In the face of an ongoing embezzlement scandal and a critical audit report released to the Clinton School Board last month, the district’s new business manager has introduced tighter business practices to staff who handle money.
Jan Culbertson said most of the budget-related changes she’s made since coming to the district early this year have been a matter of following state guidelines, although she said some of them have been in response to recent events.
A 2009 audit report made independently by a local accounting firm to the school board in late May admonished the district for deficiencies in its budget-related work. The report also mentioned the ongoing investigation into a misappropriation of funds within the budget uncovered at the beginning of the year, calling theft of an undetermined amount of money a “significant embezzlement.”
The district’s administrators and the Iowa State Auditor’s Office have not released an update on the investigation since announcing in April that the loss exceeded $500,000, and naming a district accountant and business office supervisor who worked with the district from 2004 to 2009 as the suspected culprit.
Culbertson said Monday that she met last week with district secretaries to review financial workflows, including accounting for receipts, making deposits in a secure manner, segregating duties, properly storing cash and related materials, and monitoring employee reimbursement policies.
“Little by little, we’ve been talking with staff to see some of the things we can get a little bit tighter control on,” Culbertson said Monday, adding that the district has purchased individual receipts for each of its buildings.
The guidelines reviewed with staff included placing a restrictive endorsement on incoming checks, giving customers properly documented receipts, balancing a list of received funds against bank balances and comparing receipt lists to supporting documentation by staff other than those handling the receipt cycle.
Specifically regarding receipts and checks, the district is seeking to ensure that pre-numbered receipts are accounted for, that both the district and the customer retain a copy, that checks are only accepted for the exact amount of a transaction, that postdated checks are prohibited and that proper identification is required from customers writing checks.
Culbertson also addressed the segregation of duties among staff who handle money, giving guidelines to follow to ensure that no one employee completes a transaction from start to finish, that employees are not left alone before or after hours to work with money and that procedures are defined for employees who handle cash.
A specific scenario mentioned in the guidelines was making sure that employees who open incoming mail containing checks do not have access to accounting systems or prepare bank deposits.
Culbertson also sought to verify that cash, deposit slips, checks and endorsement stamps at each of the buildings are kept in a locked safe or otherwise secure location before being processed and deposited, and that combinations and keys are protected.
The guidelines discussed with staff also suggested closely monitoring petty cash reimbursements to make sure covered purchases follow policy.
The recent talks with employees are not the only changes Culbertson has introduced into the district’s budget-related practices since replacing Gayle Isaac, the former district business manager, in February after Isaac’s resignation.
Mercia Wolf, vice president of the school board, said Culbertson has brought philosophies of openness and accountability not only into the business office, but to board meetings.
“We had a financial irregularity, and part of it was because there was an oversight on everything that was going on,” said Wolf. “And she’s really taken care of that, I think. We’ve been very pleased with Jan and her ability to answer questions we have, and have the information at her fingertips most of the time. We hadn’t had that in the past.”
Wolf said Culbertson has begun to prepare monthly revenue reports for review by school board members, and that the business manager has streamlined numerous business office practices.
Last month, Culbertson addressed the ongoing problem of the district failing to reconcile its budget fund balances. She began the process of separating – and, therefore, more easily monitoring – about a dozen funds that had all been kept together in the district’s main account at Clinton National Bank.