PROVIDENCE — The current owners of the BETA Group say they were aware that the company had “management problems” in the mid-1990s, but unaware that company employees working on state Department of Transportation projects were billing their hours to “the wrong project” until a keen-eyed DOT auditor uncovered the problem in 2003.

“I think they were reporting the appropriate number of hours,” company spokesman Michael Doyle said yesterday. “They were just assigning it incorrectly to projects because they were just being sloppy about it and allowed to be sloppy about it, by [their] supervisor.”

Doyle said the supervisor in question was “reassigned” to BETA’s Massachusetts office years ago, and subsequently left the company.

On a day when DOT Director Jerome F. Williams confirmed publicly that the unfinished BETA audit was among the files recently turned over to the state police, Doyle said: “If, in fact, there were inappropriate billings that went to [the] DOT, BETA stands at the ready to correct that.”

But Doyle said the 2003 audit had “languished” with no further inquiries by the DOT or its audit staff since 2003, and no questions from anyone in the U.S. Department of Transportation’s inspector general’s office or the Rhode Island attorney general’s office in the intervening years.

“I know BETA has sought meetings” with the DOT, he said. “There is no party more anxious than BETA to deal with this issue and put it behind them.”

The still-unexplained travel of the BETA audit came to light last week, when a former DOT auditor, Elizabeth Swartz, publicly confirmed some of her findings when she delved into BETA’s payroll records for a contract audit on a project that appears to have had its beginnings in 1996.

She said she found altered payroll reports in which the DOT’s name was allegedly written in over the “whited-out” — but still easily read — name of another client of the prominent engineering firm, based in Norwood, Mass.

She said the company claimed to have lost all of its 1993 payroll records, which compounded the difficulty of verifying contract billings for another of BETA’s long-running contracts.

Swartz, who retired in January, said the office manager at the company assured her: “The charges weren’t double-billed.”

But Swartz also said that responsibility for this particular contract audit was taken away from her and reassigned after she brought her findings to the attention of her superiors at the state transportation agency at some point between 2002 and 2003.

“I was just taken off with no explanation whatsoever,” she said Friday.

Asked yesterday whether the state police had made an effort to secure the “altered” records that Swartz uncovered, Capt. Stephen Lynch would not comment on “what actions we are taking in that review right now,” but “I will tell you this: we have not subpoenaed any records.”

But DOT Director Williams yesterday said, without qualification, that the records in question were safely “locked” away.

He acknowledged having had a series of conversations since Thursday with the chief of the DOT audit section, James Choquette, about BETA and other issues he turned over to the state police that day. BETA was also the focus of a Providence Journal records-request that same day, but Williams would not say whether the events were linked.

“At this point,” Williams said, all “I am going to say is this is an active investigation.”

Asked whether he was satisfied by the DOT’s handling of the billing irregularities raised by the DOT’s in-house auditor, Williams said he would have no comment until the investigation was completed, but as a rule, “if there are issues raised in an audit, I think they ought to be brought up immediately to appropriate parties” and resolved quickly as appropriate or not.

In December 1999, former BETA owner Michael Grilli sold the company to its employees. It is now wholly employee owned, with Frank J. Romeo as its president.

The DOT has not yet responded to requests for copies of the audit at issue, but recent invoices paint the picture of a busy company juggling multiple DOT contracts. Current contracts include a bridge rehabilitation, Routes 5 and 138 reconstruction, Route 295 design improvements, “destination signage” and “on-call liaison engineering services.” Some date to the early 1990s.

Doyle said the problems uncovered in the unfinished 2003 audit hark back to a time in 1997 when it appears, in retrospect, that “the manager in charge, rather than reviewing his subordinates’ timesheets on a weekly basis, was not doing it until the end of the month….”

“At the end of the month, he would look at them and say, these are wrong based on the work that was performed during the month … and then the reports were changed to reflect what BETA management at the time believed to be accurate.”

Doyle said it was not yet clear whether BETA owes the DOT money, and whether the 3 percent the agency withholds until the final signoff on a contract is sufficient.

But he said no similar problems cropped up in spot audits of company billings in later years, so BETA thinks the 1997 recruitment of a new manager solved the problem.

“BETA is not trying to run and hide from this. They faced up to the management issue in 1997, and if there is a financial consequence, they will face up to that, too, as soon as [the] DOT presents its findings to them.”

kgregg@projo.com