JONESBORO — Arkansas Legislative Audit released findings for several area educational institutions.
Marti Steel, a deputy legislative auditor with Arkansas Legislative Audit, said when there are findings on the audit, depending on the situation, those reports are sometimes sent to the prosecuting attorney’s office.
Westside Consolidated School District had one finding that was reportable to the prosecuting attorney.
Auditors reported Westside had been the victim of a check scam.
“This was a nationwide scheme going on where someone was making copies of checks,” Steel said.
“Somehow someone got the school’s account and routing number. When the district reconciled their bank account they found these checks,” she said.
Steel said the scammer was able to make physical checks using the district’s banking information, but that the district caught the discrepancies quickly.
“The checks cleared the account on Nov. 22, 2019, and the bank returned the funds to the school’s account on Nov. 26,” she said.
Gauntt said the district caught the issue the day after it happened.
“Westside Consolidated School District Treasurer Bill Breeden reviews our accounts every morning,” Gauntt said. “It was determined the scammers were located out of state, on the eastern seaboard.”
Gauntt said he had several telephone discussions with Shannon Norris, the supervisor of Arkansas Legislative Audit for this area, and asked why the district had to have a finding on the audit report for something they had no control over.
“I was told they had to report … anything to do with fraud and report it to the prosecuting attorney,” Gauntt said, noting he was never formally notified if that had taken place.
Westside had one other finding on the 2020 audit report.
Auditors found the district paid $13,609 for repairs and services to a company in which a school board member had a financial interest.
Gauntt said school board member Myca Ferguson’s husband Denver owns Denver’s Refrigeration and that the school has done business with the company for years.
“This is the first time in the five years that I have been superintendent that we have had an audit finding,” he said.
The reported stated the board did have a resolution passed to allow the district to conduct up to $9,900 in business with the company; however, the board did not amend the amount or obtain the necessary approval from the Arkansas Department of Education to go over the approved amount.
Gauntt said it was a reporting error.
“What we have been doing is using a calendar year approach to fiscal disclosures,” Gauntt said. “We had six months that was on one fiscal year, and six months on another fiscal year, so when those were reported together it looked like we had gone over the approved amount.”
Gauntt said the district fixed the issue.
“We changed our protocols to where we moved from a calendar year (financial) disclosure to a fiscal year (financial) disclosure,” he said.
Several other institutions had findings on their audit reports also.
Buffalo Island Central School District had an audit finding similar to that of Westside’s.
According to the Arkansas Legislative Audit Report, the district paid out $11,189 in supplies to a company in which two employees had financial interests without obtaining approval from the school board or the Arkansas Division of Elementary and Secondary Education.
The report stated the district also paid $675 to an employee for the purchase of a piano without school board approval.
Superintendent Gaylon Taylor was unavailable for comment as of press time Friday.
The Arkansas State University System also had findings present on its 2020 audit.
According to a letter in the audit report signed by Patrick Nutt, a deputy legislative auditor, ASU Mid-South had uninsured and uncollateralized bank deposits totaling $2,058,182 on June 30, 2020.
Steel said that means the school should have kept up with their deposits and contacted the bank to make sure their monetary assets were covered.
“This means the Federal Deposit Insurance Corporation (FDIC) insures a certain amount of deposits of each educational entity. The deposits exceeded that amount and the banks were supposed to provide additional coverage,” she said.
Steel said the college was responsible for contacting the bank and getting that extra coverage.
“They should be keeping up with those deposits.”
Jeff Hankins, Arkansas State University System’s vice president of strategic communications, was unavailable for comment as of press time Friday.
Gauntt said in his opinion, these annual audits are a vital part of the yearly process.
“(Auditors) come in at different times of the year,” he said. “They don’t tell us when they will be here; they just call us about two weeks before they plan to visit.”
Gauntt said the typical audit takes between six to eight weeks.
Auditors are at the school and they are going through everything with a fine tooth comb, he said.
“If they can’t find something, they ask us for it and we make sure they get it,” Gauntt said.
“They look at fixed assett, payroll …”
Gauntt said once those reports are released, district have to write a letter to Norris.
“We have to write a response letter ... telling how we are going to fix it,” he said.