The school district’s 2011 audit revealed no evidence of fraud or of any missing funds, auditors said in an hour-long presentation at Thursday night’s board meeting.
The board voted in October to pay $1,280 to bring a representative from the school district’s 2011 auditor to a meeting, and two representatives from Mauldin & Jenkins were at the meeting — Adam Fraley who managed the 2010-11 audit, and Joel Black, the audit’s quality control reviewer.
“We didn’t notice any fraud as part of our procedures, that is something that obviously we would have to report properly and immediately,” Fraley said during his presentation.
Fraley began the presentation with an overview of the firm’s audit that looked at the district’s financial statements from July 1, 2010, to June 30, 2011.
“We rendered what is often called a ‘clean opinion,’ which means that we rendered an ‘unqualified opinion.’ What that means is that we believe based on our test work that these financial statements are fairly presented in all material respects,” Fraley said.
Following Fraley’s presentation, school board member Patsy Jordan asked the first follow-up question.
“It has been interpreted by certain individuals that the 2010-11 fiscal year audit conducted by Mauldin & Jenkins indicated certain incidents of possible fraud, unaccountable tax funds and millions of dollars in financial mismanagement. Did you, as the audit manager, discover any incidents of this?” Jordan said.
While the auditor’s job is not to look for fraud, Fraley said, if the firm discovered any of the things mentioned by Jordan, “they would’ve been reported in our report.”
Fraley said the firm proposed some audit adjustments to correct the district’s financial statements, but didn’t find any missing funds.
Marlow submitted about three pages of questions in advance, according to school district spokeswoman Barbara Jacoby. At the meeting, Marlow asked if the auditors would provide written answers to questions submitted ahead of time as they were asked to do, and Fraley said no.
“Our audit reports speak to the results of the audit,” Fraley said.
There were six audit “findings,” or issues, resulting from the 2011 fiscal year audit, meaning there were six instances in the financial statements that Mauldin & Jenkins pointed out as needing to be corrected.
Marlow asked about an audit finding that pointed out funds that were not properly collateralized. Marlow wanted to know why the funds weren’t properly collateralized and what that meant.
Black responded, and said usually this finding is the result of “an honest mistake.”
“Usually it’s just an honest mistake of the bank didn’t know, or didn’t classify the funds as public funds,” Black said. “So it’s usually an honest mistake that’s easily fixed.”
Marlow pressed the issue, asking multiple follow-up questions. In her questions, Marlow accused the district of having money in a “failing bank” and of having “taxpayer funds” in an uncollateralized account.
Fraley, the auditor, and school board Chair Janet Read corrected Marlow, explaining that the bank was not failing.
“We did not say they were in a failing bank,” Fraley said.
The funds in the improperly collateralized account were school funds, not taxpayer money, Jacoby added.
“The funds were raised by schools, they weren’t taxpayer funds,” Jacoby said.
Read added that this money is for things like yearbooks that is raised by an individual school and not from the district.
When the auditors finished answering questions, Superintendent of Financial Management Candler Howell reiterated that the 2011 findings were “the first findings in 22 years.”
“In 2012, we really corrected all six findings,” Howell explained. “We have not had anything qualified in audits in 25 years.”
The school board is now operating in fiscal 2014, which will conclude June 30.