By Rob Moritz

Arkansas News Bureau

Current and former employees of the University of Arkansas are testifying this week before a legislative committee regarding financial dealings in the fundraising arm of the university.

Several witnesses were present and prepared to testify last month when the Joint Legislative Auditing Committee quietly accepted state audit findings of a multimillion-dollar shortfall in the UA Division of University Advancement without taking any testimony.

Rep. Mark Lowery, R-Maumelle, who asked he Joint Performance Review Committee to consider the audit and allow the testimony, said it was important for the principals to be heard.

"Especially since we’re talking about issues of (budgeting) process and whether the process was followed, how to improve it and all that," said Lowery. "Joint Performance is probably a very appropriate committee for that to end up in."

The meeting began Tuesday at the state Capitol.

A state audit presented to the auditing committee in September found poor fiscal oversight and a failure to follow school policies and procedures in the UA’s advancement division led to a deficit of $4.19 million over fiscal 2011 and 2012 in both university and UA Foundation funds.

Also, while "revenues for the division stayed relatively constant" for both years, spending in the division rose dramatically from $7.94 million in 2011 to $13.23 million in 2012, the audit said.

The audit, requested early last year by UA Chancellor G. David Gearhart after administrators discovered that the Advancement Division had overspent its $10 million budget in 2012, found that account receivables posts made by the division "partially obscured the deficits in the financial statements."

The report found no evidence of intentional misappropriation of resources for personal gain, and that the "primary driver of accumulated deficit balances was the addition of staff with no permanent funding."

During the September meeting, fired UA spokesman John Diamond testified under oath that he was told by Gearhart and others to destroy documents related to the budget shortfall in the advancement division. Gearhart disputed the accusations.

The audit findings, as well as the conflicting testimony of Diamond and Gearhart, were forwarded to Washington County Prosecutor John Threet, who in December issued a report that said no evidence of criminal activity was found.