Members of Sumter School District's advisory Finance Committee said Tuesday they were not made aware in any way by administration of the district's $6.2 million in overspending before the release of the fiscal 2016 audit report in December 2016. …
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Members of Sumter School District's advisory Finance Committee said Tuesday they were not made aware in any way by administration of the district's $6.2 million in overspending before the release of the fiscal 2016 audit report in December 2016. Their responses Tuesday came after a former board member, Keith Schultz, questioned last week why the committee didn't prevent the financial failures from occurring.
"The Finance Committee was set up and designed to stop this type of financial malfeasance," Schultz said during the Jan. 8 board meeting's public participation. "It happened under the watch of the Finance Committee, who in turn advised the board."
After a committee meeting Tuesday at the district office, Finance Committee Chairman and board member Johnny Hilton said the committee was never made aware of any financial problems by the previous district administration under the guidance of former Superintendent Frank Baker. Hilton said the committee and board previously received quarterly financial statements from the district. With the addition of a short-term financial consultant last year and now a chief financial officer in the district's finance department, the committee and board currently receive monthly financial statements.
"The Finance Committee was given the same information as the board was given," Hilton said. "The information that was in those financial statements did not indicate there was any issue with overspending."
Hilton said the administration repeatedly reassured the committee that the district's finances were on track.
"When the audit report came out in December 2016, then the board and the Finance Committee discovered the financial information that we had been given was inaccurate and there were not adequate procedures in place at the district level to report and keep up with the financial situation," Hilton said.
Of note, Hilton defeated Schultz, the incumbent board member for the Area 4 seat, in the November 2014 general election.
Committee member and board member William Byrd, a certified public accountant who owns and operates a local CPA firm, said a main issue previously involved the lack of reporting by district staff of year-end accruals or expenses incurred in one accounting period but not paid until a future accounting period.
"The finance committee and the board weren't aware of year-end accruals during the year because reporting during the year was based on a cash-based method of accounting," Byrd said. "Then, at the end of the year, the auditor comes in and books all these year-end accruals that changes the picture entirely."
Both Hilton and Byrd said they are pleased with the addition of new CFO Chris Griner and the current administration with putting procedures in place to monitor accruals regularly and prevent a similar occurrence from happening again.
Finance Committee member and local business owner Greg Thompson said he agreed with Byrd's and Hilton's analysis.
Committee to recommend new purchasing procedures
At its monthly committee meeting Tuesday, the school board's advisory Finance Committee voted unanimously to recommend to the full board to approve and publish a listing of additional purchasing procedures. The committee recommended those added procedures be included in the district's administrative rules to its purchasing policy.
The full board will receive the recommendation at its next meeting, which is scheduled for Monday night at the district office.
The committee's motion comes after the district's auditor noted various related findings in the district's initial procurement audit in December 2016.
Hilton said the intent of publishing the recommendations is to alleviate the potential for misinterpretation of purchasing policies by district staff in the future by having them documented somewhere.
As Finance Committee chairman, Hilton previously recommended the added procurement procedures in June of last year, but the full board took no action at the time.
The additional purchasing policies in the committee's recommendation include:
- Conducting a procurement audit every fiscal year;
- Notifying school board members immediately by email when the need arises for an emergency procurement. Emergency procurements should also only be made in the case of an actual emergency.
- Sole-source procurements should only occur rarely; and
- The procurement officer shall report all sole-source, emergency procurements and minority business utilization from the previous fiscal year - ending June 30 - in writing in open session of a board meeting no later than Sept. 30.
The December 2016 procurement audit was the first for the consolidated district, which was officially formed in July 2011. After formation, the district received a two-year grace period before a procurement audit was necessary, according to the state Department of Education. School districts are required to have the audit of purchase processes at least once every three years by state law. The procurement audit completed in December 2016 represented the three-year period of 2013-16.
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