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OKLAHOMA CITY (Nov. 12, 2015) – In the
wake of alleged misappropriation of funds at Swink Public Schools, the State
Board of Education approved establishment of a task force to create an action
plan for the school district in southeastern Oklahoma. In reviewing an audit of
the small district, board members and State Superintendent of Public
Instruction Joy Hofmeister also expressed concerns that a Broken Arrow-based
auditing firm hired by the district had found no financial problems over the previous
five years.
A review by
the Oklahoma State Department of Education (OSDE) showed that the firm of Sanders,
Bledsoe & Hewett had failed to uncover alleged embezzlement in the district
that totaled nearly $235,000. Eventually, a June 30, 2015, audit by the firm
outlines several instances of alleged fraud by the district treasurer and
encumbrance clerk, including:
- Altered school district checks payable to the
treasurer and her relatives;
- Travel reimbursement for trips not taken;
- Unapproved fuel charge cards; and
- Unauthorized purchases, including alcohol and
tobacco.
The FBI and
U.S. Department of Education are investigating the allegations. Prosecutors are
expected to file criminal charges against the pair.
The board questioned Swink Superintendent Mark Bush and officials of Sanders,
Bledsoe & Hewett as to why the firm — which has been performing annual
audits for the district since at least 2011 — did not find any suspicious
activity in the district’s books until this year. Alleged instances of fraud
have increased each year, with $7,200 misappropriated in 2010-2011, to $89,600
misappropriated in 2014-2015, according to the audit.
Of 114
school district audits conducted last year by Sanders, Bledsoe & Hewett,
all but seven were “clean” and absent of findings. Representatives of the firm
told the State Board that irregularities they find are often conveyed in
letters to the district instead of in actual audits.
“I have a
real problem with audit findings that don’t make their way into the audit,”
Hofmeister said. “This is a cautionary tale for other districts around the
state. If an audit looks too good to be true, it might be. It is important for
administrators and board members to maintain tight controls and ask questions,
especially given the fiscal challenges facing our schools.”
In the June
30, 2015, audit, the auditing firm highlights a number of incidents of alleged
fraud and makes 10 recommendations for the 164-student district to strengthen
internal controls.
Board
members voted unanimously to establish a task force comprised of OSDE officials
and chaired by board member William Flanagan, a retired certified public
accountant and personal financial specialist. The panel will work with
officials in the Choctaw County district to strengthen financial oversight. In
turn, these recommendations might be worth consideration by school districts
across the state.
“Misappropriations
of funds is a charge we take very seriously, and we are holding the Swink school
district and board members accountable for both the actions of its employees
and the auditing firm they hire. We will not sit by and watch tax dollars being
stolen from our schoolchildren,” Hofmeister said.
OSDE General
Counsel David Kinney, who is also a CPA, consulted with State Auditor and
Inspector Gary Jones and the Oklahoma Accountancy Board in the department’s
review.
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