AHEC Executives Resign Before Audit Revelations

Rick Guyton abruptly ended his eight-year stint as the director of Fayetteville’s Area Health Education Center-Northwest on June 2. Associate Director Arlis Herriman also resigned the same day.

Eight days later, the accounting activities of AHEC-NW — a division of the University of Arkansas for Medical Sciences — were scrutinized in an internal audit. Both Guyton and Herriman are mentioned in the audit, which found $329,532 worth of accounting irregularities.

Some of the funds are owed to other entities, some are simply misappropriated, and others are apparently owed to AHEC-NW.

The Northwest Arkansas Business Journal obtained a copy of the audit through a Freedom of Information Act request.

Guyton, who gave up his $178,768 annual salary, said the organization “expected documentation that wasn’t there.”

“But we had never been given the guidelines for what that documentation should be,” Guyton told the Business Journal.

The audit committee concluded that AHEC-NW’s control over grant administration may be a weakness, and that the current controls over “time and effort reporting” do not appear to reduce the risk of error.

Sterling Moore, associate director of administration for UAMS regional programs, is serving as AHEC-NW’s interim director. He did not return phone calls requesting a comment.

Leslie Taylor, UAMS’ associate vice chancellor for communications and marketing, said it’s the organization’s policy not to comment on personnel matters. She did describe the audit itself, however, saying UAMS had never before performed an audit of this scope on any AHEC office.

There are seven AHECs statewide, although the discrepancies and subsequent audit only focused on the Northwest Arkansas office.

“The audit brought to light some problems with AHEC that needed to be brought to light and needed to be fixed,” Taylor said. “The problems appear to be limited to the Northwest AHEC. We take these things very seriously, and if there was another complaint within UAMS, we would handle it with the same due diligence.”

AHEC-NW had an $8.1 million budget for 2004, a 5 percent increase over 2003. The audit found that AHEC-NW overspent its fiscal 2004 budget by $113,632, apparently by hiring employees into positions that were not included in the budget.

The report stated that Guyton personally owes UAMS a total of $8,445, of which he’s already paid back $1,320 for duplicated travel expenses. The remaining $7,125, according to the audit, relates to alleged duplicate payments and payments that were insufficiently supported by the director.

Additional audit findings include:

• Overcharges of 38 months’ rent for a Little Rock apartment for UAMS residents totaling $19,190, which was paid by Northwest Medical Center of Washington County to the AHEC office.

• An “unreconciled difference” of $118,714 for fund activity transactions.

• Overpayments on 25 trips by Guyton totaling $849 because of duplicate reimbursement requests (including $216 for a 2002 trip to Las Vegas and $255 in lodging for a 2001 trip to Little Rock).

• 88 allegedly unsupported honorariums totaling $49,597. Honorariums are typically fees paid to outside agencies or people for performing services such as a speaking engagement. Of that amount, $850 was paid to three AHEC-NW employees.

• AHEC-NW owes the U.S. Department of Health and Human Services back $20,000 of a $29,000 bioterrorism grant because the Fayetteville office didn’t use the funds appropriately. The money was approved to support 50 percent of the salary for Mary Ann Shope, AHEC-NW’s director of advancement and public relations. The audit said Shope’s job description didn’t include activities related to the grant.

• An employee hired as a Licensed Practical Nurse in 1996 was actually performing janitorial services, although her $31,000 salary was not changed. She in turn hired two nieces to become her cleaning crew — one in 2000 and one in 2003. The cleaning crew members were described as “accounting techs” and made $14,000 each, but they never submitted leave reports or timesheets for hours worked.

The LPN left in April. One “accounting tech” left in September. The other remains on staff and her classification will be changed, Taylor said.

Taylor said AHEC-NW will continue to review its accounting system.

“We are looking at a new system of checks and balances to prevent anything like this from happening in the future,” Taylor said.

Recollection

Guyton said he cannot adequately recount the $7,125 the audit indicates he owes, but he will continue to try to substantiate his receipts.

Guyton said he didn’t even detect the $1,320 worth of overpayments he received (and has already paid back) because the funds were directly deposited into his bank account. Guyton said it was important to note that AHEC-NW hadn’t been audited in 18 years.

He followed the protocol that had always been in place at AHEC-NW, he said. But when the auditors examined his eight years’ worth of expenses, Guyton said, he was suddenly expected to come up with additional documentation, such as the purpose of a meeting and who was in attendance.

Guyton said he was supposed to build partnerships and collaborations. He said he routinely met with people and conducted business meetings that might incur an expense.

AHEC-NW partners with Washington Regional Medical Center in Fayetteville, Northwest Medical Center of Washington County in Springdale, St. Mary’s Hospital in Rogers and North Arkansas Medical Center in Harrison.

The organization is funded through state appropriations, professional fees, grants and other miscellaneous sources, the audit stated.

It has two clinics, one off Joyce Boulevard in Fayetteville and one at Northwest Medical Center in Springdale.

When asked if he would have done anything different, Guyton said he wished he would have called for an audit eight years ago.

“I have loved my work and enjoyed it very much,” Guyton said. “In retrospect, I really don’t know what I would have done differently.”

Guyton said he is now contemplating early retirement. He said he left the organization of his own volition because he and AHEC-NW were going in different directions.

“My perception is that I was probably more progressive than some would desire,” Guyton said.

Ervin Weighs Audit Findings

John Ervin, owner of Ervin & Co. CPAs in Fayetteville, said audits aren’t necessarily a bad thing.

“It’s a good control measure to know that someone outside is going to come and look at your work,” Ervin said. “And hopefully the operating is adhering to policies and procedures.”

Ervin said the time in which the expense errors occurred, such as those examined in the UAMS audit, should be considered.

“If it is over a two- or three-year period, it’s not good, but that doesn’t mean it’s fraudulent activity,” Ervin said. “Irregularity doesn’t necessarily mean fraud. It could simply mean that you didn’t adhere to policies and procedures.”

Ervin said the results of the audit could just prove poor management was in place. He said an irregularity could just be considered a forgotten receipt for dinner with a client.

“Usually in a non-profit situation like that [AHEC], they keep a pretty tight grip on things because you are dealing with the public’s money,” Ervin said.

He said when an organization like AHEC-NW owes money for something such as an ongoing program, funding might be reduced for the program in future years by the amount misused.

“But they could say, cut me a check,” Ervin said. “And most non-profits don’t have the money to cut them a check.”

Ervin also commented on the payment of honorariums cited in the audit, of which $850 of the $49,597 paid out in 2004 was to AHEC employees.

Any form of compensation that is paid to an employee is considered additional salary and should have appeared on a respective income statement to be taxed, Ervin said.