Northern Arizona University paid more than $40,000 in travel expenses for President Rita Cheng and her husband that didn't comply with university travel policies and weren't properly documented, a state audit found.

The spending included more than $30,000 for airplane tickets to Russia, and the amount of improper spending represented nearly 62% of the total Cheng and her husband Tom Cheng, who also works at NAU, spent on travel in the 2019 fiscal year, the audit released Friday by the Arizona Auditor General found.

NAU didn't follow university and Arizona Board of Regents' travel policies properly, which "put public monies at potential risk of misuse" and "set an unfavorable tone that policies do not need to be followed," the audit said.

The spending on the trip to Russia and another to Israel exceeded appropriate costs, the audit found.

NAU disputed the idea that public money was at risk but acknowledged room for improvement.

"At no time were public monies at risk of misuse in our review," Wendy Swartz, associate vice president for the NAU Comptroller’s Office, said in a statement. "The report demonstrates a need for additional training."

In November 2019, after the university was sent the results of the audit, the Northern Arizona University Foundation reimbursed the university $37,785 to cover the airfare to Russia, Tom Cheng's airfare to Israel, Russian visas and early check-in fees, the audit said.

A regents' policy approved in 2014 allows spouses to travel with presidents for official purposes as long as the spouse's expenses weren't paid by state funds.

The president also reimbursed NAU $179 for a duplicate hotel stay.

Swartz said NAU staff believed they were following all policies properly for the president's travel and were not aware that the documentation they kept was "inadequate in terms of best practices."

"Moreover, once the travel expenses that did not have complete documentation attached were discovered, additional steps were taken which included, as appropriate, immediate reimbursement including reimbursement via the NAU Foundation," Swartz said.

The audit comes as NAU's financial situation has caused concern among faculty and students at the university.

Last year, an inflated revenue projection based on an enrollment target that wasn't met caused an $11 million budget shortfall. This year, the university adjusted its budget downward by 0.5%, or about $3 million.

The university also saw its first enrollment decline in 14 years this year. And, in November, a member of the regents voted against Cheng's contract extension, a rarity for a board that sees few dissenting votes.

Where was money spent?

Much of the expenses came from a trip to Russia, where the Chengs spent more than $30,000 on airfare. They purchased business- and first-class tickets, plus two additional replacement business-class tickets after experiencing travel delays, the audit said.

This trip, the university said in its response to the audit, included meetings with university and government officials including the U.S. Ambassador to Russia.

Additional tickets were needed to make sure the trip could happen, NAU said in its response. The cost for the trip was then reimbursed by the NAU Foundation.

The university did not say what, specifically, the Russia trip was for. But NAU has relationships with multiple Russian universities and offices, an NAU News article said in December. It's not noted when the trip to Russia took place.

"With NAU’s relationship with Moscow State University, Sochi State University and specific Russian government offices, we are seeing significant growth of NAU’s influence in the realm of Russia’s higher education," Cheng told NAU News. "We look forward to a long and fruitful partnership with our Russian counterparts."

Another trip, this time to Israel, included a $5,862 round-trip business-class ticket for Tom Cheng, despite an offer from the event sponsor to pay for coach airfare for both the president and her husband, the audit said.

The event in Israel was part of Project Interchange, an educational institute of the American Jewish Committee, NAU said in its response. In total, 10 university presidents and chancellors and their partners attended, NAU said. Tom Cheng's flight cost was reimbursed by the NAU Foundation, NAU said.

Additionally, Cheng received more than $2,000 in reimbursements for her and her husband's expenses on items not allowed by university policies, like visas to Russia, early check-in fees, valet parking and room service. In one instance, she was reimbursed twice for a hotel stay.

Thirteen hotel stays that year cost more than the allowable state government rate. The overages totaled $1,751, the audit said.

Of these, NAU said nine stays were in the Phoenix area, where rates can exceed the allowable government rate, especially during the spring's peak season, which coincides with the Arizona legislative session. NAU believed the higher rates were justified, but couldn't provide the documentation to show that.

Some of the expenses did not include the proper documentation for the trips' public purposes or benefit, the audit said.

The president signed off on the summaries of her travel, indicating they were correct, the audit noted.

The university also inappropriately paid expenses for five business trips taken by the Chengs that also included personal travel despite a lack of documentation to show whether the personal travel increased costs for the trips.

"Consequently, the University cannot show whether it paid higher costs to accommodate their personal travel," the audit said. "Paying costs associated with employees’ personal travel may also have income tax consequences, including a requirement to treat the payments as compensation."

The audit recommended improving procedures for reviewing the Chengs' travel expenses and more detailed, complete reporting. All exceptions to travel policies should be pre-approved in writing, the audit said.

NAU's response

The university's response to the audit, dated Jan. 2, said the university worked to improve in the areas recommended by the audit. The regents also are aware of the audit and have said they "believe there was not an intentional misuse of funds," the letter signed by NAU Chief Financial Officer Bjorn Flugstad said.

The audit's findings about inappropriate spending related to a "lack of sufficient supporting documentation," he wrote.

"NAU firmly believes no employee deliberately did not comply with applicable policies," he wrote.

Each of the trips mentioned by the audit had a public purpose of "further advancing the institutional mission of the university," Flugstad wrote, and led to "demonstrable results" like enrolling new students or creating new visiting scholar programs.

Business- and first-class travel was only used for international trips, he said.

Reach reporter Rachel Leingang by email at rachel.leingang@gannett.com or by phone at 602-444-8157, or find her on Twitter and Facebook.

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