No fraud found in Belen Schools audit
Sloppy accounting is behind the Belen Consolidated Schools receiving a "failing" audit report for the past two school years — a problem school officials say won't happen again.
An independent auditor, Accounting & Consulting Group, LLP, gave the audits, from school years 2009-10 and 2010-11, a disclaimer opinion. Such an opinion is given when auditors can't complete an accurate audit report and, therefore, can't state the district's financial status.
"The opinion of the auditor was a disclaimer based on accounting errors, lack of internal controls and there was also a computer conversion where things didn't carry over from one system to the other, and also to the change of turnover in staff, superintendent and my position," said George Perea, the district business and finance director.
Even with accounting errors, the district has found no evidence of fraud behind the district's management of funds, Perea said.
More than 30 findings were rendered during the evaluation of the district's basic financial statements, which the auditor evaluated for conformity with national generally accepted accounting principles.
"They look at the internal controls to see who is doing what and to verify that there is checks and balances, so that one person isn't doing everything," Perea said. "In most cases when that happens, fraud can occur easily, but if you have other people looking at different aspects, then you have good internal control."
On top of this evaluation, auditors verify if the district is following their financial procedures and policies through site visits, as well as double checking the information in the reports.
The findings, some repeated since 2007, include inventory discrepancies, a lack of preparation of financial statements, a lack of segregation of duties, a lack of internal controls over non-standard journal entries to the general ledger, use of manual checks and late filing of audit reports.
Issues that Perea said are being addressed and should be removed from the 2011-12 audit, which was due this month.
A school financial consultant was hired in October to assist Perea and his staff in preparing the audit.
The New Mexico Public Education Department budget analyst, assigned to the district, recommended hiring a consultant upon reviewing the 2009-10 and 2010-11 audits.
Auditors informed the district they would be "surprised if we got another disclaimer audit," said Superintendent Ron Marquez.
Perea said his department could've spent additional time combing through the past two audits for errors, but the Board of Education declined to do so.
The audits needed to be completed before the district could move forward with selling bonds for district-wide projects.
Contributing factors leading up to the auditor's findings, include accounting errors, an incomplete transfer of accounting information to a new accounting software and a turnover in staff.
During the span of three years, the business and finance department has had three directors, the department's staff and three financial consultants, a part of separate firms, have a hand in the district's finances.
Between these changes, the district fell behind on financial reporting to PED on a quarterly basis, which resulted in the district to report on a monthly basis in March 2011.
Perea described audits as a report card of the district's financial status.
"It is a report card on how to get better and fix things you don't know are broken," he said. "This letter tells you what's broken, what's not working and what's working right."
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