A six-month probe of the University of Utah Department of Economics has uncovered evidence of grade altering, nepotism and other improprieties that have rocked the department - and, some say, damaged the reputation of the university.

University officials readily admit the grade altering happened; they just don't know how or why.Front-office practices in the department have been changed to avoid repeated incidences.

"We want to assure the public that the university has tried to do as much as it can to institute changes to see that this doesn't happen again," said James Gander, professor of economics and one of five instructors whose grades he had given had been tampered. "But you just never know. It's like the rocket ship that was sent up. They corrected the O-rings. But you never know if they will hold up."

The investigation, made public by university officials this week, resulted from an anonymous letter, dated July 21, 1988, that was sent to President Chase N. Peterson.

The investigation focused on two general concerns: first, allegations that grades were changed after they were submitted to the office and that relatives of economics department employees received preferential academic treatment.

Secondly, there were allegations of financial and personnel mismanagement.

Investigators found at least three altered grades, but it was impossible to determine who tampered with grade reports.

However, officials said it appeared from the grade sheets that five grades given to one student - a faculty member's spouse - had been erased at some point and replaced with higher grades.

The changes "were done in such a fashion that it is overly obvious, as if to flag the change to anyone perusing the grade sheets," said Lt. Dick Richardson of the University Police Department.

The probe also found that the department sold photocopies of class materials to students but did not keep a cash accounting. Employees indicated some of the money was used to buy items such as an office microwave oven and coffee maker and to pay for staff birthday cakes. Investigators also found that two employees received overtime pay as a "Christmas bonus" without working overtime.

Through the investigation, officials also found that two children of employees were hired by the department, a violation of the U.'s anti-nepotism policy. Both are now off the payroll.

Jerilyn S. McIntyre, associate academic vice president, said front-office practices in the department have been changed because of the investigation.

"The university has tried to do as much as possible to institute changes to see that this doesn't happen again," Gander said. "The problem now is to reinstill confidence, rather than create any more suspicion - particularly among students who wonder if they are getting a fair deal."