Independent Audit Calls ACPS 'Dysfunctional'

The accounting firm  has characterized the school system as “dysfunctional” and suffering from fragmentation.

“During the course of our interviews it became evident that ACPS has operated in a dysfunctional environment in relation to CIP related activities,” says the Robinson, Farmer Cox Associates report released by ACPS on Thursday night. “… This fragmentation and a lack of transparency between departments have created significant internal control weaknesses in monitoring CIP financial transactions.”

The audit report looks at CIP expenditures from July 1, 2010, through Oct. 31, 2011.

The auditors also found that while the School Board and Superintendent Morton Sherman “were not apprised of the internal control weaknesses discussed in this report before budget and vendor payment problems were discovered, some of these issues had earlier been brought to the attention of certain upper-level management for consideration of corrective action.”

Additionally, the accountants reveal that ACPS does not record budgetary or financial transactions within its accounting system.

The fragmentation “creates inconsistencies” in monitoring ACPS CIP budgetary and expenditure transactions. They noted that staff in Facilities and Budget independently maintain separate spreadsheets to monitor CIP activities, and access by ACPS personnel to the city’s accounting system “is limited” making it difficult to reconcile CIP projects by their designated code.

Other findings in “Alexandria City Public Schools Report on Agreed-Upon Procedures CIP Project Expenditures” include:

• ACPS CIP contracts are not being reviewed by ACPS legal counsel prior to being awarded nor is there a policy in place requiring School Board approval of the awarding of contracts over a specified dollar amount;
• Lack of a formal process for the approval of contract change orders;
• Conflict of interest cases, such as one ACPS staff member had a contractor perform work on a staffer’s personal residence;
• Lack of communications between the Budget Office and Procurement;
• Shoddy supervision of budget transfers, allowing, for example, a transfer of $1.25 million when it’s required that the School Board approve any amount over $50,000; and
• Different Excel spreadsheets in use between different budgetary departments.

“Changes are necessary to achieve the goals of this division,” Sherman said in a statement released with the report. “I am outraged at the actions of some staff and it is clear that our internal documents and procedures have to be updated and made more rigorous. While transitions and changes occurred in recent years, I have personally viewed documents dating back to 2001 that validate that established processes, procedures and guidelines regarding the management of CIP funds were in place. Staffing changes and additional internal controls have already begun to address the recommendations."