Report I970051 Summary - December 1999

Investigative Report


The California State University at Fullerton Mismanaged Trust Accounts, Contracts, and Donated Funds


We received allegations under the Reporting of Improper Governmental Activities Act (act) that the California State University at Fullerton (campus) illegally established an all-purpose trust account, used funds in that account to pay for many types of expenditures, and diverted surplus funds to the account. Also, the allegations stated that an official in the campus's Business and Financial Affairs division (business division) improperly spent her division's fee revenues and also improperly engaged in contracting and hiring. Finally, the allegations stated that the campus improperly created an auxiliary organization to which it transferred donated funds along with the power to invest and manage them.

We investigated and substantiated these allegations and also uncovered additional improper activities. Although many of the problems we identified may not seem significant in isolation, collectively they demonstrate serious mismanagement at the campus. Based on the evidence we reviewed, we concluded the following:


Because campus employees told the campus president about some of the improprieties before we began our investigation, and because he participated in the creation of the UAF, we submitted our report to the chancellor of California State University (CSU). The chancellor responded that CSU's review of our report and their further investigation did not find any serious mismanagement at the campus. He concluded, "there were errors of judgment and mistakes in some instances." Nevertheless, he reported that, with the full support of the campus, he has initiated an evaluation of the campus's fiscal management to ensure that appropriate internal control systems are in place.