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July 20, 2018

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School district budget problems spur push for more audits

Updated Friday, Sept. 22, 2017 | 6:20 p.m.

Lawmakers and community members are pushing for more audits of the Clark County School District as officials work to bridge a massive budget shortfall.

The district does a yearly external audit, but trustees meeting on Sept. 28 will discuss the possibility of a more in-depth analysis of the district’s finances. That analysis would also be conducted externally.

A committee of lawmakers and community leaders is also providing input on the budget issues. The Community Budget Advisory Committee held its first meeting Friday, with officials going over the budget process and asking questions about procedure.

Assemblyman Chris Edwards, R-Las Vegas, wants the legislative audit agency to weigh in as well. He asked members of the legislative commission on Thursday to direct the Legislative Audit Agency to conduct a forensic audit.

The district is almost through a quarter of its fiscal year and needs to cut up to $80 million total for the year to realize $50 million to $60 million in savings. Edwards told the commission that CCSD has failed in accounting for the money and demonstrating transparency.

“My constituents don’t trust the internal audit capability of CCSD and neither do I,” he said. “After all, how can we.”

The district’s audit advisory committee also went over a possible “forensic” analysis during its regularly scheduled meeting Friday morning. CCSD Chief Financial Officer Jason Goudie said “forensic audit” is probably the wrong term for what officials want to do, since it implies wrongdoing.

With a push for a legislative audit, CCSD’s annual external audit and the district exploring another, more in-depth audit, Goudie said it’s too soon to tell if these will be redundant.

“Everybody’s using a bunch of terms about forensic audits and audits and things like this,” he said. “Until we define the scope, being in the audit world, until you tell us exactly what you want us to do, I can’t tell you whether there’s overlap. I can’t tell you if there’s overlap with what our internal auditors do now, if there’s overlap with what our external auditors do now, so there’s a lot of pieces. I think the key component is really understanding what people are asking for and what is the ask list, the scope of those services and then we can address that.”

Legislative Commission Chairman Jason Frierson, D-Las Vegas, said officials need to first determine what kind of audit work is being done already so they can make informed decisions before spending millions of dollars. Over the next few months, he said, the community budget group will continue to have public discussions about these budget issues.

“The reality is, they already do an audit,” Frierson said Friday. “We need to take the time to look at the audit that they do, find out if and how it’s inadequate, and then make decisions about whether or not there needs to be a different process to assess how they spend their money. I don’t think anyone would disagree at this point that we need to look into how they spend the public resources that they get. No one disagrees with that. We just want to make sure that we do it in an efficient and responsible way.”

Legislative Auditor Rocky Cooper says the last legislative audit of CCSD was released in 2004.

“We found that financial management practices were generally sound,” the report says, noting 21 areas for improvement that were accepted by CCSD.

Cooper said any requested audit of CCSD would impact the department’s current slate of work.

“There are considerations regarding our previously approved audits,” he said. “This audit would delay other audits.”

Edwards and others have said they don’t trust CCSD’s internal audit department. CCSD is required by law to provide schools with an internal auditing department, but its emphasis is on looking at school banking activities and income from sources such as fundraisers.

Janette Scott, director of the district’s audit department, said Friday that she’d need to at least double her staff to get to every school annually, but that the nature of her department’s responsibilities mean that its size has not contributed to the budget confusion this year.

“Even though we do obviously audit some departments, we do spend quite a bit of time out at the schools looking at the school banking activity, monies brought in for fundraisers and things like that, which is a completely different area,” she said.

When it comes to the reorganization, however, the department is anticipating some impacts down the road, Scott said. The new structure means more spending responsibilities will fall on principals.

“We do anticipate going forward that our school audits will become a little more involved and will thus take a little more time, which then means the cycle time between school audits gets longer, and just like anything, the longer between oversight, then that’s when you have opportunities for issues to arise,” she said.

The department has eight auditors paid for through the general fund, two through bonds and two UNLV students who help with elementary schools. They are responsible for more than 350 schools, and Scott said they struggle to meet their current rotation of getting to all secondary schools at least every year and a half or two years and elementary schools every three years.

“I do not think that is an adequate rotation schedule,” she said, noting that she’d love to get out to each school every year. “Especially now with the changes that we have coming up, it concerns me that we may not be able to get out to our schools as often as we would like to.”

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