Wright State University trustees release audit report of WSRI

In an effort to advance transparency about recent financial and management issues, today Wright State University trustees released a detailed audit report of Wright State Research Institute (WSRI) operations and have made it available to the public.

The audit, conducted by CPA firm Plante Moran, had been ordered by the trustees in 2015, when the trustees first learned of problems identified by federal authorities.

For the fiscal years 2011 to 2015, Plante Moran analyzed financial data for the Wright State Applied Research Corporation (WSARC), which is a 501(c)(3) tax-exempt, nonprofit corporation that serves as the administrative agency for WSRI and Wright State. WSRI is a separate department of Wright State. WSARC supports WSRI-awarded contracts for various research projects to be performed by WSRI and the faculty.

Watch the full news conference about the audit report >>

Trustees asked Plante Moran to identify potentially problematic financial and management transactions. The report did have impacts to broader university operations beyond just WSRI. The report covers several key areas:

• H-1B Visa process
• Named in grant hiring process
• Grant reporting
• Contract issues
• Affiliated entities
• WSARC disbursements
• Internal control issues (purchasing, invoice approval, conflict of interest)
• Best practices going forward

The issues and concerns highlighted in the report include:

• Use of H-1 B visa workers sponsored by the university being utilized at off-campus businesses that were essentially reimbursing the university for the work, potentially in violation of the law
• Personnel procedures being bypassed, which allowed less than a dozen positions to be hired at WSRI without going through the more rigorous hiring processes of Wright State
• Lack of proper documentation on multiple grants and contracts
• WSARC charging overhead rates less than what were approved by the Defense Contract Audit Agency, making certain contracts less efficient and resulting in some unrecoverable costs
• Conflicts of interests on some affiliated entity contracts and individuals
• Operational inefficiencies at WSRI and WSARC resulted in decreased likelihood of full reimbursement to Wright State on some projects
• Problems with some poor internal controls and compliance

Over the last several months, the university administration and trustees received and acted on recommendations in the report, largely resolving the issues identified. Beyond the recommendations of the Plante Moran report, several other improvements have been made in the management of the university. The list of both sets of updates includes:

• The university has upgraded its compliance program, including the addition of a new director of research compliance.
• Expanded the university’s legal team to keep pace with compliance demands.
• Improved administrative accountability by splitting oversight duties previously held by just the provost, empowering the provost with academic oversight and the president with operational oversight responsibilities.
• Implemented new uniform contract review procedures for purchasing.
• Empowered the law firm Dinsmore and Shohl to review existing H-1B visas and to manage the process for future hiring.

Wright State University Board of Trustees Chairman Michael Bridges ’81 said that today’s announcement represents a path forward for the university.

“Wright State University has seen its fair share of turmoil during recent times,” Bridges said. “As we look ahead to the next 50 years as a campus community, the release of this audit report represents one more step toward putting the university on firm footing.”

Bridges noted that the report captures a moment in time for the research institute and that most of the findings have already been addressed and systems improved.

“It’s important to note that the trustees waived attorney-client privilege to release this report,” Bridges said. “We’re committed to transparency, sharing what we’ve already done to address the report and making further changes as needed to address findings.”

Furthermore, the Board of Trustees has directed the university’s general counsel to review the audit report and to make any further legal referrals necessary based on the findings, while the administration reviews the report for further areas of action as well.

Board of Trustees Vice Chair Doug Fecher said that while the report identifies issues within the research institute, and more broadly the university, the response to it shows that the administration, trustees, WSRI leadership and the entire campus community is committed to making changes that will strengthen the university’s future.

“Just like in business, we became aware of an issue, sought to identify the root cause and to learn how to avoid such issues in the future,” Fecher said. “While we continue to review and recommend changes, the campus community can rest assured that the Board of Trustees stands steadfast in its determination to consistently improve and strengthen Wright State University.”

The report is available upon request to the Wright State Office of General Counsel at generalcounsel@wright.edu.