School district audit points to financial issues
Report recommends more separation of duties, better documentation, more education on use of grants
NEW IPSWICH — The Mascenic School District will be working with the Superintendent and business office to address multiple issues found in an independent audit of the district’s internal financial controls submitted to the district this month.
“During the course of our financial and compliance audits over the last several years, potential abuses and a lack of effective entity-level controls were noted,” a Nashua-based firm wrote in its audit of the district. “Multiple allegations of waste and abuse of public resources with respect to certain individuals within the district were brought to our attention. Further, our audit procedures, including interviews of District personnel and review of supporting documentation, indicated that many of these allegations, including several allegations of fraud, were brought to the attention of district administration, but were never formally (in writing by an impartial individual) investigated or brought to the attention of the School Board.”
The audit turned up multiple deficiencies, several related to control deficiencies caused by overlapping duties. For example, the audit notes, Director of Financial Services Jenifer Krook, Accounts Payable Clerk Laurie Olsen and Payroll Clerk Joanne Perkio all have the ability to print and electronically sign checks, and the accounts payable clerk and director of financial services both have the ability to sign checks and reconcile cash accounts. The audit recommended limiting the check signing authority to a single entity — the district treasurer.
However, that also causes control issues, as until recently Olsen functioned as both the accounts payable clerk and district treasurer, according the audit. It was recommended that the treasurer not otherwise be involved in the district or the School Board. According to School Board Chair Jeff Salmonson, the School Board has already separated this position, and hired Roger Somero of New Ipswich to fulfill the role of treasurer.
“Segregation of duties within the business department was a big issue,” said Salmonson. “We’ll be addressing all of the major points in there.”
The audit also recommended the district form an Audit Committee, Finance Committee and/or a Financial Risk Management Committee to create an outside review process of potential wastes or abuse of public resources. It also suggested that a human resources manager position be created in the district, as none currently exists. The School Board will be discussing the issue of forming such committees or creating a human resources position within its next few meetings, said Salmonson, but both issues will be part of longer-range planning to address issues raised in the audit.
Some of the issues brought up in the audit include an excessive amount of budget line item transfers — 240 in the past year. Best practices, according to the audit, should have very few, if any, line item transfers. Some of the transfers do not have consistent or at times even adequate supporting documentation, according to the audit report. The audit also pointed out that initiating budget line item transfers should come from department heads, and not the director of financial services, which has been the practice. The audit continued to note that budget adjustments shouldn’t be made to the budget for encumbrances from the previous year, to close out prior year purchase orders expended in the current year or to reflect grant fund balance carryovers.
In multiple instances, the audit says, the funds relegated to student activities included accounts that should have been maintained in the district’s general ledger, or were otherwise ineligible. Items such as scholarships, night school, the school soda machine, parking tags, restroom renovation and library expenses were included in student activities, when they should be with the general ledger, and other activities, including principal’s accounts, booster clubs, book fairs and coffee, were not eligible as student activities, according to the audit.
The audit also questioned some of the grant expenditures made by the district, stating that many expenditures either did not appear to be consistent with federal grant objectives or, in some cases, did not directly relate to the grant. Some grant money had been used to buy gift cards, which are specifically prohibited. The audit recommended that the personnel responsible for overseeing grants receive additional training in what expenditures are allowed under federal grants.
Salmonson said the business office has been working with Supt. Ruthann Goguin to incorporate all of the recommendations in the audit. “We feel they’re all important to have our financial and human resources processes run properly,” said Salmonson. “We’re reviewing all of the points in that process. A to Z, we’re looking at it and how to incorporate and follow the recommendations.”
The district should also review how district reimbursements are documented, the audit recommended, as the current method is inadequate. According to the audit, there have been travel, meal and conference costs that often appeared excessive or not directly related to job function. Other district reimbursements need to be clarified, the audit stated, such as a cell phone policy where some employees were reimbursed for a private cell phone used for district business, or district-issued cell phones were used for personal calls.
Salmonson said the district has already acted on the issue of reimbursements prior to the submission of the audit. The district will now be tied to the same guidelines as General Services Administration, an independent agency of the government which help manage and support the basic functioning of federal agencies. Mascenic will be following the same reimbursement rates paid to government employees for meals or hotels.
The Mascenic Regional School Board was scheduled to discuss the audit at its Monday meeting. The board is scheduled to meet next on Dec. 2.
Ashley Saari can be reached at 924-7172 ex. 244, or firstname.lastname@example.org. She’s on twitter @AshleySaari.