District 46 financial controls scrutinized
Questionable student activity funds and easy access to checks with automated signatures at Grayslake Elementary District 46 are among the concerns raised by an auditor.
Shelly Casella-Dercole, a partner in a McHenry accounting firm, presented the audit findings at a District 46 board meeting Wednesday night. Her firm generally recommended improving internal controls in several areas.
Superintendent Ellen Correll said Casella-Dercole was hired with the idea of being thorough and making sure the district is handling its finances properly.
“We expected to find some things that needed improvement, things that should have been identified years ago,” Correll said.
District officials say steps were under way to correct some problems before Wednesday's public presentation of the audit.
Casella-Dercole said the student activity funds for District 46's schools are a concern. In particular, she questioned the existence of something called the Common Fund for the district office, which went from a $13,678 balance in July 2009 to $170 in the red a year later.
Activity funds are supposed to be for something connected to students and not fueled with public money, Casella-Dercole said. She said schools are supposed to hold and manage activity money for student organizations and the like.
Casella-Dercole found 24 activity funds had negative balances as of June 30. She said the funds never should be allowed to sink into the red.
“We had several issues with the student activity funds,” she told District 46 officials.
Casella-Dercole noted in her presentation how questionable activity fund spending can place schools in a negative light.
Her firm was brought in to make recommendations in 2004 to Warren Township High School District 121 in Gurnee after shaky student activity fund spending was revealed by the Daily Herald.
In that case, former Warren Principal Philip Roffman pleaded guilty to illegally spending $400 on theater tickets for family and friends in November 2003. An independent investigator also found Roffman submitted false documents to use activity fund accounts for telephone sex, an online swingers club membership and neckties.
As for other sections of the District 46 audit covering the fiscal year that ended June 30, Casella-Dercole's areas of concern included:
Ÿ Lack of control over use of automated signatures on all accounts payable and payroll checks.
“Your accounts payable and your payroll clerk have the ability to basically print checks that already have signatures on them,” she said. “And that really creates a danger, because ... what you're doing by giving them that power is you've essentially made them a signer on your account.”
Ÿ Payments posted to incorrect accounts. Casella-Dercole said in the previous academic year, the chief school business official's salary and benefits were attributed to the wrong account.
Ÿ No clear designation for potential expenditures of $3.1 million in developer donations.
District 46 board members had few questions for Casella-Dercole and thanked her for the audit. Board member Ray Millington asked if the problems could be corrected by hiring more staff for accounting duties.
Casella-Dercole declined to address staffing levels in her response, but said it may be a matter of dividing financial jobs differently.
David Tylavsky, the district's chief school business official who was hired in July, said Thursday that work already has started on addressing the audit recommendations. For example, he said, each check is now being monitored and compared to a detailed list of recipients.
Tylavsky said he's embracing all recommendations for tighter controls.
“I'm glad that we had this audit by such a thorough auditing firm,” he said. “I have assured Ellen (Correll) and the auditors that whatever past practices occurred that led to such a critique would cease.”
Tylavsky said he recommended to Correll that all standards and expectations set forth in the audit analysis become part of his employment review goals for the year.