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Schools lacking in cash controls, auditors discover
An audit at Pasco High uncovers the misuse of funds, missing money and poor records.
By JEFFREY S. SOLOCHEK, Times Staff Writer
Published November 2, 2007
Pasco's school chief Heather Fiorentino said the rules are there, but they weren't followed.
LAND O'LAKES - Money intended for Pasco High's poorest students during 2005-06 wound up instead helping cover the red ink in its athletic department.
In a report filled with negative highlights, that was especially bothersome to auditors. Community members and district employees donate money to the Assist, Believe and Care Project to aid poor students and families. It's just not appropriate, they said, to use the account to paper over sports account deficits.
"Even if you are going to borrow money, borrow it from the principal's account," finance services manager John Simon Jr. said, adding that he did not know exactly how much money was used as it was later repaid.
The misuse of ABC funds was just one of many problems uncovered in the audit, which also revealed:
- The school had no credible accounting of ticket sales that year.
- Coaches who received meal money while traveling didn't properly document their expenses or return any remaining cash.
- Records did not indicate how much money came from concessions.
The school's bookkeeper told the district auditing staff that she didn't know all of the rules and had trouble keeping up, Simon said. So they gave her additional training, and said they'd be back in four months.
That's when they found $20,000 was missing in gate receipts from the school's athletic events. Dade City police detectives are investigating. The bookkeeper remains on the job, though the district did remove the school's business manager.
Meanwhile, on the other side of the county at River Ridge High School, auditors discovered similar problems, though none was turned over to law enforcement.
The school did not issue paper tickets when people paid to enter sporting events. That created a problem when it came time to demonstrate just how much money was collected.
"Ticket numbers on the ticket sales report were falsified to correspond with the amount of cash received for an event," the audit team wrote.
Auditors found that River Ridge also lacked concession stand procedures.
In addition, auditors said, four school booster clubs - football, band, thespian and softball - were not following district policies, and the school was instructed to close all booster club accounts.
The school has since implemented reforms, Simon said. Auditors are monitoring the changes, to see how much money, if any, the school might have lost before they took effect.
News of financial trouble spilled out earlier this week, when a staff auditor who had quit her job in frustration brought the information to the Times. Karen LaRochelle, who has since left the state, complained that the district seemed to have pervasive problems with money management at the school level, and yet few people were held accountable - especially when the district could not generate enough specific evidence to persuade police to mount an investigation.
"It's almost like the internal audits don't even matter," LaRochelle said.
Not so, superintendent Heather Fiorentino said. When the district has the evidence, it prosecutes, she said.
Fiorentino reacted swiftly after the Times' report.
She sent every principal a memo late Wednesday detailing their responsibilities when it comes to overseeing the cash that runs through their schools, and included two chapters of the policy manual for their immediate review. Fiorentino also announced plans to retrain all principals in the rules, and require them to meet monthly with their bookkeepers to make sure things are running properly.
"Every dollar is important, because these dollars are going back to the activities," Fiorentino told the Times. "We have the right procedures in place. They're just not being followed" by everyone.
Principals might find the regulations "redundant and cumbersome," she wrote in her memo. "However, it is imperative for you to remember that our financial safeguards are in place to protect our students, your staff, and you and the district. A breakdown in these procedures jeopardizes our credibility, allowing room for both human error and inappropriate activity."
That does happen. That's why the district conducts annual audits of the way schools use what are known as internal accounts, the income and spending done on behalf of athletics, clubs and support organizations.
It's not chump change.
River Ridge has an internal account of nearly $900,000. Football tickets alone accounted for more than $22,000 last year, before the school implemented new ticket sales controls.
Pasco High's account for 2006-07 was about $476,000.
Many schools follow the procedures to the letter and get clean audits. Others get reports that read like a road map for how to lose money.
Consider some of the additional details in the Pasco High 2005-06 report:
- Transactions were not properly approved by the principal or account sponsors.
- The bookkeeper frequently signed the principal's or sponsors' names on documents verifying money collected.
- The school accepted at least three checks from an account from which it had written off a check as uncollectable a month earlier. It kept no "cash-only" list.
- Checks were being issued to employees for retirement gifts.
- Several checks lacked backing documentation or invoices.
Those were just the obvious miscues. With a heavy reliance on cash handed to volunteers, there's simply no way to tell whether someone pockets money, particularly when a school doesn't have controls in place to monitor how much gets sold and how much money comes in.
"Cash is difficult to manage," Fiorentino said.
"If someone is clever enough, they're going to come up with a way to take money," Simon added. "When the policies and procedures aren't followed, that opens the door."
Auditors are finishing the 2006-07 audits, to see whether things have improved at Pasco High and River Ridge.
Simon hopes to draw more attention to future findings. Rather than issue the entire set of internal audits once a year in a big book, he said, his department wants to release them individually as they're completed. That way, the public will see what's good and bad in the system.
Top administrators, meanwhile, insist that if problems persist at any school, the people in the loop, from a principal on down, must be held accountable.
"Obviously, if it's something very serious, you don't want to see it more than once," assistant superintendent Jim Davis said.
Jeffrey S. Solochek can be reached at email@example.com or 813 909-4614. For more education news, visit the Gradebook at blogs.tampabay.com/schools.