Legislative audit targets thefts from school districts

Embezzlement of funds slated for schoolchildren, such as the recent incidents with the Davis and Weber school districts, are the target of a legislative audit.

The report recommends implementing safeguards and oversight to prevent future embezzlements. The audit was reviewed by the Joint Public Education Appropriations Subcommittee on Wednesday.

Auditors want to ensure that incidents that occurred in the Weber and Davis school districts don't happen there again — or occur in other districts.

Weber and Davis district officials told the Deseret News this week that action has been taken to set up many controls since the embezzlement incidents occurred.

While working as a part-time secretary, Denise Aughney managed to pilfer $1 million from the Weber School District Foundation by forging checks over seven years, ending in 2006. Aughney is now in prison.

The foundation, the nonprofit fundraising arm of the school district, funds field trips and student projects and purchases equipment for special-needs children.

In Davis School District, John and Susan Ross are accused of cheating the district out of approximately $4 million over five years.

The Rosses allegedly had a secret company that filled orders for tutoring kits which contained illegally copied books. Money was paid through the district's Title 1 program, which is supposed to be for disadvantaged children. The Rosses' case is still in federal court.

Legislative Audit Manager Rick Coleman said it's easy enough to see the signs after an embezzlement has happened.

"So much of what happens in fraud is the trusting of the people you work with," Coleman said.

Weber foundation director Chris Zimmerman said the foundation has implemented safeguards outlined in the audit, especially separation of duties. For example, the person signing the checks isn't the person depositing the checks.

"We feel we probably have more safeguards than most agencies," Zimmerman said.

Davis School District, which discovered financial discrepancies in 2005, has made changes such as limiting access of those who input new vendors into its computer system; and decentralizing the budget control of the Title 1 program to individual schools, therefore providing additional oversight of all purchases from program budgets.

The Davis district now requires all employees to sign a conflict of interest and ethics statement on an annual basis. No employee can solely initiate, approve, accept shipment and acknowledge receipt of purchases from any vendor without involvement of another employee.

E-mail: astewart@desnews.com