Anyone who attended Missouri State Auditor Tom Schweich's presentation Wednesday evening regarding audit findings of the Rockwood School District was handed a single-spaced, 25-page document. The presentation started promptly at 5:30 p.m. and ended just as promptly at 6:09 p.m.
Several months of detailed, investigative information and a quick-talking, but insightful, state auditor was a lot to immediately soak in.
While pieces from the nine "categories" of findings were pulled out by some St. Louis media sources to hurriedly spotlight, actually reading the lengthy document—including Rockwood's response to the auditors—provides a more intriguing overview.
- Was Glenn Construction really overpaid, or did the legal agreement in place allow for such compensation based on changes?
- The issue of Superintendent Bruce Borchers' "contract" was really about a life insurance policy discrepancy, not the overall contract. Rockwood Chief of Communications Officer Kim Cranston tells Patch on Thursday the discrepancy was due to a human error, that Borchers' was supposed to be provided with a $500,000 life insurance policy all along.
- With most procurement cards having transaction limits of $1,000, does any individual Rockwood employee need a $1.5 million limit, even if it is meant for information technology needs?
- Rockwood did not solicit proposals for consulting services prior to hiring two former colleagues of Superintendent Bruce Borchers as independent contractors in October 2010 to review district employee positions. They were paid $30,600 each. Should that have occurred?
As a reader convenience and to cut to some key points of consideration, Patch is providing an abbreviated version of the documented exchange between the auditing and Rockwood groups. A PDF version of the complete audit report accompanies this article, just like it did with the first Patch article published about this matter Wednesday night. Feel free to add your own observations based on the overall document.AUDITORS' CONCLUSIONS
AUDITORS' RECOMMENDATIONSROCKWOOD RESPONSE Significant change orders cast doubt on planning process and value of original plans. Change orders should be kept to mimimum and not used to make big changes to existing contracts. Missouri law requires school districts to advertise bids for construction exceeding $15,000. Board member Steve Smith had a conflict of interest on matters voted on by the board.
Ensure all services are clearly documented. District should attempt to collect "overpayment" of fees. Do better planning to avoid change orders. Ensure all board of directors avoid participating in decisions or situations that give appearance of conflict of interest. Proposed fees should be part of program management evaluation process. Retain all bid documentation for required period of time.
For 12 months, district has been reviewing for and updating its policies regarding construction management. Glenn Construction agreement authorized payment of additional fees to Glenn; district will review to determine whether in fact "overpayments" did exist. When Steve Smith joined the board, Rockwood board secretary asked the Missouri School Board Association should abstain from voting on Glenn-related items. Two MSBA attorneys responded in writing there was no conflict of interest and did not have to abstain. Smith did go ahead and not vote, and in fact left the room during such votes. District agreed to keep documentation. Rockwood will take additional steps toward avoiding the appearance of conflicts of interest.
District used same provider to serve as both financial adviser and bond underwriter for several general obligation refunding bond issues. Discontinue using an underwriter who also acts in a dual capacity as financial adviser.
In prior years, districts were allowed to use an adviser in both capacities. It is advantageous to do so with fluctuating interest rates. But the district agreed to not contract with just one firm.
19 percent of faculty had procurement cards. District's master credit card list is inaccurate. Monthly limits ranged from $2,000 to $1.5 million. P-card purchases totaled $4.5 million last school year. Improperly monitored credit cards can result in misuse.
Evaluate need for each procurement card issued. Update master list periodically. Evaluate credit card limits. Ensure approved purchases exceeding limits are documented. Retain such documentation as matter of policy.
Procurement cards were issued according to purchasing department policies. IT staffs were given higher limits and district received rebates from using credit cards. District agrees that master list should be reviewed. District will submit request to Board of Education annually regarding credit limits. District will enact a board policy to document and reinforce new process.
Professional services were frequently obtained without benefit of competitive selection process. Fuel purchases were not bid out in years. District used the same law and auditing firm without soliciting bids since 2005.
Ensure compliance with district purchasing policy and modify policy to require periodic and competitive selection for professional services. Soliciting proposals for all consulting services is not legally required, nor mandated as Rockwood Board of Education policy. Although the district used same law firm since 2005, there has been no increase in rate paid since that time. District's current contract with auditing firm expires after June 30, 2013, so district will consider competitive solicitation. For fuel, district does solicit bids for bulk fuel used by bus company. In 2007, district entered into contract with Fuel Man vendor; gas cards track all usage.
Copies of checks were missing. Employees do not document their acknowledgement of money transmissions.
Issue pre-numbered slips for all monies received. Reconcile receipts with deposits. Ensure slips and records are signed to better document transmittal of monies between departments.
District will implement procedures to address these issues. District will review and consider approaches to address funds received in classrooms. Controls will be put in place for funds transmittals.
Controls and procedures over district property need improvement. Annual inventories did not appear to have been taken.
Ensure complete, accurate and detailed capital asset records are maintained. Conduct annual inventories and compare to records. Board should ensure mileage logs are maintained for all district vehicles.
District maintains a perpetual inventory system. With district size of Rockwood, furniture and equipment doesn't always stay in its original location. District adjusted inventory record and now is performing monthly reconciliations. District agrees to prepare monthly reports.
Superintendent's contract for 2012-2013 provides for $150,000 of life insurance. District records show a $500,000 life insurance policy provided since July 2010.
Ensure contract is accurate. District agreed, and will update the current written contract to accurately reflect approved agreement. District noted the difference was due to typo errors.
Attendance system doesn't adequately limit the time frame during which changes can be made to student records. There is no review by district officials. Changes must be made before attendance can be certified to DESE. Additional controls are needed for accurate records. District uses a software program that doesn't allow for a "lock-out" procedure. District will change procedures to allow for adequate time changes at end of month and save on separate backup file. State reports will be based on backup. Controls over computer systems are not sufficient to prevent unauthorized access. District records are unprotected and susceptible to damage or theft. Require unique passwords for each employee. Required a security control that shuts down and locks computers after inactivity and after specified number of incorrect login attempts. District agrees with these recommendations and is in the process of implementing changes.
Read related articles:
- Patch coverage prior to the presentation
- Rockwood State Audit: The Findings Revealed
- Rockwood State Audit: Various Reactions