Wednesday, July 25, 2007

Schools prone to financial errors

Bookkeepers should be trained better and screened more carefully, audit committee tells Board of Education

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Activity funds in Montgomery County Public Schools may be prone to bookkeeping errors because school money handlers are not trained or screened well enough, officials told Board of Education members Monday.

The board’s audit committee met Monday to scrutinize MCPS independent activity funds and the school district’s financial training and audit process.

The meeting was triggered by revelations in a March memorandum about ‘‘seriously deficient” bookkeeping at Winston Churchill High School in Potomac. The audit’s findings, showing a ‘‘large negative cash position,” were described to Joan Benz, Churchill principal, in the memorandum.

Benz did not respond to a comment request for this story.

Independent activity funds are managed by schools — as opposed to being under the school system’s purview — and get their capital from ticket sales and other fundraisers. They support the spectrum of activities from school trips to athletic field maintenance contracts.

MCPS is not legally beholden to compensate for independent activity fund shortfalls.

‘‘I for one am not concerned about how Churchill is going about doing things. They just need to report it properly,” said audit committee member Stephen N. Abrams (Dist. 2) of Rockville.

Officials from MCPS reported to the committee that a forensic auditor found Churchill’s bookkeepers and principal did nothing illegal.

‘‘We’ve got to stop beating up the Churchill community on this,” Abrams said. Churchill is an ‘‘affluent school that can get creative” with its finances, Abrams said.

Christopher S. Barclay (Dist. 4) of Takoma Park, the committee chairman, argued that the district should ensure ‘‘accountability” for schools whose audits turned up problematic bookkeeping.

According to officials at the meeting, MCPS is in the process of developing course material to train visiting bookkeepers and new financial assistants. The goal is to have a pilot program running by the end of this year.

‘‘The training has to be clear,” said Churchill PTSA President Robyn Solomon. ‘‘Just like you need to have training for teachers who teach our kids.”

Solomon said she believes the school’s audit will not be the last of its kind. The findings could be an impetus for better training for money handlers, ‘‘for all schools, and for all departments,” she said.

The school system now uses a system whereby a school’s financial employee could make a telephone call to the MCPS Office of Organizational Development for answers to questions about bookkeeping.

‘‘As long as they ask the questions,” Barclay remarked. He then asked MCPS Internal Audit Supervisor Roger Pisha, ‘‘How well-trained do you think our management is?”

‘‘Some of that is having people just having the skills necessary to take the jobs,” Pisha answered. ‘‘We don’t do as much screening as possible.”

Committee members questioned whether insufficient training was the cause of troubled finances, or if MCPS did not have enough rules and standards laid out for independent activity fund management.

Board members highlighted one item in the audit memorandum: Athletic field maintenance costing $44,999.97 that had been split into three contracts of $14,999.99 each. According to the district’s rules, contracts of $15,000 or more must be competitively bid and processed through MCPS procurement.

‘‘They clearly knew what they were doing and made a decision to fall under the radar,” Barclay said.

Larry A. Bowers, MCPS chief operating officer, said the item and other flagged audit findings were ‘‘not uncommon.” Bowers said Churchill administrators claimed to have sought bids for the athletic field project, although Pisha’s audit did not reflect that.

According to Bowers, the school system’s enforcement of bookkeeping rules are limited. It has monitoring and auditing ability, but penalties for ‘‘seriously deficient” financial management go no farther than being documented on the business manager’s or principal’s evaluation.

Auditors will report to the board’s audit committee on a yearly basis, as they conduct annual audits of MCPS schools.