Salt Lake Mayor Palmer DePaulis said results of a city financial audit blaming Better Utah Inc. for the possible misuse of $20,000 could jeopardize a potential second chance for the city to host the 1998 Winter Olympics.

And a state audit of the corporation's affiliate, Utah Sports Foundation, once part of the state Community and Economic Development Department, is also being conducted, he said.The city audit, finished last week but released Tuesday, questioned the use of $20,160 for entertainment, hotel fees, dinners and air fare for the director of Better Utah, which helped to lobby for a 1998 Salt Lake Olympics venue.

"We are also finding that there is missing documentation, that there are expenditures of funds for which they have no documentation and . . . that they had told us they were going to spend the money on certain items and then spent it on other items," DePaulis said.

Salt Lake City has appropriated $60,000 to Better Utah since 1986 and authorized an additional $30,000 to the corporation this year, DePaulis said. Most of that money was funneled directly to the Sports Foundation.

In several circumstances detailed by the audit, Better Utah and its head, David Johnson, who also is head of the Sports Foundation, were paid by the state for expenditures but also billed Salt Lake City for the same costs.

Better Utah and the Sports Foundation are private organizations, but Better Utah received city funding and the Sports Foundation received state money, enabling the respective audits of the two organizations.

Among the expenditures questioned are $1,700 in hotel and entertainment costs for the Athlete's Advisory Council, $1,260 for air fare for Johnson to fly to a meeting, and $1,600 for tickets to the U.S. Fencing Championships that were actually complimentary.

Additionally, the audit questions $8,500 for a presentation for the U.S. Olympics Gymnastics trials, $2,000 in hotel and air-fare costs related to the Pan American Games and $4,642 in connection with the U.S. Volleyball Championships held in Salt Lake City in 1987.

Some checks in Better Utah's books were missing, blank checks were not secure and no budget was established at the corporation, the audit said.

DePaulis said the corporation must provide documentation legitimizing the expenditures or repay the city for ineligible costs. The city gave Johnson a Monday deadline to provide the documentation but extended it, he said.

Johnson said he admitted Better Utah's accounting system "wasn't perfect" and said he would hand over to the city documentation proving that all the questioned expenditures were legitimate.

"The money is all accountable and we have hard receipts to back up the expenditures," he said, adding that the money spent "brought an economic return to the city."

DePaulis, however, said he is severing ties with the organization to protect a bid for the 1998 Winter Olympics because Better Utah's accounting practices revealed in the audit could be very damaging.

The U.S. Olympic Committee, the body that chooses a U.S. city to vie for hosting the games, is having second thoughts about its 1985 choice of Anchorage, Alaska, as the nation's candidate to host the games.

"If we have a chance at the Olympics, we're not going to take our chances on an organization that has some problems," DePaulis said. "The perception is what's really damaging.

"If an organization that has been associated in any way with our trying to get the Olympics and pre-empts us in terms of a perception like that, I think it could be very damaging," the mayor said.

"We'll represent ourselves," he said, if the Olympic Committee should decide against Anchorage, possibly at a meeting Nov. 15. "The only city that has a crack at it (the Olympics) is Salt Lake City," he added.

Johnson said he will stop contacts with Olympic Committee delegates if DePaulis withdraws his support for Better Utah. However, he will continue efforts to attract amateur sports in general to the state.

If the Olympic Committee drops Anchorage as an Olympic venue, the city must move quickly to establish itself as a substitute.

DePaulis was unsure what an audit by the state legislative auditor general would conclude but offered, "if the city has problems, then the state does, too."

He questioned why the state is not releasing its audit of the Sports Foundation. "This is very damaging for Bangerter . . . that's probably why they're sitting on that audit," he said.

But officials in Bangerter's office point out that the audit is being done by the Legislature and that Democrats as well as Republicans sit on the committee that oversees the work.

"They would laugh in our faces if we told them to hold it up," said Reed Searle, Bangerter's chief of staff. "I have no idea when the audit will be completed. They (legislative auditors) won't give out their information early."

The Utah Sports Foundation came under scrutiny after it became a privatized organization in April when questions were raised about the manner in which bids were taken for the contract establishing the office.

Johnson worked for the Sports Foundation when it was a state office and won the contract making the foundation a private organization. He said he made more money with the private organization.

But Grant, whose office let the contract, said 19 businesses were notified of the bid, and newspaper advertisements also announced the contract, although Johnson was the only one to respond with a bid.