More than six months after Alexandria School Board Chairman Arthur Peabody requested an audit of school budget transfers for FY 2007, a preliminary report was delivered to the Budget, Human Resources and Administrative Committee of the School Board on Monday night. The Board had delayed approval of the revised FY 2007 budget because of concerns about these transfers.
Mike Gillespie from Cotton&Co., presented the report to the committee, consisting of School Board members Yvonne Folkerts, Arthur Peabody and Eileen Rivera. Gillespie stressed that the report was a report on what we found, not an audit. He also explained how Cotton&Co. went about this exercise.
First, Cotton asked for copies of all budget transfers from FY 2005, 2006 and through March, 2007. Transfers related to salaries and benefits were excluded. Originally, Cotton had intended to review 139 randomly selected transfers of more than $5,000 because they were told that there had been only 950 in FY 2007. Actually, by the end of March, 2007, there had been more than 1,600 budget transfers, a number that is in keeping with the number of such transfers in the previous two fiscal years.
While Cotton received the actual budget transfer information electronically, they also requested copies of the Request Form for Budget Adjustment and the Budget Data Entry form. Once this information was added to the electronic files, Cotton was able to look for anomalies.
What they found
Budget Transfer Request forms were not available for 51 transfers included in the sample. The Finance Department of the Alexandria City Public School system informed them that 46 of these transfers did not require such forms and the remaining five were never provided.
In 50 of the budget transfers in Cottons sample, the reasons for budget adjustment section of the request form was not completed. The Finance Department provided explanations for 47 of these after Cotton requested that information but failed to provide any explanation for the remaining three. Seven approvers signatures were missing from transfer requests, five of which, according to the Finance Department, were not required and two were simply overlooked. Many of the requesters and approvers signatures were illegible and there is no space on the request form for the printed names of these individuals.
Cotton was told that there were no policies for who is authorized to request or approve a budget transfer; when Finance is authorized to make a budget transfer; when a Budget Request form is not required for a budget transfer and the minimum dollar threshold for a transfer.
Gillespie recommended that the Budget Transfer Request form be changed to include printed names of requesters and approvers and the school system develop administrative policies governing all aspects of budget transfers. He will present a final report to the entire Board before summer recess.
School Superintendent Rebecca L. Perry attended Monday nights meeting. There were no major findings, she said. Theyre all very minor. I felt very positive about it.
Arthur Peabody’s reaction was different than the superintendent’s. “They found some very sloppy accounting practices that are much more like those you would find in an immateurish business,not a well run school system,” he said. “The staff is going to need to correct these.”