The Crested Butte News Serving the Gunnison Valley since 1999
Chronic small-district problems persist
A new team of auditors gave the Gunnison Watershed School District high marks for its financial practices over the last year, despite having lost more than a half million dollars to an alleged thief and his scam.
Paul Backes of McMahan and Associates, the auditor who presented the team’s findings to the board at a meeting on Monday, December 9, glossed over the stolen money, saying at the end of his presentation that the funds would be accounted for after the court proceedings involving the case are complete and any insurance payments have been received.
In response to a question about the school district’s having enough internal checks and balances in place, Backes said, “Yes,” going on to say, “We did not make any adjustments for how that’s handled. We didn’t book a receivable for any reimbursement you might get. Ultimately if you get an insurance payment or restitution, that money will just flow in as revenue.”
District business manager Stephanie Juneau told the board that choosing the new auditing firm was part of an ongoing effort to keep fresh eyes on the financial practices being used throughout the district, from the records of money spent and deposited to the steps taken in a transaction.
When she first took on the job of business manager, Juneau sought out an auditor who would take a hard look at the district’s books and not let them rest on their laurels. In that firm’s first year, their auditors found almost a dozen areas in the district’s accounting practices that needed fixing.
The next year the number of problems went down and now Juneau is looking to continue the improvements with a firm that specializes in school district audits.
Backes explained that the team looking at the district’s books doesn’t do anything other than audit school districts and that they have a three step process to follow: ensure that the district’s financial controls makes sense; walk through the controls and reporting process to make sure the books are balanced monthly; and finally, verify all of the financial data, from bank transactions to checking to making sure the district’s investments are in state-approved funds.
“The goal is to put together this painfully lengthy audit report,” Backes said. “The reason it’s so thick is that it’s designed to do a lot of different things. It goes to CDE [Colorado Department of Education] to make sure the money they’ve given you was actually received, deposited and used appropriately, it goes to the federal government for the grants they provide you, and most important, it goes to all your bond holders.”
Backes praised Juneau for her work, her organization and the compliance with the auditing team. He had only two areas of concern to point out for the board, both related to the district accounting standards.
The last two auditing firms the district hired have expressed some dismay with the way money made from ticket sales at games and school functions is collected and accounted for. But the board hasn’t been concerned, especially since the amount of money being handled is relatively small.
Another concern is the size of the district’s ending fund balance in the general fund, Backes said, since without the politically vulnerable state interest-free loan program that helps the district pay its bill toward the end of the year when property taxes have yet to come in, the district wouldn’t be able to pay its bills through the year.
“Ultimately, we’re measuring your fund balance at June 30, which is a fairly high point. I think the message I would say is that you have $3 million on June 30 but you’re still participating in the state loan program,” Backes said. “So you ultimately don’t have the funding to get you through the year without utilizing the state loan fund. For whatever it’s worth that’s where you’re at.”
The district is required to submit to an audit every year and provide the findings to the Colorado Department of Education. The board unanimously approved the audit December 9, and a final copy will be certified and sent out.
