State Auditor Dave Vaudt, issued his report today on the review of the managerial and financial problems within the Iowa Association of School Boards that led to major changes in the organization. Vaudt’s audit, which covered the fiscal year from July of 2008 through June of 2009, was delayed until some other investigations were completed.

“Probably one of the biggest things was just the board fudiciary oversight responsibility seemed to really fail within the organization. Obviously there were a lot of transactions entered into, decisions made that were not documented as being fully discussed at the board level or approved by the board and that led to a lot of decisions that probably people wished really hadn’t been made,” Vaudt says in summarizing his report.

“Definitely board oversight, the fudiciary responsibility, was missing in this organization.” That lack of control came to light in the revelation that executive director Maxine Kilcrease allegedly increased her own salary and the salaries of others by thousands of dollars.

Vaudt says there was little oversight when this happened. Many times agreements were never finalized, they were only discussed at the management level, noone at the board level seemed to be aware, or approving those particular transactions,” Vaudt says. Kilcrease was fired, and the president of the I.A.S.B. board resigned in the wake of the revelations.

The I.A.S.B. is funded by millions of dollars from the state’s public school districts. Vaudt says the audit found the organization did not do a good job in investing that money, ignoring warnings about potential problems.

“Back in 2004 the Attorney General’s Office cautioned them on entering into some unique investments, derivatives, and commodity derivatives and so forth. The organization in one fiscal year lost one million dollars in one of their investment transactions — some things that the board never weighed in on and should have.” Vaudt explains.

The new leaders of the organization asked for the state audit, and Vaudt says they appear to be taking action to prevent repeat problems.

“Yeah, I think definitely the organization has responded very favorably to our recommendations and will tell you that they have made some changes already. Obviously a lot of different players at the organization today,” Vaudt says.

“And then also they have formed some committees within the board, they have an audit committee, a compensation committee and a governance committee now formed that will address a lot of the issues that haven’t been addressed in the past. So I think they are definitely organized to proceed forward and learn from their mistakes.”

No criminal charges were filed from the other investigations that were conducted into the I.A.S.B.’s operations. Vaudt says his report has been forwarded to the Department of Education and the Polk County Attorney’s Office.

See the full report here: IASB audit PDF