Audit of East Haven School Bills Finds Numerous Problems

EAST HAVEN, CT - A long awaited forensic audit of how the East Haven school system pays its bill found numerous issues and makes several recommended changes to try and fix the problems.

The firm of the Shipman and Goodwin was hired by the East Haven school board when it was discovered during the fiscal year that ended in June of 2016, the school board spent $918,765 more than its allotted budgeted of $47.2 million.

The report was only made public after the board voted 5-4 to release it.

The report filed by Shipman and Goodwin, that the Board of Education reviewed this week, criticized the school system for several lax accounting procedures, including poor invoicing, poor accounting follow-up procedures, inconsistent billing, lost work orders, improper outside rental procedures, accounting problems with the Little Jackets program, tuition charge issues, etc.

The report, compiled by Thomas Mooney, concluded:

“The forensics analysis identified significant control deficiencies in various district practices. Based on this analysis, I recommend that the Administration review these recommendations and adopt and enforce appropriate new control procedures as recommended.

“Given the board’s oversight role, I further recommend that the Adminstration periodically report to the board on the status of the actions it is taking to implement the recommendations of the forensic accountants.

“While the lack of controls identified by the accountants is of great concern, their recommendations and appropriate follow-up by the Administration should be of great benefit to the East Haven Public Schools.”

The auditing firm made the following recommendations, some of which it said have already beeen implemented by the East Haven school system:

— A work order my be completed and approved for project, and every purchase must be assigned to a specific work order to assure that purchases relate to legitimate district needs;

— Work orders should include a descriptive narrative of the work performed. For work orders where large ticket items (such as air conditioners) are purchased, the serial numbers for the items should be documented on the work order;

— Original work orders must be completed using the pre-numbered, quadruplicate forms. Photocopies should not be used, without exception;

— Appropriate routing of the forms should be as follows: white copy signed and maintained by principal; gold copy further completed and maintained by the Maintenance office for the duration of the project; pink copy forwarded to accounts payable to be matched to purchase invoices; and yellow copy to remain in sequential order in the binders maintained in the Maintenance office;

— Specific standards for hardship reduction of tuition fees should be established in writing, and controls should be implemented so that the same person who considers and determines such reductions does not also approve the reductions;

— Clear records must be retained to show (1) the students enrolled, (2) the related tuition charges, and (3) payments made for such students;

— The program should establish and follow clear procedures for parents to pay the tuition fees, and tuition payments (and late pick-up fees) and must be clearly tracked. If possible, payments should not be made in cash. If it is necessary to accept cash payments, procedures must be implemented to (1) document all receipts, (2) provide written receipts to parents (maintain records of all such receipts),(3) assure that the same person does not receive cash and deposit cash, (4) assure the safeguarding of cash payments when they are made, and (5) prohibit the deposit of cash receipts in personal accounts under any circumstances;

— Expenditures and receipts from fundraisers must be documented in detail;

— Financial records must be maintained in accordance with law, and no financial records should ever be discarded without the written approval of the Director of Finance in accordance with the record retention requirements of the Public Records Administrator.

The full report can be read here.