2020 Pawhuska school audit cites deficiencies
An accountant reviewing the audit report for Pawhuska Public Schools for the fiscal year that ended June 30, 2020, told the Board of Education last week there had been problems with payroll and purchase order records.
Preston Birk, an accountant for the Broken Arrow firm of Bledsoe, Hewett and Gullekson, said there did not seem to be any evidence of malice or theft.
“It seemed like someone was over their head,” Birk said.
The audit report included two findings – that financial records indicated possible overpayments to some employees, and that there were problems with disorganization of purchase order records.
“We could not adequately reconcile six out of the ten payroll contracts selected for testing,” the audit report said regarding payments to employees. “These instances show overpayments made to employees. The district was able to provide reasonable explanation for all material overpayments, however, some immaterial amounts still existed that appear to be overpayments to employees.”
The cause of this problem, according to the audit report, was: “Proper controls and procedures were not in place to adequately file and maintain the extra duty contracts and to review the contracted amount to what was actually being paid. This increases the risk that individuals may be paid an incorrect amount but will not be detected in a timely manner.”
With regard to purchase orders, the audit listed a series of recordkeeping deficiencies.
“Proper procedures were not in place over the accounts payable function for the appropriated funds,” the audit report said. “This increases the risk that a misappropriation of assets will occur and not be detected whether due to error or fraud.”
As a result of the findings, the school district’s audit for the fiscal year that ended June 30, 2020, was not a “clean audit.”
“An adverse opinion was issued on the combined financial statements in conformity with generally accepted accounting principles, and a qualified opinion was issued for the omission of the general fixed asset account group on the combined financial statements in conformity with a regulatory basis of accounting prescribed by the Oklahoma State Department of Education,” the audit report said.
The report also said that auditors found “no significant deficiencies in the internal controls over major programs."
Board member Tom Boone asked whether the school district should proceed to conduct a forensic audit.
Birk expressed the opinion that a forensic audit might not be a cost-effective tool.
“Whatever you uncover might not be worth what you paid,” Birk said.
The purely hypothetical example he gave was that such an audit might uncover $3,000 of financial mistakes or misbehavior, but cost 10 times that amount.
“I, personally, would not do it,” he said.
Pawhuska school officials indicated there had been a staffing change or changes that should remedy the problems with regard to employee contracts and the management of purchase orders.