State Audit Finds No Criminal Wrongdoing in Stephens County School Budget Problems

By Charlie Bauder, WNEG Radio, Toccoa

Former Stephens County School Superintendent Sherrie Whiten speaks on the school system’s Fiscal Year 2013 audit.

State auditors released the final audit report on Friday.

In that report, auditors said the Stephens County school system failed to balance its budget in Fiscal Year 2013, resulting in a deficit fund balance.

According to auditors, the school system’s General Fund showed a deficit in its fund balance of more than $1.2 million at June 30, 2013.

The audit also says that the school system’s total anticipated revenues did not equal or exceed total anticipated expenditures.   Auditors said the school system’s Fiscal Year 2013 general fund revenues were about $38.8 million, but expenditures were at about $40.4 million, a $1.6 million shortfall.

Stephens County School Superintendent Bryan Dorsey said Tuesday there were no  surprises in the school system’s FY2013 audit.

“We want to make sure that the community knows that we are going to take this seriously and get this matter under control,” said Dorsey. “We feel like we are well on our way. We know that we still have some changes to make. We feel like we are getting close to having some finalized plans so we do not have a repeating of this.”

Whiten, who was superintendent during FY2013,  said she also was not surprised to see some audit findings.

“The audit results were not totally unexpected based on the way things were after our first finance director departed,” said Whiten. “We had just come off of having the previous year’s audit done. It was a clean audit. But it was like everything had stopped there. Revenues and expenses had not been posted since the last audit. We had a lot of things that we had to work on, try to straighten out, and at the same time try to make sure that everybody and all the vendors were paid and everything was up to date.”

Whiten said she did seek help to fix the problems that had been identified.

“I asked all over the state,” said Whiten. “I asked neighboring school systems for help. We actually had several school systems that sent their finance directors for a day or two to try to help out.  “I finally found someone that was retired person from the Department of Audits,” said Whiten. “She came in and worked with us to try to make sure that those debits and credits were posted, and not only posted, but posted in the correct place.”

The audit report revealed the general operating bank accounts for October 2012 through June 30, 2013 were not reconciled to the General Ledger until March 2014, around the time of Whiten’s retirement.

Claire Arnold is the Director of the Georgia Department of Audits’ Education Audit Division.

She said not recording expenses on the general ledger is the equivalent to a person not recording payments in their checkbook.

“Things not posted to the general ledger would mean that reports that maybe were given to the board during the fiscal year would not have included all of the activity,” said Arnold.

State auditors also reported that the school system did not comply with financial requirements regarding some federal grant programs.

Throughout the report, auditors blame quote, ‘management’ for the numerous errors.  According to Arnold, management typically refers to the School Superintendent and the Finance Director.

But the Stephens County School System had two finance directors during Fiscal Year 2013.  Annah Dodge served as Finance Director before resigning in February 2013.  Justin Beecher was finance director starting in March. He resigned in October 2013.

Sherrie Whiten was Superintendent during that whole fiscal year.  She retired from the school system at the end of March.   Whiten now works as a Site Administrator in Toccoa for Mountain Education Charter High School.

Dodge resigned as Finance Director in February 2013, not long after Whiten says the school system received its Fiscal Year 2012 audit, which was a clean audit.

Whiten said when Dodge resigned, the state looked for any evidence of fraud, but found none.  She said she knew there were issues, but did not know the extent of the issues.

“I was not (aware) until after the first finance director (Dodge) left,” said Whiten. “That is when we tried to make sure all the things were posted and worked really hard to try to take care of that.

Whiten said she was not aware that there were any problems with the school system’s fund balance, as stated by auditors in the report.

When asked if she informed the Board of the issues she did know about, Whiten said “the Board there were some things that had not been taken care of.”

Board of Education Chair Dr. Elizabeth Pinkerton said she was not aware of any issues with the system’s finances when Dodge resigned.

“No, absolutely not,” said Dr. Pinkerton. “I was never told personally as an individual nor was there any time the Board was told that there was any kind of financial crisis.”

Pinkerton said she did know that help was brought in earlier this year for former Finance Director Misty Cleveland.

“I was told Misty was having some difficulties with some of the issues she was dealing with,” said Dr. Pinkerton. “I thought it was because she was not able to take care of it herself and needed help herself.”

Dr. Pinkerton said she did know any specifics about what the issues Cleveland was facing were at that time.
Nothing was ever said publicly following Dodge’s resignation about any issues with the school system’s financial records.

When asked why nothing was ever said publicly if issues were known, Whiten said she did not have an answer for why she did not make it public.  Overall, Pinkerton said she was surprised at the extent of what the audit pointed out.

“I think we were disappointed and surprised by the number of line items that were not appropriately taken care of,” Dr. Pinkerton said. “The overall financial situation was about the same as we expected, but I was rather surprised by the number of line items that were not taken care of properly.”

Meanwhile, Whiten said ultimately, the issues happened on her watch.

“I take responsibility for it, it happened on my watch,” said Whiten. “But a lot went into trying to straighten it out before I ever left.”

Arnold said one thing that the audit did not find was any evidence of fraud or other criminal activity.

“Our audit does not identify any (activity) of that nature,” said Arnold. “We do plan our audit in order to have reasonable assurance that the financial statements are materially correct, so we do not design our audit to determine every potential fraud. We do design our audits to make sure we feel like the numbers that are presented as the financial statements are materially correct and nothing was identified as indicative of fraud during the report we performed.”

Dorsey, meantime, said it is understandable that there are people that want to see something done, but says that at this point, there is nothing criminal to report.

He said that as this process continues, if possible criminal activity was found or money was found to be “missing,” that will be immediately reported.

Dorsey said he has also spoken with others on the matter, but adds at this time there are no plans to do a further forensic audit or request a criminal investigation.