State auditor: IRSD heading in the right direction now
About three months after the Delaware Auditor of Accounts released a biting financial report on Indian River School District, the AOA this week commended the district for improving its financial policies.
IRSD officials have been working to correct the alleged misuse of funds, poor oversight, nepotism and other faults the AOA perceived within IRSD’s finances.
“AOA commends the District’s efforts in developing policies and procedures addressing control issues in such a short amount of time,” the new AOA report, issued Feb. 27, stated. “It is essential we give the District time to fully implement these policies and procedures before our office can perform an effective audit of their implementation.”
Although he noted the timing of the November report had been unfortunate, with the initial audit report released just five days before the IRSD’s 2016 current-expense referendum, which subsequently failed by 20 votes, State Auditor R. Thomas Wagner Jr. had said he wanted voters to have the facts when going to the polls. After the final report, the AOA agreed to a public follow-up on the IRSD’s improvements.
Wagner followed suit by issuing this week’s follow-up report three days before the March 2 re-vote on the same referendum.
“AOA felt that the timeliness of this information was important due to the upcoming referendum being held on March 2,” the Feb. 27 report stated.
“We believe that the chief financial officer (CFO) had little oversight and was free to make decisions in certain areas, such as finances and salaries, as he saw fit,” the update report states.
The IRSD subsequently determined that facsimile signature stamps would no longer be used on financial documents, the employee responsible for preparing the invoices for payment will not be the same person responsible for final approval, all invoices or reimbursements will be approved by the budget manager and there will be an annual review of policies/procedures.
Many issues cited in the 2016 report stemmed from lack of documentation. For instance, the school board didn’t keep records of salary increases or the reasoning behind granting them. The CFO merely crunched the numbers and gave calculations to the financial secretary. He “single-handedly determined employees’ salaries but also was responsible for the processing of payroll,” without the director of personnel’s involvement.
Now, the IRSD provides more detailed meeting minutes, and recorded audio is online at www.soundcloud.com/irsdspotlight. The directors of personnel and finance for the district have begun reviewing salaries and standardizing the employee paperwork. There is also more segregation of duties.
New policies address: a written code of conduct; conflicts of interest regarding relatives and favors; new travel reimbursements; annual inventories of district assets; internal controls for various purchases, including a requirement for multiple payment approvals with various levels of staff.
Policies passed in February are online at www.boarddocs.com/de/irsd/Board.nsf/Public and can be found by selecting “Feb. 27, 2017,” and then “View the Agenda” and “6.07 Policy.”
AOA said this week that they were also pleased to see the IRSD clean up or explain record-keeping that had appeared sloppy, such as retroactive pay being paid in one lump sum, corrections on the Extra Pay for Extra Responsibility (EPER) payroll code and forbidding board members to receive any pay for service to the district.
“The No. 1 thing I hear is, ‘What is the board — not the superintendent, not the administration — doing to prevent this from ever happening again?’ and I think we really need to dive into that, because the people expect us to come up with a solution to prevent this from ever happing again, and I agree with that,” Board Member Doug Hudson recently said.
New Director of Business Jan Steele has spent much of her time in the office educating the school board and the public. The IRSD Referendum Hotline has connected directly to her office. Board members have been asking more questions, and some said they feel more knowledgeable about education finance than ever before.
In the future, district officials have more ideas to put into play: more internal audits; a Community Budget Oversight Committee; and asking the teachers’ union to help facilitate special awards, such as those for retirement or Teacher of the Year ceremonies, which district leaders have said they feel are important for staff morale but for which the AOA questioned the use of taxpayer money.
Not every issue was addressed. AOA suggested a local salary scale for administrators, but district officials and the board had decided “after careful consideration” to continue basing the local portion of administrator salaries based on individual performance and experience.
“Our review was limited to interviews with district administration and a review of documentation provided,” the new report stated. “This review could not be conducted in accordance with Government Auditing Standards due to insufficient time available for the District to implement these new policies and procedures.”
The Indian River School District has created a new finance information webpage at www.irsd.net/departments/finance.
All school board meeting agendas and financial reports are posted online at www.boarddocs.com/de/irsd/Board.nsf/Public.
“So, we are trying to make everything transparent for anyone who has an interest to look at it,” Interim IRSD Superintendent Mark Steele said.
The Delaware State Auditor’s initial and follow-up reports regarding the IRSD are online at www.auditor.delaware.gov/reports.