The audit completed by Dorothea Kelly identifies a number of deficiencies in internal control over financial reporting, undocumented accounting records, journal entries being posted to the general ledger without approval from separate individuals, financial policies not being followed and other discrepancies.
The administration referred to the three audits submitted just before Wednesday's Arlington School District meeting as incomplete and put little stock in the information the audits entail. The Arlington board did not make a motion to accept its audit, and Superintendent Karen Gallese said Thursday she believes all three audits will be reviewed but they likely will not be used.
Business Manager Richard Pembroke said the audits are missing a lot of information. "In my opinion this is not a complete audit because it is missing a number of critical components, most importantly the management discussion and analysis that (should be) accompanied with the auditor's opinion," he said.
Management should have an opportunity to review the audit and respond to the auditor's findings and accuracy, which Pembroke said did not happen in this case.
"The discussion section and the analysis section is typically to put into laymen's
Kelly did not attend the meeting and could not be reached for comment Thursday. In the cover page of the audit, Kelly blames supervisory union officials for the lack of information.
"Management has omitted the required supplementary information, such as management's discussion and analysis and budgetary comparison, as there was no one qualified within the organization to provide such information," she wrote.
Two members of the public at the Wednesday meeting expressed dissatisfaction that the audits took so long to complete, after it was first expected last fall. Many times since they have been told the audits would be done shortly.
The administration has previously said the delay were due to this being the first school audit Kelly has conducted and because Arlington School District requested an additional, more in-depth cash audit of funds to track $138,000 the supervisory union owed it. That cash audit was completed earlier this summer and determined the supervisory union had spent much of the money and the rest carried over into a fund balance.
The audience also raised concerns about the history of audits in the BVSU, which in recent years have consistently had disruptions and delays.
School Board member Maureen Harvey said the BVSU is in part to blame. "In my opinion we cannot solely blame (Kelly) for it, and I do not want to see more total blame put on anybody. There were mistakes made on both sides," Harvey said.
Harvey's opinion disturbed fellow board member George Carpenter, who placed blame on Kelly.
"I was very concerned about the timeliness of this. She did not meet the timeline. Her responsibility was to absolutely have something in front of us in a reasonable amount of time," Carpenter said. "We had discussions in July and it was supposed to come a week later. It never came."
Kelly wrote in the audit that supervisory union officials broke off conversation with her in May. "Given the significance of the lack of communication, I find it necessary to report this as a material control deficiency," she wrote.
Kelly also wrote that internal controls are not sufficient to ensure financial statements are properly prepared, resulting in significant audit adjustments.
Other problems identified in the audit include a number of journal entries with the notation "force balance sheets to match audit." Kelly wrote that accounting records are to be based on "substantial, competent and evidentiary matter" and forcing a balance sheet leads to undocumented accounting records.
One example Kelly identified included 92 entries totaling nearly $1.2 million that were processed but not documented in Arlington School District.
The audit also states that a supervisory union policy is for cash flow reports to be reviewed at monthly school board meetings although minutes show no such reports were presented from July 2010 to June 2011.
Last month, BVSU contracted with The Bonadio Group of Albany, N.Y., a large accounting firm with experience auditing Vermont school systems, including Southwest Vermont Supervisory Union with whom BVSU is contracting business services. The Bonadio Group will do its own fiscal 2011 audit for BVSU and its member districts, which is expected to be complete in January, 2013, as well as the fiscal 2012 audit.