Decatur School District Demonstrates Loose Accounting of Credit Card Use

I have recently noted the purchase of 4 properties by the School Board of the Metropolitan School District of Decatur Township without the legally required number of appraisals, and in one instance, even with one of the two required appraisals in hand, overpaid for a property by 41%. This information came to light in a biennial audit of the School District's books by the Indiana State Board of Accounts. The one noting these illegal purchases was released on May 29, 2008,and covered the time period July 1, 2005 to June 30, 2007.

Many, many deficiencies in accounting for money flowing through the School District's hands are noted in the audit and I encourage everyone to read at least the "Audit Results and Comments" section of the report.

In this entry I want to focus on issues raised in the use of credit cards that show a long term disregard for the simplest of accounting principles - collecting receipts to show an expense was legitimate.

The audit report published in 2008 says that the credit card policy in place is inadequate.

The School Corporation is using credit cards in some instances to purchase items without an adequate approved credit card policy. A written credit card policy exits but does not specify the individuals authorized to use credit cards, the types of expenses which can be paid, and the internal control system over the credit cards.

The report notes that the same issue was raise in its two previous audits. One of these is posted online. It was published on September 20, 2006, and covers the two years from July 1, 2003 to June 30, 2005. In that report is the following:

The School Corporation is using credit cards in some instances to purchase items without an adequate approved credit card policy. A written credit card policy exists, but does not specify the individuals authorized to use credit cards, the types of expenses which can be paid, and the supervision and use. The policy states that "the Superintendent shall develop administrative guidelines", but guidelines have not been completed.

During both of these audit periods, Don Stinson was Superintendent and Jeff Baer was Assistant Superintendent for Business. As for School Board members, Don Huffman, Larry Taylor, Cathy Wiseman, and Judy Collins served throughout those years. Herb Bazemore served to June 30, 2006, and was replaced at that time by Dale Henson. Larry Taylor was replaced by Doug Greenwald in 2008, well after this time frame.

Getting back to the credit card issues reported in the most recent audit, published in 2008. This report keys in on travel expenses paid for by credit card. This is what the report states:

Records presented for audit included claims for travel related expenses paid for with a School Corporation credit card. Detailed documentation was not attached to the information presented for payment in all cases.

All claims, invoices, receipts and accounts payable vouchers, including those presented to the governing body for approval in accordance with IC 5-11-10, should contain adequate detailed documentation. All claims, invoices, receipts, and accounts payable vouchers regarding reimbursement for meals and expenses for individuals must have specific detailed information of the names of all individuals for whom amounts are claimed, including the nature, name and purpose of the business meeting, to enable the governing body to authorize payment. Payments which do not have proper itemization showing the business nature of the claim may be the personal obligation of the responsible official, employee or other person for whom the claim is made. (Accounting and Uniform Compliance Guidelines Manual for Indiana Public School Corporations, Chapter 9)

Each governmental unit should adopt a written travel policy in conformity with applicable statutes. (Accounting and Uniform Compliance Guidelines Manual for Indiana Public School Corporations, Chapter 9)

Reimbursement for lodging and meals should be based upon actual receipts for amounts paid unless otherwise authorized by statute. (Accounting and Uniform Compliance Guidelines Manual for Indiana Public School Corporations, Chapter 9)

Just to have stated the obvious, receipts are a basic requirement for accounting as simple proof that the expense was legitimate. For instance, School Board members have School District credit cards made available to them, should they wish to make use of them, for travel to conferences and the like. Many times spouses accompany the Board members - but the expenses of spouses are not legitimate expenses of the School District, and ultimately the Decatur taxpayers. Meal receipts would indicated multiple meals on one ticket and inquiries could be made as to whose meal was how much. It is routine for organizations of all types and even households to keep receipts as proof of the validity of expenses paid.

Since the accounting for credit card use is clearly a long standing problem for the Decatur School District, it will be very interesting to examine the audit currently underway to see if these deficiencies have been cleared up. It is asking little of Superintendent Stinson and Assistant Superintendent Baer, as well as Board members to do the most basic of accounting for how the taxpayer's money is being spent AND in such a way that we can be comfortable that it is being spent within legal bounds.