the document from public view. She asked that the school respond by Wednesday, July 2.As part of the appeal process, Attorney General Jack Conway’s office will look at the records in camera, which means the office will review the document in private, and is bound by law not to release its contents.Bensenhaver also asked U of L officials to identify the school trustees who have reviewed the audit, as well as when they reviewed it and why. She asked whether revisions of the report were anticipated and when. Further, Bensenhaver requested information on board and committee meetings during which the report was presented.Though it has withheld the audit from public view, the university on March 26 authorized a $100,000 increase in payment to Strothman and Company for its assistance in implementing the report’s recommendations. In a previous response to the attorney general’s office, the university’s outside attorney acknowledged that the school was continuing to work with the auditing firm “to implement recommendations.”Bensenhaver highlighted the admission in her follow-up letter to the school.“If Strothman’s recommendations have not been approved (finalized) by the university, how can the university commence their implementation?” Bensenhaver wrote.

Read the full letter from the Attorney General's office here.A news advisory issued Tuesday morning by U of L announced that the audit and compensation committees of the board of trustees will meet Wednesday — the same day as the deadline to respond to the attorney general — to “discuss a financial review completed by an outside firm.”The advisory characterizes the review as “completed,” which is inconsistent with the school’s other recent claims.U of L President James Ramsey is also expected to give a progress report on his goals and the overall direction of the university, according to the advisory.“The board of trustees audit committee with go over a draft of what we believe will be a near final document,” Cindy Hess, a university spokeswoman, said Tuesday afternoon.“What that means is they will discuss it, and they may take action on it and that action — remember this is just a committee meeting — so if they take action on it, it would be to give their endorsement to go on to the full board.”Hess said the university will provide a copy for public view at that meeting but not before.The full board of trustees is already scheduled to meet next week for its annual retreat.Last fall, Ramsey recommended hiring an outside firm to review the school’s financial management in response to an accusation of theft in the school’s Department of Family and Geriatric Medicine — one of a series of high profile thefts across the university in recent years.

Read the school's deal and amended contract with Strothman and Company.So far, the university has cut two checks to Strothman totaling $160,522. Another $100,000 has been authorized. The status of the report has raised questions by trustee Steve Wilson and caused speculation in the community about what the audit contains. U of L trustee Jonathan Blue said Tuesday that he briefly reviewed the draft that was presented to the board in April but has not seen the version that is expected to be presented tomorrow. "I don't know what's changed so it would be truly unfair and unjust for me to tell you anything about that because I haven't see the new one,” he said. In its proposal, the company outlined five areas it would review at the university’s request:

    • All internal reports issued by the U of L’s Office of Internal Audit since 2007 to determine whether or not recommendations have been implemented.
    • The operations of the Office of Internal Audit itself to make sure all audits are current.
    • The qualifications of employees with signature authority for bank expenditures and deposits.
    • Financial controls for faculty professional practice plans at the Health Science campus.
    • Bank accounts in a 50-mile radius that exist in the name of University of Louisville, University of Louisville Physicians or any derivative.

This story was reported by Louisville Public Media's Kentucky Center for Investigative Reporting. Reporter Kristina Goetz can be reached at kgoetz@kycir.org or (502) 814-6546.

Kristina Goetz is an investigative reporter specializing in higher education, military, law enforcement and public financing.