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MUNCIE, Ind. (AP) — Indiana has stopped auditing extracurricular accounts at school systems across the state because of a lack of manpower, raising concerns that the absence of oversight could contribute to new problems with accounts already prone to lax financial controls.
The State Board of Accounts saw its annual budget drop from $22 million to $17.5 million and its staff shrink by 110 as part of cuts from 2007 to 2009, The Star Press reported (http://tspne.ws/1vuCOIh ). The agency is also replacing retiring field examiners who had 30 to 40 years of experience with inexperienced hires.
Mark Burkhart, former longtime chief financial officer of Muncie schools, said school officials supplied records for all extracurricular accounts for Board of Accounts employees to review but were told "they ran out of time and would not look at them."
State examiner Paul Joyce, one of three members of the Board of Accounts, said he plans to push for legislation that would increase the amount local governments pay for audits to $45 per hour instead of the current $45 per day.
"I've been told many times: We are the cheapest CPAs on Earth," he said.
He said that without legislation, school corporations will have to turn to outside firms for financial audits, at higher costs.
"They will hire it out to get it done," Joyce said. "They won't get it done from me. I just don't have the people. Instead of $45 an hour, they will pay $125 to $250 an hour for private accounting firms."
The audits have proven invaluable in identifying problems with extracurricular accounts.
The last extracurricular audit in Muncie, published March 27, found a lack of controls at Central High School, whose athletic department, softball team, track team, band, student publications and student council conducted fundraisers that all resulted in losses.
"It doesn't make any sense (conducting fundraisers that lose money). It's a good reason to stop having them, I think," Joyce said.
A 2007 audit of Mitchell Elementary School's extracurricular account found cash collected but not deposited, untimely deposits of receipts, missing deposit slips and receipts and a lack of oversight of unprofitable fundraisers. Extracurricular treasurer Debbie Garrett was forced to repay $982.
Since 2009, the Indiana attorney general's office has attempted to collect $11.1 million in funds that the Board of Accounts identified as being misappropriated by public officials throughout the state. That figure includes $157,208 in Delaware County, $146,555 in Randolph County and $817,438 in Madison County.
Joyce said the losses could be even greater.
"Fifty percent of the entities out there are just not getting looked at, so I assume if there is malfeasance, misfeasance or nonfeasance going on, it's not being detected," he said. "It's not a state budget issue; it's local government accepting the fact that this is their need."
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Information from: The Star Press, http://www.thestarpress.com
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