Auditor Stands By School District Finances

Audit firm Mauldin & Jenkins defended its "unqualified" opinion of the Cherokee County School District's fiscal year 2011 audit.

Credit: Patch file photo
Credit: Patch file photo
The firm who performed the Cherokee County School District fiscal year 2011 audit is not backing down from its stance on the district's finances.

Representatives from Mauldin & Jenkins appeared before the School Board on Thursday to review the audit for the fiscal year ending June 30, 2011. The audit received an unqualified opinion from the firm, meaning the district's financial reporting practices are in compliance with governmental accounting standards.

The report has come under scrutiny from District 1 member Kelly Marlow, who has accused district staff of mismanaging millions of dollars. 

Adam Fraley, a partner at the firm, noted both he and his fellow partner Joel Black both stand by the "clean" opinion the company issued to the district. 

He did note the firm listed six findings in the audit, which the district outlined in a frequently asked questions document on the audit: restatement of opening equity balances, reconciliation of cash accounts, year-end financial close-out procedure, collateralization of deposits, schedule of expenditures of federal awards and procurement and suspension and debasement. 

Board members thanked both Fraley and Black for taking the time to appear before the board. Board member Patsy Jordan asked Fraley if the firm had noticed any type of fraudulent activities or taxpayer dollars that were unaccounted for. 

Fraley said the firm had no such inkling, and it would have had to report such a finding to management or to the board. 

"The financial records were in error and we had to propose audit adjustments to make sure those were stated correctly in order to give a clean opinion," he added.

Board member Michael Geist added he had concerns as to why one audit firm would have findings one year and another would not report any findings from another fiscal year. 

Geist asked Fraley why the district's fiscal year 2010 audit would not have any findings, but its fiscal year 2011 audit could end up with six. The district had Williamson & Co. Certified Public Accounting perform its 2010 audit. 

Fraley noted he could not speak to another audit firm's practices and findings.

Mauldin & Jenkins has performed fiscal year audits for over 200 local entities across the southeast, mainly in the state of Georgia, Fraley said. The firm currently has the Cherokee County government and the cities of Woodstock and Canton as clients.

Marlow took a more direct approach in her questions to Fraley. Marlow asked the auditor how he would classify the bookkeeping of the district's financial management office, but Fraley did not respond to that specific question.

Marlow asked Fraley if a layperson should be concerned about the findings.

"Why did that happen?" she asked. "What would cause so many adjustments to be made?"

Marlow then asked how was it possible that the district had two individual accounts — which were both school funds raised through activities  — that would remain at a local bank without being collateralized. Both accounts had not been collateralized at Cherokee Bank, which is required by state law. The district eventually moved those accounts to Wells Fargo. 

The board member asked what would be the right word to characterize a staff member who "left the funds" at the bank "illegally."  

"Risky?" She asked. 

"Noncompliant," Fraley responded with.

Candler Howell, the district's assistant superintendent for financial management, reminded board members the district has received an unqualified opinion for its financial accounts for the last 26 years.

He added fiscal year 2011 was the first time the district had received findings in its audit.

"It’s as good as you can get," he said, referring to the unqualified opinion.
Allah Tabul January 17, 2014 at 03:57 PM
Bullies, no apologies necessary. Does the video name the District employee that mismanaged the accounted-for funds? What about the name of the employee that illegally put the funds in the wrong bank account, which apparently is illegal under state law? Is there any accountability for these errors whatsoever? I don't see anything fraudulent but misplacing 70 million dollars of taxpayer money is quite incompetent, no? Or is a 20% margin of error now an accepted standard of mediocrity in the District? Boom shakalaka, Amen!
Joe Johnson January 17, 2014 at 06:52 PM
" The audit received an unqualified opinion from the firm, meaning the district's financial reporting practices are in compliance with governmental accounting standards." And what part of "clean opinion" do you not understand?
Debbie Harry January 17, 2014 at 06:57 PM
Allah, "illegally" was Marlow's word, not the auditor's. Kelly Marlow and the audit crowd got a beatdown last night.
Allah Tabul January 17, 2014 at 07:36 PM
Ms. Harry, I'm simply referencing the Patch article. "Both accounts had not been collateralized at Cherokee Bank, which is required by state law." If a procedure is 'required by state law' but wasn't followed, then the subsequent procedure that was followed that did not adhere to law would, by definition, be an illegal one. Do not lump me into the crowd of loony Tea Party fools. I see no criminal activity nor conspiracy here. Only complete, gross incompetence in bookkeeping. I'm curious why some of the District supporters are so adamant to ignore that almost 15% of the budget was grossly mismanaged? Incompetence isn't necessarily criminal but why are these supporters so eager to tolerate it...even support it? Whomever was in charge of those accounts that weren't collateralized should be fired. Whomever was on the job when 72 million $$$ got mismanaged should be fired. It's that simple. Stop tolerating idiocy, people. boom shakalaka, Amen!
No More Bullies January 17, 2014 at 09:09 PM
Watch the video on the school district website. The audit discussion starts about 45 minutes in. It's complicated stuff and one article can't possibly cover all angles of the questions and follow up and discussion. It lasts an hour. Basically, the collaterization concerned individual school accounts for fundraisers, not district funds, and the errors were on the bank's side.


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