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Ex-Myeloma Unit Chief Gareth Morgan Says UAMS Audit Faulted Accounting

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Dr. Gareth Morgan, former director of the Myeloma Institute for Research & Therapy at the University of Arkansas for Medical Sciences in Little Rock, said $29 million in operating losses detected by a recent audit were “accounting errors” outside his control.

“The findings were accounting findings only that had nothing to do with anything we had control of within the Myeloma Institute,” Morgan said in an emailed response to questions from Arkansas Business. “My understanding is that the accounting errors were immediately corrected and did not impact UAMS financial performance.”

Arkansas Business mistakenly gave Morgan an incorrect deadline to respond to questions, so his responses came after an article about the preliminary audit findings was published on Feb. 25.

Morgan, who started at UAMS in 2014 and left last month, said he had not seen the audit, conducted by the University of Arkansas System at the request of UAMS Chancellor Cam Patterson, who began serving in that post in June.

An interim internal audit released Jan. 30 showed for the first time that operating losses totaled $29 million from fiscal 2010 to fiscal 2018. The audit is expected to be final this month.

The audit said operating losses should have been recorded and closed out after the June 30 end of each fiscal year, but journal entries to record those losses on the financial statements weren’t made. Instead, the operating losses were assigned to a Myeloma Institute account that should have been used only for restricted funds and specific purposes.

He also said the Myeloma Institute was not having financial losses. “It was quite the opposite,” Morgan said. “It is always important to look at the whole financial picture rather than one fund in isolation. At the end of my tenure the Myeloma Institute had become highly profitable and contributed significantly to the overall budget of UAMS.”

UAMS spokeswoman Leslie Taylor had told Arkansas Business in an email that the $29 million wasn’t missing or unaccounted for, just incorrectly classified. UAMS has moved $29 million from unrestricted funds to the restricted funds account to cover the deficit, she said.

One audit recommendation was for UAMS management to monitor the money available to pay for Myeloma Institute research to ensure that expenses don’t exceed revenue. UAMS agreed, according to the audit.

The Myeloma Institute was renamed the Myeloma Center in August, and it has been combined with UAMS’ Winthrop P. Rockefeller Cancer Institute. Combining the two programs is tied to getting a National Cancer Institute-designated cancer center in Arkansas. In the current fiscal year, Morgan was no longer director of the institute.

An NCI-designation will help patients “fighting all types of cancer including myeloma,” Taylor said. The designation will give Arkansans access to clinical trials and cancer therapies available only at those centers, she said. A designated cancer center would be expected to create 1,500 jobs over five years, Taylor said.

On Losing a $19.5M Grant
Dr. Bart Barlogie founded the Myeloma Institute in 1989. In 2009, the myeloma program got a five-year, $19.5 million grant from the National Cancer Institute, part of the National Institutes of Health. The grant was for continued research and had been awarded before.

The audit said that the grant covered several research projects by various principal investigators in the Myeloma Institute. But it wasn’t renewed in 2015, and Morgan said that outcome wasn’t unexpected.

“It was always thought that having it renew was a long shot, especially as I was told that the NIH was moving away from these large program grants,” Morgan said. “I believe the grant had just run its course, as frequently happens after such long time periods.”

The audit said that after the grant was discontinued, the institute’s dependency on foundation funds increased. Morgan said the institute focused on different types of grants and sources of money.

He said he received a “substantial grant” from the biopharmaceutical company Celgene Corp. of Summit, New Jersey, for research. “I successfully obtained research funding from a national body, the Multiple Myeloma Research Fund, to study ways of preventing the development of myeloma,” Morgan said. “Additional grants had also been submitted to the National Cancer Institute and Leukemia and Lymphoma Society.”

The audit didn’t total the grants received under Morgan, but for fiscal 2018, the Myeloma Center’s funding included $15,281 in federal grants and $14,346 in private sponsored grants.

Morgan said he thought he’d retire at UAMS. But he got an offer from NYU Langone Health in New York and started working there last month. The school had received an anonymous gift of $75 million to create a blood cancer center with a focus on multiple myeloma. It was “too good to pass up,” Morgan said.

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