AMPHI GETS WARNING FROM AUDITOR GENERAL - Tucson Local Media: Import

AMPHI GETS WARNING FROM AUDITOR GENERAL

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Posted: Wednesday, March 12, 2003 12:00 am | Updated: 7:47 am, Thu Mar 24, 2011.

The past came back to haunt Amphitheater Public Schools last month when the district received a letter from the Arizona Office of the Auditor General giving the district until April 30 to correct deficiencies in accounting procedures as noted in an external audit covering fiscal year 2000-2001.

The five-page report accompanying the letter highlighted five main areas of non-compliance, many of which have already been corrected, according to Constance Cigliana, district director of finance.

Auditor General Debra K. Davenport wrote in her letter that a review of the district's audit and compliance questionnaire for the Uniform System of Financial Records showed "significant deficiencies in internal controls" in the district's accounting procedures during fiscal year 2000-2001. Heinfeld & Meech, 6749 N. Oracle Road, conducted the audit.

According to the report, the district:

Did not always follow competitive purchasing procedures.

Lacked adequate controls over its accounting records.

Did not maintain sufficient controls over student activities monies.

Did not maintain adequate controls over its bank accounts.

Lacked adequate controls over student attendance reporting.

The Governing Board was notified by Davenport in early February of the deficiencies. The letter, dated Jan. 31, was addressed to members of the district governing board and copied to Superintendent Vicki Balentine, Pima County School Superintendent Linda Arzoumanian, Vicki G. Salazar, associate superintendent of financial services for the Arizona Department of Education, and Cigliana. The letter was not discussed at any of the governing board meetings in February or March and was given to the Northwest EXPLORER by Arzoumanian's office.

Heinfeld & Meech notified Amphi of the district's problems in a post-audit management letter dated Nov. 7, 2001. Cigliana said Amphi has been "working at addressing them" since that time.

"We get a certain amount of information at the end of each audit, where we come in and make adjustments based on what we found from our audit management letter," said Cigliana, who was hired in February 2001.

"Most of this was fixed the first year I was here and (what remains), when you look at it, a lot of this is clerical errors, doing things that are prohibited, coding (funds) with the wrong code," she said. "This is a matter of instruction, teaching the people, bringing them up to speed. Some people will catch it right away; other people - five years from now I'll still be telling them the same thing: Please do not do that."

Jerry Strom, account services manager with the auditor general's office, said an exit interview with Amphi in April or May will determine if the district has corrected the deficiencies noted in the auditor general's letter.

"If we determine they have not corrected enough deficiencies to come into compliance, we'll notify the State Board of Education and the district and the State Board of Education could withhold funding," he said.

Examples from the management letter include: the cost of 101 computers was listed at $27 less each on the purchasing order than on the invoice; two clubs at Wilson K-8 School, 2330 W. Glover Road, had negative club balances at June 30, 2001; 41 computer monitors priced at $295 each were listed in a fund that requires a minimum price of $300 to be recorded in that fund; entry dates for two student registration forms were omitted at La Cima Middle School, 5600 N. La Canada Drive; the previous years' interest of $133,242 in the bond building fund was not transferred to the district's debt service fund; and the 2000-2001 proposed expenditure budget was published only five days before the budget hearing instead of the 10 days required by law.

Governing Board President Nancy Young Wright said the auditor general's letter is a sign of how poorly things were done in the district under the prior administration that was in place in the late 1990s.

"Things were done in a very different fashion then, obviously it wasn't up to par and we're the people standing here today dealing with what happened back then," Young Wright said.

"Constance spent her entire time her first year here trying to get us into compliance, to implement basic controls (because) there were no operating controls, for whatever reason. She didn't take vacation the first summer she was here and worked Saturdays. Apparently (former finance director John) Rose had used a coding system that was particular to him and (she) had to de-code those codes and we had to go through an entire year just to get things on an even keel," Young Wright said.

Rose was the district's director of finance until Oct. 2000 when he resigned after child pornography was found on his district computer. He was killed during an ATM robbery last year.

Balentine said Amphi is taking the auditor general's letter "very seriously" but that she is confident most of the issues have been fixed. The fact that the letter came so long after the actual audit "gives you a hint as to how backlogged the state is," she said, adding that the time frame dealt with in the audit was a time of "great upheaval" in the district.

"This letter very clearly lays out the position the district was in at that moment in time (2000-2001)," Balentine said. "We had major staff turnover in the accounting department. Our CFO (Rose) resigned in October of 2000, our purchasing agent resigned in December or January, then our senior staff accountant left in February of 2001. We were able to bring in Constance in February. I think it is fair to focus on the time frame where the district was in recovering from the mess that they were in prior to 2001 that culminated in the consent decree."

The district entered into a consent degree with the attorney general's office Feb. 2, 2001, concerning procurement violations that occurred between December 1996 and June 2000 involving the construction of Ironwood Ridge High School, 2475 W. Naranja Drive.

During that time, more than $1 million was spent on construction and security guard services at the high school. The security guards were hired to protect the site while a protracted environmental lawsuit worked its way through the federal court system. Construction contracts were awarded within days of the district winning the suit on appeal, bypassing the state's sealed bidding process. Because of these violations, the auditor general conducted an investigation and the attorney general entered into the consent decree with the district to save the district from having to pay fines on its violations.

The decree stated that the district would obtain "at its own expense, detailed state school district procurement law, purchasing, financial accounting and conflict-of-interest training for all employees who are involved in procurement with the district."

Young Wright confirmed that "we've been conducting training annually, as per our agreement" with the attorney general and that "anyone involved in financial decisions" is required to attend.

The new report from the auditor general "does not appear to violate" the consent decree, according to the attorney general's office, but staff couldn't confirm that because, due to high turnover in the department, new people are in the jobs and unfamiliar with the decree, said Dianna Jennings, public information officer. She asked the EXPLORER to fax a copy of the decree and the auditor general's report to the attorney general's office for review "because no one here can seem to find a copy of it." Jennings did not have a definitive answer on possible violation by the time the EXPLORER went to press.

Although the auditor general's report concerns violations that may have occurred after the consent degree was signed in Feb. 2001, Balentine said she could not see how the district would be in violation of the decree because training to implement compliance was held up by the state until a trainer was available in June 2001.

"When we signed the consent decree in February, we were working with the State Department of Procurement and they couldn't even do the training until June," Balentine said. "When that decree came down, and you don't have key people in important jobs, there is a period of time that is kind of benign management and you can't really analyze what your (accounting system) issues might be. The bottom line is, in reality, from about October of 2000 until March or April (of 2001) when we got key staff members in place, we were just coping."

Cigliana said the bidding and procurement violations mentioned in the auditor general's management letter have been corrected, and that the only things that are outstanding are determining which schools were not recording student activities funds in the correct manner.

The letter refers to "several clubs" appearing to be invalid, but doesn't mention which ones or at what school. In addition, it mentions unreconciled differences between club's listing their total cash balance at two middle schools and the district's cash balance records, but does not say which middle schools or what the discrepancy was.

"I have to discuss this with Heinfeld & Meech and find out exactly which schools were talking about, then I'll have to go to those schools and determine what was happening and make sure it isn't happening anymore," said Cigliana.

Balentine said she is confident all the issues mentioned in the auditor general's letter will be addressed and corrected by April.

"We are certain that after all these years of addressing these problems, that we are OK," said Balentine. "Certainly we don't want to live under a delusion that we've taken care of something if it hasn't been addressed - no one has any interest in continuing the bad old days - so we are looking into absolutely everything. If there's any frustration I have, it's that I hope everyone is fair in addressing this and not creating the impression that somehow we're mired in problems with the auditor general right now instead of looking at this for what it is, which is a reflection of that year (2000-2001), which anyone who knows what we were trying to rebuild knows we were in deep trouble back then."

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