The audit looked at fiscal year 2006, the first year a new law was on the books limiting the types of investments allowed for endowments. The law also created governing rules involving the Utah Board of Regents, schools' individual boards of trustees and internal auditors.

Each of the five schools examined - the University of Utah, Utah State University, Weber State University, Southern Utah University and Dixie State College - had minor problems, ranging from having money invested in individual stocks to holding bonds that matured too slowly. The law dictates that endowment funds must reside in mutual funds and that bonds held must mature in no longer than 365 days.

"We're trying to strike a balance between safe liquidity and long-term investments," said Senate President John Valentine, R-Orem.

The audit committee recommended that regents amend their policy to track compliance, and said schools need to combine endowment funds with "more sophisticated" institutions if they are too small to manage the oversight themselves.

Richard Kendell, higher education commissioner, concurred with the report's recommendations, and said the problems were "relatively minor," especially considering the new law required 30 years of investing practices to change "virtually overnight."

The schools that were not in compliance have since fixed the problems or will do so quickly, he said. Internal auditors will also receive better, more specific training.

"The Utah System of Higher Education acknowledges, accepts and appreciates the findings related to weaknesses in the oversight and governance structures," Kendell stated in a letter to the audit committee. "The fact that cases of noncompliance [small as they were] went undetected by the oversight mechanism is indeed troubling."

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* SHEENA MCFARLAND can be contacted at smcfarland@sltrib.com or 801-257-8619.