Tuesday, April 18, 2000

Schools audit reveals errors

'Activity funds' cited

BY Andrea Tortora
The Cincinnati Enquirer

        COVINGTON — The Covington school system does an A-plus job of managing most of its money, financial audits for the past four years reveal, but there are consistent problems at the school level with the way “activity funds” are handled.

        A CPA firm's audits reveal a variety of errors in accounting for the funds, such as improper co-signing of checks, lack of receipt forms, or school officials authorizing reimbursements for themselves.

        Activity funds include money the schools earn from bake sales, athletic boosters and other PTA fund-raisers. The amount ranges from $100 to a few thousand dollars for each school each year.

        In addition, several schools paid sales tax, even though schools are exempt from sales tax in Kentucky.

        Altogether, the amount affected by the errors is a drop in the bucket compared with Covington Schools' overall budget of $39 million a year. Yet those problems could open the doors for major money mishaps, said Matt Wireman, Covington's finance director.

        Mr. Wireman said an upcoming state audit will focus on how schools handle activity funds.

        “It's the place for impropriety at the school level,” Mr. Wireman said.

        The fiscal year audits for 1996, 1997, 1998 and 1999 were conducted by an Edgewood firm, Bertke and Sparks CPAs.

        “These are problems you find everywhere you go,” George Sparks said in an interview. “It's not something I see just at this district.”

        Yet the problems are repeated over the years, noted Kyna Koch, the state Education Department's Division of Finance director, in a February 1999 letter to the school district. She requested an explanation for the continued problems.

        To improve things, the district is installing an accounting software package in all school administration computers, so everyone is using the same procedures.

        And all principals and school staff were trained in the proper way to handle checks, funds, purchase orders and receipts. The training has happened before, usually after Bertke and Sparks completes an audit and finds errors.


        Among the errors pointed out in the audit for the year ending June 30, 1999:

        • At Glenn O. Swing Elementary, an employee authorized a reimbursement to herself. Auditors explained the importance of having someone else authorize reimbursements.

        • At Holmes High, a request for reimbursement and the approval were made by the same person. Invoices were not marked to indicate they had been paid.

        • At Ninth District Elementary, photocopied signatures were used on request forms. Auditors recommended that all signatures be originals.

        Similar problems were noted in 1998, 1997 and 1996.


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