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Haas School of Business
Anthony, Robert N.
Young, David W.
Functional Area(s):
   Management Control Systems
   Organizational Behavior
Difficulty Level: Intermediate
Pages: 7
Teaching Note: Available. 
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First Page and the Assignment Questions:

. . . The most serious finding of the audit confirmed that the HSB paid approximately $648,000 in unauthorized supplemental compensation to selected faculty members. [Of that total,] $323,000 represented additional salary to 17 faculty members for which no services were performed. . . .

While the goal of the Haas School in terms of addressing an identified salary parity problem was honorable, the mechanism used was in violation of existing policy. . . . With respect to the Dean, we have agreed that he will step down on June 30, 1998. . . . Further, the campus is addressing audit recommendations to ensure policy compliance and to strengthen internal controls.

Letter from Chang-Lin Tien, Chancellor of the University of California-Berkeley,
to Richard C. Atkinson, President of the University of California, reproduced in the
December 11, 1996 California edition of The Wall Street Journal.

On December 11, 1996 the California edition of The Wall Street Journal contained an article by Marc Lifsher entitled “Audit Finds Financial Irregularities at UC-Berkeley Business School.” The article was followed at 11:00am on the same day by an e-mail from William A. Hasler, the Dean of the Haas School, to the school’s students, faculty, and staff. On December 12, the Public Relations Office of the University issued a statement concerning the audit. On December 16, the elected faculty representatives of the Haas School sent a letter to “Friends of the Haas School of Business.” And on February 5, 1997, a Letter to the Editor from Chang-Lin Tien was published in the California edition of The Wall Street Journal. Excerpts from these documents follow:


“The dean of the University of California-Berkeley’s prestigious Haas School of Business violated university rules by funneling nearly $650,000 in unauthorized faculty pay through an executive-training program, according to a confidential internal audit.

“The audit, which was obtained by The Wall Street Journal, found that some $323,000 in payments over a two-year period were used to boost salaries for 17 professors who didn’t teach extra classes or perform any other special duties for their enhanced pay. An additional 18 faculty members received pay increases totaling $325,000 for providing loosely defined “program and curriculum development” services from the fall of 1993 through the fall of last year, the May 28 auditor’s report to Berkeley Vice Chancellor Carol Christ shows.

“In all, supplementary payments for which no extra work was performed averaged $17,950 per teacher. Checks to the faculty—who weren’t identified in the report—were processed through a university extension program for the Berkeley Center for Executive Development, which offers evening courses for mid-career professionals.

“The dean of the Haas School, William A. Hasler, wasn’t accused of benefiting . . ..


  1. Do you agree with Dean Hasler’s decision?
  2. Do you agree with the reaction of Professors Fleming, Mr. Josephson, Mr. Leach, and Mr. Bravin? How would you respond to each of them?
  3. What is your assessment of the manner in which the University’s administration dealt with this situation?