Expenditures categorized by auditors as "disallowed and questionable charges," and previously reported in The Advertiser, included $26,000 charged as business expenses and later reclassified as personal; and $1,447 in multiple and conflicting credit card charges.

In reviewing the way the fund was managed, UH Board of Regents vice chairwoman Kitty Lagareta said she was "absolutely stunned" that expenses could be reimbursed "without giving receipts and proper documentation."

And she said it may be necessary for the board to monitor the discretionary fund, which is provided to the president by the UH Foundation.

"Perhaps, since we oversee the president, that should be something we have better access to so we can review it on a regular basis going forward," Lagareta said. "Why weren't certain procedures being implemented properly and why weren't certain procedures being applied to the president?"

A legal battle between the regents and Dobelle was launched on June 15 when the regents announced they had fired him "for cause." Regents rescinded their decision in a mediated settlement that included a $1.05 million cash payment to Dobelle, payments on his $2 million insurance policy, payment of his attorneys fees, and a paid faculty position for two years. Under the agreement, he will resign as president effective Saturday.

Recommendations

The final audit includes recommendations for tightening procedures and policies on the protocol fund, which was set up to be used for travel and entertainment to promote the university.

The audit notes there is no one clearly authorized to sign the president's travel or vacation forms, and much of the time Dobelle signed his own, sometimes after the fact. Usual university procedures call for approval by an employee's supervisor.

Even the UH Foundation —which provided the $200,000 for the fund annually in Dobelle's last two years, and $150,000 in his first — bypassed some of its own policies by not requiring receipts for business expenses, said foundation chief financial officer Bill King.

"Our practice requires it," King said. "It has always been required. That's why the auditors brought it up. I'm not going to defend us on this. We're out of compliance with what our policy is."

King said adjustments to actual reimbursements were made throughout Dobelle's tenure, sometimes because of inaccurate information and sometimes because documents were missing. But records were eventually straightened out, King said.

Dobelle's office has said that on occasion the president was owed large sums of money by the foundation, sometimes for months, and that whenever he was asked to reimburse a personal charge, he did so immediately.

L. Richard Fried Jr., chief counsel for Dobelle, said a discretionary fund gives a president just that — "the opportunity to do things and to make quick decisions." Fried asked rhetorically: "Is the president supposed to call the board and ask if he can have kids over for Thanksgiving who couldn't go home?"

He cited a number of actions Dobelle was able to take rapidly because of the fund — give $50,000 to administrators within the system for their needs; send eight Native Hawaiian students to a model United Nations and two journalism students to a symposium in Paris; and provide $7,500 for needs of UH-Hilo faculty when budgets fell short.

But the foundation has agreed with recommendations by the auditors that policies be evaluated.

In comments attached to the audit, foundation board chairman Howard Karr said that in the future the foundation "will require detailed receipts rather than credit-card statements for reimbursement of all business expenses."

King said the practice of not requiring receipts "sort of developed that way."

He also said he doesn't believe that Dobelle knew he was supposed to be saving them. "Obviously we didn't push it," he said. "From our perspective we felt like we had adequate proof that the expenditure occurred."

The president's office supplied a credit-card statement and a spreadsheet listing the event, who was at the event and their affiliation, he noted.

During three years in the presidency, there were three different arrangements for handling personal and protocol fund expenses charged on Dobelle's personal credit card. At one point Dobelle paid the entire credit-card bill and requested reimbursement from the foundation for the business portion; during another period, the foundation paid the entire credit-card bill and requested reimbursement from Dobelle for the personal portion; most recently, the foundation made payments for only business charges and Dobelle made separate payments for personal charges.

Practices elsewhere

King said the foundation is now researching "best practices" at other universities, among them Harvard, which gives the option of providing credit-card bills, receipts or canceled checks in seeking reimbursement for travel expenses.

In looking back at the way the foundation handled reimbursements, King said 99 percent of the adjustments from "business" to "personal" occurred during the period from October 2001 through March 2003 when the foundation was paying the president's whole credit-card bill and being reimbursed by Dobelle for personal charges.

"That was a messy process," King said.

Starting June 1, King said, the foundation began "getting everybody on the same page regarding receipts" by insisting on them.

The foundation is also looking at alternatives to how to pay for the president's travel expenses, and Karr said they will work with the university in doing so.

Recommendations in the audit call for establishing clear guidelines to remove ambiguities and hence plug loopholes. Besides calling for improvements to the way credit-card reimbursements are made, the audit recommends that the university consider having the president pay for his entire credit-card charges and then submit business and travel reimbursement forms for business expenses.

"The forms should provide for a certification by the president that the charges are accurate, reasonable, and relate to the business purpose of the trip," the audit states.

The document also points out that there are no guidelines for what are "reasonable" expenses while traveling and what constitutes a business day versus a personal day on the road.

The foundation's King said he would like to see more guidelines on what would be "reasonable" expenses. "In the past, that "was left up to the judgment of the president," he said.

According to the audit report, Dobelle and his staff almost universally failed to complete or provide appropriate paperwork in a timely manner, or follow guidelines set by the foundation that was paying most of the bills.

For instance, the audit notes that in 27 of Dobelle's 32 out-of-state trips during his three years as president, his staff made reservations less than a week ahead, meaning they failed to qualify for discounts. University policy calls for reservations to be made at least a week ahead.

In 12 of those trips, travel was not approved beforehand; in 14, proper forms were not provided to verify flight information, including boarding passes; and in 30, travel reimbursement forms for per diem payments were not submitted within seven days of the trip's completion.

Loose management

While missing receipts were subsequently discovered — or recovered by calling hotels and other vendors for new invoices — these oversights pointed to poor management of money, cited by members of the Board of Regents in discussing their dispute with Dobelle.

Kristin Blanchfield, Dobelle's assistant who oversaw the discretionary fund from his office, responded to auditors who pointed to missing documents, by saying "we have copies (in the president's office) of many items that Deloitte & Touche said were not available."

"The report does not show any intent not to follow policy and procedures," she wrote, "but did identify some areas of concern that need to be and are being addressed."

According to internal memos released by the university last week, foundation personnel tried to impress upon the president's staff that supporting documentation was necessary for reimbursement.

Both Blanchfield and former UH chief financial officer J.R.W. "Wick" Sloane were authorized to approve paperwork submitted for reimbursement for Dobelle. King notes that because Sloane's wife, Betsy, was the foundation president (she left several months ago for a job at Harvard University), she recused herself from any involvement in the discretionary fund.

In a Dec. 24, 2002, memo from King to Blanchfield, King noted that the Internal Revenue Service had "very specific guidelines" for supporting documentation for entertainment, including meals, with clients.

"At a minimum, we need to document our expenditures in accordance with these rules," King wrote. "We have a fiduciary responsibility to a wide array of constituents and this level of detail is needed to insure that the dollars ... are being spent on bonafide business activities."

Almost 18 months later, on May 17 of this year, King sent Blanchfield another memo as he was being asked to produce documents for the Deloitte & Touche audit.

"Whenever the foundation's fiscal staff asked for receipts for credit card charges, they were told receipts were either lost or not available," he wrote. "I understand that at our request your staff had to call vendors, e.g. hotels and limousine services to obtain copies of folios and invoices with detail charges.

"It should be a normal procedure after each business trip or at the end of each month or as soon as a business expense is incurred for the president to turn over all receipts and charge slips to you or your designate to record the business purpose and hold for reconciliation with the monthly charge card statement.

"If this is done, there should be no problem in getting the details of each expense for processing credit card payments on a timely basis."