An independent report on UC executive compensation found instances where exceptions to policy were not approved by the regents or disclosed to the public as required.

Released Monday, the Pricewaterhouse-Coopers audit examined compensation and benefits provided to 64 people who occupied senior positions over a 10-year period ending December 2005. The revelations, first reported by the San Francisco Chronicle, have prompted legislative hearings and a number of investigations. In light of this, the UC Office of the President commissioned the report from the accounting agency.

"I welcome this audit and do not minimize its seriousness," said UC President Robert Dynes upon the report's release, "and I fully understand the changes that we must now enact. The university has begun a complete overhaul of its compensation practices."

The audit cited gaps in reporting over the last decade and recommended tightening the process and improving public disclosure of how UC funds are spent on executive pay and benefits. According to the audit, some practices, such as paying for leased automobiles, were omitted from administrators' W-2 forms as income for tax reporting purposes. The auditors recommended the UC enact these reforms:

• Implement a "checklist" format for documenting elements of compensation. This standard format could be used to capture all agreements during the hiring process and subsequently be used for approval and disclosure purposes;
• Review the format of UC's annual report on compensation to ensure that all elements of compensation requiring disclosure under regental policies are included;
• Use payroll data to generate or validate the accuracy and completeness of the annual report on compensation;
• Review mechanisms for disclosing compensation information to the public to ensure that data is provided in accordance with internal and external requirements, and
• Perform ongoing monitoring and oversight to ensure adherence to policies and procedures for regental approval and public disclosure.

The PricewaterhouseCoopers report was released a week after the UC-appointed Task Force on UC Compensation, Accountability and Transparency released its audit examining UC policies on compensation. Monday's meeting marked the second such special meeting on compensation in as many weeks for the regents. On May 2, the regents will receive an external audit by the Bureau of State Audits.

Regents Chairman Gerald Parsky issued a statement after Monday's meeting, explaining the urgency in which UC is addressing the issue.

"Time is of absolute essence if we are to restore the public's trust in the university and its compensation policies and practices," Parsky wrote. "It is crucial that we take these steps so we can return our focus from compensation to the fundamental teaching and research missions of this university."

Parsky noted that after last week's audit he instructed a regental committee to provide "a detailed plan of action, beginning immediately" for possible implementation of each and every recommendation made by the Task Force on UC Compensation, Accountability and Transparency.

In particular, Parsky noted the task force recommendation that there be specific consequences for violations of compensation policy. "The regents will also determine, on a case-by-case basis beginning at our May meeting, how people should be held accountable for policy violations and other acts deemed to be inappropriate by the independent, state and internal auditors," he said.

Dynes added that his office already has adopted the following reforms:

• Information systems to support internal controls;
• Mandatory ethics training for UC employees;
• A Web site where compensation actions will be posted and accessible to the public;
• A public information practices coordinator to oversee all Public Records Act requests and set up a new Office of Public Records in the Office of the President.

The audit and Parsky's and Dynes' statements are at www.universityofcalifornia.edu/news/compensation/audits.html.