YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2006-44

July 2006

We identified the following concerns with the Wheaton R-III School District.

During two of the last four fiscal years ended June 30, 2004, the district has spent more than it received, resulting in a decline of the district's ending fund balance.  In addition, the board approved carrying the July and August payrolls into the next year during the years ending June 30, 2004 and 2003 contrary to the district's handling of payroll in prior and current years and misrepresented the district's financial condition on the Annual Secretary to the Board Report, to DESE, and to the public.  Losses incurred by the district's self-insurance fund and the need for the district to subsidize it limited the district's ability to fund school programs.  The district has demonstrated a better job of utilizing the budget document as a tool to monitor and control the district finances during the 2004-2005 and 2005-2006 school years.

Additional compensation totaling $31,400 was paid to 38 employees' for attending meetings and workshops, and for after school tutoring during the 2004-2005 school year.  The district failed to enter into extra duty contracts or require the employees to document their time spent at these functions, and the additional compensation was not included on the employees' W-2 form nor subjected to payroll tax withholdings.  In addition, the district paid monies to former employees for work on a grant, but had no extra duty contracts.  Also, a former superintendent resigned in January 2003 and was paid $34,000 in severance pay; however, the superintendent's contract did not provide for severance pay and there was no documentation that the board obtained a legal opinion to support their decision.

The district refinanced $420,000 in general obligation bonds through a negotiated instead of a competitive sale, and selected a bond underwriter and financial advisor to act in a dual capacity.  Also, the district's current bidding procedures could be made more effective by adopting a more comprehensive policy.

The school board reviews and approves a listing of expenditures each month; however, the listing does not include payroll expenditures or other expenditures paid prior to each board meeting.  Some expenditures we reviewed were not approved by the board.  The district's policy provides for the superintendent to review and authorize all invoices prior to payment; however, the current and former superintendents' reviews were not always documented. 

The school district has numerous credit cards.  Purchases on these cards totaled approximately $61,800 during the 2004-2005 school year.  The school district has not adopted formal policies and procedures for the use of these credit cards.  Adequate supporting  documentation was not  maintained for $7,050 of  the credit card purchases

reviewed.  Credit card purchases are not always reviewed and approved by the superintendent or school board.  The superintendent's secretary determined the amount to be paid each month by compiling credit card slips submitted by the individual card holders.  In addition, the school district carried balances on several of its credit card accounts throughout the 2004-2005 school year, and often incurred late fees or finance charges.  Finally, the district incurred expenditures totaling approximately $524 for shopping gift cards, restaurant gift cards, a bike, a boom box/cd player, and a luncheon.  District officials indicated that some of these items were given away as attendance awards; however, documentation of the awards was not retained. 

Accounting controls over student meal collections, vocational agriculture receipts, and vending monies need improvement.  The elementary and high school offices processed approximately $31,388 in meal receipts during the 2005-2005 school year, and the district's accounting records indicated revenues of $28,794 were collected by the vocational agriculture (VoAg) teacher during the 2004-2005 school year.    

Various board members apparently violated the district's conflicts of interest policy. For example, a school board member approved payments totaling $1,387 to his wife's flower shop, another school board member approved $1,275 in additional compensation to his wife, another board member approved selling a district vehicle to his father, and another board member and the board president approved payments to themselves to serve as score keepers at ballgames.

The district has employed a librarian during the 2005-2006 and 2004-2005 school years and two teachers during the 2005-2006 school year that were not certified or appropriately certified by DESE.  

Also included in the report are recommendations related to timesheets and payroll functions, written contracts, expenditures, meeting minutes and appointment policies,  accounting controls, budgets, and general fixed assets.

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