The University Record, June 6, 1994

Department of Communication audit prompts review of endowment use

The Department of Communication will be reviewing its use of funds from endowments as a result of an internal audit.

The audit, which covered the period from July 1989 through December 1992, concluded that some expenditures charged by the department to three privately funded endowment accounts may not have been strictly in accordance with the original intentions of the donors.

The audit involved the expenditures of income generated by the Harry and Helen F. Weber Endowment, Howard R. Marsh Professorship in Journalism, and Howard R. Marsh Center for the Study of Journalistic Performance. Auditors noted that “a clear understanding of the conditions of use was not available for these endowments. Verification that the funds were used in accordance with the donors’ intent could not be done at the department level due to lack of clear guidelines on use.”

In fall 1992, said the audit report, “the College of Literature, Science, and the Arts (LS&A) added an additional administrative position to the department and changes were initiated that improved the administrative and financial management of the department.” The changes were instituted under the direction of Neil Malamuth, who chaired the department from September 1991 through early 1994.

The Weber Endowment, established in 1975, is to be “used to further the preparation of students at the U-M for professional careers in journalism and communication. To this end internships will be established in which students can gain professional journalistic and communication experience of the highest quality.” The audit report noted that, in addition to funding internships, the Weber account also was used to fund salaries of supplemental teaching staff, support staff, instructional assistants and library staff, as well as for publication and distribution of Newsline, the department’s alumni magazine.

During the time period audited, no individuals were formally appointed to the Marsh Professorship, which was established in 1974 “to bring distinguished persons to this campus for visiting assignments” and was to be “filled by distinguished visiting professors of journalism drawn from both the professional and academic worlds.” Payroll expenses charged to the endowment account in 1989–92 did support supplemental teaching staff, visiting lecturers and guest lecturers.

The Marsh Center for the Study of Journalistic Performance was created in 1974 to support “inquiries into journalistic issues” including “the economics of the press, recruitment and career mobility in journalism, effects of news media on audiences, and relationships between government and the press.”

Auditors found the endowment account was used to fund payroll expenses for student and staff assistants as well as faculty attendance and presentations at domestic and international conferences. “While it appears that some of the expenditures fall within the purposes of the Marsh Center endowment,” said the report, “without clear guidelines it is difficult to determine whether all these expenditures would meet the purpose of the endowment.”

In response to recommendations contained in the audit, said LS&A Dean Edie Goldenberg, “we have already begun reviewing the endowment files with an eye toward developing clear and specific guidelines for the use of the endowments in the future. These guidelines will be reviewed by the University’s Office of the General Counsel to ensure that they meet the legal requirements of the endowment. With firm guidelines in place, the department will then review earlier expenditures, making adjustments where necessary.”

The audit report advised that formal, long-range program goals and financial budgets be developed for each of the endowments. Further, the auditors recommended that all endowment funds used by the University should have formal, written guidelines for use, and program statements to assist in monitoring the use of funds prior to the formal establishment of the endowment funds by the University.

The audit, delivered to the offices of the dean of LS&A, the provost and executive vice president for academic affairs, and the general counsel on May 31, requires a formal response from each of the three offices within 30 days.