Maillie

TESD Auditor to Attend Finance Meeting Monday, Dec. 9 – Will the Public Receive Answers to $1.2M Accounting Error? Some Taxpayers are Suggesting Fraud & Cover-Up!

As the T/E School District launches its $40 million high school expansion plan and new parking lot, there remain unanswered questions and concerns about the District’s finances and budget process – particularly the unanswered status of the $1.2 million accounting error.  Six months ago the school board voted 6-3 for the District to take responsibility for the accounting error and to correct the audits and annual financial reports for 2016-17 and 2017-18 years.

At the Finance Meeting on Monday night (7 PM TEAO), the District’s audit report and updates is on the agenda and will be presented by Auditor Donald J. Pierce, CPA and partner at Maillie, LLP. Former school board President Scott Dorsey previously assured members of the public that they would be able to ask the Auditor questions directly – it is assumed that newly elected Board President Michele Burger will honor that commitment.

Since the District’s accounting error was first identified in early 2019, residents in the community, including financial professionals, have attended meetings, asked questions, voiced concerns and followed up with emails to school board directors. To date, there have been few answers.

In advance of the finance meeting tomorrow, one of the community’s financial experts Neal Colligan sent me an email detailing specific concerns/questions re the District’s accounting error. Neal is convinced that the accounting error was intentional on the part of the District (I read this to mean the Business Manager) and wants to know specifically when the Auditor learned about the error. It was previously established that the Administration did not tell the school board of the accounting error.  Neal states the following in his email –

The Administration has always maintained that the Auditor was aware of this timing error when the decision was made (by the Business Office) to post them in the wrong year.  Some of the Board has parroted the same story.  On April 22, 2019; the Superintendent read a statement into the record that included, “once the invoices were found, they were booked, according to GAAP, in the 2017-18 year…” and that this information “was shared by the auditor at the time..”.  On August 26, 2019; the District Solicitor wrote this statement of Fact: “concurrent with the processing of the invoices and recording of the expenses in the 2017-2018 fiscal year, the District informed its independent auditor of the found unpaid invoices….” and “the independent auditors verbally advised that the invoices did not meet their test for materiality…”

Over the course of the last year it was apparent to the public that some members of the school board were not interested in the correction of the accounting error (remember three members of our school board opposed the vote in June).  It appeared that they expected the public to quit asking questions about the accounting error; probably in hopes that the problem would just go away. The good news is that Neal and others in the public may finally get the answers from the Auditor tomorrow night!

Aside from simply “doing what’s right”, why should this error in the District’s accounting be important to the school board (and the taxpayers)?  Neal answers that question here –

The Auditor is hired by, and works directly FOR, the Board.  They are reviewing the Business Office and their internal controls.  Mistakes or break-downs in controls MUST be reported directly to the Board (by the Auditor if the Administration does not share with the Board as in this case).  The Auditor has NEVER mentioned this “timing error” in their Management Letters report to the Board; they will certainly address it THIS year.

An audit is an expensive (cost of the audit) check on the Administration.  IF the Administration is not honest with the Auditor, this important control does not exist.  There’s plenty of written evidence that this accounting error was engineered by the Administration and that they never informed the Board or the Auditor.  If that’s the case: this is extraordinarily dangerous to the Community.

Board Members must then consider the likelihood that this has happened before and assure that it does not happen again.  An audit can never catch Management Fraud.  The reason is obvious; Management can commit the Fraud and then cover it up.  Did this happen here?  If so, the Board needs to take serious action and remove the individuals who engineered this financial mis-statement and non-disclosure.

There are plenty of documented statements like the ones above indicating those involved in this saga and (???) cover-up.  The timing of the Auditor’s “notice” of this November of 2017 event is a critical piece of information.  The Board wants to be trusted by the Community, can they trust their Administration/Solicitor?  Maybe we’ll find those answers when the Auditor speaks.

Here’s hoping that Neal is able to help to find the community’s needed answers from the Auditor at the Finance Committee meeting!

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