Corruption in Collegiate Sports

U.S. University Athletic Programs Vulnerable to Devastating Fraud

By By Joseph T. Wells, CFE, CPA; and Dick Carozza

Editor’s note: This article also appeared in the April issue of Internal Auditor, a publication of the Institute of Internal Auditors. Thanks to managing editor Leah Miller and staff editor Christina Brune for their assistance.  

Had a repentant tutor not listened to her conscience and subsequently spoken with a reporter, everything would have been just fine. But Jan Gangelhoff, the former office manager and part-time tutor for the University of Minnesota men’s basketball team, blew the whistle on the program. As a result, the head coach and, shortly thereafter, two top athletic department administrators were no longer employed by the University of Minnesota, and the school endured months of embarrassing publicity.

Gangelhoff has said that she wrote more than 400 term papers for at least 18 Minnesota basketball players from 1993 to 1998. A subsequent university investigation found that the coach, Clem Haskins, not only broke National Collegiate Athletic Association (NCAA) rules by making cash payments to players, he also told his team to mislead attorneys who were looking into the academic fraud. The university’s report cited the administration’s failure to separate the coach’s influence from the academic support staff. In hopes of preempting possible NCAA punishment later this year, the university has imposed penalties on itself.

“It rates right at the top as far as scandals go,” said Armen Keteyian, who investigated the scandal. “We’re talking about a system that systematically corrupts the very essence of what public education is all about in this country. Point-shaving scandals and academic fraud are two issues that cut right to the heart of what college sports are all about today, and the integrity of the institution is at stake.”

While the University of Minnesota’s reputation singed under harsh media glare, internal auditors at colleges and universities throughout the United States may have secretly hoped that a similar scandal wasn’t brewing in their own backyards. Although the athletic department is just one area under the internal audit department’s umbrella of responsibility, its corruption – and the subsequent high-profile public interest – can result in a crippling blow to the university’s integrity.

It’s fair to say that internal audit departments are challenged by the deep pockets and often unbridled power of big-time college athletic departments. These are highly political environments where the boss is sometimes ambivalent, even turning his back to fraud as long as the team keeps winning. The internal auditors, armed only with complicated NCAA regulations and limited budgets, must still seek ways to implement appropriate checks and balances to help ensure the integrity of their organizations.

College sports fraud and corruption is a sticky subject at best. Of about 20 internal auditors contacted for this article, only a handful responded. Those willing to speak on their experiences wouldn’t allow their names to be used, indicating the delicate nature of their positions.

Internal Audit Role in NCAA Compliance 

“Scott Ford,” the director of internal audit at a Pacific-10 university, claims that most university presidents and audit committees fear “damage to reputation” more than any other threat. “And there’s no greater risk for a potential public-relations nightmare than in college sports and the failure to comply with NCAA rules,” said Ford.

“ Rules violations are big deals, particularly when they appear to be intentional,” he added. “Those cases usually revolve around the highly skilled athletes in football and men’s basketball and may include improper recruiting, ineligible student-athletes, athletes receiving extra benefits, academic fraud, and students being paid for work they didn’t do.” NCAA violations also cover agents who make illegal cash payoffs to recruits – bags of money, new homes, and cars delivered to family members or “street agents” in exchange for a player’s services, for example. Athletic boosters, the affluent supporters of sports, can also potentially hurt programs by giving athletes illegal money.

“Most of the investigations my department conducts in the area of college sports is related to compliance with the NCAA regulations,” Ford said. “The NCAA rules manual is huge, and it includes numerous internal controls designed to document and create audit trails. The NCAA also requires that the athletics program be subjected to an independent review at least once every three years, and the association’s interpretation of that rule is that internal auditors are an appropriate entity to carry out that review.”

While Ford considers the NCAA rulebook to be a thorough asset, many of his peers think that it’s a bit cumbersome. “One of the biggest problems I face is the convoluted and ever-changing nature of NCAA rules,” said “Mary Little,” an audit supervisor at a small university. “It’s very overwhelming to learn and keep up with every single one of the regulations. In some cases there can be violations because it ‘wasn’t that way last year,’ and we didn’t recognize the change. I compare these regulations to income tax laws. We need to have reform, but every time we reform we make it worse.”

“Jennifer Morrison” agreed. A former internal auditor, Morrison currently serves as an NCAA compliance officer for a Division I university. Her experience is unusual in that most of her counterparts have legal backgrounds or are former coaches or athletic department staff employees. “The changing and growing number of NCAA regulations often makes my job challenging,” she said. For example, Morrison related the story of a coach who inadvertently broke a rule by visiting too long with a prospective player while on a recruiting trip without first consulting with the school’s administrators. In another case, Morrison said that a basketball team booster used his plane to ferry a possible recruit. “If he had only documented the trip, there wouldn’t have been an infraction,” she said.

Still, it behooves the university – and the audit staff – to remain alert to potential rules infractions. “If the NCAA punishes a school, they risk losing athletic grants and financial aid,” Ford said. “But far worse than the financial impact is the potential damage to the school’s reputation. Big schools have big stakes in their reputations, and this is an area in which internal auditors can make a huge impact. If the internal auditors can identify potential noncompliance areas and weak controls; fix these areas of weakness; and, as a result, prevent a major rules violation, they’ve really done their colleges a big favor.”

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