By Amanda Tonoli
A state auditor’s report on Youngstown City Schools has a finding for adjustment against the athletic fund of more than $24,000 and against the general fund of about $7,000.
These two amounts could not be reconciled by auditors, Auditor Dave Yost’s office said in a report dated May 30, in asking the district to make adjustments to its books. There are no missing funds or findings for recovery, however. Most of the state’s recommendations deal with tightening up procedures.
Denise Dick, district spokeswoman, said the district has hired a Columbus CPA firm to handle bank reconciliations.
“Our treasurer’s office was short four fiscal positions through fiscal year 2017,” she said. “That led to work that had been handled by multiple people falling to just one or two. The CPA firm will help to alleviate that ... Regarding the adjustments, the problem has been corrected and it stemmed from a shortage of manpower in the treasurer’s office as well.”
The report, obtained in advance by The Vindicator, is for the year ended June 30, 2017 (fiscal year 2017). It also revealed a few noncompliance findings and recommendations to the Youngstown City Schools CEO and Board of Education.
The two large adjustments recommended in the auditor’s report are a result of “lack of completing an accurate and timely reconciliation.”
One of the noncompliance findings is not encumbering appropriate funds during the time when contracts or purchase orders were made.
“Eight out of 38 purchase orders tested were not properly encumbered,” the report says. “Six of the purchase orders not properly encumbered related to the treasurer not being provided specific permission by the CEO/Board of Education on the expenditures which exceeded $3,000.”
The city schools deal with about $150 million in annual expenses.
“While we aren’t making light of the auditor’s office recommendations, and we are working to address them, some of the issues listed occur in many districts,” Dick said. “There have been times when the date of a purchase order has been after the funds were expended. If that amount is less than $3,000, the district’s CFO can approve it. If it’s over $3,000, it’s supposed to be approved by the CEO. The audit refers to instances when auditors didn’t find written approval by the CEO. Again, it’s an issue that we’re correcting, but the CEO is kept abreast of the budget.”
Schools CEO Krish Mohip was put in place by House Bill 70, commonly referred to as the Youngstown Plan, signed into law by Gov. John Kasich in July 2015. The bill gives Mohip complete operational, managerial and instructional control. Mohip refers to the board of education as advisory.
School board member Dario Hunter said: “This audit in many regards validates the long-standing complaints that I and other members of the community have raised about the financial mismanagement under the CEO’s administration. Some of the more disturbing findings include incurring financial obligations without proper certification from the treasurer, incorrectly paying out unwarranted funds to former employees, equipment not being properly inventoried to prevent loss to the taxpayers and outstanding failures in the reconciliation of the accounting records.
“What the audit’s findings point to is a state of confusion and lack of communication between departments as well as serious missteps within departments that simply should not be happening in any well-run enterprise.”
Another item of noncompliance is an insufficient physical inventory of property record, which did not accurately reflect the cost of an item or its disposal date.
One of the recommendations for improvement involves “stale-dated checks [90 days from the issue date].” “The outstanding check list for the district’s main account reflected 14 stale-dated checks totaling $28,751,” according to the report. “In addition, 44 stale-dated checks totaling $357,597 were identified for the payroll account.”
Another recommendation resulted from “15 of 31 instances in which the current-year salary notification was not placed in the Human Resources employee’s master file,” the report states.
The 15 employees’ pay rates had to be verified with human resources and traced back to their salary schedules found in their contracts.
“Inconsistent reporting of salary amounts between departments could cause confusion and errors during the payroll process,” it continues. “To ensure that all employees are compensated correctly, the Human Resources Department should complete Salary Notification Forms annually for all employees and file a copy in the employee master file.”
Another payroll error occurred with a retired district employee who was underpaid by $163. The recommendation was that “the district should pay its severance obligations in a timelier basis.”
Other recommendations included establishing a fuel-reimbursement policy, better segregating duties, the treasurer providing the district more timely meeting minutes, and the treasurer also providing the district financial reports monthly.