Chancellor Larry Vanderhoef has taken several steps to ensure that he and the campus's other senior managers are fully complying with university policies regarding travel and entertainment expenses, as well as the chancellor's own administrative fund and housing expenses.

A recent campus audit determined that senior managers did not always follow campus policy for internal approval of expenses. However, the audit found that senior managers did not receive additional compensation through expense reimbursements. It was lack of knowledge, not willful attempts to circumvent policy, that was the likely cause of approval errors, according to Richard Catalano, director of Internal Audit Services.

"I know how seriously we all take our responsibilities to spend university funds wisely and appropriately, and I have no doubt that you have acted in accordance with policy as you have understood it," Vanderhoef said in a July 20 letter to deans, vice chancellors and vice provosts yesterday. "With the help of this audit, we will be able to strengthen our policies and practices and continue the tradition of responsible stewardship that has long characterized this campus."

Vanderhoef requested the internal audit — and another, of his own expenses — last December during the early stages of the executive compensation controversy in the UC system. Patrick Reed, the UC systemwide auditor, subsequently instructed all campuses to do the same.

This week's agenda for the Board of Regents meeting included Reed's briefing on the campus audits. Reed was expected to report that audits at all 10 UC campuses identified issues similar to those at UC Davis, and that no funds were inappropriately or excessively spent.

Vanderhoef has called for the following corrective actions at UC Davis:

• A directive to senior campus administrators confirming the approval process for travel and entertainment expenses. Further, the chancellor said he had requested the preparation of an expense-approval guidebook by Sept. 30, and training sessions by Oct. 31 for senior managers and their staff who prepare reimbursement requests.
• A review of whether a new online expense reporting and approval system called MyTravel — already being developed before the audit — can help avoid mistakes. Pilot testing began this week, and the system could be in place campuswide within 18 months, said Michael Allred, associate vice chancellor for finance.
• A new oversight system for catering expenses and Mondavi Center ticket purchases, so that they are reviewed and approved the same as other entertainment expenses. Policy revisions for this are due by Jan. 1.
• A new approval process for the chancellor's travel and entertainment expenses, routing them through the associate vice chancellor for finance, who has dual reporting duty to the chancellor and the UC Office of the President. This will strengthen controls by having these expenses reviewed by a senior manager outside the chancellor's office.

A separate audit of the chancellor's administrative fund and housing expenses for the 2004-05 fiscal year "did not identify any significant violations of university policy," according to the report.

The travel and entertainment audit focused on the expenses for the 2004-05 fiscal year for the senior management group, which is comprised of 28 deans, vice chancellors, vice provosts, health system executives and other campus leaders.

Specifically, the audit found incorrect review and approval for about 40 percent of travel reimbursement vouchers; about 15 percent of entertainment expense vouchers; catering charges incurred through Sodexho, the main campus's food service vendor, and the medical center's Food and Nutrition Services; and $3,429 worth of ticket purchases for Mondavi Center events.

"It appears that Mondavi Center tickets (used for business purposes) were not considered entertainment expenses requiring review and approval" by the Offices of the Chancellor and Provost, the audit states.

The senior management group audit lists the group's travel expenses in 2004-05 at about $230,000, or 1.3 percent of the campus's total travel costs, and the group's entertainment expenses in the same year at about $50,000, or 3.1 percent of the campus total.

The report examined 517 travel vouchers worth about $225,000 and 314 entertainment vouchers worth about $49,000.

Of the vouchers with supporting documentation, auditors said, 206 of the travel reimbursements and 46 of the entertainment reimbursements "were not reviewed and approved at the appropriate level" — identified as the Offices of the Chancellor and Provost, or the vice chancellor for Human Health Sciences (for senior managers in the UC Davis Health System).

The audit "confirmed that a practice exists" of senior management group executives approving expense reports for events they hosted, by listing their staff members as the official hosts. There was no subsequent review by the Offices of the Chancellor and Provost, or the vice chancellor for Human Health Sciences.

The other audit notes that Vanderhoef in 2004-05 spent $28,211 of the $31,100 allocated to the chancellor's administrative fund. During the same year, the campus budgeted $85,400 for the maintenance of Vanderhoef's university-provided home, and spent $58,667.

The audit notes that the Offices of the Chancellor and Provost "had not yet fully established an accounting structure," as required, for the annual reporting of expenses associated with the chancellor's residence, travel and entertainment, gifts, automobiles, memberships and other support costs, along with taxable expenses.

The Offices of the Chancellor and Provost have since corrected this by establishing the required accounting system, the audit states.