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A financial audit of Downtown Eugene Inc. is under way, triggered by questions about the past record-keeping of the nonprofit group that provides red-capped guides, graffiti removal and advocacy for downtown.

The Eugene Area Chamber of Commerce took over management of DEI four months ago and noticed problems in the group’s financial records, Chamber President Dave Hauser said Tuesday.

“We just found the financial record-keeping in somewhat of a state of disarray,” he said. “We are in the process of systematically going back and auditing DEI’s financial records to answer any questions about funds coming in or going out just to make sure our financial records are accurate.”

Hauser and DEI board chairman Gerry Gaydos said it is too early to say what the audit may find.

“At this point, we are in this awkward position of where we have more questions than answers,” Hauser said. “Suffice it to say, the problems deal with financial record-keeping, documentation and other record-keeping issues.”

Russ Brink served as DEI executive director for the past 20 years, ever since the group was formed by downtown property owners and business people.

DEI’s board hired the chamber to manage the group, starting last July. Brink left his job in early July. He now is executive director of a nonprofit group in Vermont that provides housing for low-to-moderate-income people.

He could not be reached for comment Tuesday.

The DEI board hired Isler CPA to audit financial records for the last fiscal year, covering the period between July 1, 2007, and June 30, 2008, Gaydos said.

“We don’t know what the audit will disclose,” he said. “I don’t think there is anything to talk about until we have an understanding of the facts.”

DEI has an annual budget of about $300,000, much of which pays for eight red-capped guides who patrol downtown, plus cleanup and promotional efforts.

Hauser said the audit may expand to cover previous years, if that is recommended by auditors.

Downtown property owners support DEI through an annual assessment of 16 cents per occupied foot of office and retail space. The assessment, collected by the city on behalf of DEI, is in addition to what landlords pay in property taxes.

DEI’s board agreed to eliminate the agency’s staff and hire the chamber in order to free more funds to directly help downtown, Gaydos said.

The group’s budget had declined over the past few years because of rising administrative expenses and no growth in the occupancy of downtown commercial buildings, Hauser said.

During the last fiscal year, the salaries and benefits for Brink and his assistant, plus office rent and other administrative expenses, totaled $144,300.

In contrast, the chamber has agreed to run DEI for $44,900 a year, a savings of $99,400, Hauser said.

“DEI still exists as a separate organization with its own budget and governance structure apart from the chamber,” Hauser said. “They have simply contracted with us to manage their day-to-day operations. The goal was to leverage the chamber’s resources and reduce their administrative costs to free more resources to pursue the mission of a vital, clean and safe downtown.”

Hauser, the chamber’s top executive, has taken Brink’s place in running DEI.

Hauser said he and his staff first started raising questions about DEI’s record-keeping a couple of months ago.

After DEI hired Isler to scrutinize its books, Hauser last month notified city officials.

The audit of DEI’s last fiscal year could be done during the next few weeks, he said “All of us are working diligently to complete this work,” Hauser said.