Scope of Lowell Schools Audit Questioned
LOWELL -- When representatives from the auditing firm CliftonLarsonAllen came before the Lowell School Committee to discuss its recent audit of the district’s finances, two board members had the same question.
Though School Committee member Robert Hoey Jr. and Gerry Nutter often clash, on Wednesday night both wanted to know how the audit that described a district in “financial crisis” determined its scope.
“In the whole scope of things, I don’t know why this was put into it,” Nutter said, referring to a section of the 20-page document that described an attorney employed by the school district who received a $40,000 raise in fiscal year 2018 “without sufficient documentation.”
“We have several major, much more major, payroll inconsistencies,” Nutter later added.
Nutter said he was generally in agreement with the audit, which he felt confirmed the grim financial findings described by the district’s internal review led by Interim Chief Financial Officer Billie Jo Turner. However he questioned the inclusion of several items such as the attorney’s salary and the process of choosing the new Chelmsford location for a day school.
“There’s a lot of inconsistencies going on,” said auditing firm employee Chris Rogers, while discussing the attorney’s salary. “That’s why it’s in the report.”
Another representative from the company described the inclusion as an example of poor financial controls.
Hoey said he was “not happy” with the audit and praised the work of the current school administrators. He requested clarification to the concluding paragraph of the audit that was released Friday.
“Who told you what to look at, who was the legal counsel?” said Hoey.
Rogers said a “group” of people guided the scope of the report. The “legal counsel” referenced in the concluding paragraph as having the power to determine the use or distribution of the document is the city solicitor, he said.
After Nutter requested why the audit was not more in-depth in citing instances of non-compliance with regulations or improper procedures, Rogers said the School Committee’s budget was a limitation.
Shortly after placing former Superintendent Salah Khelfaoui on paid administrative leave in July, the School Committee approved up to $50,000 to fund the audit.
“We didn’t do an entire forensic audit or a forensic investigation of everything, because we only had a $50,000 budget,” Rogers said. ”$50,000 goes very quickly in these kind of engagements. When we originally threw out a number it was $125,000.”
Nutter also questioned a section of the audit discussing a proposal to provide special education transportation by North Reading Transportation, which auditors said Khelfaoui never presented to the School Committee.
The representatives from CliftonLarsonAllen said though a version of this proposal was on an October 2017 School Committee agenda, the investigation found discussion of the proposal was delayed and the company revised it later that month. According to the audit, the revised proposal was not presented to the School Committee.
School Committee member Jackie Doherty said questioned areas, like contracts, were worth including in the audit.
“Looking at the improprieties and the way the budget proposals were handled, I felt that that was worth including,” she said.
She also highlighted a part of the audit that described transfers submitted by the district and approved by the city without proper documentation.
Mayor William Samaras and School Committee member Connie Martin said the next step is implementing internal controls to protect district funds from issues described in the audit -- like overpaying employees -- in the future.
“Having gotten this report I would like us to be able to put in a process so we can use this to instruct ourself moving forward,” said Martin.
In a packet presented to the School Committee Finance Subcommittee meeting also held Wednesday night, Turner and Acting Superintendent Jeannine Durkin outlined the following financial controls and other practices they’re implementing in the district, including:
* Attendance reporting procedures are being reinstated to ensure accuracy, which will save the district on sick leave buy back.
* A form will be requested of each school to summarize their Human Resources staff changes and reconcile with central office data.
* Retirement tracking will give the district better notice on sick leave buy-back projections.
* The district will follow and report the increases/decreases of student counts in transportation and tuition to justify the variations in projections.
* Weekly salaries are now summarized to identify trends and variations in payroll for immediate investigation.
* Complete step increases of current staff during the budget process will be done to ensure availability of such data for City Hall and avoid complications
* Checks and balances for student activities funds were implemented.
* Review grant budgets to maximize spending potential.
Follow Elizabeth Dobbins on Twitter @ElizDobbins