Recommendations On Procedures And Policies—

No Fraud, Abuse Found In Independent School ‘Audit’

By John Voket

The final results of a $13,000 independent review of internal controls and procedures was delivered to members of the Board of Education Tuesday evening for review, and to give members an opportunity to formulate questions for a member of the firm who conducted what has been described as “an independent audit.”

School district business director Ronald Bienkowski told The Bee Wednesday that he was encouraged by the report.

“It proved that we don’t have any fraud or abuse, or major issues of concern or mismanagement,” Mr Bienkowski said. Those comments were echoed by town Finance Director Benjamin Spragg.

“I don’t see any drastic issues,” Mr Spragg said. “The central office needs some tightening up in their procedures, the cafeteria system needs some work and there are some suggestions for improving the way activity funds and [grants]administered at the school level are handled.”

Ultimately, both finance authorities said there needs to be a careful weighing of costs versus benefit factors before implementing any or all recommendations.

The full board is expected to address any lingering questions or concerns to a member of the Waterbury-based accounting firm of Konowitz, Kahn and Company, PC at the May 16 meeting. The audit was formally proposed by school board member Paul Mangiafico in September of 2005.

Despite the fact that the school district had already budgeted almost $17,000 to another auditing firm already on retainer for both the district and the town, Mr Mangiafico said the district and Newtown taxpayers deserve a “second opinion,” from an “independent and unaffiliated source...to ensure that we are managing [school] financial practices in a responsible way.”

Mr Mangiafico said he was not necessarily interested in utilizing the district’s auditing firm Kostin, Ruffkess & Co., LLC already on retainer at $16,896. The independent firm, he said, has never worked for the town and, in fact, has never audited a school district before.

“We wanted a firm not connected with the town or school district to come in and take an unbiased look at our internal bookkeeping procedures, checks and balances to highlight any weaknesses, to ensure we have the proper controls in place, and that they are being implemented successfully,” Mr Mangiafico said. “We’re [the school board] spending 72 cents of every tax dollar and as a taxpayer, I want to be able to have a higher level of confidence that the system is working. It’s our fiduciary responsibility to every taxpayer.”

Mr Mangiafico first introduced the idea of what he continued to classify as, “an independent audit,” earlier last year, but since he was referencing to incidents involving former Newtown High School choral director Sabrina Post as part of the justification for the audit, initial discussions were conducted in closed session. Ms Post was subsequently charged with several felonies and a misdemeanor in relation to alleged thefts and forgery.

Following her arrest, Ms Post voluntarily agreed to resign her teaching post in exchange for the district agreeing to withdraw termination proceedings against her. She agreed to make restitution to the school system in the amount of $11,194.04, and eventually received two years of special probation.

During Tuesday’s meeting, school board chair Elaine McClure expressed relief that the report was restricted to procedural recommendations, mainly related to general accounting and control issues.

“Thank God there was no fraud found,” she said.

Overall recommendations in the report’s conclusion pointed to a need for a full, written accounting policies and procedures manual. Mr Bienkowski said he concurs with that recommendation, although he conceded that many of the controls and procedures that staff are expected to follow are already outlined in the various contracts between the district and its personnel.

“We will probably make one massive manual, even though it will be time consuming to put it together,” Mr Bienkowski said. “It would be beneficial to have one, especially in the event we had a complete turnover of staff [in the accounting and business department].”

The report also suggested segregating certain duties among central and school business office personnel “regarding accounts payable, purchasing, payroll and student activity funds. Segregation of duties is a basic, key internal control, and one of the most difficult to achieve,” the report noted.

Another repeating element in the report was the suggestion to establish a “fraud hot line…to anonymously report fraud or abuse.

“Research performed by the Association of Certified Fraud Examiners shows that the most common method of detecting fraud is via a tip,” the report continued, pointing out such a device is relatively inexpensive, and can be administered by a single employee.

While the report stated that computers are the only fixed assets being inventoried, Mr Bienkowski said that all items valued at more than $1,000 are inventoried by bar code, and administered by an outside vendor. The report suggested mounting video cameras either inside or outside of all exit doors to help deter theft by recording the comings and goings of students, visitors, vendors, and personnel.

In terms of controls on payroll accounting, the report also suggested installing time clocks instead of the paper sign-in system currently used by much of the school district’s staff to account for hours worked.

But Mr Beinkowski noted the expense and atmosphere such installations could create.

“We don’t have and don’t want to create a factory mentality in the district,” he said. “These measures can make people feel we are constantly watching over them and accounting for their every move. I don’t think we want that climate — we need to maintain a positive work culture.”

Since the report was funded by public tax dollars, it is available for review by the general public during regular business hours at the District offices on Pack’s Lane. If the report is among items on the board’s next meeting agenda, residents are welcome to comment on its findings during the public portion of the May 16 meeting.