Auditors find many problems, but no missing funds

BELLOWS FALLS UNION HIGH SCHOOL

BY SUSAN SMALLHEER

Brattleboro Reformer

WESTMINSTER - Financial auditors for Bellows Falls Union High School said Monday that they discovered a $300,000 mistake in their review of the troubled finances of the school district, when the school overpaid toward its teachers' health insurance.

But the overpayment never resulted in a check being cut to the state's health insurance plan, Superintendent Andrew Haas said in a follow-up interview, and it will not affect employees' premiums.

Auditors with RHR Smith & Co. of Buxton, Maine, gave an update to the school board on their audit work for the fiscal year that ended last June. The Smith auditors had previously put the school boards, which belong to the Windham Northeast Supervisory Union, on notice that there were profound accounting problems with the district's financial books.

That letter last December prompted the departure of Finance Director Flora Pagan, who was first put on administrative leave by Haas, and then resigned later the same day. Since then, Haas, who became acting superintendent in September after the surprise departures of former Superintendent Christopher Pratt and Assistant Superintendent Lynn Carey, has brought in experts to try and straighten out the financial books. Getting five different school budgets completed and ready for voter approval next month was a struggle for Haas and the individual school boards.

To date, no missing funds have been been discovered, but in the words of the auditors, there have been plenty of mistakes - including the $300,000 one - uncovered during their review of the high school's books.

"What actually happened is that the district had the deduction set up improperly, so a greater expense was being booked, but the correct amount in total was paid," Haas said in a follow-up email. "We were able to correct the expenditures and this won't have an impact on staff. It was an accounting error."

"The amount was not actually paid to VEHI (Vermont Education Health Initiative). The transaction was essentially sitting in a holding account (a liability account) waiting to be paid, which is what triggered us to look into it because the balance in that 'holding account' was unusually high. So we were able to reverse the entries that were made, but there was not a cash issue," he added.

The presentation by Miranda MacDonald and Brittany Gilman of Smith & Co. prompted few questions. But Gilman said the audit team had to make "a lot of adjustments" to the books, and had hired back the supervisory union's former accountant Christine Balch to help decipher the books. Gilman said the auditors were tipped off to the $300,000 mistake because "it didn't look right."

The people keeping the financial books were not following general accounting guidelines, nor the school district's own policy, the auditors said. There were issues with documentation and "not making entries in a timely way," or reconciling the bank statements.

School Director David Clark of Westminster asked when the board could expect the final audit. The answer- sometime in March.

In addition, the supervisory union will be returning $500,000 to BFUHS because of an overassessment of the services it provides to the union high school, the Smith audit team said.

While the high school's books show about a $523,000 surplus, or in audit lingo, "unassigned fund balance," it was actually bigger. But the board has already agreed to use some of it to lower taxes.

Contact Susan Smallheer at ssmallheer@reformer.com.