Michigan State Reorgs Compliance Again

Breaking news from East Lansing, Mich., today: Michigan State University has reorganized its office for ethics and compliance just four months after the department was created, consolidating the office into the university’s existing internal audit function.

We last saw Michigan State blundering around the compliance world in June, when acting university president John Engler said he was creating an Office of Ethics, Risk Management, and Compliance. That was in response to the disgrace of Larry Nassar, the doctor affiliated with Michigan State who sexually assaulted young girls on the USA Gymnastics team while university higher-ups looked the other way.

At that time, Engler proudly said, “This new office will help maintain the university’s integrity in this crucial set of obligations and develop its culture of compliance.”


Well, so much for that statement. On Tuesday Engler said the ethics and compliance office would go away, swallowed into a new Office of Audit, Risk, and Compliance starting this week. Marilyn Tarrant, Michigan State’s head of internal audit since 2015, will oversee the new office and hold the title of associate vice president.

Nick Wittner, a Michigan State law school professor who basically temped as the university’s chief compliance officer over the summer, will go back to teaching this winter.

Now Engler says the original plan from July was kinda sorta temporary all along — that Wittner “helped refine the components of a more robust and long-term university-wide compliance function,” as the school said in a statement. Engler himself said:

“This appointment completes the work we began in June to develop an office of compliance and integrity. Professor Nick Wittner, the acting chief compliance officer, has done a great job getting us started down the right path and I appreciate his expertise and work in developing the needed structure for our compliance office. As I worked with Nick and Marilyn, formerly our executive director of internal audit, it became clear that we needed to avoid creating overlapping responsibilities and duties.”

That was not my reading of Engler’s original compliance announcement in June. It also feeds into the exasperated sentiment I hear from Michiganders, who keep seeing new plans for better compliance at the university, when most people just want to get on with, ya know, being an ethical organization.

A Few Hopeful Hints

As bumbling as Engler has been so far (one of his first acts as university president was to speculate that Nassar’s first abuse victim was taking kickbacks from plaintiff lawyers), we can take some small comfort that Michigan State might yet give its ethics and compliance reforms the attention they deserve. Crazier things have happened.

First, Marilyn Tarrant will answer directly to Michigan State’s president and board of trustees. Except for the part that Engler is university president, this is good. Anyone serving as a chief compliance officer — and make no mistake, that’s what Tarrant will be doing — should answer directly to the organization’s top executive and governing body. And Engler will move on as university president eventually.

Then again, this new Office of Audit, Risk, and Compliance will have three lieutenants reporting to Tarrant:

  • Ryan O’Rourke, internal audit, finance and operations director,
  • Steven Kurncz, information technology internal audit director, and
  • a new position for the institutional ethics and compliance director.

That arrangement isn’t ideal, but it brings some clarity and is better than nothing. I worry that for an institution as large as Michigan State (59,000 students, $1.3 billion budget, $596 million in research grants), compliance should be an office unto itself, given how many concerns the compliance director will need to address. Smaller businesses in the corporate world have offices devoted to audit and compliance separately.

Still, my ears also perked up that “institutional ethics” is in the mix somewhere. More than anything else, that struck me as Michigan State’s principal problem: a perception among the public that the university couldn’t be bothered to investigate Nassar’s abuse until far, far too late.

Yes, it’s true that many universities combine the audit and compliance functions into one office. As Engler was quick to note, Duke, Harvard, Princeton and Stanford, the University of Tennessee, and Virginia Commonwealth University all do this. Companies and not-for-profits (Realogy Corp. and Cleveland Clinic) do this too. This arrangement can work. I don’t know Tarrant personally, and have no reason to believe that she can’t rise to the task.

That said, few institutions have had such an awful lapse of ethical conduct as Michigan State did. Reviving the school’s policies, procedures, and culture will take a long time. So here’s hoping a new permanent Michigan State president, whenever he or she arrives, will consider elevating ethics and compliance again.

Along those lines, I do wonder how long this new consolidated office might last, too. Michigan is going to elect a new governor next week, along with new members of the university’s board of trustees. Then will come a permanent new university president — and then perhaps, finally, permanent improvement in Michigan State’s ethics and compliance.

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