Lack of Financial Internal Controls Revealed at Huntley School District

Sometimes there’s something healthy about hiring someone from another type of government.

That seems to be what happened at Huntley School District 158 when it replaced finance guy Stan Hall with finance woman Stacie Talbert. I understand she came from Rock Valley College.

It seems that community colleges run a much tighter ship than unit school districts, at least Unit School District 158, at least if her recommendations are indicative of how Rock Valley College is run.

Thursday night the school board considered an “Internal Controls Report” prepared by Talbert.

Perhaps it should have been titled, “Lack of Internal Controls Report.”

The board packet for Thursday night meeting contains over 600 pages of information. If any of the board members reads it all, I’d award him or her a gold star.

But they ought to read this Talbert report. Start on page 10 of the Finance Report in the board packet for December 13th.

Most shocking was the following, which appears in a CPA organization’s guidelines in the board packet under Talbert’s internal controls (or lack there of) report:

”Management may be in a position to override controls and ignore or stifle communications from subordinates, enabling a dishonest management which intentially misrepresents results to cover its tracks.

A strong, active board, particularly when coupled with effective upward communications channels and capable financial, legal and internal audit functions, is often best able to identify and correct such a problem.”

What follows comes from a summary chart below the narrative part of the report. (I wrote a report from the narrative that you can read here.)

Payroll…system does not provide audit trails and background on a consistent basis of who changed data.

All payroll and tax forms and reports not done “historically on a consistent basis.”

Complaints from employees not receiving their extra duty or sub pay in accordance with pay calendar.

No responsible employee identified for keeping up to date with current tax and related legislative requirements and ensuring ongoing compliance. (More on this Monday.)

Inadequate records to track capital assets. Tech maintains inventory list of all items that have a tendency to “walk away.”

There is no formal follow through process on significant budget variances.

There is no true culture and/or understanding of internal controls in the fiscal office or the district as a whole.

There is a lack of training and understanding of key laws and regulations.

The system does not provide audit trails and background on a consistent basis of who changed data.

No fund balance policy exists (re plan for contingencies—future emergencies–plan for future funding of capital projects other than debt, cash availability).

Investment policy does not address all the requirements of the Public Funds Act.

No procurement policy exists.

Culture exists of “I do what I was told to do.” Minimal questioning of questionable expenses and transactions. Fear of public scrutiny and demeaning comments.

In the Executive Summary of The Committee of Sponsoring Organizations of the Treadway Commission’s report on Internal Control, I found the following sentence:

”Management may be in a position to override controls and ignore or stifle communications from subordinates, enabling a dishonest management which intentially misrepresents results to cover its tracks. A strong, active board, particularly when coupled with effective upward communications channels and capable financial, legal and internal audit functions, is often best able to identify and correct such a problem.”

This seems to suggest that a questioning school board would be appropriate for a school district like Huntley.


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