Thursday, December 20, 2012

State Auditor's Annual Review

Our school district is examined each year by the Auditor of State, and this year's audit report has just been released.

As shown on the "Schedule of Findings" section of the report, the State Auditor's Office found no problems, and our District was once again declared to be a "low risk auditee."  I'm not sure what exactly that means in the context of a public entity, but when a business is audited, a declaration like this means that the auditors feel no need to look in every nook and cranny every year, and that they will generally gauge the accuracy of the financial reports, and the effectiveness of management and accounting controls, by looking in detail at only the accounts through which large amounts of money pass, plus a few others chosen at random.

There was a comment in the Management Letter recommending that the School Board put in place a policy "requiring the approval of the Treasurer and the Board of Education prior to the establishment of any outside checking accounts in the District's name or for District sponsored activities. The policy should include oversight procedures to be performed by the Treasurer’s Office of Board of Education to ensure all District employees responsible for handling cash collections are adhering to the policy."

This will require some thought. If you look at the Monthly Treasurer's Reports, you'll notice that many pages are taken up by the "Financial Report by Fund/SCC" section. This lists the 300+ fund accounts managed by the Treasurer's Office. Some of these are the big primary funds through which most of our funding and spending flows, such as the General Fund. It also includes scores of little funds, like one set up for the Bradley German Club, which has a balance of $25.67. These are the 'official' funds, meaning the money is deposited into the bank by the Treasurer's office, and disbursements from these funds are made according to standard procedures, via official checks.

But there are other occasions when fairly significant amounts of money are collected on behalf of a school activity, held in the hands of an individual - maybe a school employee, maybe a community member - and disbursed without controls, often in cash. This might be a school-sponsored club running a car wash to raise money for uniforms, selling trinkets to help fund a trip, and other similar situations.

The School Board's Policy Review Committee will take the Auditor of State's recommendation, consult with folks such as the policy experts at the Ohio School Boards Association, and report back to the School Board.

The audit reports for prior years can be found via the website of the Auditor of State. Just go to this search page, enter "Hilliard City Schools" and select "Franklin County."


  1. Such as the money that Chip Ebert had under his control? And we seem to have not heard a word about whatever became of that situation, other than both he and his schoolteacher wife are no longer with the HCSD?

    1. This was the situation which led to the State Auditor's recommendation. There was never any HCSD funds involved.

  2. The Ebert incident itself isn't a big deal. But it's one of those things that may be a signal of other problems. This just does not happen in a well-controlled environment. It certainly shows a lack of oversight and awareness, at least at the building level.

    The handling also calls into question the competence of our finance staff. Why didnt we have a cash handling policy in the first place? Why was an outside accountant needed to get to the bottom of a relatively simple matter? Why didnt the district come up with cash procedures in the immediate aftermath? That's Accounting 101 stuff there. I'm sorry, but if you cant do that, you aren't qualified to run a gas station, let alone a school district.

    Makes it hard to justify that 'low risk' rating.... Not that I'm complaining. I don't have much faith that a more extensive (read expensive) audit by the state would do any good...

    1. That's a little harsh.

      The situation we had here was related to the Ohio High School Athletic Association, and events such as tournaments which were directed under the auspices of OSHAA, not the school district. It was OSHAA who advised Athletic Directors to open separate bank accounts to collect revenues and pay expenses for these events. This isn't taxpayer money, and it's not part of the budget for the school district.

      Nor was this a situation unique to our district. Because OSHAA recommended the use of these 'tournament accounts' across Ohio, it was a fairly common practice in school districts, and generally accepted by the Administration.

      To accept the existence of this accounts may have been an ill-advised decision, but appropriate steps has been taken. Even prior to adoption of a new policy, our Superintendent and Treasurer took action to bring the control of these accounts under the Treasurer's office.

      As for the general financial control of our district, I have a great deal of faith in and trust for our our Treasurer, Brian Wilson, as I have frequent interactions with him, given my interest in all things financial. The external audits reports we the School Board receive are alone a good reason that trust is warranted, but if you've come to know Brian as I have, you'll know he's a trustworthy man with a great team. I see it as a complement that his assistant treasurer, Melissa Lee, has just been named the Treasurer of the Dublin School District.

      I have been publishing the Treasurer's Monthly Financial Reports for several months now. All are welcome to examine it and as questions, as I do each month.

  3. My issues have never been with Brian Wilson. He has always responded to my questions and issues. It is the direction the Dale McVey has driven this district during his years or rule. He has recommended and the board approved items which in a short period of time will put us on the edge of cliff. However there will be no reply as the board has long held to the idea we need it all and anything less than we ask for cheats our kids. As we approach 90% people cost tell me who it is about.

    1. Which circles back to the point I've been trying to make for several years: the Superintendent doesn't spend a dime that hasn't been approved by a majority of the School Board, the duly elected representatives of the people.

      The majority of our Board is made up of folks who were elected, by pretty substantial margins, to serve multiple terms. Does that not indicate that the district is being run according to the wishes of the majority of the voters as well?

      Three seats are up for election this coming November: those currently held by Andy Teater, Lisa Whiting and me. The voters will once again have the opportunity to 'fire' any of us (who decide to run for re-election).

    2. For starters we can save our cuts to busing, music by taking the exhoribant supplemental contracts and getting these in the proper perspective. Just think over the last 5 years if we could have saved
      2.5 million just for starters.

    3. Could. Think there's 3 votes to do that? If not, our opinions are irrelevant.