The unusual accounting practices and lax internal control environment at THS exhibit all the characteristics of an environment susceptible to errors, misappropriations, and waste or abuse. —Natalie Grange, CPA, CFE
PROVO — A state audit of financial practices at Timpview High School indicates a much more widespread problem than just issues related to the school's football program.
In fact, the state's auditor who oversaw the examination recommended that the Provo School Board "undertake a thorough examination of all school activity accounts by engaging an independent auditor and legal counsel."
On Tuesday, the district suspended Timpview's head football coach Louis Wong without pay pending termination. He does have the right to a hearing on the action within 15 days. Otherwise, he'll be fired in 30 days.
Acting Superintendent Bob Gentry said the investigation by the Provo School District is ongoing and other personnel could face disciplinary action for their roles in questionable financial transactions.
Supporters of Wong and parents are expected to be at tonight's regularly scheduled school board meeting.
In the audit, which was released at 12:01 a.m. Wednesday, state officials point out that while the district and school appear to have sufficient safeguards and policies governing financial transactions, there doesn't appear to be adequate oversight to ensure compliance of those rules.
"The unusual accounting practices and lax internal control environment at THS exhibit all the characteristics of an environment susceptible to errors, misappropriations, and waste or abuse," CPA Natalie Grange wrote in the audit letter. "There appears to have been an intentional and willful disregard by certain PSD employees at THS for compliance with appropriate practices and PSD policies."
Grange's letter also points out that some of these issues were reported to the Provo School District's Board of Education in its Oct. 11, 2011, meeting, "and many of the issues appear to remain unresolved."
Auditors took samples from 14 Timpview accounts, including that of its administration, and sampled 90 transactions — or roughly 22 percent of the expenditures of those accounts. They separated football and drivers education accounts — both of which Wong oversees — and sampled 11 percent of those expenditures or 85 items.
The auditor then pointed out "questionable or unusual expenditures."
Some notable examples:
Personal reimbursement for former principal George Bayles' spouse for $358 in airfare.
Personal reimbursement for airfare and hotel to a vendor-sponsored football game in Florida. Player was not paid for by Timpview, while principal and assistant principal were.
Reimbursement for Bayles' spouse for a hotel room for an assessment conference in Atlanta that Timpview administrators attended. Bayles was compensated $801.30, while the other hotel room charges were $686.55, "which may represent an additional charge for the weekend, after the rest of the staff had returned to Utah. No explanation provided."
Reimbursements for food, clothing and gifts for coaches that totaled $1,265.17. Those included shrimp cocktail, hot dogs, drinks and bulk candy.
Personal reimbursements for meals during summer football camps for which coaches were being paid by another entity. One of those was a summer camp in Price that totaled $910.66, while another was a little league summer football camp that totaled $1,083.85.
Personal reimbursement for a football vendor golf tournament totaling $200.
Reimbursements for personal repairs to Wong's vehicles totaling $759.84. No sales tax was paid on those repairs as they were processed through the school's account.
In another section of the audit there is missing money. In fiscal year 2012, revenues from fees paid by players should have totaled $43,500. Instead, the coach's log lists receipts of $28,506 and a deposit into the school's activity account of $13,056. The audit points out that there is no explanation as to the $15,450 difference between the deposit and the coach's list of receipts.
The audit points out that even money raised through donations and fundraisers becomes "public funds" once in the possession of district employees. It therefore becomes subject to the district's and/or school's rules and regulations.
The auditor points out that the practices are not standard for public agencies.
"We have identified accounting and fiscal practices within the PSD that do not conform to generally accepted practices in the management of funds in a public entity," the auditor wrote. Those practices created "significant risk" for the district, employees and "stakeholders."
Those risks include:
Inability to ensure the most effective use of funds and the prevention of waste.
Potential for misappropriation or the appearance of misappropriation.
Lack of accountability to citizens for use of public funds.
Lack of information to enable the board of education to exercise appropriate financial oversight.
The 27-page audit then details its findings, which include:
Inadequate segregation of duties at Timpview.
Inadequate internal controls over Timpview High activity accounts. That includes approvals for purchases or reimbursements obtained after the purchases have occurred, hence making efforts to monitor purchases meaningless.
Assistant principals routinely approve expenditures and reimbursements for programs over which they do not have supervisory authority.
No petty cash fund. When employees need cash, a check is written to the bank and cashed, and it doesn't appear that there is a review process for petty-cash-type transactions.
Pre-approval of travel is not documented.
Charges to local gas stations for the Timpview drivers education program don't include receipts, making it possible for unauthorized charges to go undetected.
Revenue and expenditures are often mixed, which makes determining the true nature of transactions difficult.
Timpview doesn't provide an acceptable process for students to pay fees or for employees to deposit funds collected for activity camps during the summer months.
While "internal control procedures over cash disbursements established by the PSD and THS appear to be designed effectively," the reviews are not detailed enough.
The audit also takes the school to task for incomplete employee and volunteer background checks, which are required by law to work with minors in an educational setting.
And finally, the audit suggests that a contract entered into by Wong and Under Armour could violate the Utah Educator Standards and the Public Employee Ethics Act. It was the $1,500 personal clothing allowance from Under Armour that Wong received as part of a sponsorship agreement he signed with the company.