Friday, August 21, 2009

Phoenixville Area School District releases forensic audit - UPDATED - Dennis Wright - Mercury article

Last night's Phoenixville Area School District school board meeting included a presentation of the forensic audit conducted on the district finances.

Follow this link for the PDF document:

Exerpts from the PDF:

- As a forensic accountant with over 20 years of experience in financial investigations the problems we observed at PASD in the handling of taxpayer money
are significant and disturbing

- 10s of thousands of dollars of taxpayer money has been used in questionable ways

- This investigation began with an allegation of misuse of taxpayer money to the Superintendent

- Poor recordkeeping at the high school (e.g., number of permits, cash receipt
log, transfers to business group)

- Deficits in four of last five years totaling approximately $1,000.

- Former PASD employee used student parking permit program funds for flowers, lunches, birthdays, and other personal expenditures

- Interviewing process identified additional PASD programs that had similar
problems. We expanded the investigation at the direction of the Superintendent


- Approximately $123,000 in total expenditures on school credit cards; $53,000 in
missing any supporting documentation

- Ability to determine the appropriateness of many transactions was limited

- Iron Hill Brewery, Ernestos Caf6, Independence Brewery, Fitzwater Station, Molly Maguire’s

- Party tubs, Margarita mix, Smoothie mix

- Hotel Room reimbursement on St. Patrick’s Day without a business purpose


- Appropriateness of expenditures (Documentation for amounts in excess of $23,000 did not indicate business purpose).

- Former PASD employee was reimbursed for $1,300-$1,800 per year in travel/mileage expenses for travel mileage from home to work

- Non School expenditures commingled with other expenses

- Mileage reimbursement to attend non school charitable events

- Improper support for lunches, dinners, and in some cases alcohol was reimbursed

- Former PASD employee made a charitable donation and was subsequently reimbursed with district funds

- Medical expenses - Flexible Spending Accounts

- Backdating reimbursements and missing documentation to support expenses as healthcare related


- PASD employees used student activity money to rent and purchase barbecue
gas grills for approximately $1,000

- Food purchases of approximately $1~000 for hamburgers, hot dogs, etc. for
football tailgating by former employees

- Class donations used by PASD employees without proper authorization or
meeting minutes. In multiple cases, after the class graduated, former employees depleted the funds left in the accounts

- Forms were missing authorization signatures and supporting documentation


- The former athletic director had full control over expenditures of athletic money

- The former athletic director commingled funds with student activity accounts

- The former athletic director did not reconcile money by student activity

- The former athletic director backdated quotes and requests for proposals to
circumvent the bid process described above*


- A former PASD employee used petty cash for flowers, birthdays, and meals
such as Dunkin Donuts and Pizza Hut

- Practice halted in March 2006

- Petty Cash accounts were never replenished

- Funds from the high school safe in the amounts of approximately $1,200 and
$200 were unaccounted for by the former employee

*(info at link provided)


Karen said...

Anonymous 1:13, 1:15 p.m., please feel free to post again with your sentiments or opinions but as you suggested in your follow-up without the personal info.

Thanks for your comments!

Anonymous said...

I would love to know the names of those who were fired because of this. It comes as no surprise to me that the Athletic Director was one of the employees that was involved in the missing/unaccounted for funds. In my opinion he was a horrible teacher and should have been let go back then. I guess it turns out he wasn't much better as an AD or a human being. If he truly was stealing/misappropriating funds, he should be ashamed of himself. But alas, he wouldn't be because he acts like he's better than everyone else anyway.

Anonymous said...

Confidentiality agreements don't let school districts identify terminated employees. But if they were let go (or fired or left) in the recent past, you can guess their names.

It's sad. I heard some of them were offered the chance to return the ill-gotten booty, but they refused. So now they're probably going to get a visit from the police.

And now there's still ANOTHER non-profit mentioned in the Phoenixville news. Stay tuned. Some of the people at the meeting last nite questioning this looked a little nervous...

Anonymous said...

This report should be filed with the DA's office for investigation of Criminal Activity. These are not minor mistakes. These are serious lapses in judgement. Class funds should never have been touched. These monies should be returned immeadiately or the file goes to the DA period.

Anonymous said...

most likely this is the tip of the iceberg. If they were so bold to do these things in full public view what do you think they may have done in secret.

I would begin auditing every bid over the last few years for equipment and services. Any no bid award or bid where there was no competition should be reviewed.

This is outrageous!

Anonymous said...

I can not believe the AD was involved. No way Coatesville would hire him if they knew was going on and no way he would not tell them. That would be lieing on an employement application and that would be grounds for immediate termination.

Anonymous said...

Since this audit was done by the state, would they not turn it over to the state's attorneys to see if they want to bring charges?

Anonymous said...

It is time the school board got involved in every aspect of business that involves money being collected. Obviously the sports programs have been run crookedly. Time to outsource the concessions at the football games if people cant be trusted. Tail Gates? You can't be serious. No wonder Springford, Owen J Roberts and Great Valley all have nicer fields... the money collected goes to where it should go and not to cocktail hour.

Karen said...

Anonymous 4:18 p.m.,

I bow to your humor and wit.

Such a poem

deserves a home,

but this blog isn't it.


Anonymous said...

I believe it is a matter of poor self esteem that creates much of these problems. Let's face it...
phantom...what exactly is a phantom? Is it a villian? Is it an apparition as defined by Webster. The character looks like batman. In fact like batman, phoenixvilleans take on a loner type identity in the vast sports communities. An identity but undefinable. Phantoms go up against Rams, Wildcats, Lions, Vikings, Patriots, Trojans.

Low self-esteem or possessing an inferiority complex is often attributed to ‘self-defeating behaviors’. The reason being that accomplishing the task that someone intends or attempts will give the person a feeling of better self-esteem, which will conflict with the low self-esteem the person feels about himself subconsciously. He therefore sabotages his success to keep himself where he is comfortable, in this case his self-esteem.

Phoenixville needs to get a new mascot or new name or whatever. No one really will care and with that we can order up new attire and even get rid of that horrible purple.

Anonymous said...

Does anyone know the number of people who were involved in the thievery?

Anonymous said...

Don't worry when I get a hold of the complete audit thru the FOIA it will be hand delivered to CC detectives for perusal.Anyone unauthorized who signed for a credit card will be flushed out and prosecuted .YOU CAN BET YOUR BOTTOM DOLLAR ON THAT.

Anonymous said...

Where can you find all of the information regarding these claims?

Taxpayers should demand to see all of the expenditures from the Athletic Department and the School that were no bid or sole source.

What technology did they buy for over 50,000 dollars? Was that no bid? Was that sole sourced? Were the specifications manipulated on any of these purchases to drive it to one vendor?

Anonymous said...

I didn't see any coverage of this in the "Phoenix" of August 22. But then again why would I have expected to?

Did the "Mercury" cover this information?

Or is this information that the citizens of Phoenixville have to pass around to one another?

Anonymous said...

Spoke to a reporter from the Merc who was at the meeting and is definitely doing a story on this.

I think it's our duties as taxpayers to keep the pressure on. Noyse still has supporters out there.

Some of the comments on below article in the Merc imply there's a contrivance between the pasd lawyer and the auditor. Ninja, please. Neither the school board nor the lawyer were involved in the audit.

The Phoenix...whatever.

Anonymous said...

So when is the audit for the Library?
Where is their $500,000.00+ per year going?

Anonymous said...

Everything around Noyes smells bad. His appointees and his cowboy type methods of running things. It is time to review every thing that the business administrator governed including bids for goods and services. I was told thousands of dollars were brought in for Phuture Phantom day. Who is in control of that money?

A Phoenixville Taxpayer said...

Time to name names and get either the Chester County DA's office or PA's Attorney General's office involved.

Charges against those involved MUST be pressed!

If you do the crime - do the time!!

Karen said...

Part 1

Report: Thousands misappropriated by schools staff
Sunday, August 23, 2009

By Dennis J. Wright

PHOENIXVILLE — Tens of thousands of dollars of taxpayer money was allegedly misappropriated over the past five years, according to a presentation at Thursday evening's Phoenixville School Board meeting.

The one-hour PowerPoint presentation, given by James O'Brien of Parente Randolph Accountants & Consultants, showed school district funds from various accounts were used for meals and/or beverages at Iron Hill Brewery, Independence Brew Pub and Molly Maguire's, and for party tubs, margarita mix and a hotel room reimbursement on St. Patrick's Day. None of the expenses had a business purpose, according to the presentation.

A forensic accountant with more than 20 years of experience in financial investigations, O'Brien said his firm was hired to conduct the forensic audit of the district after an allegation of misuse was made by a taxpayer to the superintendent.

O'Brien said that the student parking permit program was the beginning. He said he wanted to evaluate the operational and financial controls to determine integrity, transparency and accountability of the program.

"Currently students are charged $20 per school year for a parking spot at the

high school," O'Brien said. "Approximately 100 spots are available to students."

Interviews of district staff, were conducted by O'Brien's firm, the superintendent and other administrative personnel. No board members participated, and legal counsel was not involved in the interviewing process, O'Brien said.

"After analyzing the financial records of the student parking permit program, we found poor recordkeeping at the high school (e.g., number of permits, cash receipt log, transfers to business group)," he said. "There were deficits in four of the last five years totaling approximately $1,000."

O'Brien stated that a former school district employee used the student parking permit funds for flowers, lunches, birthdays and other personal expenditures.

"Our interviewing process identified additional programs in the district with similar problems," O'Brien continued. "We expanded the investigation at the direction of the superintendent. We used the same procedures that we used with the student parking permit program."

The expanded investigation examined use of school credit cards, reimbursement for mileage and other expenses, the home economics food purchase accounts (Acme/Giant cards), student activity accounts, and the use of athletics funds and the high school's petty cash account.

O'Brien said he found discrepancies and misappropriation throughout his investigation.

Regarding school credit cards, O'Brien said that they were issued to certain senior level members of the prior administration, and purchases were reviewed and approved by the former business manager.

"Approximately $123,000 in total expenditures were on school credit cards, and $53,000 was missing any supporting documentation," he said. "The ability to determine the appropriateness of many transactions was limited."

Found on the credit card bills were visits to Iron Hill Brewery; Ernesto's Cafe and Independence Brew Pub, both in Philadelphia; Fitzwater Station, and Molly Maguire's, along with the charges for alcoholic mixes and the hotel room reimbursement.

O'Brien showed a chart of the school credit card summary from 2004-2008, which showed former senior administrators had supporting documentation for $14,964 in expenditures and $46,139 without supporting documentation — which is 76 percent not supported.


Karen said...

Part 2

Regarding reimbursement for mileage and other expenditures, O'Brien said that documentation for amounts in excess of $23,000 did not indicate a business purpose.

He said one former district employee was reimbursed $1,300 to $1,800 per year in travel/mileage expenses for traveling from home to work.

Others received mileage reimbursement to attend non-school, charitable events; improper support for lunches, dinners and, in some cases, alcohol; and a former district employee made a charitable donation — and was subsequently reimbursed with district funds.

O'Brien alleged that former district employees used student activity account money to rent and purchase barbecue gas grills for approximately $1,000, with food purchases of $1,000 for hamburgers and hot dogs for football tailgating.

He said class donations were used by district employees without proper authorization or meeting minutes.

"In multiple cases, after the class graduated, the former employees depleted the funds left in the accounts," O'Brien said his investigation showed.

Prior to discussing the use of athletic funds, several school board members spoke up about the presentation revealing any identity of former employees.

Paul Slaninka, Lisa Starczewski and Debbie Dawson brought this to O'Brien's attention; however, one member stated that it should be "put out there."

With that being said, O'Brien said the former athletic director was required to obtain bids for items between $4,000 and $10,000.

"He had full control over expenditures of athletic money," O'Brien said.

"He commingled funds with student activity funds and did not reconcile money by student activity. The former athletic director backdated quotes and requests for proposals to circumvent the bid process," O'Brien alleged.

Regarding the high school's petty cash, O'Brien said that $100 in cash was held at the high school, and if an expenditure was made from it, the principal was required to submit a receipt to the business group to replenish the amount spent.

"A former district employee used petty cash for flowers, birthdays, and meals such as Dunkin' Donuts and Pizza Hut," O'Brien reported. "The practice was halted in March 2006, and the petty cash accounts were never replenished. Funds from the high school safe in the amounts of $1,200 and $200 were unaccounted for by the former employee."

In reviewing all of the discrepancies, O'Brien said that there were internal control deficiencies surrounding the collection and disbursement of district taxpayer money, and poor control around expense reimbursement.

"Former senior administrators were unfamiliar with typical internal controls in similar organizations," he said. "Former administrators were allowed to have too much control and no accountability. Employees were hesitant to question the actions of superiors during prior administration."

O'Brien said that he has recommended to the new administration that all cash handling must be completed under a dual control system; authorization and access to safes should be limited; there should be no authorization/access to school credit cards; and a formal approval hierarchy should be developed for all expenditures.

Slaninka asked O'Brien if he'd ever seen such abuse like this before.

"Unfortunately, I have," he answered. "This is very egregious behavior. This is not just a couple of packs of hot dogs."

"This current administration has the utmost integrity," said Slaninka.

"It is our sole responsibility to move this board forward and get our schools open this year," board President Mark Casaday concluded.