Any views expressed below represent those of Erik Scheinfeldt and may not necessarily be shared by the full Wachusett Regional District School Committee.
School Committee Accepts Powers & Sullivan FY12 Audit Report
By Erik D. Scheinfeldt, WRDSC Member (Holden)
November 19, 2012
This past October, the Certified Public Accounting firm of Powers & Sullivan, LLC performed its annual independent audit of WRSD funds, internal controls and financial statements for the fiscal year ended June 30, 2012. Thereafter, on November 5, 2012, Powers & Sullivan presented its findings to a Joint Meeting of the district’s Audit Advisory Board and the WRSDC Business/Finance Subcommittee. Many of these findings were summarized and memorialized in a series of letters and reports, which included a Management Letter, a Report on Examination of Basic Financial Statements, and other reports on Federal Award Programs for the fiscal year ended June 30, 2012.
On November 14, 2012, the Audit Advisory Board presented a recommendation to the WRSD School Committee to “Accept Management, Letter, Report on Examination of Basic Financial Statements, and Reports on Federal Award Programs for fiscal year ended June 30, 2012.” After deliberation, the School Committee voted in favor of accepting the Powers & Sullivan Management Letter and related reports.
Notwithstanding the completion of the Powers & Sullivan audit, the School Committee and the school district administration remain committed to addressing any and all of the lingering questions, and will continue to work together towards implementing solutions and permanent safeguards to ensure that these serious financial errors do no occur again. In the meantime, it is my belief that the findings of Power & Sullivan audit can serve to answer some of the questions that our residents, town officials and district employees have been asking. To that end, given the recent (and justified) debate and public concern regarding the 2012 budget over-run, I am writing this bulletin for the purpose of sharing a few excerpts from the Powers & Sullivan “Management Letter.” The “Management Letter” provides, in part, the following:
- “In closing out the FY2012 books it was discovered that information contained in a spread sheet that had been relied upon by the business manager to monitor expenditures and appropriation balances was incorrect. Specifically, expenditures for debt services had been incorrectly reported on the spreadsheet and, as a result, the perceived available balance in this appropriation was transferred and used to fund other budget line items. The error was discovered when the spreadsheet was reconciled to the year-end MUNIS balances. The end result is that expenditures exceeded both this line item and the overall budget.”
- “The cause of the error appears to be due to the fact that the internal spreadsheet used by the business manager to monitor budgetary spending was not routinely compared and reconciled to the MUNIS system. Had this occurred, the budget to actual results that were accurately reported in MUNIS would have detected the error in the spreadsheet. Unfortunately this did not occur until after year-end and, as a result, management decisions were made regarding the utilization of available budget amounts based on incorrect data in the spreadsheet.”
In sum, Powers & Sullivan clearly attributes the FY12 over-run to “human error.” Fortunately, Powers & Sullivan found absolutely no evidence of intentional wrong-doing or fraudulent activity.
Once again, the School Committee and administration are committed to implementing new initiatives and solutions to ensure that these types of errors do not happen again. To that end, I believe that we have already taken three significant steps in the right direction:
First, at the November 14, 2012 meeting the School Committee voted to hire Joseph Scanlon as the new Director of Business & Finance for the school district (contingent upon successful contract negotiations). Mr. Scanlon will begin this position on December 17, and will bring with him years of experience, as well as an extremely solid background with respect to school budgets and finances.
Second, this winter, the Business/Finance Subcommittee will be taking a much more substantial and pro-active role with respect to formulating next year’s budget. Specifically, in January and February, the Business/Finance Subcommittee will be meeting every Thursday night for the purpose of reviewing and discussing the Budget Submissions of the various district principals. These meetings will be open to the public.
Third, the School Committee recently retained the Massachusetts Association of School Business Officials, Inc. (MASBO) to perform a “Financial Operations Review.” Accordingly, later this year, MASBO will perform a thorough assessment of the District’s current financial operations and procedures, and will provide recommendations regarding potential areas for improvement.
Thank you for your time, and Happy Thanksgiving.
Regards,
Erik Scheinfeldt
To contact Erik Scheinfeldt, School Committee Representative, with questions/concerns about this particular bulletin posting, please send an email to escheinfeldt@gmail.com.
