Auditors blast Smithsonian

Internal auditors for the Smithsonian Institution are accusing the museum complex’s business unit of violating its own policy by paying bonuses to executives even when the unit has failed to meet financial goals.

In a report released this week, acting Inspector General A. Sprightley Ryan also questioned whether the Washington-based Smithsonian should pay the executives market-based salaries. She noted the business unit has failed in recent years to bring the government-subsidized nonprofit organization as much cash as projected.

In 2006, the Smithsonian Business Ventures unit, which includes a magazine publishing division, retail sales and Imax theaters, provided a net gain of $23.9 million to supplement the Smithsonian’s federal funding, according to the report. But compared with 1999, before the business operations were centralized under the new division, auditors found its net gain -- the contributions it sends back to the nonprofit Smithsonian -- had declined 29% when adjusted for inflation.

On Tuesday, Smithsonian leaders said they agreed with most of the auditor’s recommendations for improving the business administration, such as making sure business goals are specific and measurable. But they rejected the idea of abandoning market-based compensation for the business unit.