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 investigation found that grade sheets were kept on a secretary's desk, so anyone who entered the office would be a suspect in the tampering.

"No instructor wants his grades to be changed," Gander said. "That's the most sacred thing in the university. A lot of students would be upset by such practices."

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. It was conducted by personnel from the financial analysis section, university police, Dean Howard Ball of the College of Social and Behavioral Science, and McIntyre who interviewed dozens of people.

"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.

"You can't have that doubt and suspicion running around. This was just a one-time incident."

Faculty members want the public to know that responsibility for the problems rests with the department's administration - not with the faculty as a whole. They too are upset by problems that have plagued the department.

"All decisions with respect to hiring and firing of staff are the responsibility of the department chairman," said Claron E. Nelson, economics professor and department chairman in the 1970s. "The procedures that take place in the office are again the responsibility of the department chairman and his assistants. At no time did the faculty have anything to do with implementing, carrying out, or supervising these procedures."