State Audit Reviews Hopatcong Schools' Cash Management, Payroll Practices

HOPATCONG, NJ — A recently released state audit claims Hopatcong Borough School District didn’t follow procedures for cash management, as well as didn’t have controls set up for processing payroll.

Although auditors from the state’s Office of the Comptroller say the district lost about $23,000 in state aid from errors on its applications and fiscal management practices, it has been working to “improve its operations," the New Jersey Herald reported.

The results of the audit, posted on Sept. 30 and from July 1, 2017 through June 30, 2020, triggered 11 recommendations from the Comptroller’s “to improve [Hopatcong School] District’s operations and its compliance with applicable statutes and regulations.”

Among the issues auditors claimed to have found were that the district’s cash reconciliations and financial reports didn’t match for the time period, with inaccuracies in significant “reconciling items” not processed “in a timely manner.”

The district additionally hadn’t updated its Standard Operating procedures since 2014, which were expected to be changed in a past audit, the Office of the Comptroller reported.

There were discrepancies the audit uncovered in the areas of food service and transportation in 2020. The Day Plus childcare program, a before and after-care program ended in 2018, still had a cash balance, but it wasn't accounted for in the monthly treasurer’s report in fiscal year 2020, according to auditors.

Auditors stated they were not able to match $886,824, reportedly in outstanding checks on the “general fund’s bank account reconciliation as of June 30, 2020,” with a check number.

The audit raised flags that the district not comparing reports could allow “for significant errors or fraud to occur and go undected or corrected," the audit stated.

“Additionally, those charged with governance could make decisions based on inaccurate or incomplete information,” auditors wrote.

The audit additionally found “weaknesses in internal controls involving payroll processing and distribution.”

Among them, auditors said that the payroll and benefits coordinator could “process and distribute a manual check without secondary approval.”

Auditors also stated the Coordinator “had privileges in the district’s information system that allowed the editing of payroll information,” which could permit them to change salary information, including their own.

Click here to view the full audit report.

Dr. Joseph Piccirillo, the district’s superintendent who took the helm as superintendent following the retirement of former superintendent Art DiBenedetto in July, told the New Jersey Herald that the district’s business administrator Jeff Hallenbeck - who had listed his role with the district on one of his LinkedIn accounts as the director of curriculum and technology since 2003 - has been working with him on correcting the issues. Hallenbeck, according to his second LinkedIn profile, began as a principal his first year and progressed to director of curriculum from 2009 through 2020, started serving as the director school security in 2018 and then started as business administrator in 2020.

The Herald also reported that Kevin Walsh, acting comptroller for the state, said Hopatcong has “already improved its operations and services it delivers to kids.”

As part of remedying the situation, ahead of the report, the Board of Education passed a “Corrective Action Plan” in April.

Read more here in the New Jersey Herald.

Editor's Note: This article was updated and corrected on Oct. 6 to expand on Hallenbeck's tenure with the district.

Questions or comments about this story? Have a news tip? Contact me at: jennifer.miller@patch.com.