The Taos Municipal Schools board of education reviewed its latest independent auditors report at its May 11 meeting, revealing deficiencies in the district's financial controls and hiring practices, among other findings. The report, which was released in late February, found that one former employee was paid almost $10,000 in wages after he'd left his job with the district.
"The Human Resources Department failed to notify the payroll department that an employee had quit working for the District," the audit report states. "Therefore, the payroll department continued to pay the employee for a number of months until the employee notified the school they were still having checks direct deposited into their account."
Board of education president Mark Flores asked if there was any "legal way to recoup" the $9,436, but according to the audit report, the district "may not be able to recoup from the ex-employee."
"Also, this weakness in internal control procedures creates an environment that might allow for not only errors and irregularities, but actual fraud through the payroll system," the report continues, giving a recommendation that "the district should reevaluate all policies and procedures in the HR department."
The board said it would invite the district's Human Resources director to discuss the issue at the next board meeting.
At least one of the five audit findings, three of which were repeat findings, is fairly common among districts in New Mexico, according to Brent Woodward of Woodard Cowen and Co. certified accountants, which produced the report. The report is available on the State Auditor's website, saonm.org.
"Purchase orders that get prepared after the date of the invoice, are a real common thing," Woodward said, adding that his recommendation was for the district to issue a "blanket purchase order ahead of time" for things like sports referees.
"The District had purchase orders prepared after the date of the invoice," according to the audit report, which notes that the finding is one of three "significant" deficiencies. "Of 142 accounts payable invoices tested, three, or 2 percent, were dated prior to the purchase order, amounting to $18,485 of $11,116,664. Two of the purchase orders were for athletics game officials. The District has made significant progress in completing the action plan outlined in the prior year response."
Finance Director Brenda Hadler responded to most of the findings, and said her department is now enforcing rules for employee reimbursements.
"This audit finding is so common throughout school districts and even government entities," Hadler said, adding that teachers and other staff know that they must provide receipts for reimbursable purchases, which should also be cleared by the Finance Department ahead of time.
"I do call them into my office and explain to them, we cannot be doing this, like you know, we do know the rules and there has been times that I've turned it around and said "Thanks for the donation, but I'm not going to reimburse you,'" Hadler said. "It's hard because I understand employees are thinking in the best interests of their students, but we need to follow the rules."
Board member Pascual Maestas said the district should draw a hard line on the reimbursement issue going forward so the finding isn't repeated again.
"As long as we're providing the training for our staff at the beginning of the year to make sure that they understand the process, I think it's time we do what we need to do so that we don't see this next year," Maestas said, to which Flores added he would like Superintendent Lillian Torrez to "send out a memo of sorts, or an email," advising that there will no longer be reimbursements for unsanctioned purchases and purchases without receipts.
Also according to the audit, 20 percent of cash deposits were not made within the statutory time limit of 24 hours, a repeat finding.
Five of 25 activity cash deposits tested, totaling $7,230 of $33,704, were not deposited within 24 hours of being received by the sponsor in charge of the activity which raised the funds because the sponsor did not turn them into the school secretary timely, and 2 out of 20 athletics cash deposits tested, totaling $120 of $3,219, were not deposited within 24 hours by the secretary who received them."
"That's state law," Woodward said, emphasizing that "the District made great progress over the prior year but still has some work to do."
Woodward said the cash deposit issue can be difficult for districts to overcome, because of the diversity of sources of cash, which is often generated through student activities like fundraisers or the sale of tickets to school events and sports games.
"I don't know a really good way to to avoid having some of these kinds of issues with things not getting deposited timely, it just takes people working at it. Inevitably, almost every school district I work in has a problem with this at least once every year or two."
Woodward also pointed the school board to an "other finding of non-compliance" in the audit report.
"We had a finding over in Taos Charter School with background checks," he said. "They don't have a lot of employees, so I only tested five. But that was a pretty big percentage of their total number of employees, and one of those had a problem with background checks."
According to the report, Taos Charter School didn't complete a background check for a tutor who worked "unsupervised with students." The report doesn't indicate anything amiss with the employee, other than the complete lack of a background check on file, as required by state law.
"This was a repeat from last year," Hadler said. "So, you know, again, we are doing our due diligence and trying to clean up these audit findings. But like I told my staff, these audit findings are okay, and work as a district and we'll just continue doing the best that we can."
"Overall, I felt like findings weren't that bad this year," Woodward added. "The district did a great job."