Special Review of. Freedom Shores Elementary School s Parent School Organization

Transcription

1 Special Review of Freedom Shores Elementary School s Parent School Organization July 15, 2014 Report #

2 MISSION STATEMENT The School Board of Palm Beach County is committed to providing a world class education with excellence and equity to empower each student to reach his or her highest potential with the most effective staff to foster the knowledge, skills, and ethics required for responsible citizenship and productive careers. E. Wayne Gent Superintendent of Schools School Board Members Audit Committee Members Chuck Shaw, Chair Noah Silver, CPA, Chair Frank A. Barbieri, Jr., Esq., Vice Chair David H. Talley, Vice Chair Marcia Andrews N. Ronald Bennett, CPA Karen M. Brill Gregory S. Daniel Jennifer Prior Brown, Esq. Michael Dixon, CPA/PFS Michael Murgio Richard Roberts, CPA Debra L. Robinson, M.D. Bill Thrasher, CGFO Representatives Frank A. Barbieri, Jr., Esq., School Board Member E. Wayne Gent, Superintendent of Schools JulieAnn Rico, Esq., General Counsel Stephanie Nance, Principal Representative CTA Representative

3 Special Review of Freedom Shores Elementary School s Parent School Organization Table of Contents Page PURPOSE AND AUTHORITY 1 SCOPE AND METHODOLOGY 1 BACKGROUND 2 LAW ENFORCEMENT INVOLVEMENT AND BANK ACCOUNT CLOSED 2 CONCLUSIONS 1. Disbursements Without Supporting Documentation 2 2. Purchases From Personal Business 4 3. Questionable Expense Record Forms 5 4. Delayed Deposits and Inadequate Documentation for Revenue Collections 5 5. Other Internal Control Weaknesses 6 APPENDICES Management s Responses A. Principal of Freedom Shores Elementary 7 B. President of Freedom Shores Elementary s Parent School Organization 8 C. Chief Operating Officer of the School District 9

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5 THE SCHOOL DISTRICT OF LUNG CHIU, CIG, CPA SCHOOL BOARD PALM BEACH COUNTY, FLORIDA INSPECTOR GENERAL CHUCK SHAW, CHAIRMAN FRANK A. BARBIERI, JR, ESQ., VICE CHAIRMAN OFFICE OF INSPECTOR GENERAL MARCIA ANDREWS 3318 FOREST HILL BLVD., C-306 KAREN M. BRILL WEST PALM BEACH, FL JENNIFER PRIOR BROWN, ESQ. MICHAEL MURGIO (561) FAX: (561) DEBRA L. ROBINSON, M.D. E. WAYNE GENT, SUPERINTENDENT M E M O R A N D U M TO: FROM: Honorable Chair and Members of the School Board E. Wayne Gent, Superintendent of Schools Chair and Members of the Audit Committee Lung Chiu, CPA, Inspector General DATE: July 15, 2014 SUBJECT: Special Review of Freedom Shores Elementary School s Parent School Organization PURPOSE AND AUTHORITY In response to the request of the Principal of Freedom Shores Elementary School, we have conducted a special review of the school s Parent School Organization (Freedom Shores PSO) financial records for the period July 1, 2012, through December 4, The primary objective of this special review was to determine the appropriateness of disbursements by Freedom Shores PSO. Authority to Audit the School s Parent School Organization Since Freedom Shores PSO is an independent legal entity and maintained a separate bank account outside of the school s Internal Funds, the Office of Inspector General does not have the authority to audit its financial records. Subsequently, on October 31, 2013, the school s Principal and Area Superintendent contacted us and indicated that Freedom Shores PSO s Board of Directors requested our department to review its financial records. SCOPE AND METHODOLOGY This review was conducted during November 20, 2013, through December 18, 2013, and included reviewing Freedom Shores PSO s: General Ledger, Bank statements, and Supporting documentation for disbursements. Draft findings were sent to Freedom Shores PSO s Board of Directors and the school principal for comment. Management responses are included in Appendices. We appreciate the courtesy and cooperation extended to us by Freedom Shores PSO and District staff during the review. The final draft report was presented to the Audit Committee at its July 15, 2014, meeting. 1

6 BACKGROUND During our Annual Audit of the school s 2013 Internal Funds, the Principal of Freedom Shores Elementary expressed concerns that the treasurer of Freedom Shores PSO: May have purchased items from her personal business with Freedom Shores PSO funds, which might have conflict of interest and ethical implications. Got irate at school staff when staff accidently opened a bank statement for Freedom Shores PSO. LAW ENFORCEMENT INVOLVEMENT AND BANK ACCOUNT CLOSED Our review concluded several instances of irregularities. We recommended to the Parent School Organization that a report be filed with the appropriate law enforcement agency for necessary actions. Subsequently, Boynton Beach Police Department referred the case back to the School Police Department for further investigation. School Police completed its investigation in April 2014, and the conclusions were forwarded to the State Attorney for further actions. In December 2013, Freedom Shores PSO closed its bank account. Since then, Freedom Shores PSO s funds and financial records have been maintained in the school s Internal Funds. CONCLUSIONS 1. Disbursements Without Supporting Documentation a) $8, in Disbursements Without Supporting Documentation. According to Freedom Shores PSO s bank statements, a total of $77, (including checks, ATM, bank charges, and debit card transactions) was disbursed from Freedom Shores PSO s checking account during July 1, 2012, through November 30, Our review of the expenditure records found that 25 transactions, totaling $8,850.82, did not have supporting documentation for the expenses. # Date Paid By * Payee Amount 1. 10/10/2012 Check #1272 Enjoy the City $2, /13/2012 Check #1273 PTO Today /10/2012 Debit Card #6135 (PSO s treasurer) Cash Withdrawal /21/2012 Debit Card #8972 (PSO s ex-president) Cracker Barrel /11/2013 Debit Card #8972 (PSO s ex-president) Wayfair Wayfair /25/2013 Check #1283 Powerline Promotion /11/2013 Debit Card #6135 (PSO s treasurer) Cash Withdrawal /13/2013 Check #1286 Aloha Ice /28/2013 Debit Card #6135 (PSO s treasurer) Little Caesars /6/2013 Debit Card #6135 (PSO s treasurer) Publix /6/2013 Debit Card #6135 (PSO s treasurer) Little Caesars /10/2013 Check #1290 Above & Beyond Balloons

7 # Date Paid By * Payee Amount 13. 6/11/2013 ACH Debit Harland Clarke CHK Orders $ /14/2013 Debit Card #8972 (PSO s ex-president) Benchmark Education Co /14/2013 ACH Debit Harland Clarke CHK Orders /17/2013 Check #1292 Free the Children 1, /25/2013 Check #1291 Heifer International 1, /8/2013 Debit Card #8972 (PSO s ex-president) Panera Bread /18/2013 Debit Card #3421 (PSO s current president) Thirty-One ** /18/2013 Debit Card #3421 (PSO s current president) Thirty-One ** /24/2013 Debit Card #4853 (PSO s ex-vice-president-1) Thirty-One ** /24/2013 Debit Card #4853 (PSO s ex-vice-president-1) Thirty-One ** /8/2013 Debit Card #4853 (PSO s ex-vice-president-1) Thirty-One ** /12/2013 Debit Card #6135 (PSO s treasurer) Thirty-One ** /12/2013 Debit Card #6135 (PSO s treasurer) Office Depot Total $8, * Debit cards for Freedom Shores PSO s checking account were issued to four Freedom Shores PSO officers: current president, ex-president, ex-vice-president-1, and treasurer. ** Both Freedom Shores PSO s ex-vice-president-1 and treasurer were sales agents of Thirty-One, a catalog sales vendor. As required by Article V, Section 4.f. of Freedom Shores PSO s Bylaws, The Treasurer is responsible for ensuring that all disbursements from the PSO account are properly recorded and that disbursements are not made without a completed PSO Expense Record accompanied by required documentation. In addition, Article VIII of the Bylaws requires that All funds raised must be placed in the PSO bank account. All funds that leave the PSO account must be accounted for using an expense record. b) $ in Gift Cards With Inadequate Supporting Documentation. Another seven purchases totaling $ ($440 in gift-cards and $7.88 in activation fees) for 20 giftcards did not have documentation for the recipients of the gifts. In absence of supporting documentation for the recipients, there is no assurance that these 20 gift-cards were properly handled. Date Purpose Amount 10/01/2012 McDonalds thank you gifts $60.00 (Six $10 Starbucks gift-cards) 10/27/2012 Winner of fundraiser (One $50 Visa gift-card) 10/27/2012 Winner of fundraiser (One $50 gift-card) 12/21/2012 Staff appreciation gift (One $20 Dunkin Donuts gift-card) 03/04/2013 Administration appreciation (One $10 Starbucks gift-card) 06/06/2013 Teachers retirement (Four $25 Publix gift-cards) 09/25/ Winners for Enjoy the City (Six $25 Target gift-cards) Total $

8 2. Purchases From Personal Business Freedom Shores PSO s ex-vice-president-1 and the treasurer were consultants (i.e. sales agents) with a catalog sales company (Thirty-One) which sells Trendy and Affordable Purses, Totes, Bags and Accessories. The review of April through November 2013 bank statements found that Freedom Shores PSO made 15 purchases, totaling $8,607.12, from Thirty-One: Six purchases, totaling $4,895.71, were charged to the debit card issued to the treasurer. Six purchases, totaling $2,940.74, were charged to the debit card issued to the current president. Three purchases, totaling $770.67, were charged to the debit card issued to the exvice-president-1. Six purchases, totaling $1,996.74, did not have any supporting documentation. The Expense Record Forms for six purchases, totaling $4,397.41, were submitted by the treasurer. The Expense Record Form for one purchase (for $997.75) did not have the signature of the requestor/submitter. Date Paid By Expense Report Submitted/Signed By Amount 8/26/2013 Debit Card #3421 (PSO s current president) PSO s treasurer $ /18/2013 Debit Card #3421 (PSO s current president) No supporting documentation /18/2013 Debit Card #3421 (PSO s current president) No supporting documentation /15/2013 Debit Card #3421 (PSO s current president) PSO s treasurer /18/2013 Debit Card #3421 (PSO s current president) PSO s treasurer /22/2013 Debit Card #3421 (PSO s current president) PSO s current president * /24/2013 Debit Card #4853 (PSO s ex-vice-president-1) No supporting documentation /24/2013 Debit Card #4853 (PSO s ex-vice-president-1) No supporting documentation /8/2013 Debit Card #4853 (PSO s ex-vice-president-1) No supporting documentation /9/2013 Debit Card #6135 (PSO s treasurer) PSO s treasurer 2, /22/2013 Debit Card #6135 (PSO s treasurer) Not signed /31/2013 Debit Card #6135 (PSO s treasurer) PSO s treasurer /28/2013 Debit Card #6135 (PSO s treasurer) PSO s current president * /29/2013 Debit Card #6135 (PSO s treasurer) PSO s treasurer /12/2013 Debit Card #6135 (PSO s treasurer) No supporting documentation Total $8, * According to Freedom Shores PSO s current president, she did not sign the forms. As a result, the signatures that appeared on the forms were allegedly forged. According to Thirty-One, their consultants receive a 25% commission on the sales (excluding sales tax and shipping and handling fees). Freedom Shores PSO s ex-vicepresident-1 and the treasurer would have received commission up to an estimated total of $2, from Freedom Shores PSO s $8, purchases with Thirty-One. 4

9 3. Questionable Expense Record Forms Of the 15 purchases from Thirty-One, six purchases (totaled $2,940.74) were charged to the debit card issued to Freedom Shores PSO s current president. Two purchases (totaled $673.27) did not have any supporting documentation. The Expense Record Forms for another three purchases (totaled $1,574.59) were signed and submitted by the treasurer instead of Freedom Shores PSO s current president (card holder). Moreover, the Expense Record Forms for two purchases, totaling $1,215.22, indicated that they were signed and submitted by the current president. One purchase (for $692.88) was paid with the debit card issued to the President and the other one (for $522.34) was paid with the card issued to the treasurer. However, the current president indicated that the signatures on the related Expense Record Forms were not hers. Due to the alleged fraudulent signatures on the forms, we recommended to the Parent School Organization that a report be filed with the appropriate law enforcement agency for necessary actions. 4. Delayed Deposits and Inadequate Documentation for Revenue Collections No Record for Collections. According to the bank statements, a total of $57, was deposited into Freedom Shores PSO s checking account during July 1, 2012, through November 30, However, there was no documentation available to verify the sources and accuracy of the monies deposited. According to the Treasurer, the documentation was discarded at the time after the collections were deposited. $13, in Freedom Shores PSO Funds Kept by the Treasurer at Her House. The only supporting documentation for collections was for the Great American Opportunities fundraiser event. However, the money was not deposited after collection; and was kept in the closet of the treasurer s home. On December 3, 2013, Freedom Shores PSO s president obtained a total of $13, from the treasurer s home. Our review of the fundraiser order forms found that a total of $11, in merchandise was purchased. Delay in Deposit. We also noted that a total of $107 ($47 in cash and $60 in two checks) was found in Freedom Shores PSO s office on December 3, One $20 check was dated September 23, 2013, and another $40 check was dated September 26, Money that was apparently collected in September 2013, was left in the office for over two months, instead of being deposited into the bank. 5

10 5. Other Internal Control Weaknesses Debit cards for Freedom Shores PSO s checking account were issued to four Freedom Shores PSO officers: current president, ex-president, ex-vice-president-1, and the treasurer. These debit card holders are allowed to withdraw funds from the checking account and authorize purchase payments without the approval of a second person. This practice is contrary to the purpose of dual-control for withdrawing funds from Freedom Shores PSO s checking account as required by Freedom Shores PSO s Bylaws. Specifically, Article VIII of the Bylaws requires that Two signatures shall be required on all PSO checks to ensure the proper check and balance. Overall Management s Responses Principal of Freedom Shores Elementary: Upon careful review of the draft report regarding the Parent Student Organization at Freedom Shores Elementary School; I acknowledge your independent findings based on the evidence provided. (Please see page 7.) President of Freedom Shores PSO: Concurs. (Please see page 8.) Chief Operating Officer of the School District: I have reviewed your report on the Special Review of Freedom Shores Elementary School s Parent School Organization (PSO) and the response provided by Robynne Kruse, PSO President and Patricia Trejo, Principal of Freedom Shores Elementary School. As the specific audit recommendations have already been addressed I have nothing further to add. (Please see page 9.) End of Report 6

11 Appendix A Management s Response Principal of Freedom Shores Elementary 7

12 Appendix B Management s Response President of Freedom Shores Elementary s Parent School Organization 8

13 Appendix C Management s Response Chief Operating Officer of the School District 9