The facts of WBCSD's forensic audit, finances

Over the last month, with discussions about the next fiscal year budget and the forensic audit presentations, rumors have been flying. I’d like to take this opportunity to address what is being said. 

First, in order to solve its current financial position, the District has to simultaneously undertake a five-prong approach that entails: (1) Forensic audit completion; (2) Financial audit completion; (3) 2024-25 Budget development and identification of shortfall; (4) Review, update and implementation of Financial Management policies (Series 7000) and procedures; and (5) Solutions to Business/Office staff shortage and accounting system’s shortcomings. Know that these issues are being addressed on all fronts — not only by myself and the board but also the Finance Committee and the dedicated central office staff.

Second, in response to the claims being made:

CLAIM: ESSER III Funds Missing: In December 2023 2.1M was approved in ESSER III funds allocated for facilities. — Where did all the ESSER money go?

FACT: On Aug. 10, 2022, the Board approved the use of the ESSER III funds for facilities/capital improvements. On May 17, 2023, with the failure of the levy, the board approved to “Use Fund Balance and ESSER Funds to arrive at a balanced budget.” 

CLAIM: Phase 1 found 1,343 checks with no vendor names listed in the general ledger. That amounts to $8,305,032.95!  — We don’t know who/where $ 8.3 million went!

FACT: The actual report reads: “Check was found in bank statement and a canceled check was provided, but no vendor names was listed in the general ledger.” There is a canceled check indicating who the check was written to. The district received Eide Bailly’s list Feb. 15, 2024; it is attached to the Feb. 21 meeting agenda.

CLAIM: Also, 31 checks where the vendor name was different in the general ledger.

FACT: The actual report read: “Check was found in bank statement and canceled check, but vendor name was different in the general ledger.” The list has been requested from Eide Bailly; receipt is pending.

CLAIM: Also, two checks were found in the bank statement, no canceled check, and the check number was not in the general ledger. Exactly $217,733. Who received $217,733.00?

FACT: The district has disclosed that this check had an incomplete check number assigned by the bank and the check was a transfer from Wells Fargo to Columbia when the district switched accounts. These checks are part of Eide Bailly’s Workpaper No. 2. District staff is working with the bank to provide documents to the auditor.

CLAIM: One check was found in the bank statement (canceled check provided), but the vendor name was listed differently in the general ledger, totaling $19,640. With an accounting background, I can tell you this was almost definitely not done by accident. This is incredibly suspicious!

FACT: The district continues to work with Eide Bailley to address these issues and find the source documents.  

Upon final reflection, I am reminded of a quote by economist and senior fellow at the Hoover Institution, Thomas Sowell. Sowell wrote, “Some things are believed because they are demonstrably true. But many other things are believed simply because they have been asserted repeatedly — and repetition has been accepted as a substitute for evidence.”

As I indicated during one of my previous board reports, I welcome the forensic audit, and acknowledge that improvement of our financial practices, driven by fair and accurate fiscal oversight is a must. I recognize, and accept the district has work to do in terms of improving its accounting practices. Our limited but incredible staff is working hard to do so. Our consistent, and unfiltered improvement, evidenced by open and clear reporting, will continue. Once again, it’s time to come together.

Joseph A. Kren is superintendent of the West Bonner County School District.