The State Auditor says a special investigation of the Cedar Rapids School District turned up over $587,000 in stolen funds by a former accounting clerk. Auditor David Vaudt says a confidential informant tipped off police and they then requested the state audit that found clerk Janet May at the center of the problem.
Vaudt says the clerk was making cash withdrawals from the district’s bank account with the excuse that the money was needed for change for events at the school. He says she then would take fees intended for registration and transportation to cover the withdrawals. May was fired in September of 2009 and died in November from cancer.
Vaudt says the district didn’t have proper checks and balances in place to prevent the theft, and then missed signs that it was taking place. Vaudt says the district did see that the transportation and registration fees were not as high as they had budgeted, which should have been an alert, but he says they instead kept lowering their estimates instead of trying to find out why they weren’t collecting as much as they should have.
Vaudt says the school district can correct the problem with better procedures. He says the Cedar Rapids district is large enough that with proper segregation of duties and oversight they could solve the problem. Vaudt says they also needed proper numbered receipts to keep better control over the money. The theft of the money took place from 2003 through 2009.
The Cedar Rapids School District released this statement in response to the report:
Fiscal integrity is a District priority and we are very concerned that this situation has occurred. We are committed to public accountability and improved District operations. District administration realizes the significance of this theft and its influence on the trust the community places in the school district. We look forward to the opportunity to restore the community’s trust and confidence.
To that end, we took immediate steps. Within 30 days of learning of the embezzlement, the District conducted an internal review of Accounting Department functions, worked with bank officials to implement better banking controls between the District and depository bank, developed an Accounting Department restructuring plan that better segregated duties, and added the positions of Internal Auditor and Accounting Supervisor to further safeguard District finances.
The District continues to review internal procedures. Administration will be presenting the information to the Board of Education for their input and further direction.
The District also utilizes a Financial Integrity Hotline, launched in 2007, to provide for anonymous submission of information regarding financial concerns. A District Audit Committee has been in place since the 1997-1998 school year and meets quarterly to review District financial matters.
The financial loss to the District is fully insured, less a $10,000 deductible that the District will attempt to recover from Ms. May’s estate. Funds received from the insurance will be restored to the appropriate budget accounts. Additionally, District administration will recommend to the Board of Education that the insurance amount credited to the District’s General Fund be used for property tax relief for the fiscal year 2011 property tax rate.
We appreciate the State Auditor’s acknowledgement of District staff in cooperating and assisting with the investigation. Recommendations from the State Auditor’s Office will continue to guide District efforts to further improve internal controls. The community can be assured that we will become even more vigilant in protecting District financial assets.