The Resolution to Close the Forensic Audit

Bongo thought that while we're beating to death the forensic audit issue, I may as well show everyone the text of the resolution that had Larry Snow and Aileen Seedorf so upset. Remember, two of the board members who helped President Green put the resolution together are CPAs who said the audit was complete and done according to industry standards. There were two small additions made to this document that are not included below, but the Bongo blog post beneath this one explains those.

RESOLUTION OF THE BOARD OF EDUCATION OF CONSOLIDATED SCHOOL DISTRICT No. 158 DECLARING THE FORENSIC AUDIT AND ASSOCIATED INVESTIGATIONS COMPLETE AND CLOSED
WHEREAS, the accounting firm Jefferson Wells was engaged on December 4th 2006 to perform a forensic investigation, commonly referred to as the “Forensic Audit”, of the Site and Construction Fund and District payroll for the fiscal years 2003 through 2006;

WHEREAS, Jefferson Wells issued reports to the Board of Education which concluded they could not identify any evidence of fraud, nor specific evidence or support regarding the allegations of misappropriation based upon their review and analysis of documents, interviews, and procedures performed and enumerated in their Statement of Work and Forensic Investigation Reports provided to the District;

WHEREAS, evidence of potential improprieties in payroll discovered prior to the Forensic Audit has been turned over to the proper authorities for investigation and those responsible for said potential improprieties are no longer employed with the District;

WHEREAS, the original report from Jefferson Wells provided to the Board of Education initially, indicated unsupported salary differences in a sampling of all levels of district employees;

WHEREAS, subsequent investigation and interviews conducted by Jefferson Wells of current administration reconciled more than 96% of their unsupported salary differences for all the years, except FY03;

WHEREAS, FY03 was never fully reconciled by Jefferson Wells due to the lack of reconcilable internal records, time and cost constraints, and reasonable reliance on the similarity in differences that existed in the other years determined from the interviews that were conducted with current administrators after the original report was issued;

WHEREAS, the District’s internal investigation of unsupported salary differences for current and former administrators has prompted the Board of Education to seek reimbursement from three former employees for overpayments totaling $6,230.95, and to reimburse one current employee for underpayments totaling $1,155.38;

WHEREAS, the District’s internal investigation of employee benefits has prompted the Board of Education to seek reimbursement in the amount of $19,619.75 from a former administrator, who without Board authorization granted benefit time to year-round administrators, resulting in a monetary loss to the District when four former administrators were paid for unused benefit time upon their separation from the District;

WHEREAS, the District’s internal investigation of employee benefits has prompted the Board of Education to seek reimbursement from a former administrator for an overpayment to TRS in the amount of $5,998.84;

WHEREAS, the Board of Education sought several legal opinions from its attorneys regarding the practice of providing “Cash in Lieu” of benefits during the audit period, and based upon subsequent documentation provided to the Board of Education and the advice of its legal counsel the Board of Education determined it will not pursue the issue of “Cash in Lieu”;

WHEREAS, the practice of “Cash in Lieu” has been in a phase-out period since 2006;

WHEREAS, the Forensic Audit determined the Site & Construction expenditures were slightly less than the original budget created prior to the start of the Square Barn Road Campus and Reed Road Campus building projects;

WHEREAS, it was also determined the Site & Construction Fund contained a fund deficit of over $5.53 million prior to starting the $83 million building project; and the land purchase of the Square Barn Road Campus for $5.65 million, which was an installment purchase to be paid for by future impact fees, was separate from the $83 million construction budget financed by the $80 million bond referendum;

WHEREAS, internal review of District contracts revealed District 158 has not received contractually due payments for tillable farmland on District property on or near the Harmony Road Campus;

WHEREAS, the Board of Education is currently seeking uniformity in contracts for all farmland owned by District 158, and reserves the right to seek reimbursement for back payments contractually owed to the District for tillable acreage on or near the Harmony Road Campus (assuming 30 tillable acres at present, the minimum amount owed the District totals $34,659.78 as of January 24th 2008);

WHEREAS, the Forensic Audit and subsequent investigation confirmed the need for enhanced internal controls in the Fiscal Office, and upgraded financial software in the processing of payroll;

WHEREAS, District administration is working diligently to improve internal controls; and the District significantly upgraded payroll processing effective for the 2008 calendar year by contracting with ADP, which addresses several of the recommendations contained in the original report issued by Jefferson Wells;

WHEREAS, the Forensic Audit and subsequent investigation provided the Board of Education with reasonable assurance that there has been no malfeasance committed by any current District employee; and no current District employee is under suspicion of wrongdoing;

WHEREAS, Jefferson Wells has reasonably and satisfactorily completed the Forensic Audit as directed by the Board of Education and contained in the Statement of Work; and

WHEREAS, the Board of Education has completed their due diligence ensuring appropriate follow-up investigation to Jefferson Wells’ findings.


NOW THEREFORE, be it resolved by the Board of Education of Consolidated School District No. 158 as follows:

1. The recitals set forth above are found to be true and correct.

2.The Board of Education declares the Forensic Audit and associated investigations complete and closed.