Almost every area scrutinized in an audit of Rock Terrace School’s independent activity fund contained weaknesses in its management, school officials said Friday.
“It was hard to tell from the audit how many things the school did right,” said Philip Kauffman, vice president of the Montgomery County Board of Education.
The Rockville school serves developmentally delayed students, and parents alleged last summer that school staff misappropriated money students earned in a work-study program.
The audit did not review the money collected in the work-study program, called Transition to Work. In the wake of the allegations, school principal Dianne Thornton retired in August.
Auditor Roger Pisha did examine the school’s independent activity funds, which a school mostly generates through avenues such as its PTA, booster club and activities such as the school’s cafe and paper-shredding program that generate funds for the school and provide other work-experience opportunities for students.
The audit period covered Oct. 1, 2011, to May 31, 2013.
In an Aug. 19 report to the school’s acting principal, Katherine Lertora, Pisha said he found instances of improper recording or poor reviewing of the school’s financial activity with these funds, among other issues.
“Almost all areas” the audit examined contained “weaknesses,” said Larry Bowers, chief operating officer for the school system.
“I would say this is pretty unusual in terms of how many areas have been identified,” he said.
As a result, school system officials now are considering whether the Rockville school may need an extra person on staff to handle the financial management responsibilities that now fall to the school’s administrative secretary, Bowers said.
Among other findings, the audit report said school employees made expenditures without properly documenting the reason for them.
Some unexplained expenditures included magazine subscriptions, books, gift cards, an iPod Nano and a traffic citation, according to the audit report.
“We did not find any information that would lead us to believe they were for personal use,” Bowers said of the expenditures.
Some of the same expenditure items, including gift cards, came up in a 2011 audit of the school, which discovered the items were given to students, Bowers said.
The school system also could not locate the logs where school employees are required to record purchases they make with the school’s credit cards.
Rock Terrace also did not follow financial procedures for its “business-like activities” that were put in a place after a previous audit, the report said.
Bowers said he believes those financial procedures stemmed from the 2011 audit.
The business activities refer to the work-experience opportunities available to students in the school, Bowers said. The report does not specify which ones it is referring to.
Other issues identified in the recently released audit report include: School employees did not properly document fundraising activities; employees did not submit some financial information related to field trips; the school’s outdoor environmental education program account had excess money for an undetermined reason; transfers were made between school accounts without necessary signatures; and it was not always clear whether the principal had reviewed financial reports in a timely manner.
Bowers emphasized in an interview that some of these issues are not unique to Rock Terrace.
They are also tied to teachers’ responsibilities, he said.
“This isn’t just about the principal or the financial agent,” he said.
Kauffman said responsibility for a school’s financial management ultimately lies with the leadership, but that teachers should also have been aware of their responsibilities.
With the school’s administrative secretary currently balances financial management responsibilities with others, Bowers said the school system is looking into whether the school may need a separate person for the job.
The school system will provide a “visiting bookkeeper” who will help the school’s administrative secretary as “a stop-drop measure” until it decides whether a financial specialist is necessary, he said.
Bowers said the school once had a financial specialist position, but it was eliminated in 2011. He said he does not recall why exactly, but thinks it was related to a regular process to identify possible reductions in the school.
Every middle and high school has a financial specialist, Bowers said. Each elementary school has an administrative secretary to handle financial management responsibilities along with other responsibilities.
Kauffman said Rock Terrace has fewer students than a typical middle or high school.
The school system has developed a plan for the school that outlines how it can improve its fiscal management.
Among other measures, the plan includes training the school system will provide for the administrative secretary and other employees.
A school employee at the school’s main phone number said Lertora had no comment on the audit.
“I think the question is the oversight that will need to be provided by the central office,” Kauffman said.
Meanwhile, the county State’s Attorney’s Office continues to investigate the bank accounts related to the school’s Transition to Work program.
The school system has offered to do whatever it can to help, but the bank accounts fall outside of its authority to investigate, Bowers said.
Ramon Korionoff, a spokesman for the Montgomery County State’s Attorney’s Office, declined to comment on the details of the case.
Kauffman said the school board will have to “vigorously follow up” on the remaining questions regarding the student bank accounts set up as part of the work-study program.
“The board recognizes that the system has a lot to do to redeem the trust of parents in the community and make it right by the families,” he said.