A state auditor's report released Wednesday sharply criticizes top ranking current and former officials of the Mountainland Applied Technology College, which has three campuses in Utah County.

The report accuses them of breaking laws, including falsifying account records, failing to comply with open meetings laws and underreporting employee income.

Triggered by the audit, current MATC president Clay Christensen and Rob Brems, the former president who is now president of the school's oversight organization, the Utah College of Applied Technology, were placed on a paid leave of absence last week.

"One of the risk factors you deal with right up front is trustworthiness of management," said State Auditor Auston Johnson. "We've got management overriding the controls. That puts our reliance on management at the agency at zero."

The audit claims that Christensen falsified time cards of employees who worked on a steel chassis donated by a trucking company to the Utah County Republican Party for a parade float. Utah law prohibits the use of public money for political purposes, and MATC is publicly funded.

Questions about the float transaction are what initially prompted the audit.

Assistant Utah attorney general Bill Evans said Wednesday that if the Republican Party had planned all along to pay for the project -- as Rep. Becky Lockhart (R-Provo) says -- then it would be a legal transaction. Similar exchanges happen often when political parties use public facilities, then pay the bill, he said.

It remains unclear why MATC officials did not simply bill the Republican Party for the chassis work.

One early allegation that was explored was that Christensen was feeling political pressure from Republican Sen. Curt Bramble of Provo. But that accusation was dismissed by Johnson on Wednesday. Bramble has been cleared of any ethics violations by Sen. Mike Dmitrich of Price, a Democrat who is co-chairman of the Senate Ethics Committee.

Lockhart said that it was the party's intention all along to pay for the float work but that when the chassis was delivered to MATC it was requested that the party wait on payment until an amount could be determined. After the work was done, however, she said that she was informed that an anonymous donor had already paid the bill.

She said Wednesday she's as confused as anyone about why Christensen wouldn't have simply told auditors that the Republican Party was going to pay.

The audit report focuses on what happened between the time the chassis was dropped of and when it was picked up. After an initial $416.14 for parts was spent by MATC, Christensen was advised -- after calling the state Auditor's Office and the state Attorney General's Office -- that the expenditure was against the law.

"In spite of this advice, the Campus President continued to look for a way to use campus funds to pay an additional $694.87 towards the parade float, including falsifying documents to hide the true purpose of the expenditure," the report reads.

Christensen reportedly attempted to push payment through accounts payable but failed. He then approved separate time sheets for two instructors to cover expenses for the float. One of the time sheets was accurate, according to the audit. The other sheet, now considered fraudulent, was for 29 hours that were not actually worked but which covered the cost of labor.

Eventually Brems asked the donor of the chassis, Don Ipson, to donate the $416.14 for parts, which he did. The labor had already been paid out, Brems wrote in his response to a draft of the audit report, so he later went back to Ipson for reimbursement of the labor costs. Ipson, who is the CEO of DATS Trucking and sits on the UCAT board, then donated the additional $694.87 for the labor.

But paid for by a donor or not, auditor Johnson said Christensen's actions with the timecards concerns him.

"My real issue is that the president falsified documents to force them through the system so the school would pay for them," Johnson said.

Transition package

Also at issue was a "transition package" for Brems, who had recently been hired as UCAT president after serving as MATC president. A year away from full retirement benefits, the MATC board decided to give Brems a $157,782 package to buy out his last year and qualify him for full retirement under the Utah State Retirement System.

The audit states that the board inappropriately made the decision in a closed session then failed to publicly disclose the details of that decision. It also questions why the board gave Brems the money based on some "monetary penalty" he would suffer for leaving.

"We question the validity of the Campus'[s] claim that the former Campus President suffered a monetary penalty by being promoted," the report states.

The report says that $117,995 of the package was used to purchase additional years of service credit, on top of a $22,335 annual pay increase, concluding that "[t]he former Campus President could have used personal funds to buy the service credits."

Tied to the transition package is an endowment Brems and his wife started with $39,807 of the money. MATC provided written acknowledgment to Brems that "No goods or services have been exchanged in order to obtain this contribution."

The audit disputes that. Brems remained in control of the endowment, which allows funds to be used to purchase health and dental insurance for himself and his wife. It was also used to provide nearly $5,500 to Brems's dependents at MATC and UVSC.

Because of that control, the audit states that the contribution does not appear charitable as defined by the IRS. That in turn could allow for an improper tax deduction. The campus also failed to put the $39,807 on Brems's W-2, which would allow Brems to underreport tax liability. Also, because MATC didn't put the money on the W-2, its payroll taxes have been underreported, for which the campus could be held liable.

Brems contends that the endowment document was overseen by the MATC director of development, who told him that support for donor's dependents was common in endowments. Relying on that, he agreed to the terms, he wrote.

By comparison, Kent Clark, assistant to the president for development at Utah State University, is overseeing a $200 million fundraising drive including more than $20 million in endowments. He said that while he can't speak specifically to the MATC case, he has never seen an endowment that included such stipulations.

"The purpose should be charitable in nature. It's not about private remuneration," Clark said.

Purchasing conflict of interest

Outside Christensen and Brems, the state audit also examined the now former director of the Culinary Arts program at MATC, who reportedly funneled purchases to a spouse, who was a vendor sales representative.

Changes were supposed to have been made to avoid that conflict of interest, but the audit found that the director continued to make such decisions. From July 1, 2006, through June 30, 2007, disbursements totaling $82,513 were made to the vendor.

A dozen of those purchase orders were reviewed by auditors and 11 were found to have no competitive bids, as required by MATC policy.

The director has since been reassigned outside the culinary arts program as a result of the audit, said Chuck Castleton, of the MATC board of directors.

Castleton said the matter is still under investigation and declined to comment on whether the former director had been or will be punished.

What nowfi

Both Christensen and Brems remain on leave until independent audits are concluded by the state board of regents for Brems and the UCAT board for Christensen, according to regents spokeswoman Amanda Covington. A decision will then be made on their status. There is no timeline for completion of either of those audits. Calls to Christensen and Brems were not returned Wednesday.

"As far as a client/auditor relationship, this is a big problem," Johnson said. "We're going to be looking at it closely in the future."

The MATC board responses to the audit include a promise to start an independently run anonymous hotline by Aug. 30 to report suspected unethical behavior.

Every party involved had letters attached to the audit claiming no wrongdoing or pointing fingers at others while at the same time agreeing to follow audit suggestions of tightened protocols, clearer lines of communication and reviewing ethics and conflict of interest policies.

This story appeared in The Daily Herald on page A1.