By Judy Reed
UPDATE Sept. 23, 2016: The section on p-card credit limits and purchase limits has been revised to reflect more accurate information.
A forensic audit into record keeping in the athletic department at Cedar Springs Public Schools did not show any intentional misuse of funds or fraud, but did show that the district needs to have stricter policies and procedures on procurement cards and ensuring employees have the guidelines on how to use them.
“The investigation was a reflection of concerns brought to us about athletic accounts,” explained Dr. Laura VanDuyn, Superintendent at Cedar Springs Public Schools. “When several concerns mounted, the board decided to go ahead with the investigation. We are accountable to the community, staff, and parents. We are stewards of taxpayer dollars.”
According to the report, Rehmann Corporate Investigative Services was contacted on December 11, 2015, by the Thrun Law Firm (representing CSPS) to request a review of financial transactions and internal controls at Cedar Springs Public Schools. The review included forensic accounting analysis and interviews. Additional investigation involved purchase or “P-cards” issued to 13 unique employees, and a more detailed review of all transactions impacting the football team’s agency account during the 2015-2016 school year.
The results of the Rehmann report, which was printed in June, was initially suppressed from the public under attorney-client privilege. The Cedar Springs Board of Education voted on August 8 to make it available to the public. According to the board minutes, the vote passed 7-0. No video was available for that portion of the meeting, but according to the Superintendent’s office, there was no public discussion about its contents.
The Post asked Supt. VanDuyn why they decided to release the report now. “People would ask whatever happened with that investigation, and we are accountable to our constituents, so decided to release it,” she explained.
The report explained that purchases made using the p-cards are generally allocated to a specific fund. At CSPS there is a general athletic department fund, a general fund for each team, and an agency fund for each team (which is generally restricted to funds raised through boosters and other sources). The report said that according to their investigation, there does not appear to be any consistent practice with regards to when purchases should be paid using agency funds instead of general funds, nor when a general athletic department expense account is charged for a purchase instead of a team account. It said there also didn’t appear to be any consistent methodology for allocating expenses between more than one team when there was shared expenses.
The report also indicated that during review of p-card purchases and receipts, that in only a few instances was the reason for the purchase adequately documented, and little indication that the purchase had been reviewed and approved by anyone (such as a supervisor). Detailed receipts could not be found for purchases in some instances. One such instance they mentioned was a credit card purchase in July 2013 by then Athletic Director Autumn Mattson from Daktronics for $8,437. The company sells scoreboards, audio systems, message boards, etc. The report said that no detailed receipt was attached to the credit card statement, so they couldn’t ascertain what the purchase was.
VanDuyn said that many of the instances referred to happened before either she or Finance Director Rosemary Zink took office. She did say, however, that she has confidence in the accounting department. “They do make sure there are receipts, they are very strict about that,” said VanDuyn.
The report noted that “based on our limited review of the purchases initiated on the p-cards for the Athletic Department under the control of Autumn Mattson, we did not note any purchases that were inherently inappropriate. In many instances, the lack of a detailed receipt hindered our ability to review what was purchased and make a determination with regards to its appropriateness.”
The Post asked why the yearly auditor would not find the discrepancies that the forensic auditor had. “The difference between an annual audit and this one is that the annual audit is making sure you are spending federal money the way you are supposed to,” explained VanDuyn. “They might do random samples of two credit cards. They don’t go through all the transactions detail by detail.”
There were several exhibits attached to the original report that included the policy and guidelines for the p-card holders, and referenced purchases. The school did not release those exhibits. “We only released the executive summary,” explained Van Duyn. “The rest would’ve been problematic. We wanted to protect the confidentiality of those employees,”
The Post asked if there were guidelines that all the p–card users have, and was told all p-card holders have to sign off on them. We asked to have them sent to us but the guidelines didn’t seem to be readily available.
Another problem noted was that the different departments keep track of their budget on an Excel spreadsheet, while the accounting department then gets together with them every so often to reconcile the account. The investigator was not able to reconcile an error in the athletic department’s Excel spreadsheet for funds available for the football team at the end of 2014.
The report said it was important to note that the accounting department maintains the agency funds for the various teams and other groups at CSPS. “As a result, we believe that it would be difficult for a member of the athletic department to misappropriate funds once they had been remitted to the accounting department for deposit in to the bank. During our meeting with Coach Kapolka, he was provided with a copy of the invoices and other expenditures pertaining to the football team for his review. During this analysis, Kapolka did not indicate that any of the expenditures were inappropriate.” They felt the accounting records were more accurate than the athletic department records.
The report made a variety of recommendations. One was limiting the number of p-cards. CSPS currently has in excess of 70 p-cards, which they said means that the accounting department has to spend too much time reviewing statements and tracking down receipts. “The school is also at a heightened risk for financial loss due to the number of cards in circulation in the event of an abusive or tempted employee,” it said. They recommended cutting it down to 10, and to make as many purchases as possible through the accounts payable process.
The report also recommended lowering both the credit limit and purchase limit on p-cards, noting that they are mainly for small transactions. The AD had a credit limit of $20,000; the supervisor a limit of $5,000; and TV production of $35,000.
Many colleges and universities don’t have credit limits that large. For example, Cornerstone University p-card holders have a credit limit of $3,000 with a per purchase limit of $1,000; and Western Michigan University has a credit limit of $5,000 with a purchase limit also of $5,000.
The Rehmann report recommended lowering the purchase limit for Cedar Springs p-card holders to $50 to $100 for the majority of the cards.
Other recommendations included employees getting approval before purchases; including an explanation on why items were purchased using the p-card; developing and implementing clear guidance on when general funds should be used and when agency funds should be used; using a corporate Amazon account instead of individual accounts; requiring the submission of detailed receipts; and more.
Dr. VanDuyn said they haven’t implemented any of the recommendations yet. “We will look at all the recommendations from the Rehmann Report. It’s up to us to go through them and see what works for us. We are looking to review them and see which things we will address,” she said.
So what’s the bottom line? “It basically says we need to clean up our business practices. We want accountability and have high expectations of all of our employees,” remarked VanDuyn. “Anytime you can work hard to make things better, it’s worth it.”
The Post asked for a statement from former AD Autumn Mattson regarding the report and the information it contained. “I was aware that CSPS was reviewing their financial processes and procedures. And after reading the report, I can see that no illegal activity was found. I wish CSPS the best of luck as they implement the recommendations that were in the report,” she said.
Anyone wishing a full copy of the report may file a Freedom of Information Act with the school.